Uncover the Stocks Driving Nasdaq-100's Growth in 2024
AppLovin: Harnessing AI for App Success
AppLovin, with a market cap of $113 billion, has been a standout in 2024. Through the use of artificial intelligence, it assists developers in getting their apps noticed and effectively manages in-app advertising. This innovative approach has propelled AppLovin to a remarkable year-to-date return of 724%. It showcases how AI is transforming the app monetization landscape and creating opportunities for growth.The company's ability to leverage AI technology gives it a competitive edge in the highly competitive app market. It enables developers to reach a wider audience and maximize their revenue potential. AppLovin's success is a testament to the power of AI in driving business growth in the digital age.Nvidia: The AI Semiconductor Giant
Nvidia, with a massive market cap of $3.3 trillion, is at the forefront of the AI revolution. As the leading provider of graphics processing units (GPUs), it plays a crucial role in gaming, cloud computing, data centers, and most recently, in AI. Its GPUs are the backbone of many AI applications, enabling high-performance computing and accelerating the development of AI models.In 2024, Nvidia has achieved a year-to-date return of 169%, demonstrating its strong performance in the AI-driven market. The company's continuous innovation and investment in research and development have positioned it as a dominant force in the semiconductor industry. Its products are essential for the growth and advancement of AI technologies, and its future looks very promising.Constellation Energy: Pioneering Clean Energy
Constellation Energy, with a market cap of $75 billion, is at the forefront of the clean energy movement. As the largest provider of clean energy and nuclear power in the US, it is making significant contributions to a sustainable future. Recently, it inked a deal with Microsoft to provide energy for its power-hungry AI data centers.This partnership highlights Constellation Energy's ability to adapt to the changing energy landscape and meet the growing demand for clean energy. Its clean energy solutions not only help reduce carbon emissions but also provide a reliable source of power for the digital age. Constellation Energy's success is a testament to the importance of clean energy in driving economic growth and environmental sustainability.ARM Holdings: The AI-Enabled Chip Design Leader
ARM Holdings, with a market cap of $161 billion, is at the heart of the semiconductor industry. It creates and licenses semiconductor designs and is experiencing a significant boost from the AI boom. Its designs are integrated into a wide range of devices, from smartphones to data centers, where much of AI resides.In 2024, ARM Holdings has achieved a year-to-date return of 104%, reflecting its strong performance in the AI-driven market. The company's expertise in chip design and its ability to collaborate with leading technology companies have positioned it as a key player in the AI ecosystem. Its products are essential for the development and deployment of AI applications, and its future growth prospects are bright.Marvell Technology: Semiconductor Powerhouse in Data Centers
Marvell Technology, with a market cap of $104 billion, is a leading semiconductor company with a strong presence in data centers. It develops semiconductors, networking, and storage devices that are crucial for the operation of data centers, where much of AI is processed.In 2024, Marvell Technology has achieved a year-to-date return of 96%, demonstrating its ability to capitalize on the growth of the AI market. The company's innovative products and technologies enable efficient data processing and storage, which are essential for the success of AI applications. Marvell Technology's expertise in semiconductors makes it a valuable partner for companies in the AI space.If you haven't guessed by now, the common thread among these high-flying stocks is AI. The excitement surrounding this technology has been palpable over the past few years, and it shows no signs of slowing down. These stocks have demonstrated their ability to generate significant returns and are well-positioned for future growth.When it comes to valuation, the most commonly used metrics struggle with high-growth stocks. However, using the more appropriate price/earnings-to-growth (PEG) ratio, which factors in accelerating growth, shows that each of these high-fliers has a multiple of less than 1, indicating that they are undervalued. Additionally, each of these market leaders has earned an average analyst rating of "buy," suggesting that there is still upside ahead.If Wall Street is right (and there are strong indications that it is), these stocks have the potential to continue their upward trajectory and deliver even greater returns in the future. Investors who are looking to capitalize on the AI boom and participate in the growth of the Nasdaq-100 should consider these stocks as part of their portfolio.Danny Vena has positions in Microsoft and Nvidia. The Motley Fool has positions in and recommends AppLovin, Microsoft, and Nvidia. The Motley Fool recommends Constellation Energy and Marvell Technology and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.Unlock the Potential of the $4 Trillion Club with Nvidia, Microsoft, and Apple
Nvidia
Nvidia (NVDA -2.25%) is an undeniable force in the AI arena. Its graphics processing units (GPUs) are the backbone of AI technology, driving a meteoric rise in its sales, profits, and stock price. As of now, Nvidia is the world's third-most valuable company with a market cap of $3.4 trillion. Just a 19% increase in its stock price is all it takes to secure its membership in the $4 trillion club. Nvidia's GPUs are the gold standard for generative AI, making them an essential component in data centers where AI processing occurs. In 2023, it reportedly controlled 98% of the data center GPU market, and this dominance is likely to continue. The major cloud infrastructure providers have already signaled their intention to invest heavily in advancing their AI agendas. Additionally, the upcoming debut of Nvidia's next-generation AI-centric Blackwell chip has generated significant excitement, indicating that this trend will persist. "Blackwell represents the next frontier for Nvidia and the overall AI revolution," as Dan Ives wrote. "The Street is still underestimating the demand curve over the next 12 to 18 months and beyond." With its unrivaled position in the data center GPU market, Nvidia is well-positioned to continue benefiting from the accelerating adoption of AI. Moreover, the company's gross profit margin remains near a record high, enhancing its profitability. This combination is likely to propel its stock even higher, ensuring its admission to the $4 trillion club.
