According to CNBC data going back to 1980, the Nasdaq and other benchmark indexes have historically risen in the months following presidential elections. This trend has continued into 2024, with the tech-heavy index up about 10% since Donald Trump’s victory on November 5. A new administration could mean less political uncertainty, making many market participants generally more comfortable holding assets.
There is no guarantee that the Nasdaq’s momentum will continue into 2025. But as Wall Street continues to pump money into AI technology, Advanced micro devices (NASDAQ: AMD) And Amazon (NASDAQ: AMZN) There are two stocks that could ride the wave into another year of stellar growth. Let’s dig deeper.
With its stock down 13% this year, AMD is one chipmaker that has somehow missed a big part of the generative AI rally despite being a major player in hardware. The chipmaker’s diversified business model makes it a great alternative Nvidia. And a reasonable valuation is the icing on the cake for investors.
AMD’s Q3 revenue grew a modest 17% year after year to $6.8 billion. However, this consolidated figure could mask the spectacular performance of the data center segment, which rose 122% to $3.5 billion, driven by sales of advanced graphics processing units (GPUs) for running and training AI algorithms. Management plans to fuel further data center growth by releasing new, more advanced chips such as the Instinct MI325X series, designed to compete with Nvidia’s Blackwell.
With 51% of its revenue coming from data center sales, AMD is much more diversified than Nvidia, which earned about 88% of its revenue from the data center segment in the third quarter. While AMD’s less AI-driven business model has led to slower growth in the short term, it will make the company much more resilient to a potential industry slowdown.
AMDs forward price-earnings ratio (P/E) multiple of 25 is also lower than Nvidia’s, which is about 31 times forward earnings.
While AMD is diversified within the technology hardware industry, Amazon is taking diversification to another level with footprints in e-commerce, cloud computingand AI infrastructure. Management’s cost-cutting efforts have placed the company in an excellent position to execute its long-term strategy and return value to investors.
Under the leadership of CEO Andy Jassy, ​​who took the helm in early 2021, Amazon has shifted from a growth-at-any-cost strategy to one that prioritizes sustainable profitability. Several years of layoffs and optimization of the fulfillment network have done just that has worked wonders its operating results.
