The 2 Best Nasdaq-100 Stocks to Buy Now, According to Wall Street

The Nasdaq-100 includes the 100 largest non-financial companies in the Nasdaq Composite (NASDAQINDEX:^IXIC). It is widely regarded as a benchmark for growth stocks because it is heavily weighted toward the technology sector. While the broad-based S&P 500 (SNPINDEX:^GSPC) added 323% during the last decade, the Nasdaq-100 added 593%.

Listed below are the two best Nasdaq-100 stocks to buy today based on the upside implied by Wall Street's median 12-month target prices as of Oct. 4:

• AppLovin (NASDAQ:APP) has a median target price of $500 per share. That implies 86% upside from its current share price of $268.
• Axon Enterprise (NASDAQ:AXON) has a median target price of $700 per share. That implies 69% upside from its current share price of $413.

Here's what investors should know about these stocks.

Image source: Getty Images.

AppLovin: 86% upside implied by Wall Street's median target price

AppLovin is an ad tech company that initially focused on mobile gaming, with products that helped publishers market and monetize applications. But last year, the company expanded into e-commerce advertising with a self-service platform. AppLovin recently started adding generative AI creative tools, and it plans to automate the whole advertising process in the future, from campaign creation to optimization.

AppLovin has a key competitive advantage in its Axon recommendation engine. The underlying machine learning models are trained to optimize ad buying in real time based on which users are predicted to take valuable actions. The models become more effective with each new data point, creating a network effect that leads to better recommendations over time.

AppLovin reported decent financial results in the second quarter despite narrowly missing top-line estimates. Revenue increased 53% to $1.9 billion, and GAAP net income increased 57% to $3.76 per diluted share. At the midpoint, management expects revenue to total $2.07 billion in the third quarter, implying 47% growth.

Wall Street estimates AppLovin's earnings will grow at 35% annually through 2027. That makes the current valuation of 22 times earnings look cheap, and it explains why so many analysts see substantial upside in the stock. Now is a good time to buy a small stake in this ad tech company.

Axon Enterprise: 69% upside implied by Wall Street's median target price

Axon develops public safety products for law enforcement, enterprises, and government agencies. Its hardware portfolio includes conducted energy weapons (Tasers), body-worn cameras, and in-car cameras. Its software portfolio includes products for digital evidence management, records management, emergency communications, and real-time operations.

Axon is the market leader in Tasers, body-worn cameras, and digital evidence management software, and the company is supercharging its products with AI features that improve law enforcement productivity and efficiency. For instance, Draft One uses body-worn camera video and generative AI to draft reports. And Axon Fusus uses AI to process video and alert human operators to situations like physical fights and vehicle crashes.

Axon reported strong second-quarter financial results that handily beat estimates on the top and bottom lines. Revenue increased 35% to $904 billion, driven strong growth across connected devices and software products, including newer solutions for dispatch, real-time operations, and AI. Meanwhile, non-GAAP EBITDA increased 41% to $242 million. The company also raised its full-year guidance, which now implies 33% revenue growth in 2026.

Wall Street expects Axon's adjusted earnings to grow at 35% annually through 2027. That makes the current valuation of 61 times adjusted earnings look rich, but not outrageously expensive. Patient investors with a time horizon of at least five years can buy a few shares today, but I would keep the position relatively small unless the stock drops 20% or so. If that happens, the valuation would be much more attractive.

Trevor Jennewine has positions in AppLovin and Axon Enterprise. The Motley Fool has positions in and recommends Axon Enterprise. The Motley Fool has a disclosure policy.