The impact of Nvidia's GPU technology extends beyond just market capitalization. Its GPUs are powering innovative applications across various industries, from healthcare to entertainment. The ability to handle complex AI tasks with speed and efficiency has made Nvidia a leader in the field. As AI continues to evolve, Nvidia's role is set to become even more crucial. Its continuous research and development efforts ensure that it stays at the forefront of technological advancements, providing customers with the best possible solutions.
Microsoft
Microsoft (MSFT -0.51%) is currently the world's second-most valuable company with a market cap of $3.38 trillion. It only needs an 18% increase in its stock to reach the $4 trillion benchmark. The company recognized the immense potential of AI early on and took swift action to capitalize on this opportunity. The initial release of Copilot, Microsoft's suite of AI-fueled productivity tools, was just the beginning. Recently, the company launched analytics tools to help customers measure their return on investment (ROI) related to AI spending, removing one of the major barriers to AI adoption. Microsoft is also working hard to reduce the cost of AI computing for users, addressing another key challenge. Furthermore, the company is developing AI agents that focus on mission-critical business applications, expanding its reach and impact.
Microsoft's AI revenue is on track to exceed a $10 billion run rate this quarter. Dan Ives estimates that 70% of Microsoft's installed base will adopt its AI solutions over the next three years, which will significantly boost sales and profitability. He also calculates that for every $100 of current Azure Cloud spending, Microsoft could generate an additional $40 annually. Given Microsoft's extensive presence in both the enterprise and consumer markets, it has a vast opportunity to drive growth. The company's ability to integrate AI seamlessly into its existing products and services gives it a competitive edge. As AI continues to shape the future of computing, Microsoft is well-positioned to lead the way.
Apple
Apple (AAPL 0.07%) has a long history as the world's most valuable company, although it has occasionally ceded the top spot. Currently, it has a market cap of $3.73 trillion, approximately 7% below the $4 trillion threshold. The iPhone 16, which hit stores in mid-September, holds the biggest potential to push Apple over the finish line. This latest version of the iPhone supports Apple Intelligence, bringing a host of generative AI features to the device. CEO Tim Cook has noted that these advanced capabilities are already attracting user attention. " (iOS) 18.1 has twice the adoption rate of (iOS) 17.1," Cook said, highlighting the level of interest. Despite recent economic headwinds, consumers who have been hesitant to upgrade due to inflation are now starting to loosen their purse strings. Dan Ives estimates that there are approximately 300 million iPhones in use that have not been upgraded in over four years. The improving economy and the AI functionality of the iPhone 16 could trigger a long-awaited "supercycle." Ives predicts that Apple could sell as many as 240 million iPhones in the coming year.
Apple's brand loyalty and its focus on innovation make it a strong contender in the race for the $4 trillion market cap. The integration of AI into its products has the potential to enhance the user experience and drive sales. As consumers become more accustomed to using AI-powered devices, Apple's position is likely to strengthen. The company's ability to combine hardware, software, and services in a seamless manner gives it a unique advantage in the market.
AI is already experiencing rapid growth, and experts predict even more significant advancements in the coming decade. The generative AI market is expected to be worth between $2.6 trillion and $4.4 trillion. As leaders in bringing AI to the masses, Nvidia, Apple, and Microsoft are well-positioned to share in the rewards. Despite the significant potential for future gains, these companies are still attractively priced at 32 times, 30 times, and 30 times next year's earnings, respectively. Their positions at the top of the leaderboard highlight the importance of AI and the opportunities it presents.