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4 Momentum Technology Stocks That Promise Gains in 2024
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Tech stocks have made a remarkable comeback in 2023 after a massive sell-off in 2022 on recession concerns, inflationary pressure, increased oil prices and higher interest rates. With a year-to-date (YTD) rise of 43.25%, the tech-laden Nasdaq Composite has outperformed The Dow Jones Industrial Average and the S&P 500 index’s increase of 12.79% and 23.83%, respectively.
Technology stocks have more than 50% of weightage in the Nasdaq Composite index. Technology Select Sector SPDR, the most important component of the broad market index, has returned 54.3% YTD.
The latest forecast for worldwide IT spending by Gartner indicates bright prospects for tech stocks in the near term. Despite the ongoing macroeconomic and geopolitical challenges, the independent research firm forecasts worldwide IT spending to increase 8% year over year to $5.1 trillion in 2024.
Interest rates have retreated in the past few weeks, in line with market expectations of a dovish Federal Reserve announcement in December. The Federal Reserve not only maintained its pause on the federal funds rate, which was last raised in July, but also disclosed its plans to go for at least three 25-basis point rate cuts in 2024, which could start as early as March.
Technology companies have been focusing on cost-cutting measures to improve profitability and stay afloat. The strategies have boosted investors’ confidence, thereby boosting their share prices.
Against this backdrop, investment in momentum tech stocks like Splunk , CrowdStrike (CRWD - Free Report) , Workday (WDAY - Free Report) and Alphabet (GOOGL - Free Report) is expected to strengthen one’s portfolio in 2024.
In addition, the long-term growth prospects of these companies look promising due to continued digital transformations. Moreover, the growing demand for e-commerce, contactless delivery through drones and digital payment highlights the urgency for accelerated 5G network development.
Meanwhile, blockchain, IoT, smartphones, autonomous vehicles, storage solutions, AR/VR and wearables, networking and connectivity solutions — including Wi-Fi, as well as Wi-Fi/Bluetooth integrated SOCs — and the need for high-speed data in both communications networks and data centers offer significant growth opportunities.
The rapid adoption of cloud computing and the ongoing integration of AI and machine learning are expected to be major growth drivers in 2024.
Therefore, investors should look for fundamentally strong technology stocks that could sustain market jitters and ensure solid portfolio returns. However, it is difficult to pick such multi-faceted stocks from a plethora of investment opportunities.
Our Top Picks
We have selected four tech stocks that presently carry either a Zacks Rank #1 (Strong Buy) or 2 (Buy) each, with a market capitalization of more than $10 billion. These stocks have witnessed steady earnings estimate revision for 2024 in the past month. You can see the complete list of today’s Zacks #1 Rank stocks here.
Moreover, each of the stocks carries a Momentum Score of A or B. Momentum investors seek to make the most of the upward trends in a stock's price or earnings. Per the Zacks proprietary methodology, stocks with these favorable combinations offer good investment opportunities.
Year-to-Date Performance
Image Source: Zacks Investment Research
Splunk provides software solutions that enable enterprises to gain real-time operational intelligence by harnessing the value of their data. Splunk is committed to enhancing its core platform and premium products with advanced AI capabilities. It is witnessing healthy momentum in cybersecurity and cloud services.
The company’s merger with Cisco will likely drive the development of next-generation AI-enabled solutions in the cybersecurity domain. Splunk is also benefiting from healthy customer engagement, which is evident from the consistently high net retention and competitive win rates alongside solid momentum with large orders overall.
The estimates for this Zacks Rank #1 company's 2024 earnings have moved north by 11.4% to $5 per share over the last 30 days. It has a Momentum Score of A and a market cap of $25.6 billion. The stock price has advanced 76.7% year to date.
CrowdStrike is a leader in next-generation endpoint protection, threat intelligence and cyberattack response services. CrowdStrike is benefiting from the rising demand for cyber-security solutions due to a slew of data breaches and the increasing need for security and networking products amid the growing hybrid working trend.
Continued digital transformation and cloud migration strategies adopted by organizations are key growth drivers. The company’s portfolio strength, mainly the Falcon platform’s 10 cloud modules, boosts its competitive edge and helps add users. Additionally, strategic acquisitions such as Bionic and Reposify are expected to fuel growth.
The estimates for this Zacks Rank #2 company's 2024 earnings have moved north by 5.18% to $3.64 per share over the last 30 days. It has a Momentum Score of A and a market cap of $61.39 billion. The stock price has advanced 142.8% year to date.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Developers are increasingly using Workday’s AI services to craft intelligent applications for business process optimization. The growing clout of Workday Prism Analytics and Adaptive Insights business planning cloud offerings holds promise.
The estimates for this Zacks Rank #2 company's 2024 earnings have moved north by 0.64% to $6.51 per share over the last 30 days. It has a Momentum Score of A and a market cap of $71.69 billion. The stock price has advanced 62.9% year to date.
Alphabet’s strong cloud division is aiding substantial revenue growth. Moreover, expanding data centers will continue to bolster its presence in the cloud space. Further, major updates in its search segment are enhancing the search results. Also, a strong focus on the innovation of AI techniques and the home automation space is likely to aid business growth in the long term.
Further, its deepening focus on the wearables category remains a tailwind. Alphabet’s expanding presence in the autonomous driving space is contributing well. Its growing efforts to gain a foothold in the healthcare industry are other positives.
The estimates for this Zacks Rank #2 company's 2024 earnings have moved north by 1% to $6.72 per share over the last 30 days. It has a Momentum Score of A and a market cap of $1770.89 billion. The stock price has advanced 60.4% year to date.
