Nasdaq Ready to Rocket in 2024? This "Magnificent Seven" Stock Could Lead the Charge

Though it is already fading in memory, Wall Street's worst performance in recent memory was the market turmoil of 2022. As of Tuesday's market closing, the Nasdaq Composite had risen 43% this year after falling more than 35% the previous year.

History indicates that this present rise is likely to last. Back to 1972, the Nasdaq's first full year of trading, the tech-heavy index has increased by 19% on average each year following a market rebound, suggesting more upside potential.

The renowned equities of the so-called "Magnificent Seven," which have significantly outperformed the overall market, are contributing to the drive this year:

• Nvidia: Up 239 %
• Platforms for Meta: Up 191%
• Tesla: Gaining 109%
• Amazon: Up 83%
• Microsoft: Up 56% (NASDAQ: MSFT)
• Alphabet: Up 55%
• Apple: Up 52%

These businesses are united by their connection to artificial intelligence (AI), which is commonly acknowledged as the catalyst for the current stock market upswing. Many are rushing to invest in the businesses that will benefit the most from this long-term trend of growth. Microsoft is one such business; even though it has been in flames since 2023, there may be much more to come.

Emergence of AI in Recent Times

Though AI has existed in one form or another since the early 1950s, investors' interest has recently been piqued by fresh advances. More specifically, because of the wide range of time-saving applications, breakthroughs in generative AI and the underlying large language models (LLMs) gained a wide audience.

With the goal of boosting user productivity, Microsoft swiftly integrated AI capabilities into several of its key products after investing $13 billion in ChatGPT parent OpenAI. The subsequent rush to deploy AI was partly caused by these actions. Additionally, it may bring in billions of dollars for the business in new income.

One of the highlights is Microsoft Copilot, the AI-powered assistant that speeds up several tedious, time-consuming chores and is firmly integrated into many of the company's most popular software-as-a-service (SaaS) services.

Microsoft recently revealed that 40% of Fortune 100 organizations are taking part in the program known as early access, or "pilot," which is receiving extremely positive feedback from consumers. CFO Amy Hood stated in a recent interview that "the next-generation AI business will be the fastest-growing $10 billion business in our history."

Analysts have been offering their best guesses, but it's still too early to know how big of a market there may be for Copilot and related software products. The founder of Third Point hedge fund, Dan Loeb, believes it may be worth "$25 billion or more in software sales alone." Kirk Materne, an analyst with Evercore ISI, is even more optimistic, estimating that AI might bring in an additional $100 billion in income for Microsoft by 2027.

Wall Street won't fully grasp AI's potential for quite some time, since new use cases are being tried on a daily basis, but Microsoft is already fighting for a piece of the possible profit.