Key Points
The Nasdaq has climbed in recent years thanks to excitement about game-changing technologies such as artificial intelligence (AI) and quantum computing. Investors have wanted to get in on potential winners earlier to maximize their gains once these technologies are fully developed and become anchored in our daily lives.
The AI boom and the interest in quantum computing are far from over. If we look at AI alone, analysts predict that today’s $300 billion market will reach into the trillions by the end of the decade. Considering this and the solid earnings we’ve seen from tech companies, my prediction is the Nasdaq will soar in 2026. And here’s one AI stock to buy now before it does.
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A modest 2025 gain
This particular player saw its stock rise only about 5% last year, even as it reported growth from AI — and from its well-established e-commerce and cloud computing businesses. I’m talking about Amazon (NASDAQ: AMZN), a leader in these key growth areas.
Amazon is a great buy for both aggressive and cautious investors, and here’s why. Cautious investors will like the fact that Amazon has demonstrated its strength and ability to grow well before the emergence of AI. This means that if AI spending slows, Amazon can rely on other parts of its business for growth. Even Amazon Web Services (AWS), which offers AI chips and platforms, also provides a broad range of products and services outside of the AI space.
Aggressive investors will appreciate Amazon because, on top of this already strong business, it’s also benefiting from the AI boom. Amazon uses AI to improve its operations, for example, streamlining processes at fulfillment centers. And AWS is delivering tremendous growth thanks to the successes of its AI offerings — from its own in-house designed chips to top Nvidia chips and a fully managed AI service called Amazon Bedrock. All of this has helped the unit reach an annual revenue run rate of $132 billion.
A reasonable valuation
Meanwhile, Amazon stock remains very reasonably priced. It trades for about 30x forward earnings estimates, down from more than 50x a few years ago.
This valuation could attract investors right now as they shift out of AI players that have reached lofty price levels. In recent times, concern has grown about the formation of an AI bubble, so investors may prefer buying AI stocks with proven strengths — and for reasonable prices. This could work in Amazon’s favor in the new year as potential AI winners and losers begin to emerge.
Amazon has already scored AI victories, such as AWS revenue growth, so it’s on track to become a true AI winner. And that’s why it’s a great idea to buy this stock before the Nasdaq climbs in 2026.
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Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
