The Future of the Nasdaq: Predictions for 2025 and a Semiconductor Stock to Watch

The Nasdaq Composite (^IXIC) has experienced remarkable growth over the past two years, significantly driven by the expanding opportunities in the realm of artificial intelligence (AI).

With impressive annual gains of 43% in 2023 and another 29% in 2024, many investors are wondering if the Nasdaq can continue this upward trajectory into 2025.

What History Tells Us About the Nasdaq in 2025

One consistent aspect of the stock market is its resilience. Through various peaks and valleys, historical trends demonstrate that the markets often recover and emerge even stronger after facing challenges.

The Nasdaq Composite index has followed similar patterns. Historical data showcases the years when the Nasdaq recorded negative annual returns:

Year(s)	Annual Return
1973 and 1974	(31%) and (35%)
1981	(3%)
1984	(11%)
1987	(5%)
1990	(18%)
1994	(3%)
2000 through 2002	(39%), (21%), and (32%)
2008	(41%)
2011	(2%)
2018	(4%)
2022	(33%)

Source: Macrotrends.

From the data presented, it is clear that the Nasdaq has faced annual losses only 14 times in its 55-year existence. More significantly, it has only encountered declines exceeding 20% on seven occasions. These significant declines coincided with serious events, such as the dot-com bubble burst, geopolitical tensions, the subprime mortgage crisis, and, more recently, high inflation.

Considering this historical context, it becomes evident that the Nasdaq tends to rebound following a down year. Notably, the index has often enjoyed multiple years of growth following a slump.

Thus, while the recent performance of the Nasdaq has been extraordinary, 2025 may still present another opportunity for solid gains in this technology-focused index.

Why Micron Technology Stands Out

While semiconductor companies have gained significant attention lately, Micron Technology often does not top the list for many investors. More commonly, headlines highlight industry giants like Nvidia, Broadcom, and Taiwan Semiconductor Manufacturing.

It is important to acknowledge that these firms deserve recognition for their critical roles within the semiconductor landscape. For instance, the demand for graphics processing units (GPUs) from Nvidia, as well as from Advanced Micro Devices, has surged. Their GPUs are essential for executing complex AI algorithms, especially for tasks like training large language models.

In this process, the training and inferencing phases are vital for refining AI models. This is where the high-bandwidth memory (HBM) protocols, an area where Micron excels, come into play.

The ongoing demand for AI infrastructure indicates that investments in training and inferencing will persist for years to come. Micron forecasts that the addressable market for HBM chips will exceed $100 billion by 2030, representing more than a sixfold increase from its current level.

Micron's Attractive Valuation

Over the past year, Micron shares have increased by 27%, aligning with the performance of the S&P 500. Despite this growth, the stock remains over 30% lighter than its peak in 52 weeks. This presents a prime opportunity for investors.

Micron’s forward price-to-earnings (P/E) ratio of 15.3 is significantly lower than many peers in the semiconductor field and even shows a discount compared to the S&P 500. It seems that investors have yet to fully grasp the significance of HBM chips for the future, leading to a general oversight of Micron’s importance in the semiconductor sector.

Given these factors, Micron Technology represents a compelling investment opportunity, potentially yielding substantial returns in the long run.

Nasdaq, AI, Micron