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AI Optimism Powers Nasdaq to Hit Fresh All-Time High: 5 Picks

The tech rally has been helping Wall Street hit fresh records this year. On Jun 11, the Nasdaq and the S&P 500 closed at fresh all-time highs for the second straight day.

The tech-heavy Nasdaq closed 0.9% higher at 17,343.55 points on Tuesday, as the enthusiasm surrounding artificial intelligence continued to make investors optimistic about the AI space.

Year to date, the Nasdaq Composite has gained 15.5% after soaring 43.4% in 2023, recording its best year since 2020.

Tech stocks have been performing particularly well after a not-so-impressive 2022 as higher interest rates weighed on growth stocks. However, tech companies have since rebounded and powered Nasdaq into the winning zone.

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This year’s rally is particularly being driven by stocks focused on AI, particularly generative AI, which has also been helping the broader market.

Optimism Surrounding AI Powering Nasdaq Rally

While AI experts' opinions, particularly on the future of generative AI, are divided, the excitement around this field has been enormous in the past year. Many believe that AI is still in its early stages and that its full potential has yet to be realized.

NVIDIA Corporation NVDA has been a frontrunner in generative artificial intelligence (AI) and has been central to the surge in interest in this field.

Its shares have soared 211.9% in the past 12 months and 144.2% year to date.

The company’s CEO, Jensen Huang, recently unveiled the company's new AI chip architecture, dubbed "Rubin," at an industry conference in Taipei. He also announced plans to release a high-performance version of the Blackwell chip, called the Blackwell Ultra, in 2025.

The Rubin architecture will include new GPUs designed for AI systems, CPUs, and networking chips.

NVIDIA’s solid progress in the generative AI space has seen several tech giants trying to get a prominent footprint in that area. On Tuesday, Apple, Inc. AAPL unveiled a series of new AI-powered features backed by a deal with OpenAI.

Also, the advancement of smart devices is supporting the field as they require computing and learning abilities for tasks like face detection, image recognition and video analytics. These functions require high processing power, speed, memory, low power consumption, and improved graphic processors and solutions, which are all favorable conditions for the semiconductor industry.

Moreover, the semiconductor industry is experiencing a strong recovery as a result, following a period of challenges until the first half of 2022.

Our Choices

Given this scenario, it would be ideal to invest in Nasdaq stocks such asAlphabet Inc. GOOGL, Netflix, Inc. NFLX and Broadcom Inc. AVGO, whichhave strong potential in 2024. These stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and assure good returns. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alphabet Inc. is one of the most innovative companies in the modern technological age. Over the last few years, GOOGL has evolved from primarily being a search-engine provider to cloud computing, ad-based video and music streaming, autonomous vehicles, healthcare providers and others.

Alphabet’s expected earnings growth rate for next year is 31%. The Zacks Consensus Estimate for current-year earnings has improved 12.3% over the past 60 days. GOOGL presently sports a Zacks Rank #1.

Netflix, Inc. is considered a pioneer in the streaming space. NFLX has been spending aggressively on building its portfolio of original shows. This is helping Netflix sustain its leading position despite the launch of new services like Disney+ and Apple TV+, as well as existing services like Amazon Prime Video.

Netflix’s expected earnings growth rate for the current year is 52.2%. The Zacks Consensus Estimate for the current-year earnings has improved 7.5% over the past 60 days. NFLX currently sports a Zacks Rank #1.

Broadcom Inc. is a premier designer, developer and global supplier of a broad range of semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor-based devices and analog III-V-based products. AVGO’s semiconductor solutions are used in end products such as enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays.

Broadcom’s expected earnings growth rate for the current year is 11.4%. The Zacks Consensus Estimate for the current-year earnings has improved 0.3% over the past 60 days. AVGO currently carries a Zacks Rank #2.

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Apple Inc. (AAPL) : Free Stock Analysis Report

Netflix, Inc. (NFLX) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Broadcom Inc. (AVGO) : Free Stock Analysis Report

Alphabet Inc. (GOOGL) : Free Stock Analysis Report

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