Wall Street has had a great year so far. Stocks have rallied on renewed optimism that the economy is likely to have a softer landing after the Federal Reserve hinted at multiple rate cuts in 2024.

This saw all three major indexes hitting record highs this year. The Dow and S&P 500 hit all-time highs in early February. Nasdaq was a bit slow in catching up, but on Mar 1, the tech-heavy index hit a new high of 16,274.94 points.

Tech stocks particularly performed well last year after a disappointing 2022, helping the broader market, and the rally has continued into this year. The Nasdaq gained 43.4% in 2023, recording one of its best years since 2020. The index has risen 6.7% year to date and is poised to gain in the near term.

This year’s rally is being particularly fueled by the ongoing enthusiasm surrounding artificial intelligence (AI), particularly generative AI, led by NVIDIA Corporation (NVDA Quick QuoteNVDA - Free Report) .

Experts believe AI has tremendous potential, which is yet to be witnessed by the world. NVIDIA’s stupendous success over the past year has motivated a large number of tech companies to explore the potential of AI in a bid to secure more business opportunities in the long term.

Also, the progression of various smart devices is playing a significant role in this field, as they demand computing and learning capabilities for tasks such as face detection, image recognition and video analytics.

These operations require features such as high processing power, speed, memory, low power consumption, and improved graphic processors and solutions. These specific requirements are creating favorable conditions for the semiconductor industry.

Besides, the Federal Reserve has indicated multiple rate cuts this year after ending its monetary tightening campaigns. Market participants are expecting at least five 25-basis point rate cuts in 2024.

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 Quick QuoteAMZN - Free Report) , Microsoft Corporation (MSFT Quick QuoteMSFT - Free Report) , Netflix, Inc. (NFLX Quick QuoteNFLX - Free Report) and QUALCOMM Incorporated (QCOM Quick QuoteQCOM - Free Report) , which have strong potential for 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 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 artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.

NVIDIA has an expected earnings growth rate of 79.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 16.1% over the past 60 days. NVDA presently sports a Zacks Rank #1.

Amazon.com  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 13% over the past 60 days. AMZN currently sports a Zacks Rank #1.

Microsoft 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. The 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 has an expected earnings growth rate of 18.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 60 days. MSFT presently carries a Zacks Rank #2.

Netflix is considered a pioneer in the streaming space. NFLX has been spending aggressively on building its portfolio of original shows. This is helping Netflix sustain its leading position despite the launch of new services like Disney+ and Apple TV+, as well as existing services like Amazon Prime Video.

Netflix’s expected earnings growth rate for the current year is 41.6%. The Zacks Consensus Estimate for the current-year earnings has improved 6.5% over the past 60 days. NFLX currently sports a Zacks Rank #1.

QUALCOMM designs, manufactures and markets digital wireless telecom products and services based on the Code Division Multiple Access (CDMA) technology. QCOM’s products include CDMA-based integrated circuits (ICs) and system software for wireless voice and data communications, as well as global positioning system (GPS) products. QUALCOMMalso offers development and other product-related services to U.S. government agencies and their contractors.

QUALCOMM’s expected earnings growth rate for the current year is 13.5%. The Zacks Consensus Estimate for the current-year earnings has improved 4.2% over the past 60 days. QCOM currently carries a Zacks Rank #2.