This year has started on a highly optimistic note, and we are seeing the results in the stock market. The Nasdaq is on a spree and has hit a new high for the first time since 2021. That means the bull run has already begun and we should be ready for surprises. The rally is driven by a slowdown in inflation, strong jobs data, high optimism around rate cuts and tremendous upside offered by artificial intelligence (AI). Companies are making big gains, and shareholders who held on to their investments for the past two years will make significant profits.
Many investors believe the bull run has only begun, and we could see Nasdaq hit higher in the coming months. That means now is the time to choose your stocks and load up on them before they soar. With that in mind, let’s take a look at the three Nasdaq stocks to buy for the next bull run.
Nasdaq Stocks to Buy: Microsoft (MSFT)
Up 15% year-to-date (YTD) and 53% in the year, Microsoft (NASDAQ:MSFT) is enjoying the rally driven by its AI prowess. The stock is near an all-time high of $428 and could keep soaring higher. The company has made significant investments in AI and integrated the same into its products and services. It is also launching AI for cybersecurity professionals on April 1.
Known for its operating systems, it is hard to imagine life without Microsoft. The company has exceptional leadership that believes in innovation and does not step back from risk-taking. Its investment in OpenAI has helped the company integrate ChatGPT into its search engine and improved productivity in its office solutions through AI features.
Its timely investment in AI has already started paying off. Fundamentally, Microsoft is in a very strong place and saw its revenues soar 18% year-over-year, hitting $62 billion, while the net income was up 33% to reach $21.9 billion. The stock has been on a monumental rally since the results.
MSFT generated over $67 billion of free cash flow in 2023. It also has a dividend yield of 0.70% and steadily rewards investors. Microsoft CEO Satya Nadella set a goal of $500 billion in revenue by 2030, more than double its present size. However, looking at the company’s history, it does look possible.
One of the hottest Nasdaq stocks to buy, Microsoft could see the rally continue for the coming quarter as the macroeconomic conditions improve and consumer spending increases.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) stock has been on a roll, up 8% YTD and 44% in the year. A favorite of investors, GOOG stock is trading at $151 and is a bargain buy. The stock could move upwards in the coming months and become too expensive to own.
Several catalysts are working in favor of the company. Its recent surge came after the news that Apple (NASDAQ:AAPL) might license Google’s Gemini for its iPhone, which could boost the company’s revenue. Gemini is a suite of generative AI tools, including everything from coding to chatbots, and Apple plans to build the AI engine into its iPhones.
While there is no confirmation yet, it could be a game-changer for the business and help Alphabet achieve high publicity. That also proves Gemini is not behind in the AI race and has the potential to become a leader.
The company has steadily dominated the market with its core business, Google search and digital advertising. These two segments continue to generate income, and it is hard for any other company to beat the market dominance. Despite AI, the company’s search engine hasn’t seen a drop in users.
Its cloud segment and YouTube are also showing rapid growth, with fourth-quarter revenue hitting $9.19 billion and $9.2 billion, respectively. It saw a 13% rise in total sales in the quarter, the fastest three-month period for revenue growth since 2022.
Wedbush analysts target $175 for the stock and believe it could reward investors over the next year.
Amazon (AMZN)
I have been pounding the table for Amazon (NASDAQ:AMZN) stock, and if you had bought it in December when I recommended it for $149, you could be sitting on gains of 20%. Up 18% YTD, the stock is exchanging hands for $178 today and is very close to the 52-week high of $181.
However, I believe it will soar over $200 this year. There are multiple reasons to buy Amazon stock and hold it for the long term.
Amazon’s cloud unit, Amazon Web Services (AWS) saw a minor slowdown in growth to 13% in the fourth quarter, and the annual revenue from the segment came in at $90 billion. However, AWS has a significant hold on the market, and I expect it to grow this year. As marketing experts loosen their budgets, we could see an improvement in cloud spending, which Amazon could benefit from.
Another revenue generator, the advertising segment is thriving. It is also the fastest-growing revenue stream right now. With millions of people visiting Amazon, advertisers are keen on getting a spot with their ads.
The ad sales have hit $46 billion in 2023, and I think they will soar higher this year, given the higher spending budgets of companies. The recent quarters have seen the company’s revenue, profit and cash flow soar, leading to a stock rally.
With an improvement in consumer spending, Amazon is set to benefit, and it is one of the top Nasdaq stocks to buy if you want to make the most of the bull run.
On the date of publication, Vandita Jadeja did not hold (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.
