History Says the Nasdaq Could Soar in 2025. Here Is 1 Dirt-Cheap Artificial Intelligence (AI) Semiconductor Stock to Buy Right Now.

The Nasdaq Composite (^IXIC -0.89%) has been soaring over the last two years thanks in large part to a bull market featuring numerous opportunities in the field of artificial intelligence (AI).

After posting gains of 43% and 29% in 2023 and 2024, how likely is it that the Nasdaq will soar again this year?

Below, I will explain what historical trends from the Nasdaq suggest could be in store this year. Moreover, I'll detail why I see Micron Technology (MU -0.57%) as one of my top picks among opportunities in the AI chip market.

Here is what history suggests about the Nasdaq in 2025

One thing that is certain about the stock market is that it is resilient. Despite periods of economic depressions and recessions, history shows that the capital markets always come out stronger following a tumultuous period.

The Nasdaq is no exception here. In the table below, I've specifically called out the years in which the Nasdaq posted negative annual returns:

Data source: Wikipedia.

As you can see, the Nasdaq has only dropped 14 times in its entire history. More importantly, the index has only experienced pronounced drops in excess of 30% on six occasions. When drops of this magnitude happened in the early 2000s, 2008, and in 2022, the U.S. found itself in a number of complicated issues including geopolitical strife, the subprime mortgage crisis, and most recently, a period of abnormally high inflation.

Given the data above, it becomes clear that the Nasdaq tends to rebound following a year of decline. And taking this a step further, usually the Nasdaq's gains go on for several years before taking another breather.

Nasdaq's gains over the last two years were quite generous, and history suggests that 2025 should be another solid year for the tech-heavy index.

Image source: Getty Images.

Why I've got my eyes on Micron

While semiconductor stocks have gotten a lot of attention over the last two years, Micron isn't necessarily top-of-mind for most investors. Rather, many AI investors have become enamored with Nvidia, Broadcom, or Taiwan Semiconductor Manufacturing.

Don't get me wrong. All three of those companies deserve a position in the spotlight. Each plays a critical role in the chip realm, and long-term tailwinds supporting investment in AI infrastructure should bode well for their respective potential.

For the last two years, demand for graphics processing units (GPUs) from Nvidia and Advanced Micro Devices have been through the roof. The reason is that GPUs have the capacity to run complicated algorithms needed for generative AI applications, such as training large language models (LLMs) or machine learning.

During these processes, training and inferencing become critical for honing generative AI models. This is where high-bandwidth memory (HBM) protocols become important, and that is exactly what Micron specializes in.

Ongoing demand trends in AI infrastructure suggest that investment in training and inferencing is going to continue for many years. In fact, by 2028 the total addressable market for HBM chips is expected to reach north of $100 billion -- more than sixfold what it is valued at today.

Micron's valuation is priced to perfection

Over the last year, shares of Micron have gained 26%, right in line with the S&P 500 (^GSPC -0.21%). Micron's current price is more than 30% off its 52-week high. Clearly, shares have taken a breather -- and I think now is the time to pounce.

Right now, Micron's forward price-to-earnings (P/E) ratio of 14 is considerably below many peers in the chip realm and below the average forward P/E of the S&P 500. I think investors are discounting how important HBM chips are going to be down the road and therefore are overlooking Micron's importance in the semiconductor landscape.

I think now is a lucrative time to buy Micron stock hand over fist and prepare to hold on tight for the long run.