2 Top Artificial Intelligence (AI) Stocks to Buy Before Nasdaq Tops

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gave Nasdaq-100 The index is up 10 percent so far in 2024, and that's not surprising since it has benefited from solid growth reported by its major components, driven by growing demand for artificial intelligence (AI) and cloud computing. Benefiting from

The good news is that the Nasdaq-100 can go higher as the year progresses. Deutsche Bank It is estimated that the index could rise 19% in 2024, based on inflation and solid economic growth in the US. can play a central role in the development of Nasdaq-100.

Let's take a closer look at two Nasdaq-100 components — Nvidia (NASDAQ: NVDA ) And Qualcomm (NASDAQ: QCOM ) — that are delivering outstanding results from adopting AI. We'll look at why these two AI stocks make sense to buy before the Nasdaq gains further.

1. Nvidia

Nvidia's stunning 121% gains in 2024 have played a central role in sending the Nasdaq-100 higher. And the stock's spectacular rally seems to be here to stay. Analysts are raising their earnings expectations for the chipmaker after its latest quarterly report.

Over the past 30 days, 47 analysts have increased their FY2025 earnings per share (EPS) estimates, while 44 have done the same for FY2026. Expectations for EPS improvement from Nvidia are shown in the chart below.

NVDA EPS Estimates for the Current Fiscal Year Chart

There are two reasons why analysts expect Nvidia to deliver strong earnings. First, the company has been able to maintain its grip on the AI ​​chip market. It ended 2023 with a 94% share of the AI ​​server market. As a result, its revenue from sales of data center chips rose a remarkable 427 percent year-over-year to $22.6 billion in the first quarter of fiscal 2025 (which ended April 28).

Nvidia's partners like AMD And Intel The data center reported revenue of $2.3 billion and $3 billion in the first quarter of 2024, respectively. More importantly, Nvidia could maintain its dominance in the AI ​​chip market with the arrival of a new generation of chips that could widen the technology gap. on competitors. Its upcoming chips based on Blackwell architecture are said to be four times faster than existing chips based on Hopper architecture.

Nvidia says that demand for its Blackwell chips is so strong that it will have trouble meeting them by 2025. So the company's AI lead remains here, and that should allow it to ship more units of its AI graphics cards.

Another reason analysts are optimistic about Nvidia's bottom-line growth is its immense pricing power in AI chips. According to Raymond JamesA Blackwell B200 accelerator can cost Nvidia $6,000 to build. Since each processor is expected to sell for $30,000 to $40,000, it will make a huge profit on its new chips.

Overall, the secular growth of the market for AI chips is going to be a big tailwind for Nvidia for the reasons mentioned above, which is why there's a good chance that this AI stock will make these impressive gains. It can increase after. Already clocked in 2024.

2. Qualcomm

Qualcomm has gained impressive momentum, up 41 percent so far in 2024, and the Nasdaq-100 stock looks poised for more volatility due to AI-related tailwinds in the smartphone and personal computer (PC) markets. Which is ready to change it. good fortune

Qualcomm's revenue in fiscal 2023 (which ended in September last year) fell 19% to $35.8 billion. Its adjusted earnings also fell 33% to $8.43 per share.

However, revenue for the first six months of fiscal 2024 rose 3 percent year-over-year to $19.3 billion. It also reported 13 percent year-over-year adjusted earnings growth in the second quarter of fiscal 2024 to $2.44 per share.

Analysts are expecting Qualcomm's revenue to rise 7% to $38.3 billion in the current fiscal year, while earnings are forecast to rise 18% to $9.91 per share. More importantly, as the following chart indicates, Qualcomm is expected to grow over the next two fiscal years as well.

QCOM Revenue Estimates for Next Fiscal Year Chart

But there's a good chance Qualcomm's growth could be stronger than expected as demand for AI-powered smartphones continues to take off, and Qualcomm hopes to capture a significant portion of that market.

Counterpoint Research predicts that a total of 1 billion AI-powered smartphones could be shipped between 2024 and 2027. The researcher expects Qualcomm's chips to power more than 80 percent of generative-AI-powered smartphones in the next few years, not surprising since its chips are already powering SamsungK's flagship AI-powered Galaxy smartphones.

Additionally, Qualcomm's strategy of deploying AI in midrange smartphones could help it stay on top of this market in the long run. At the same time, the company has also started making inroads into the market for AI-powered PCs. Microsoft Recently announced new AI personal computers powered by Qualcomm chips.

The company said that all leading PC original equipment manufacturers will be launching AI PCs powered by its Snapdragon chips very soon. This is likely to open up another solid opportunity for Qualcomm as shipments are forecast to grow at an annual rate of 44% through 2028, according to Canalys.

All of this indicates that Qualcomm's growth may be accelerating, which is why it might be a good idea to buy the stock while it's trading at just 20 times forward earnings, the Nasdaq-100's forward earnings. Discount on multiples of K27.

Should you invest $1,000 in Nvidia right now?

Before buying stock in Nvidia, consider this:

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Consider when Nvidia This list was created on April 15, 2005… If you invested $1,000 at the time of our recommendation, You will have $740,688.!*

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Microsoft, Nvidia, and Qualcomm. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a Disclosure Policy.

2 Top Artificial Intelligence (AI) Stocks to Buy Before the Nasdaq Soars Higher was originally published by The Motley Fool.

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