THE Nasdaq Composite (NASDAQ INDEX: ^IXIC) has exploded over the past two years, largely thanks to growing opportunities in the field of artificial intelligence (AI).
But after posting gains of 43% and 29% in 2023 and 2024 respectively, how likely is the Nasdaq to soar again this year?
Historical trends give an idea of what might await us this year. Additionally, I will detail why Micron technology (NASDAQ:MU) is one of my top opportunities among the opportunities in the AI chip market.
One thing that is certain about the stock market is that it is resilient. Despite periods of volatility and economic weakness, history shows that capital markets have always emerged stronger after a tumultuous period.
Nasdaq is no exception here. In the table below, I have specifically indicated the years in which the Nasdaq posted negative annual returns:
| Years) | Annual yield |
|---|---|
| 1973 and 1974 | (31%) and (35%) |
| 1981 | (3%) |
| 1984 | (11%) |
| 1987 | (5%) |
| 1990 | (18%) |
| 1994 | (3%) |
| 2000 to 2002 | (39%), (21%) and (32%) |
| 2008 | (41%) |
| 2011 | (2%) |
| 2018 | (4%) |
| 2022 | (33%) |
Data source: Macrotrends.
As you can see, the Nasdaq has only experienced an annual loss 14 times in its 55-year history. More importantly, the index has only seen steep declines of more than 20% on seven occasions. When declines of this magnitude occurred in the early 2000s, in 2008 and in 2022, the United States found itself facing a number of complex problems, including the dotcom bubble, geopolitical conflicts, the loan crisis subprime mortgages and, more recently, a period of abnormal crisis. high inflation.
Given the above data, it becomes clear that the Nasdaq is trending towards rebounding after a year of decline. And to take it a step further, Nasdaq gains often last for several years before taking another hiatus.
So even though the Nasdaq’s recent gains have been quite generous, 2025 could still be a good year for this tech-heavy index.
Although semiconductor stocks have received a lot of attention over the past couple of years, Micron isn’t necessarily a priority for most investors. The headlines have instead been dominated by Nvidia, BroadcomOr Semiconductor manufacturing in Taiwan.
Don’t get me wrong. These three companies deserve the spotlight, given that they each play a vital role in the chip industry. For example, demand for graphics processing units (GPUs) from Nvidia (and Advanced microdevices) went through the roof. Their GPUs have the capacity to run the complex algorithms needed for generative AI applications, such as large language model (LLM) training or machine learning.
During these processes, training and inference become essential for perfecting AI models. This is where high-bandwidth memory (HBM) protocols become important, and that’s exactly what Micron specializes in.
Current trends in demand for AI infrastructure suggest that investments in training and inference will continue for many years. In fact, by 2030, Micron expects the total market for HBM chips to exceed $100 billion, more than six times its current value.
Over the past year, Micron shares have gained 27%, in line with the S&P500. But the stock is also down more than 30% from its 52-week high. Clearly, stocks have taken a pause – and now it’s time to pounce.
Micron’s forward price-to-earnings (P/E) ratio of 15.3 is considerably lower than many of its chip industry peers, and it even represents a discount to the S&P 500. Investors don’t see not how big the HBM chips are going to be. be on the road and therefore overlook the importance of Micron in the semiconductor landscape.
This is why Micron is such an attractive stock to buy in the new year and one that investors should hold for the long term.
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Adam Spatacco holds positions at Nvidia. The Motley Fool holds positions and recommends Advanced Micro Devices, Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
History says the Nasdaq could soar in 2025. Here is 1 cheap artificial intelligence (AI) semiconductor stock to buy right now. was originally published by The Motley Fool
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