Two Nasdaq stocks have seen remarkable increases of 510% and 910% over the past two years, as suggested for potential investment by Wall Street analysts.
Two Nasdaq stocks have seen remarkable increases of 510% and 910% over the past two years, as suggested for potential investment by Wall Street analysts.
The Nasdaq-100 keeps tabs on the performance of the 100 largest non-financial companies listed on the Nasdaq Stock Exchange. The index's components are reweighted every three months in March, June, and September, and a full overhaul happens annually in December.
The tech sector takes up a significant portion of the Nasdaq-100, with AI playing a significant role in its growth. For instance, Nvidia (NVDA 3.08%) and Meta Platforms (META -1.73%) have had a substantial impact on the index due to their impressive two-year returns since ChatGPT's debut in late 2022: 910% for Nvidia and 510% for Meta Platforms.
The financial market has a positive outlook on both stocks. At the time of writing, 92% of 65 Nvidia analysts recommend buying the stock, with a median price target of $150 per share. This suggests a 2% rise from its current share price of $147. Similarly, 84% of 70 Meta Platforms analysts suggest buying the stock, with a median price target of $655 per share, which represents an 11% increase from its current share price of $589.
Here's what investors need to know about these hot stocks from the Nasdaq:
Nvidia: 2-year return of 910%
Nvidia's graphics processing units (GPUs) have become the standard in speeding up data center tasks, including training machine learning models and running AI applications. GPUs can surpass central processing units (CPUs) in calculating technical tasks because of their efficiency. Nvidia systems consistently set performance records at the MLPerfs, which are unbiased benchmarks for evaluating AI training and inferencing capabilities.
According to David Harold at Jon Peddie Research, one reason for Nvidia's success is its "vertical integration" across hardware and software domains. This means that not only does Nvidia manufacture GPUs but also provides CPUs, networking equipment, interconnects, and software like CUDA to streamline application development.
The strong financial performance of Nvidia was evident in the second quarter of fiscal 2025. Revenue grew 122% to $30 billion due to high demand for AI hardware and software. Furthermore, the company's non-GAAP earnings increased 152% to $0.68 per diluted share. Analysts project that spending on AI accelerators will grow annually by 29% through 2030, according to Grand View Research.
Nvidia is well-positioned to maintain its momentum in the future. Next-quarter earnings are expected to increase by 35% annually over the next three years. Despite this growth, the stock's current valuation of 69 times earnings is seen as tolerable but not cheap. Investors who are comfortable with volatility may consider purchasing shares since the company is set to announce its third-quarter earnings on Nov. 20.
Meta Platforms: 2-year return of 510%
Meta Platforms owns four of the top seven most popular social media platforms worldwide: Facebook, Instagram, WhatsApp, and Messenger. These platforms boast a combined total of over 3.2 billion unique daily visitors and more than 2.9 billion monthly active users. Meta's ability to gather data from such vast user interactions has helped it become the second-largest ad tech company in the world after Google.
Meta is capitalizing on AI to enhance user engagement and reduce ad costs for advertisers. AI recommendations have significantly increased user engagement on Facebook and Instagram by 8% and 6%, respectively, according to CEO Mark Zuckerberg. Additionally, Meta AI's conversational assistant has amassed over 500 million monthly users since its beta release a year ago. Zuckerberg predicts that it will become the most widely used AI assistant by year-end.
Meta reported impressive financial results in the third quarter, surpassing both revenue and earnings estimates. Its revenue climbed 19% to $40.6 billion, while its GAAP earnings rose 37% to $6.03 per diluted share. Analysts believe that AI is having a positive impact on Meta's business in various ways, from improving core services to planning new services and computing platforms.
However, Meta Platforms has reported operating losses of over $58 billion in Reality Labs, its AR-focused business unit, since 2020. The significant cash burn has raised concerns about this investment. But some financial experts, like Rosenblatt analyst Barton Crockett, think that Meta's Ray-Ban smart glasses could be this Christmas's hit product. Meta Platforms has also unveiled Orion, its first pair of holographic AR glasses, and CEO Mark Zuckerberg mentioned it during the recent earnings call, hinting at its upcoming release.
Looking ahead, analysts expect Meta Platforms' earnings to grow by 21% annually over the next three years. Given this projection, the current valuation of 28 times earnings looks reasonable, and investors may consider buying a small position in this stock today.
Investors looking to diversify their portfolios might consider investing in tech companies like Nvidia and Meta Platforms due to their impressive two-year returns. With a 2-year return of 910%, Nvidia's graphics processing units (GPUs) have revolutionized data center tasks and set performance records in AI training and inferencing capabilities. On the other hand, Meta Platforms, the second-largest ad tech company in the world, has a 2-year return of 510%, and is capitalizing on AI to enhance user engagement and reduce ad costs for advertisers.