Investors interested in the tech-heavy Nasdaq index should stick with the titans. It has become clear in 2023 that a few tech names that boomed in the pandemic have now taken the reins on the next great opportunity – artificial intelligence (AI). There’s no reason to believe that 2023 is anything but predictive of the long term at this point for Nasdaq-listed shares. Certain Nasdaq stocks are some of the best suited for long haul investors.
The power players got much stronger throughout the pandemic. The massive windfalls those companies reaped have all the potential to be leveraged and carve out dominant positions in AI. Inevitable questions about valuation are bound to crop up. But with tech giants propping up the Nasdaq, that’s how it has to continue to be.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) recently answered the question of whether its stock can continue to run even higher in 2023. The answer was a resounding ‘Yes’ as Nvidia added $184 billion to its market capitalization following its May 24 earnings release. That massive spike in valuation was the second-largest ever increase in valuation over a day.
Nvidia had already more than doubled in value in 2023 and increasing concerns that it was overvalued were growing. Detractors worried that AI had become overdone. But then Nvidia provided a current quarter outlook for sales of $11 billion on May 24. That was much higher than the $7.2 billion Wall Street had been forecasting prior. It essentially let the market know that Nvidia is, in fact, the real deal in AI. The hype was not overdone.
Nvidia’s chips are central to the computing power necessary for AI applications which require thousands of Nvidia engines. Nvidia surged from $305 to $380 on the news blowing past previous highs set at the peak of the tech bubble in late 2021. It remains on pace to become the next trillion-dollar firm.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) also surged on the blockbuster news for Nvidia and its stock. The connection between Nvidia and Microsoft is deeper than a rising tide lifting all ships though.
Microsoft, like Nvidia, established itself as an early force in AI months ago. Back in January, the company announced that it was investing heavily in a multiyear partnership with OpenAI. DALL-E 2, ChatGPT, and GitHub Copilot are now inextricably linked to Microsoft’s Azure cloud through their early development.
That means that MSFT stock wins yet again. Remember, the tech giants surged ahead during the pandemic. That period was defined by a massive uptick in computer usage and resultant windfall of profits. That success allowed Microsoft more cushion to bet big on AI and that’s what it has done. However you define the long haul, Microsoft is going to be there. Its position as a tech giant is secure and AI’s emerging presence makes that certain. The OpenAI investment will prove to be a seminal moment for Microsoft.
Alphabet (GOOG,GOOGL)
Alphabet (NASDAQ:GOOG,GOOGL) has long been a buy-and-hold stock – and that is not changing. It has also emerged as an AI name to be reckoned with.
Alphabet botched its Bard release earlier in the year allowing Microsoft to gain an early lead. But it allayed many of the previous fears with its second round Mountain View developer conference in mid-May.
Alphabet is again a top name, despite the problems it continues to have. If the post-pandemic slowdown was a drag on shares, the AI opportunity is the shot in the arm Alphabet needed.
Now a lot of the pressure is off Alphabet for growing at 3% in the first quarter. It doesn’t matter that net income contracted nearly as much now as it did when Microsoft was dominating the AI game. Instead, Alphabet has shown that its AI development is on solid ground and that means it has a new means of recovery. More importantly, it has a long-term growth vector for the future.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.