There’s an incredible amount of uncertainty that’s been building within the stock market (and the real economy for that matter) since the start of the year. A new administration has brought about an increase in uncertainty that many investors didn’t expect. At least, the voracity with which the Trump administration is moving on issues like trade, immigration and other social policies (instead of deregulation and tax adjustments) have some concerned that not enough momentum is being built at present to send stocks higher.
I’m of the view that trade and immigration policy is more likely than not to be streamlined at some point in the near future. And if we do get some sort of positive (at least in terms of what it means for equity markets) announcements around taxation and regulation, there are a number of sectors and specific stocks which can benefit in an outsized way.
Key Points
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There are plenty of reasons why some long-term investors are banking on a risk-on rally starting before year end.
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Here are three stocks I think are well-positioned to take advantage of this momentum and sentiment shift.
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Here are three of my ideas that could represent big winners for investors banking on a risk-on rally into year year end.
Vertiv (VRT)
One emerging AI and digital infrastructure stock I’ve started to pay a lot more attention to of late is Vertiv (NYSE:VRT). The company’s strategic positioning (in partnering with the next company on this list) to expand the forefront of the AI infrastructure buildout is notable The company remains among one of the fastest-growing companies on the AI infrastructure front, a sector most long-term investors appear willing to continue to invest in for the long-term (assuming this sector’s growth can continue or accelerate for a decade or longer down the line).
In Vertiv’s Q1 2025 results, the company posted inedible year-over-year revenue growth of 24%, which spurred even better EPS growth of 49% compared to the same quarter the year prior. Importantly, the company’s operating margins also expanded by 130 basis points, a very significant move, which I think indices this is a company with plenty of pricing power looking ahead to the future.
For long-term investors looking for a potential cash flow machine (cash flow growth also accelerated this past quarter, more than doubling on a year-over-year basis), Vertiv is a great option to consider in my books.
Nvidia (NVDA)
For growth investors looking to capture the upside a risk-on, momentum-driven rally can provide, Nvidia (NASDAQ:NVDA) certainly stands out as a top way to play such a trend.
The world’s leading high-performance chip maker has benefited from a surge in investor interest in the companies that produce the most efficient and powerful semiconductors. With an impressive market share lead in the world of AI hardware, Nvidia stands as perhaps the most ardent pure-play beneficiary of the AI super cycle that’s still worth buying (despite its recent rise).
What’s most impressive about Nvidia’s performance over the past five years is that this stock has actually gotten cheaper despite surging roughly 1,500% over this time frame. Yup, that’s right, Nvidia’s growth rate has blown away its 15x return over this time frame, with the company’s ability to work as a capital compounder continuing to shine through.
As Nvidia continues to expand its software and services ecosystem, this is a company I think could rally into year end (and for years to come).
Amazon (AMZN)
Last, but certainly not least on this list of top growth stocks investors can buy to take on additional exposure to high-growth stocks in this market, is Amazon (NASDAQ:AMZN).
The e-commerce giant is well-known for its core platform which allows consumers to purchase almost anything on its platform. Amazon’s ability to revolutionize how American consumers shop is notable, and has provided a cash flow machine the company has continued to use to invest in other high-growth businesses over time.
Where exactly Amazon has decided to invest the cash flow produced from its core business is worth considering. The company has invested heavily in its AWS cloud division, which has continued to post double-digit returns over the long-term. This past quarter, AWS saw 17% revenue growth and operating income growth of 22% (with 40% margins). That’s one of the key profit engines for the company, and one which investors will continue to watch closely.
However, the company’s increasingly important investments in its AI business (which is growing at a triple-digit rate) is perhaps most important to growth investors looking for reasons to buy this stock heading into year end. As more clients adopt the company’s Trainium2 chips, and Amazon’s backlog grows on this front, I think more and more investors will price in a higher growth rate for this company moving forward.
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The post 3 Stocks to Buy to Play What Could Be a Massive Risk-On Rally Into Year End: VRT, NVDA, AMZN appeared first on 24/7 Wall St..
