Since ChatGPT was released on Nov. 30, 2022, the S&P 500 (^GSPC 1.83%) and Nasdaq Composite (^IXIC 2.45%) have boasted total returns of 48% and 69%, respectively.
Euphoria around the prospects of artificial intelligence (AI) helped snap the capital markets out of a wicked funk that took place during much of 2022. And while some investors may be wary of just how long the bull market will last, history suggests 2025 should be another terrific year for technology stocks in particular.
Below, I'll make the case for why this year could feature another strong performance by the Nasdaq. Moreover, I'll outline why AI infrastructure stock Nebius Group (NBIS -0.19%) looks well positioned for some solid gains.
A walk down memory lane featuring the Nasdaq
Since the Nasdaq's inception in 1971, the index has generated negative annual returns a total of 14 times. During this period, the Nasdaq has only declined across consecutive years on two occasions: between 1973 and 1974 and from 2000 to 2002.
Annotating these periods is important, as it underscores the resiliency of the Nasdaq as a whole. Looked at through a different lens, with the exception of only two periods, the index has demonstrated an ability to bounce back after a year of declines.
The last time the Nasdaq witnessed negative returns was in 2022 -- when the index fell by 33%. However, investors appear relatively bullish as macroeconomic indicators such as inflation showed consistent signs of cooling over the last couple of years, the Federal Reserve tapered interest rates, and AI emerged as the next megatrend fueling the capital markets.
While the Nasdaq gained 43% and 29% between 2023 and 2024, respectively, the index looks primed for another solid performance this year.
Image source: Getty Images.
Never heard of Nebius? Don't worry
If you aren't aware of Nebius, it's likely because the company has a limited trading history. Nebius was divested from a Russian internet company called Yandex.
As a result of sanctions imposed by the United States and European Union, Yandex decided to spin out its non-Russian operating units. Following these transactions, Nebius became an independent entity and started trading on the Nasdaq just a few months ago.
Given its complicated and limited history, you may be wondering why I'm so bullish on the stock. The answer? Nvidia.
Why 2025 is shaping up to be a breakout year for Nebius
In December, Nebius completed a private placement in which it raised $700 million through the issuance of 33.3 million shares priced at $21. One of the main investors in the transaction was Nvidia, and I think I know the reason why.
Nebius specializes in AI infrastructure for data centers. According to some recent press releases, Nebius will be heavily involved in scaling Nvidia's new Blackwell GPU architecture across Europe and the U.S.
To put into perspective how important this business is for Nebius, the company recently raised its 2025 annual recurring revenue (ARR) guidance to reach a run rate between $750 million and $1 billion -- significantly higher than prior estimates, which showed $500 million at the low end.
I see Nvidia's investment in Nebius and its explicit position in the Blackwell launch as a major nod of approval related to the company's ability to execute. Given how important the Blackwell rollout will be for Nvidia, I suspect industry analysts will be keeping a keen eye on suppliers and vendors operating within the Nvidia ecosystem.
While this raises the stakes for Nebius, I think now is a great time to consider a position in the company for your portfolio. Blackwell remains very much in its early stages, and I think it could evolve into a major tailwind for the company throughout 2025 and beyond -- paving the way for Nebius to become a larger and more influential player for other chip companies and hyperscalers as the AI infrastructure market continues to grow at record speed.
