The Nasdaq Composite (NASDAQINDEX: ^IXIC) has been enjoying a robust bull market for the past 16 months, surging 53% during this period. However, historical data suggests that there could be much more upside in the coming years. Over the past three decades, the Nasdaq has returned an average of 215% during eight bull markets, with gains realized over an average period of 40 months.
If the current bull market aligns with historical averages, the Nasdaq could potentially gain another 162% over the next two years. While such high annual returns are unlikely given the prevailing economic uncertainty, historical trends indicate that the index is poised for substantial long-term growth. Over the past decade, the Nasdaq has delivered annual returns of 15%, and similar results are expected in the coming decade.
1. Amazon: Amazon maintains a dominant presence across three major markets: e-commerce, digital advertising, and cloud services. The company continues to gain market share in e-commerce and digital advertising, solidifying its position as the largest e-commerce company in the U.S. and the third-largest digital advertising company globally. Additionally, Amazon Web Services (AWS) remains a leader in cloud services, positioned to benefit from increased spending on artificial intelligence by businesses.
Despite facing stiff competition, Amazon reported robust fourth-quarter financial results, exceeding consensus estimates for revenue and operating margin. Analysts project the company to achieve 11% annual sales growth over the next five years, with potential upside driven by regained market share in cloud computing. Moreover, Amazon's current valuation of 3.3 times sales is reasonable, considering its growth prospects
Analysts at JPMorgan Chase have identified Amazon as their top pick among internet stocks for 2024, reflecting bullish sentiment. With a consensus "buy" rating from Wall Street analysts and a median one-year price target of $215 per share (implying 20% upside), Amazon presents an attractive investment opportunity.
2.The Trade Desk: The Trade Desk operates the leading independent ad tech platform for media buyers, offering sophisticated machine learning and measurement capabilities. The company's independence from media content ownership has fostered trust among media buyers, leading to strong customer retention rates exceeding 95% for the past decade. The Trade Desk's partnerships with publishers, including retail giants like Walmart, provide access to robust data for informed decision-making.
In the fourth quarter, The Trade Desk reported solid financial results, with revenue increasing by 23% and GAAP net income rising by 36%. Management expects revenue growth to accelerate to 25% in the first quarter, driven by its strong presence in connected TV advertising and retail media. Analysts project the company to achieve 20% annual sales growth over the next five years, with a current valuation of 20.8 times sales.
Wall Street analysts maintain a consensus "buy" rating on The Trade Desk stock, with a median one-year price target of $100 per share (implying 24% upside). Considering its strong market position and growth prospects, investors may consider starting with a small position in The Trade Desk.