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4 Momentum Technology Stocks That Promise Gains in 2024
Tech stocks have made a remarkable comeback in 2023 after a massive sell-off in 2022 on recession concerns, inflationary pressure, increased oil prices and higher interest rates. With a year-to-date (YTD) rise of 43.25%, the tech-laden Nasdaq Composite has outperformed The Dow Jones Industrial Average and the S&P 500 index’s increase of 12.79% and 23.83%, respectively.
Technology stocks have more than 50% of weightage in the Nasdaq Composite index. Technology Select Sector SPDR, the most important component of the broad market index, has returned 54.3% YTD.
The latest forecast for worldwide IT spending by Gartner indicates bright prospects for tech stocks in the near term. Despite the ongoing macroeconomic and geopolitical challenges, the independent research firm forecasts worldwide IT spending to increase 8% year over year to $5.1 trillion in 2024.
Interest rates have retreated in the past few weeks, in line with market expectations of a dovish Federal Reserve announcement in December. The Federal Reserve not only maintained its pause on the federal funds rate, which was last raised in July, but also disclosed its plans to go for at least three 25-basis point rate cuts in 2024, which could start as early as March.
Technology companies have been focusing on cost-cutting measures to improve profitability and stay afloat. The strategies have boosted investors’ confidence, thereby boosting their share prices.
Against this backdrop, investment in momentum tech stocks like Splunk , CrowdStrike (CRWD - Free Report) , Workday (WDAY - Free Report) and Alphabet (GOOGL - Free Report) is expected to strengthen one’s portfolio in 2024.
In addition, the long-term growth prospects of these companies look promising due to continued digital transformations. Moreover, the growing demand for e-commerce, contactless delivery through drones and digital payment highlights the urgency for accelerated 5G network development.
Meanwhile, blockchain, IoT, smartphones, autonomous vehicles, storage solutions, AR/VR and wearables, networking and connectivity solutions — including Wi-Fi, as well as Wi-Fi/Bluetooth integrated SOCs — and the need for high-speed data in both communications networks and data centers offer significant growth opportunities.
The rapid adoption of cloud computing and the ongoing integration of AI and machine learning are expected to be major growth drivers in 2024.
Therefore, investors should look for fundamentally strong technology stocks that could sustain market jitters and ensure solid portfolio returns. However, it is difficult to pick such multi-faceted stocks from a plethora of investment opportunities.
Our Top Picks
We have selected four tech stocks that presently carry either a Zacks Rank #1 (Strong Buy) or 2 (Buy) each, with a market capitalization of more than $10 billion. These stocks have witnessed steady earnings estimate revision for 2024 in the past month. You can see the complete list of today’s Zacks #1 Rank stocks here.
Moreover, each of the stocks carries a Momentum Score of A or B. Momentum investors seek to make the most of the upward trends in a stock's price or earnings. Per the Zacks proprietary methodology, stocks with these favorable combinations offer good investment opportunities.
Year-to-Date Performance
Image Source: Zacks Investment Research
Splunk provides software solutions that enable enterprises to gain real-time operational intelligence by harnessing the value of their data. Splunk is committed to enhancing its core platform and premium products with advanced AI capabilities. It is witnessing healthy momentum in cybersecurity and cloud services.
The company’s merger with Cisco will likely drive the development of next-generation AI-enabled solutions in the cybersecurity domain. Splunk is also benefiting from healthy customer engagement, which is evident from the consistently high net retention and competitive win rates alongside solid momentum with large orders overall.
The estimates for this Zacks Rank #1 company's 2024 earnings have moved north by 11.4% to $5 per share over the last 30 days. It has a Momentum Score of A and a market cap of $25.6 billion. The stock price has advanced 76.7% year to date.
CrowdStrike is a leader in next-generation endpoint protection, threat intelligence and cyberattack response services. CrowdStrike is benefiting from the rising demand for cyber-security solutions due to a slew of data breaches and the increasing need for security and networking products amid the growing hybrid working trend.
Continued digital transformation and cloud migration strategies adopted by organizations are key growth drivers. The company’s portfolio strength, mainly the Falcon platform’s 10 cloud modules, boosts its competitive edge and helps add users. Additionally, strategic acquisitions such as Bionic and Reposify are expected to fuel growth.
The estimates for this Zacks Rank #2 company's 2024 earnings have moved north by 5.18% to $3.64 per share over the last 30 days. It has a Momentum Score of A and a market cap of $61.39 billion. The stock price has advanced 142.8% year to date.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Developers are increasingly using Workday’s AI services to craft intelligent applications for business process optimization. The growing clout of Workday Prism Analytics and Adaptive Insights business planning cloud offerings holds promise.
The estimates for this Zacks Rank #2 company's 2024 earnings have moved north by 0.64% to $6.51 per share over the last 30 days. It has a Momentum Score of A and a market cap of $71.69 billion. The stock price has advanced 62.9% year to date.
Alphabet’s strong cloud division is aiding substantial revenue growth. Moreover, expanding data centers will continue to bolster its presence in the cloud space. Further, major updates in its search segment are enhancing the search results. Also, a strong focus on the innovation of AI techniques and the home automation space is likely to aid business growth in the long term.
Further, its deepening focus on the wearables category remains a tailwind. Alphabet’s expanding presence in the autonomous driving space is contributing well. Its growing efforts to gain a foothold in the healthcare industry are other positives.
The estimates for this Zacks Rank #2 company's 2024 earnings have moved north by 1% to $6.72 per share over the last 30 days. It has a Momentum Score of A and a market cap of $1770.89 billion. The stock price has advanced 60.4% year to date.