The Wall Street rally appears to have returned after Donald Trump took over as the President to begin a new term. Major indexes have resumed their northbound journey since the beginning of the week after a shaky start to 2025. On Wednesday, the S&P 500 hit an intraday record before closing just shy of its all-time closing high.
The rally is once again being driven by optimism surrounding artificial intelligence (AI). Tech stocks have been largely responsible for the broader rally seen over the past couple of years and their stellar performance is likely to continue, making them a lucrative buy.
Given the upbeat sentiment, it would be ideal to invest in tech stocks from the S&P 500 index, such as Broadcom Inc. AVGO, NVIDIA Corporation NVDA, Amazon.com, Inc. AMZN andArista Networks, Inc. ANET. Each of these stocks has seen positive earnings estimate revisions in the last 60 days and carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The S&P 500 hit an intraday record of 6,100.81, surpassing the last milestone attained in December before closing slightly below its all-time closing high. The index finally closed at 6,086.37.
The rebound in the rally comes after a brief pause when stocks pulled back in the final weeks of December. However, a fresh wave of optimism surrounding AI and Trump’s new term as the President helped resume the rally this week.
On Wednesday, Trump announced a $500 investment in AI infrastructure. The venture, named Stargate, will be created in collaboration with Oracle Corporation ORCL, SoftBank and OpenAI. Tech stocks rallied following the announcement.
The enthusiasm surrounding AI has already been driving the broader market rally since 2024. The S&P 500 gained 23.3% in 2024 after climbing 24.2% in 2023. The index jumped 53% in the last two years, recording its best performance since the 66% gain in 1997-98.
Experts believe that AI has vast untapped potential. NVIDIA’s impressive achievements over the past year have inspired many tech companies to explore AI’s capabilities for gaining long-term business benefits.
The advancement of smart devices is essential in this area, as they rely on strong computing and learning abilities for tasks like face detection, image recognition, and video analysis. These tasks demand high processing power, speed, memory, energy efficiency, and advanced graphics processors, all of which ultimately benefit the semiconductor industry.
According to statista.com, the global AI market is projected to grow to $243.7 billion this year, up from $184.1 billion last year.
Broadcom Inc. is a premier designer, developer and global supplier of a broad range of semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor-based devices and analog III-V-based products. AVGO is steadily solidifying its presence in the AI chip market. Broadcom’s Ethernet AI solutions have seen a 400% increase year over year, and its Accelerators business has grown by 350%.
Broadcom’s expected earnings growth rate for the current year is 29.4%. The Zacks Consensus Estimate for the current-year earnings has improved 2.9% over the past 60 days. AVGO currently has a Zacks Rank #2.
Image Source: Zacks Investment Research
NVIDIA Corporation is a major player in the semiconductor industry and has been one of the standout success stories of 2023. As a leading designer of graphic processing units (GPUs), the value of the NVDA stock tends to surge in a thriving crypto market. This is primarily due to the crucial role that GPUs play in data centers, artificial intelligence, and the mining or production of cryptocurrencies.
NVIDIA’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days. Currently, NVIDIA has a Zacks Rank #2.
Image Source: Zacks Investment Research
Amazon.com, Inc. is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. AMZN’s online retail business revolves around the Prime program, which is well supported by its massive distribution network. Further, the Whole Foods Market acquisition helped Amazon establish a footprint in the physical grocery supermarket space. AMZN also enjoys a dominant position in the cloud-computing market, particularly in the Infrastructure as a Service space, thanks to Amazon Web Services.
Amazon.com has an expected earnings growth rate of 82.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the last 60 days. AMZN presently carries a Zacks Rank #2.
Image Source: Zacks Investment Research
Arista Networks, Inc. provides cloud networking solutions for data centers and cloud computing environments. ANET offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for the next-generation data center networks. Arista uses multiple silicon architectures across its products.
Arista Networks’ expected earnings growth rate for the current year is 26.4%. The Zacks Consensus Estimate for current-year earnings improved 1.4% over the past 60 days. ANET presently has a Zacks Rank #2.
Image Source: Zacks Investment Research
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Oracle Corporation (ORCL) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
