The tech-heavy Nasdaq-100 index has bounced back strongly in 2023 and shot up close to 19%, driven by rising investor confidence in tech stocks amid signs of cooling inflation, a potential pause in the Federal Reserve's rate hikes, and the emergence of hot growth avenues such as artificial intelligence.

What's more, history suggests that tech stocks could appreciate strongly following a down year. For instance, tech stocks jumped 15% in 1988 following a 5% drop the prior year, soared 57% in 1991 after an 18% decline in 1990, and gained 35% in 2019 after 2018's pullback of 4%. These are just some of the instances when tech stocks bounced back impressively after a down year. And 2023 isn't looking any different thus far following last year's 33% crash.

So it wouldn't be surprising to see the Nasdaq head higher as the year progresses. This is the reason why investors should consider buying shares of Nvidia (NVDA -2.61%) and Upstart Holdings (UPST -2.18%), as they could double in the next five years. Let's look at the reasons why buying these stocks could be a solid move.

1. Nvidia: The company driving the AI revolution

There has been a ton of hype around artificial intelligence (AI) applications in recent months, and that explains the 87% rally in Nvidia stock in 2023. With Nvidia controlling an estimated 95% of the artificial intelligence (AI) graphics card market, it isn't surprising to see that investors have been piling into this semiconductor stock this year.

After all, Nvidia's graphics processing units (GPUs) are the backbone of the AI industry, powering popular generative AI applications such as ChatGPT. As it turns out, the deployment of Nvidia's chips for AI applications is 20 to 100 times more than that of rivals' offerings. This should set the stage for terrific growth in Nvidia's business over the next five years and beyond, as the global AI chip market is expected to generate $263 billion in annual revenue by 2031, a massive increase from $11 billion in 2021.

Nvidia's dominant position in this market means that it could corner a nice chunk of that huge opportunity, especially considering that it is expanding its processor lineup beyond GPUs to boost its presence in the AI chip market. When Nvidia's revealed its Grace server processors two years ago, it claimed that they "will deliver 10x the performance of today's fastest servers on the most complex AI and high-performance computing workloads" compared to the x86 processors from Intel and AMD.

Nvidia deployed the Grace server processors in its AI inference platform last month, and pointed out that they will enter full production in the second half of 2023. With this move, Nvidia is now offering a full stack of AI solutions that includes both hardware and software. The company estimates that the addressable market for its full-stack AI offerings is worth a mammoth $300 billion.

Moreover, Nvidia sees a total addressable market worth a whopping $1 trillion across multiple industries ranging from gaming to AI to data centers to automotive. The company generated $27 billion in revenue over the trailing 12 months, indicating that it is at the beginning of a massive growth curve.

Not surprisingly, Nvidia's revenue growth is expected to accelerate. Consensus estimates indicate that Nvidia could generate $29.8 billion in revenue this fiscal year, an increase of 10% over fiscal 2023's revenue of $27 billion. In fiscal 2025, which is the company's next fiscal year, it is expected to deliver 24% revenue growth to $37 billion. That growth rate could accelerate in the following years as AI adoption gains critical mass and the company starts taking advantage of other opportunities.

Assuming Nvidia delivers consistent annual revenue growth of 25% for the next five years, its top line could hit $82 billion in fiscal 2028, using fiscal 2023's revenue of $27 billion as the base. Nvidia has a five-year average price-to-sales multiple of 17. It could command a similar multiple after five years as well thanks to its commanding position in the GPU market. Multiplying Nvidia's projected sales after five years with the company's sales multiple translates into a market cap of nearly $1.4 trillion.

That's more than double Nvidia's current market cap of around $675 billion, suggesting that it could double investors' money in the long run.

2. Upstart: Too cheap to ignore

The past year has been terrible for Upstart investors, as shares of the AI-enabled lending platform crashed a massive 82%. That terrible drop has been driven by rising interest rates that led to a sharp pullback in the company's growth.

For instance, the company's revenue in the fourth quarter of 2022 was down a whopping 52% year over year to $147 million. This sharp decline was a result of a big drop in loan originations by Upstart's lending partners. These lending partners originated $1.5 billion worth of loans during the quarter, a 62% decline over the prior year. Upstart's conversion rate (which refers to the percentage of inquiries converted into actual loans) also fell to 11% from 24% in the prior-year period.

The company's full-year 2022 revenue was down 1% to $842 million. Consensus estimates indicate that things are likely to get worse for Upstart this year. Its revenue is expected to fall 34% to $553 million. The company is expected to swing to an adjusted loss of $0.88 per share from a profit of $0.21 per share in 2022.

But investors would do well to buy Upstart stock while it is still down and is trading at a cheap 1.7 times sales. The stock has gained 28% in 2023 and it could soar higher thanks to a couple of factors.

First, inflation fell for the eighth month in a row in February this year. The consumer price index (CPI) rose 6% year over year in February, down significantly from the 9% growth it recorded in June last year. Inflation is expected to fall further as the year progresses and average 4.2% for 2023, down significantly from last year's average of almost 9.6%. What's more, inflation could cool further in 2024, with CPI growth expected to average 3%.

Cooling inflation should set the pace for potential interest rate cuts going forward, and increase the demand for loans.

The second reason to buy Upstart stock is the massive addressable market the company is targeting. Upstart partners with banks and credit unions and uses AI to provide loans to consumers using non-traditional credit data. Upstart simply acts as a marketplace that connects loan providers with consumers based on the credit data it generates using AI algorithms.

The adoption of AI in banking services is expected to grow rapidly over the next decade, clocking annual growth of nearly 23% through 2032. As Upstart's AI platform claims to have four times better risk separation than the FICO score, it could continue to gain more traction in the future. Additionally, Upstart claims that it sees a $780 billion addressable market in auto loans, $644 billion in small business loans, and $162 billion in personal loans.

So a combination of a low-interest rate environment, the deployment of AI in banking and lending, and a huge addressable market should help Upstart regain its mojo. Not surprisingly, its top-line growth is expected to gather terrific momentum and increase 41% in 2024. The company is also expected to swing to an adjusted profit of $0.62 per share next year, and is expected to clock 30% annual earnings growth for the next five years.

Applying the 30% projected earnings growth to 2024's estimated earnings for four years would translate into earnings of $1.77 per share at the end of 2028. Multiplying the projected earnings after five years with the Nasdaq-100's forward earnings ratio of 25.7 would translate into a share price of $45 after five years. That's easily more than double Upstart's current stock price of almost $17, suggesting that it could turn out to be a solid growth stock in the long run.