Historically, the stock market, including the Nasdaq, has shown an upward trend in the months following a U.S. presidential election. Data from CNBC dating back to 1980 supports this observation, and 2024 has been no exception. Following Donald Trump’s election victory on November 5, the Nasdaq index has climbed approximately 10%. This momentum reflects reduced political uncertainty, providing investors with confidence in holding assets.
As 2025 approaches, the future of the Nasdaq remains uncertain, but Wall Street’s continued focus on artificial intelligence (AI) technology offers potential growth opportunities. Among the stocks benefiting from this trend, Advanced Micro Devices (NASDAQ: AMD) and Amazon (NASDAQ: AMZN) stand out as strong contenders for investors seeking returns from the AI boom. Here’s a closer look at these two companies.
Advanced Micro Devices: The Chipmaker Poised for AI Growth
Advanced Micro Devices (AMD) may have missed out on the full benefits of the generative AI rally this year, with shares down 13%, but its fundamentals suggest a promising future. The company’s diversified business model and reasonable valuation make it a compelling alternative to Nvidia, the dominant player in the AI chip market.
In the third quarter of 2024, AMD reported a 17% year-over-year revenue increase to $6.8 billion. While this growth may seem modest, its data center segment was the star performer, delivering a staggering 122% revenue surge to $3.5 billion. This growth was driven by sales of advanced GPUs designed for AI algorithm training and execution.
AMD is positioning itself for continued data center expansion with its upcoming Instinct MI325X series, designed to compete directly with Nvidia’s Blackwell chips. This product launch underscores AMD’s commitment to capturing a larger share of the AI market.
One of AMD’s key advantages lies in its diversified revenue streams. Unlike Nvidia, which generated 88% of its Q3 revenue from data center sales, AMD derives only 51% from this segment. This diversification not only positions AMD for steady growth but also provides resilience against potential downturns in the AI sector.
For investors, AMD offers a more attractive valuation, trading at a forward price-to-earnings (P/E) ratio of 25 compared to Nvidia’s P/E of 31. This makes AMD an appealing choice for those seeking a balanced investment in the AI-driven tech landscape.
Amazon: A Diversified Giant Thriving on AI
Amazon’s vast operations span e-commerce, cloud computing, and AI infrastructure, making it one of the most diversified players in the tech industry. Under CEO Andy Jassy, who assumed leadership in early 2021, the company has shifted from aggressive growth to a strategy emphasizing sustainable profitability.
This strategic pivot has paid off. Amazon’s cost-cutting measures, including layoffs and fulfillment network optimizations, have significantly improved its operational efficiency. These changes have allowed Amazon to strengthen its long-term competitive position while enhancing shareholder value.
Amazon Web Services (AWS), the company’s cloud computing arm, remains a cornerstone of its success. AWS is not only a leader in cloud infrastructure but also a key enabler of AI-driven technologies. The company continues to invest heavily in AI to enhance its cloud services and develop proprietary tools that can drive customer adoption.
Furthermore, Amazon’s diversification extends beyond technology. Its leadership in e-commerce and strategic investments in logistics infrastructure ensure a stable revenue base, even during periods of economic uncertainty.
With AI technology becoming increasingly integrated into its operations, Amazon is well-positioned to capitalize on emerging trends in the tech industry. This makes the company a valuable addition to any investor’s portfolio seeking exposure to AI and beyond.
The Broader Market Outlook
The Nasdaq’s performance in 2024 highlights investor confidence in the tech sector, particularly in AI. While challenges remain, including potential economic headwinds and evolving regulatory landscapes, companies like AMD and Amazon demonstrate the resilience and adaptability needed to thrive in such an environment.
Wall Street’s enthusiasm for AI technology suggests continued growth potential for related stocks. For investors, identifying companies with strong fundamentals, diversified operations, and strategic positioning in AI will be crucial for achieving long-term success.
Conclusion
The post-election surge in the Nasdaq reflects optimism about reduced political uncertainty and strong market fundamentals. Within this landscape, Advanced Micro Devices and Amazon stand out as leading players poised to benefit from the ongoing AI revolution. AMD’s diversified chip business and competitive valuation make it a compelling choice, while Amazon’s expansive operations and AI investments position it as a tech powerhouse.
Investors should monitor these companies closely as they navigate the opportunities and challenges of the AI-driven market.
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