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Nvidia is expected to maintain its lead in the AI chip market for the near future.
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Microsoft’s cloud and AI sectors are notably growing.
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Amazon’s cloud services, e-commerce, and advertising areas have considerable room for development.
The Dow Jones Industrial Average is a price-weighted index that reflects 30 key companies in the U.S., serving as an economic benchmark. While it’s not as diversified as the market-cap-weighted S&P 500, it remains a solid starting point for identifying notable blue-chip stocks that typically offer stable long-term gains.
While the Dow is often linked with slow-growth stocks, like Verizon Communications and Caterpillar, it also includes high-growth tech companies. For instance, let’s discuss three significant players: Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN)—all of which might see substantial growth by 2026 and even beyond.
Nvidia stands out as the biggest manufacturer of discrete GPUs, making it an easy choice for those wanting to tap into the long-term growth of GPU technology. The company’s data center GPUs are essential for complex AI tasks and are utilized by top tech firms like OpenAI, Microsoft, and Amazon. They also secure customer loyalty through their proprietary software platform, CUDA, which allows developers to create AI applications tailored to Nvidia’s technology.
Though Nvidia does face competition from less expensive data center GPU manufacturers like AMD, for now, they’re focusing on selling the essential tools needed for the ongoing AI boom.
Analysts project that Nvidia’s revenue and earnings per share (EPS) will grow at around 45% annually from fiscal year 2025 (which wraps up in January) to fiscal year 2028, thanks to the sustained AI surge. With a price-to-earnings ratio of 26 for next year, Nvidia appears to be relatively undervalued given its growth trajectory.
While Nvidia has become the most valuable company in the world with a $4.4 trillion market cap, it’s unlikely to replicate its astonishing 21,400% increase over the past decade. Still, its core business seems to be thriving, suggesting it could be one of the top-performing stocks in the Dow in the upcoming year.
Microsoft has significantly expanded its Azure cloud infrastructure. The company has transitioned much of its software to cloud services and upgraded its applications to feature AI capabilities.
Since Satya Nadella took over as CEO in 2014, Microsoft has shifted toward a “mobile-first, cloud-first” model. This transformation has turned the company from a low-growth firm into a diversified one with strong growth across cloud, AI, mobile, and gaming sectors. Microsoft is also OpenAI’s largest investor, seamlessly integrating generative AI tools into its services.
Analysts anticipate overall revenue and EPS growth of 16% and 17%, respectively, for Microsoft from fiscal 2025 (beginning July) to 2028. The AI boom will likely continue to propel its growth as more companies upgrade their cloud services.
Microsoft currently stands as the third most valuable company worldwide, boasting a market cap of $3.65 trillion. At 26 times next year’s earnings, it doesn’t seem overhyped. Therefore, if you’re seeking a straightforward way to benefit from cloud and AI growth, Microsoft is an attractive option.
Amazon continues its ascent as the largest e-commerce and cloud service provider. The company’s e-commerce branch is expanding into international markets, while its cloud services are thriving due to the AI market’s growth. Additionally, Amazon is enhancing its advertising segment by offering promotional listings and integrated ads.
While a significant portion of Amazon’s revenue comes from e-commerce, the majority of its profits stem from its high-margin Amazon Web Services (AWS) platform. Expanding AWS helps broaden the Prime ecosystem, which provides discounts, free shipping, lower-priced devices, and additional streaming offerings. With over 240 million Prime members globally, Amazon has a strong competitive edge. Plus, its rising advertising business could potentially rival AWS as a major revenue source, further enlarging its ecosystem.
Analysts project Amazon’s revenue and EPS to grow at rates of 11% and 20%, respectively, from 2024 to 2027. As the fifth most valuable company, valued at $2.5 trillion, it seems fairly priced at 29 times next year’s earnings. So, I wouldn’t be shocked to see Amazon easily surpass the Dow’s performance in the years ahead.
Before considering Nvidia stock, keep this in mind:
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Reflect on past recommendations, like Netflix, where a $1,000 investment back when it was suggested has turned into around $521,982!* Or consider Nvidia, where a $1,000 investment since it was recommended would have grown to about $1,137,459!*
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