The S&P 500 has risen 2% so far this year, but historical data suggests it could climb much more in the next 12 months. A recent survey by the American Association of Individual Investors found that 61.9% of respondents were bearish, expecting the market to fall over the next six months.
This level of pessimism is rare, occurring only eight times since 1987. In past cases, the S&P 500 rose significantly within a year after such bearish sentiment, averaging a 27% gain. If this trend holds, the index could reach about 6,854 by next April, up 13% from its current level.
Two AI-related stocks stand out as smart investments in this environment: Amazon and CoreWeave.
Amazon dominates U.S. e-commerce with a market share expected to exceed 40% this year. It also leads in retail advertising and cloud services through Amazon Web Services (AWS), which holds 29% of the cloud infrastructure market.
Amazon is aggressively using AI to boost revenue and efficiency. CEO Andy Jassy revealed the company is developing 1,000 generative AI applications to improve tasks like coding, customer service, inventory, and delivery.
AWS has introduced AI-specific chips and a new AI development platform called Bedrock, enhancing its machine learning capabilities. Despite a high valuation of 35 times earnings, Amazon’s earnings are expected to grow 10% annually through 2026.
The company has consistently beaten earnings estimates, making it a solid buy for patient investors.
CoreWeave specializes in GPU-accelerated cloud infrastructure tailored for AI workloads such as training large language models. It has earned top marks in AI performance benchmarks and was recently ranked the best GPU cloud platform.
CoreWeave’s revenue surged 420% in Q1 to $981 million, with operating income up 550%. Its revenue backlog jumped 63%, largely due to a new deal with OpenAI.
Although CoreWeave’s stock price has soared 285% since its recent IPO and trades at 29 times sales, its rapid growth and strong profit margins justify the premium.
In summary, historical market trends suggest a strong year ahead for stocks. Amazon and CoreWeave stand out as promising AI-driven investments, combining market leadership, innovation, and solid financial growth.
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