Forget Inflation, Buy These 5 Stocks on the Ongoing Tech Rally


Wall Street ended the first quarter on an impressive note after a solid 2023. All the major indexes hit fresh record highs, and the rally is expected to continue as the Federal Reserve has indicated at least three rate cuts by the end of this year.

The Dow and the S&P 500 were the first to hit a record high. The Nasdaq was a bit slow in catching up in the race but did so in February end. In the first quarter, the Nasdaq gained 9.1%.

Tech stocks were responsible for the broader market rally in 2023 and the momentum has continued into this year.

The tech rally is being fueled by the ongoing optimism surrounding artificial intelligence (AI), particularly generative AI, spearheaded by NVIDIA Corporation NVDA.

AI holds immense potential and the world is yet to witness it, several experts believe. NVIDIA’s success over the past year has inspired several other tech companies, big and small, to shift focus to AI to ensure more business opportunities in the coming days.

The advancement of smart devices is greatly influencing this domain, as they necessitate computing and learning capabilities for tasks like face detection, image recognition and video analytics.

Such operations demand high processing power, speed, memory, low power consumption, and enhanced graphic processors and solutions. These specific requirements are fostering favorable conditions for the semiconductor industry to thrive.

Interestingly, the Nasdaq rally comes despite inflation coming in hotter than expected in the first two months of the year. The consumer price index (CPI) jumped 0.4% sequentially in February, higher than a rise of 0.3% in the prior month and the biggest increase since September 2023. Core PPI also rose 0.4% month over month in February.

However, the Federal Reserve said last month that it still plans three rate cuts of 25 basis points each by the end of this year. Although the Fed didn’t give a timeline, market participants believe the first rate cut is likely to happen in June.

Lower interest rates mean lower borrowing costs, which bode well for growth stocks.

Our Choices

Given this scenario, it would be ideal to invest in mega-cap tech stocks such as NVIDIA Corporation, Amazon.com, Inc. AMZN, Meta Platforms, Inc. META, Logitech International LOGI and Microsoft Corporation MSFT, whichhave strong potential in 2024. These stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and assure good returns. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Over the years, NVDA’s focus has evolved from PC graphics to AI-based solutions that now support high-performance computing, gaming and virtual reality platforms.

NVIDIA has an expected earnings growth rate of 83.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 19.5% over the last 60 days. NVDA presently has a Zacks Rank #2.

Amazon.com, Inc. is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. AMZN’s online retail business revolves around the Prime program well-supported by the company’s massive distribution network. Further, the Whole Foods Market acquisition helped Amazon establish its footprint in the physical grocery supermarket space. AMZN also enjoys a dominant position in the cloud-computing market, particularly in the Infrastructure as a Service space, thanks to Amazon Web Services.

Amazon.com has an expected earnings growth rate of 40.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 11.2% over the last 60 days. AMZN currently carries a Zacks Rank #2.

Meta Platforms, Inc. is the world’s largest social media platform. META’s portfolio offering evolved from a single Facebook app to multiple apps like photo and video sharing app Instagram and WhatsApp messaging app owing to acquisitions. Along with the in-house developed Messenger, these apps now form Meta’s family of products used by almost 3.96 billion people on a monthly basis as of Sep 30, 2023.

Meta Platforms has an expected earnings growth rate of 34.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 13% over the last 60 days. META presently sports a Zacks Rank #1.

Logitech International is a global leader in peripherals for personal computers and other digital platforms. LOGI develops and markets innovative products in PC navigation, Internet communications, digital music, home-entertainment control, video security, interactive gaming and wireless devices.

Logitech International has an expected earnings growth rate of 20.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the last 60 days. LOGI presently carries a Zacks Rank #2.

Microsoft Corporation is one of the largest broad-based technology providers in the world. MSFT dominates the PC software market, with more than 73% of the market share for desktop operating systems. Microsoft Corporation’s Microsoft 365 application suite is one of the most popular productivity software globally. MSFT is also one of the prominent public cloud providers that can deliver a wide variety of infrastructure-as-a-service and platform-as-a-service solutions at scale.

Microsoft Corporation has an expected earnings growth rate of 18.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the last 60 days. MSFT presently carries a Zacks Rank #2.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Amazon.com, Inc. (AMZN) : Free Stock Analysis Report

Microsoft Corporation (MSFT) : Free Stock Analysis Report

Logitech International S.A. (LOGI) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Meta Platforms, Inc. (META) : Free Stock Analysis Report

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