In 2023, the tech sector defied expectations, with the Technology Select Sector SPDR Fund (NYSEARCA:XLK) surging over 56% despite rising interest rates. This surge, hinting at the beginning of a new bull market, highlights the resilience and growth potential of tech stocks for 2024. A favorable macroeconomic environment and the likelihood of reduced borrowing costs also drove the sector’s strong performance.
Moreover, the rise of generative artificial intelligence (AI) added to the momentum, driving investment and excitement within the sector. This technological leap forward is mirrored in the projected increase of global revenue in the devices market, which is expected to grow by $88.4 billion, reaching a peak of $807.2 billion by 2028.
Heading into 2024, these factors collectively suggest a bright future for top tech stocks. With a confluence of innovation and favorable economic conditions, select companies are uniquely poised to capitalize on these trends, heralding a year of significant growth and opportunity in the tech realm. Here are three top tech stock picks for 2024.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) has emerged as a powerhouse in the tech industry, driven by its cutting-edge advancements in AI. This innovation streak has not only cemented its leadership but also propelled significant growth. As Nvidia continually innovates, its influence in the tech world strengthens, solidifying its position as a market leader.
Financially, Nvidia’s recent achievements are impressive. In the third quarter, the company’s non-GAAP earnings per share (EPS) reached $4.02, exceeding estimates by 63 cents. Additionally, Nvidia’s revenue witnessed a stellar rise to $18.12 billion, a 205% increase year-over- year (YOY), surpassing expectations by $2.01 billion. These figures reflect Nvidia’s robust financial health and dominant market presence.
Furthermore, the demand for AI and high-performance computing chips has surged, benefiting Nvidia. In just the third quarter, it sold over half a million H100 chips. Analysts remain positive about Nvidia’s future, expecting continued strong sales of these chips in the fourth quarter, reinforcing Nvidia’s status as a tech industry leader.
ServiceNow (NOW)
ServiceNow (NYSE:NOW), through its Now Platform, has become a quintessential productivity tool for large enterprises. Its workflow automation tools, spanning across various domains like IT, customer service and human resources, are in high demand as companies strive for cost efficiency. This demand underlines the platform’s significance in the burgeoning software-as-a-service market.
Financially, ServiceNow stands out with a market capitalization exceeding $140 billion and trailing 12-month revenues of $8.4 billion. Remarkably, it maintains growth rates comparable to those of startups. In the third quarter of 2023, the company exceeded its growth and profitability targets, demonstrating a YOY revenue increase of 27%.
ServiceNow’s growth is further evidenced by its success in securing large-scale deals. In the third quarter, it closed 83 deals, each worth over $1 million in annual revenue. This achievement, coupled with the fact that it has 1,789 customers paying over $1 million per year, showcases ServiceNow’s robust position and growing influence in the cloud computing and enterprise software sectors.
With a 98% renewal rate on contracts and approximately 85% of Fortune 500 companies using ServiceNow within their organizations, NOW is a great option for investors looking for top tech stocks for 2024.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) stands out as a top investment choice, blending its legacy as a tech titan with dynamic growth and dividend payouts. Its aggressive foray into AI, underscored by a hefty $13 billion investment in OpenAI and the integration of ChatGPT across its products, positions it at the forefront of this technological frontier.
Moreover, with the recent expansion of its cutting-edge AI chatbot, Copilot, to Android platforms, Microsoft has now broadened its horizons by integrating this innovative technology into iOS and iPadOS. This expansion allows a broader user base to access the app’s advanced AI features, increasing its impact and usability.
Furthermore, ambitious goals and robust growth mark Microsoft’s trajectory in the AI landscape. Under CEO Satya Nadella’s leadership, the company aims for $500 billion in annual revenues by 2030. This target, driven by aggressive AI investments, suggests a future where Microsoft not only leads in the tech sphere but also redefines the industry’s landscape.
On the date of publication, Muslim Farooque did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
