The Nasdaq Composite has been on fire over the past couple of years, driven higher by the advent of artificial intelligence (AI), improving economic conditions, an uncontested election, and the Federal Reserve Bank’s recent moves to cut interest rates. After returning 43% in 2023, the tech-centric index is up roughly 30% in 2024. History suggests the rally will likely continue into 2025.
The current bull market began on Oct. 12, 2022, and while every rally is different, history can provide important context. Bull markets last more than five years, on average. Since the current rally just entered its third year, there’s a strong likelihood the Nasdaq will continue to gain ground next year. It’s also worth noting that the Nasdaq has generated gains 73% of the time, dating back 53 years, so history is on the side of investors. Finally, the Nasdaq has jumped 12%, on average, in years following positive gains, which suggests there’s additional upside ahead.
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Furthermore, there’s been a resurgence in the popularity of stock splits over the past few years. As a result, investors are taking a renewed interest in companies that split their shares, as this is historically preceded by years of robust sales and profit growth. One such company is Nvidia (NASDAQ: NVDA). The stock has gained 26,920% over the past decade (as of this writing), prompting management to initiate a 10-for-1 stock split earlier this year — after a 4-for-1 split in 2021.
Despite its recent run-up, there’s reason to believe that Nvidia’s growth spurt will continue into 2025. Read on to find out why.
The adoption of generative AI has spread like wildfire over the past two years as businesses are eager to share in the productivity increases promised by these advanced algorithms. Generative AI has proven adept at drafting and summarizing emails, searching and abbreviating content, mining data, generating original content, and writing computer code — and new applications are being discovered every day. Automating and streamlining tasks saves users time and money, driving new users to adopt AI.
Nvidia pioneered the graphics processing units (GPUs) that make this all possible. These specialized chips provide the sheer number-crunching capability that brought AI to life. The secret lies in parallel processing or breaking up computer-intensive jobs into smaller, more manageable bits. Nvidia first developed these chips to render lifelike images in video games but soon discovered other applications for this breakthrough technology, including data centers, high-performance computing (HPC), and machine learning — an earlier branch of AI.
