The bull market Supported by stocks like Wall Street is intact nvidia And Microsoftwhich are posting impressive results on the back of the Artificial Intelligence (AI) boom. Knowing that investing in a market near an all-time high is difficult. Many feel the bull market will continue with a business-friendly incoming administration and Big Tech investments in AI. These companies are forecast to pour $250 billion in capital expenditures next year alone. And, as shown below, revenue from AI could exceed $820 billion by 2030.
Chart by Statista.
Are you missing the morning scoop? wake up with Breakfast news to your inbox every market day. Sign up for free »
That doesn’t mean stocks will continue to rise; There are always dangers. I will discuss buying strategies in a bull market below. But first, there are two very different companies that can each provide excellent long-term returns.
The number of hyperscales data center (those with more than 100,000 square feet) have acquired 1,000 this year, and predictions are that at least 120 will come online annually for the foreseeable future. This huge center, over 1 million square feet, requires infrastructure like servers. Dell(NYSE: DELL) is a market leader in this field. Dell’s infrastructure solutions group reported record revenue of $11.6 billion, up 38% last quarter. The company’s net sales for the quarter rose 9% to $25 billion.
Dell believes its addressable market in AI will be $124 billion by 2027 and its total infrastructure market will be $265 billion. Recent developments in its competition Super Microcomputer Dell will likely capture this market even more than previously expected. Supermicro is troubled by a short report, delays in financial filings, and the resignation of its auditors. Its public struggles should benefit its competition. As proof, analysts have been busy raising their Dell price targets this month.
Wells Fargo Raised its target from $140 to $160 per share, while Morgan Stanley raised its target to $154 from $136. Targets range from 7% to 11% above current price; However, if Dell continues to dominate the server market, analysts will likely raise them again. Shareholders also benefit from dividends and a share buyback program that returned a combined $1 billion last quarter. Dell expects to increase its dividend by 10% annually through at least fiscal 2028. AI opportunities, competitive struggles, and rising valuation targets make Dell a tempting stock to own for the next several years.
Moving from a company that supplies data centers to one that builds them Amazon(NASDAQ: AMZN ). For example, construction has begun on Amazon’s $11 billion data center in Indiana. These centers are key to increasing the processing and storage capacity of Amazon Web Services (AWS).
Some people still think of Amazon as a product company, but AWS is the straw that stirs Amazon’s drink. The segment accounted for 60% of Amazon’s $60.5 billion in operating income over the past 12 months. It posted a very impressive operating margin of 38% in the last quarter compared to a combined 5% for the other two segments.
As shown below, Amazon’s operating cash flow has exploded with a lot of help from AWS.
Amazon stock trades below its five-year averages based on sales, operating cash flow per share, and earnings, a rarity in today’s record-setting market.
So, what is the best way to invest in the raging bull market? Investing at market peaks is risky, but it’s important not to try to time the market. Just because major indexes are near all-time highs doesn’t mean they can’t go higher. There are two strategies to reduce risk.
First, consider dollar-cost averaging – accumulating shares over several months. This allows you to take advantage of stock price declines and limits the risk of buying at a market peak. Or, consider a “buy-the-dip” strategy. The market experiences frequent corrections (more than 10% decline); However, we have not experienced one in 2024, although there was one in 2023, four in 2022 and five in 2020. However you choose to invest, consider Dell and Amazon for a piece of the AI market.
Have you ever felt like you missed the boat on buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts a “Double down” stock Recommend companies they think are going to pop. If you’re worried that you’ve already missed out on an investment opportunity, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Nvidia:If you invested $1,000 when we doubled in 2009,You will have $358,460!*
Apple: If you invested $1,000 when we doubled in 2008, You will have $44,946!*
Netflix: If you invested $1,000 when we doubled in 2004, You will have $478,249!*
Right now, we’re issuing “double down” alerts for three great companies, and there may not be another opportunity like this anytime soon.
Wells Fargo is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, is a member of the board of directors of The Motley Fool, an Amazon subsidiary. Bradley Guichard Holds positions at Amazon and Dell Technologies. The Motley Fool has positions in and recommends Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. Motley Fool has a Disclosure Policy.
