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5 Tech Stocks Poised to Rally in 2024 as Fed Hints at Rate Cuts
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The tech sector has had a solid 2023 as investors’ confidence has been on a high on steadily declining inflation that has escalated hopes of the Federal Reserve soon ending its monetary tightening campaign.
This has seen the Nasdaq rallying 41.2% year to date as of Dec 20 and with chances of multiple rate cuts in 2024 increasing, tech stocks are expected to continue their northbound journey.
Also, out of the 11 broad sectors of the market’s benchmark S&P 500 Index, the Technology Select Sector SPDR (XLK) has been the biggest gainer, increasing 52.4%
Inflation has declined sharply over the past year from its peak of 9.1% in June 2022, which saw the Federal Reserve leaving interest rates unchanged. The Federal Reserve left its benchmark policy rate unchanged in the current range of 5.25-5.50% for the third straight time in its December FOMC meeting after hiking interest rates by 525 basis points since March 2022.
Market participants now have a clearer picture of the Fed’s next move after it said that the policy rate may have reached its peak or near it. Moreover, the central bank will now closely watch inflation data and try not to keep interest rates higher for a longer period.
Also, Federal Reserve officials are now planning to go for at least three 25-basis point rate cuts in 2024, which could start as early as March.
In an environment of low market interest rates, growth stocks, especially in the technology sector, tend to thrive. Currently, it would be wise to consider investing in large-cap technology stocks that have a favorable Zacks Rank.
Our Choices
We have narrowed our search to five technology giants (market capital > $50 billion) that have strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy).
NVIDIA Corporation (NVDA - Free Report) is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, 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’s GPU success can be attributed to its parallel processing capabilities supported by thousands of computing cores, necessary to run deep-learning algorithms.
NVIDIA’s expected earnings growth rate for next year is 61.5%. The Zacks Consensus Estimate for current-year earnings has improved 14.4% over the past 60 days. NVDA presently has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Intel Corporation (INTC - Free Report) is the world’s largest semiconductor company and primary supplier of microprocessors and chipsets. INTC is gradually reducing its dependence on the PC-centric business by moving into data-centric businesses — such as AI and autonomous driving.
Intel Corporation’s expected earnings growth rate for next year is 97.9%. The Zacks Consensus Estimate for current-year earnings has improved 55.7% over the past 60 days. INTC presently carries a Zacks Rank #2.
CrowdStrike Holdings, Inc. (CRWD - Free Report) is a leader in next-generation endpoint protection, threat intelligence and cyberattack response services. CRWD’s co-founders, George Kurtz and Dmitri Alperovitch, were inspired by the shortcomings in the previous-generation security software technologies. They managed to turn the previous-generation adversaries by leveraging the network effects of crowdsourced data from its customer base applied to modern technologies, including AI, cloud computing, and graph databases to detect threats and stop breaches. As a result of its wide-scale offerings, CrowdStrike is one shop for almost all types of security solutions.
CrowdStrike’s expected earnings growth rate for next year is 23.8%. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the past 60 days. CRWD currently carries a Zacks Rank #2.
Meta Platforms, Inc. (META - Free Report) 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’ expected earnings growth rate for next year is 22.7%. The Zacks Consensus Estimate for current-year earnings has improved 5.4% over the past 60 days. META currently carries a Zacks Rank #2.
Shopify Inc. (SHOP - Free Report) provides a multi-tenant, cloud-based, multi-channel commerce platform for small and medium-sized businesses. Merchants use SHOP’s software to run business across various sales channels, including web and mobile storefronts, physical retail locations, social media storefronts and marketplaces.
Shopify’s expected earnings growth rate for next year is 48.6%. The Zacks Consensus Estimate for current-year earnings has improved 32.1% over the past 60 days. SHOP currently carries a Zacks Rank #2.
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5 Tech Stocks Poised to Rally in 2024 as Fed Hints at Rate Cuts
The tech sector has had a solid 2023 as investors’ confidence has been on a high on steadily declining inflation that has escalated hopes of the Federal Reserve soon ending its monetary tightening campaign.
This has seen the Nasdaq rallying 41.2% year to date as of Dec 20 and with chances of multiple rate cuts in 2024 increasing, tech stocks are expected to continue their northbound journey.
Also, out of the 11 broad sectors of the market’s benchmark S&P 500 Index, the Technology Select Sector SPDR (XLK) has been the biggest gainer, increasing 52.4%
Inflation has declined sharply over the past year from its peak of 9.1% in June 2022, which saw the Federal Reserve leaving interest rates unchanged. The Federal Reserve left its benchmark policy rate unchanged in the current range of 5.25-5.50% for the third straight time in its December FOMC meeting after hiking interest rates by 525 basis points since March 2022.
Market participants now have a clearer picture of the Fed’s next move after it said that the policy rate may have reached its peak or near it. Moreover, the central bank will now closely watch inflation data and try not to keep interest rates higher for a longer period.
Also, Federal Reserve officials are now planning to go for at least three 25-basis point rate cuts in 2024, which could start as early as March.
In an environment of low market interest rates, growth stocks, especially in the technology sector, tend to thrive. Currently, it would be wise to consider investing in large-cap technology stocks that have a favorable Zacks Rank.
Our Choices
We have narrowed our search to five technology giants (market capital > $50 billion) that have strong potential for 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy).
NVIDIA Corporation (NVDA - Free Report) is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, 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’s GPU success can be attributed to its parallel processing capabilities supported by thousands of computing cores, necessary to run deep-learning algorithms.
NVIDIA’s expected earnings growth rate for next year is 61.5%. The Zacks Consensus Estimate for current-year earnings has improved 14.4% over the past 60 days. NVDA presently has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Intel Corporation (INTC - Free Report) is the world’s largest semiconductor company and primary supplier of microprocessors and chipsets. INTC is gradually reducing its dependence on the PC-centric business by moving into data-centric businesses — such as AI and autonomous driving.
Intel Corporation’s expected earnings growth rate for next year is 97.9%. The Zacks Consensus Estimate for current-year earnings has improved 55.7% over the past 60 days. INTC presently carries a Zacks Rank #2.
CrowdStrike Holdings, Inc. (CRWD - Free Report) is a leader in next-generation endpoint protection, threat intelligence and cyberattack response services. CRWD’s co-founders, George Kurtz and Dmitri Alperovitch, were inspired by the shortcomings in the previous-generation security software technologies. They managed to turn the previous-generation adversaries by leveraging the network effects of crowdsourced data from its customer base applied to modern technologies, including AI, cloud computing, and graph databases to detect threats and stop breaches. As a result of its wide-scale offerings, CrowdStrike is one shop for almost all types of security solutions.
CrowdStrike’s expected earnings growth rate for next year is 23.8%. The Zacks Consensus Estimate for current-year earnings has improved 4.3% over the past 60 days. CRWD currently carries a Zacks Rank #2.
Meta Platforms, Inc. (META - Free Report) 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’ expected earnings growth rate for next year is 22.7%. The Zacks Consensus Estimate for current-year earnings has improved 5.4% over the past 60 days. META currently carries a Zacks Rank #2.
Shopify Inc. (SHOP - Free Report) provides a multi-tenant, cloud-based, multi-channel commerce platform for small and medium-sized businesses. Merchants use SHOP’s software to run business across various sales channels, including web and mobile storefronts, physical retail locations, social media storefronts and marketplaces.
Shopify’s expected earnings growth rate for next year is 48.6%. The Zacks Consensus Estimate for current-year earnings has improved 32.1% over the past 60 days. SHOP currently carries a Zacks Rank #2.