The Nasdaq 100 Index, which reflects the largest tech and nonfinancial companies listed on the Nasdaq exchange, is up some 25% year-to-date and hit multiple record highs in 2024.
The top 5 winners on the Nasdaq 100 (as of Dec. 30) are AppLovin, MicroStrategy, Palantir, Nvidia, and Axon.
Four of these top performers—Palantir, MicroStrategy, Axon, and AppLovin—are newcomers to the Nasdaq 100. AppLovin was added on Nov. 18, and the others on Dec. 23.
Nvidia remains the seasoned veteran, having been a component of the index since 2001.
And after their significant surge in 2024, some analysts expect more gains for them in 2025.
Strong demand for the Blackwell chip platform will dispel worries about Nvidia, Morgan Stanley says.Bloomberg/Getty Images
AI drives Applovin adtech (Up 712%)
AppLovin's impressive 8x growth is attributed primarily to the company's AI-driven advertising technology:
It builds models that help show targeted ads to the users who are most likely to engage, enabling companies to make data-driven marketing decisions.
AppLovin stock rose 46% on Nov. 7 following its Q3 results. In the third quarter, AppLovin reported a 39% year-over-year revenue increase to $1.2 billion, with adjusted earnings before interest, taxes, depreciation and amortization rising 72% to $722 million.
AppLovin reached an all-time high of $417.60 on Dec. 6, then slumped. The stock closed at $323.83 on Dec. 31.
Loop Capital raised AppLovin's price target to $450 from $385 and affirmed a buy rating, thefly.com reported on Dec. 16.
The investment firm said AppLovin could be one of the better growth stocks again in 2025, and its recent weakness is possibly "the best opportunity to accumulate the stock during this upcycle."
Wolfe Research has raised AppLovin's price target on AppLovin to $370 from $235 with an outperform rating.
The firm says the combination of improving fundamentals, an easing regulatory environment, secular AI tailwinds, and open-for-business capital markets represents "an amazing time to not only be alive but also to cover software stocks."
MicroStrategy: Trump win might help bitcoin plans (Up 359%)
MicroStrategy's surge is primarily due to its Bitcoin holdings.
The company has aggressively acquired the world's largest cryptocurrency. As of Dec. 29, the company held some 446,400 bitcoins valued at $27.9 billion.
Donald Trump's election to a second term was perceived as favorable toward cryptocurrencies as it likely means looser regulations. Bitcoin's price surpassed $100,000 in mid-December.
MicroStrategy is viewed as a proxy for bitcoin investment, attracting investors seeking to buy cryptocurrency without direct crypto ownership.
On Dec. 12, investment firm Bernstein commented that MicroStrategy could sustain the strategy through at least 2025, supported by a favorable regulatory environment.
Palantir: Software could be next AI wave (Up 340%)
A number of investment firms believe in AI software's potential to boom into 2025.
Wedbush recently reported that while Nvidia fueled the AI engines with its chips, software giants are poised to steer those engines, empowering enterprises to use these data effectively.
“Now the time has come for the broader software space to get in on the AI Party as we believe the use cases are exploding,” Wedbush analysts led by Daniel Ives wrote in a Dec. 26 report. The “enterprise consumption phase is ahead of us beginning in 2025.”
Palantir could benefit a lot from this big shift, according to Ives.
Palantir's rally this year is driven by the company’s expanding role in AI-powered data analytics. Governments widely use Palantir for intelligence and defense and enterprises use it for data-driven operations. Its products help them spot patterns and discover key insights in large datasets.
Palantir reported quarterly results and guidance well above Wall Street expectations in November. Wedbush said the demand was "rapidly rising."
"This will be a major growth driver for the U.S. Commercial business over the next 12 to 18 months as more enterprises head down the AI path with Palantir," the investment firm said.
Nvidia remains the AI chip star (Up 171%)
Nvidia's gain this year was fueled by surging demand for its graphics-processing units, which power AI applications across industries.
The stock faced some recent weakness, closing at $134.29 on Dec. 31. Nonetheless, many Wall Street analysts remain highly bullish on Nvidia.
Morgan Stanley recently said "strong demand for Blackwell will prevail" over worries about Nvidia, thefly.com reported. The investment firm has an overweight rating and $166 price target on Nvidia.
Truist raised its Nvidia price target to $204 from $169 with a buy rating, citing all industry support for Nvidia's superior technology and expecting a constructive 2025.
Axon: AI applications in law enforcement (Up 130%)
Axon is a public safety technology company known for its body cameras, taser devices, and cloud-based evidence-management software.
Analysts are seeing growth points in its AI-powered software, like Draft One, which analyzes body camera video and audio transcripts and writes the first draft of police reports for officers.
"Today, we hear police officers spend about 50% of their time writing reports, and we drive that number down to about 10-20% of their time," Axon President Josh Isner recently told the Motley Fool.
In early December, Morgan Stanley analyst Meta Marshall upgraded Axon to overweight from equal weight with a price target of $700, a 40% increase from $500.
Morgan Stanley expects Axon's 25%-30% growth to be durable, driven by the increasing role of software in its business. Over the long term, the firm sees it as a core holding.
