The Nasdaq Composite (NASDAQINDEX: ^IXIC) he’s had a monster two-year career. After gaining 43% in 2023, the index rose around 30% in 2024, marking one of the best performing periods in its history.

Contrary to what your instincts might tell you, this does not mean that the index is ripe for a correction in 2025. In fact, the opposite may be true. Going back to 1972, every year with returns of 30% or higher is followed by an average return of 19%, likely due to the momentum factor. As long as he doesn’t guarantee good returns for your portfolio in 2025, it seems more likely that the good times will pass, given the historical data.

History suggests the Nasdaq could shoot up again in 2025. Here’s an artificial intelligence (AI) stock to buy before it does.

The Nasdaq’s returns over the past two years have been driven by the AI ​​boom. Many actions associated with AI, such as Nvidiathey are now trading at multiple nosebleed gains. However, one remains undervalued and is hiding in plain sight for investors to buy in 2025: alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

The owner of Google, YouTube and other tech assets has been mired in a narrative that it is losing market share to new AI tools like ChatGPT. It’s true that ChatGPT gained a lot of popularity, but it hasn’t come at the expense of Google Search’s profitability. According to third-party estimates, Google Search still has about 90% market share among search engines worldwide, which has not increased much in recent years.

Google is rooted in modern digital operating systems and has billions of daily users. Now, the company has an opportunity to power the business with new AI products, such as its new search results summaries, the Gemini chatbot, and Google Lens (which lets you search what you see). Google wants to let you search for anything in the world around you and get a thoughtful, AI-powered answer. This will open up more opportunities for day-to-day search queries, which will generate more advertising revenue for the business.

Last quarter, Google Search revenue grew 12% year over year to $49 billion.

Alphabet has plenty of levers it can pull to keep revenue and earnings growing. There’s the aforementioned AI boom that will help grow Google Search. There’s YouTube, which continues to gain market share in streaming video and grew revenue by 12% last quarter. Google Cloud is helping Alphabet sell its AI breakthroughs to third parties, growing revenue by a staggering 35% year over year. At this rate, the segment will reach $100 billion in annual revenue within a few years.

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In addition to revenue growth, Alphabet is driving its bottom line by expanding its operating margin. Operating margin came in at 32% last quarter, compared to 28% in the same period a year ago. With more scale, operating leverage will continue to kick in and help Alphabet increase its earnings power for years to come.

Finally, Alphabet is a consistent stock buyback, with shares down 11% over the past five years. A reduction in the number of shares helps increase earnings per share (EPS).

The five factors listed will help Alphabet grow its EPS at a double-digit rate over the next five years, and likely beyond. And what should investors pay for this double-digit producer? At this writing, the stock is trading at a price-to-earnings (P/E) ratio of 26, which is below the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite averages over 30.

The AI ​​boom will help Alphabet grow its EPS above the market average, while the stock trades at a P/E below the market average. This is a great situation to enter a position in Alphabet stock. Investors should buy this hyper grower and hold it until 2025 and beyond.

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Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. Brett Schafer has positions in Alphabet. The Motley Fool has positions and recommends Alphabet and Nvidia. The Motley Fool has one disclosure policy.

History Says Nasdaq Will Soar in 2025: 1 Hyper-Growth AI Stocks to Buy Before It Does was originally published by The Motley Fool