The Nasdaq Composite (^IXIC 0.93%) has achieved an average annual return of 17% over the past ten years, largely due to the growth of cloud computing, digital advertising, and artificial intelligence (AI). However, the index has seen a 4% decline year-to-date, indicating it would need to gain 21% by December to maintain its decade average.
While this may seem ambitious, analysts predict that the technology and consumer discretionary sectors will grow by 33% and 22%, respectively, in the coming year. These sectors comprise 80% of the Nasdaq’s performance, suggesting that a 21% rise by December is within reach.
Investors looking to capitalize on this potential might consider two remarkable growth stocks: Nvidia (NVDA 1.56%) and MercadoLibre (MELI 0.59%). Here’s why these stocks are worth considering.
Nvidia: 45% Upside Projected by Median Target Price
Nvidia has recently posted impressive fourth-quarter results, with a 73% revenue increase to $68 billion and an 82% rise in non-GAAP net income to $1.62 per diluted share. CEO Jensen Huang highlighted the ongoing AI boom, stating, “Compute demand is growing exponentially — the agentic AI inflection point has arrived.”
Some investors are concerned about the durability of AI spending and rising competition. However, historical trends indicate that Wall Street has consistently underestimated AI capital expenditures over the past two years. Last October, predictions suggested a 19% increase in capex spending by the five major hyperscalers (Alphabet, Amazon, Meta Platforms, Microsoft, and Oracle) in 2026, but guidance indicates a likely 60% increase this year, following a 70% annual growth in AI spending over the last two years.
Furthermore, while custom chips like Google’s TPUs may capture some market share, Nvidia remains well-positioned to maintain its leading status due to its unique combination of GPUs, CPUs, networking, and a comprehensive software ecosystem. Analysts believe Nvidia’s earnings will increase by 38% annually for the next three years, making its current valuation of 37 times earnings appear attractive. The median price target of $265 per share indicates a 45% potential upside from its current price of $183, according to The Wall Street Journal.
MercadoLibre: 59% Upside Forecasted by Median Target Price
MercadoLibre operates the largest online marketplace in Latin America, holding a 29% share of the region’s online retail sales last year, with estimates suggesting it could rise to 30% this year. The company excels not only in e-commerce but also in ancillary services like logistics, financing, and payment processing, enhancing the appeal of its marketplace. Its sales surpass the combined total of the next 15 competitors in the area, as reported by eMarketer.
Additionally, MercadoLibre has established the fastest and most extensive delivery network in the region, making it the largest retail advertiser and a significant fintech player through its subsidiary, Mercado Pago. This positions the company at the intersection of three rapidly growing markets: e-commerce, digital advertising, and digital payments. Wall Street anticipates a 39% annual increase in earnings through 2027, suggesting that the current valuation of 43 times earnings is undervalued. The median target price of $2,650 per share reflects a potential upside of 59% from its current trading price of $1,669.
