After a year of spectacular gains, the stock market seems to be taking a breather to kick off the new year. Investors are justifiably cautious after the Nasdaq Composite (NASDAQINDEX: ^IXIC) notched gains of 43% last year. Given those stellar gains, investors are left to wonder if the current rally still has legs — and history can help provide some guidance.
Going back to 1972 — the first full year the tech-centric index traded — in every year following a bear market rebound, the Nasdaq has rallied another 19%, on average. The results varied by year, of course, ranging from a 7% increase in 1986 to a 38% surge in 2013. That said, and given the ongoing economic recovery, chances are good that the current market rally will continue in 2024.
There’s evidence that suggests it was the emergence of generative AI that fueled the market surge last year. These advanced algorithms were deployed to handle menial tasks, freeing the user for higher-level chores. While it’s still early innings for AI, there are a couple of companies that stand out from the pack and are well-positioned to profit from the AI revolution.
Image source: Getty Images.
AI stock No. 1: Microsoft
Microsoft (NASDAQ: MSFT) is arguably a household name, best known for its pervasive Windows PC operating system and Office suite of productivity tools.
Seeing the vast potential for generative AI, Microsoft dove in headfirst, taking a $13 billion stake in ChatGPT creator OpenAI. More importantly, the company quickly developed Copilot, an AI-powered assistant designed to make its software users more productive by streamlining repetitive, time-consuming tasks.
Even before it was released for general availability, the company experienced a surge in demand during its “pilot” project, with 40% of the Fortune 100 using Microsoft 365 Copilot during the company’s early access program. Microsoft reported strong interest in the digital assistant, which was made generally available in November.
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The increased demand is already having a halo effect on Azure Cloud, which swept past its rivals as the…
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