Last year was an amazing year for tech stocks. Coming off a disappointing 2022, tech rallied to make up much of its losses and set the stage for further gains in 2022.
The tech-heavy Nasdaq composite was up 43% in 2023, and many of the top tech-themed exchange-traded funds did even better. If you were holding tech stocks, you likely had a very good 2022.
And tech is off to a solid start this year, with the Nasdaq up 5% to keep pace with top tech ETFs. Investors are still bullish on tech and advances in artificial intelligence, machine learning and the Internet of Things.
Tech stocks have greater-than-average growth potential because of their disruptive tendencies. Tech companies are looking to break new ground, create new products or devise new ways to accomplish tasks. Many tech stocks can also be considered growth stocks because they’re aggressively looking to scale up and show gains in growth and earnings.
While there are some amazing tech stocks to buy out there, we’re using the Portfolio Grader today to identify the best of the best and figure out which ones have the best chance of catching fire in 2024.
Some of the names on this list are well-known and others fly under the radar. But all of them show massive potential as we roll into 2024.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is one of those well-known names we talked about. In fact, it’s the biggest publicly traded company in the world, with a market capitalization of more than $3 trillion.
About $1 billion of that came in 2023 when advances in generative AI helped push Microsoft stock up 56%. Microsoft invested $13 million into OpenAI, the maker of ChatGPT, and infused the technology into its universe of products.
Microsoft reported earnings for its fiscal second quarter of 2024 on Jan. 30. And while the results included revenue growth of 18% to $62 billion and earnings per share were up 33% to $2.93, MSFT stock has been a little stagnant ever since.
But I’m still a Microsoft bull. I agree with analysts like BNP Paribas’ Stefan Slowinski who says that major free cash flow improvements related to Microsoft’s gen AI commercialization could begin in the next fiscal year.
MSFT stock will have a strong 2024, although I can’t promise another 50% gain. It still gets an “A” rating in the Portfolio Grader.
Synopsys (SNPS)
Synopsys (NASDAQ:SNPS) is a tech company that provides tools and serves companies that design and manufacture semiconductors.
Semiconductors continue to grow in importance because they power many electronic devices, from solar systems to electronics, computers and electric vehicles. Advances in AI are made possible only by the most powerful semiconductors.
Synopsys has a key partnership with Nvidia (NASDAQ:NVDA), the semiconductor company with the biggest market share in semiconductor chips for generative AI. It also collaborates with Microsoft and other major tech companies.
Synopsys, meanwhile, is making moves to be an even bigger player. In January, it announced plans to buy Ansys (NASDAQ:ANSS) in a $35 billion deal to be a leader in the silicon-to-systems design solutions space.
As semiconductors continue to grow in importance, so do the prospects of SNPS stock. The stock is up 54% in the last year and gets an “A” rating in the Portfolio Grader.
Meta Platforms (META)
At one point, Meta Platforms (NASDAQ:META) was best known as a social media company. And while it still has Facebook and Instagram as its dominant holdings, Meta is evolving into something more: an advertising company, a content company and a top tech company.
Meta is using AI to help it monetize its Facebook and Instagram platforms. Advertising is hugely important for Facebook and Instagram as Meta works to keep audiences engaged and show users content and ads that are the most relevant.
The fourth quarter of 2023 was a good one. Meta reported revenue of $40.1 billion, up 25% from a year ago. And net income of $14 billion was a huge increase from $4.6 billion in the same period last year.
Meta also saw an 8% increase in daily active users to 3.19 billion.
I also love that Meta announced its first dividend – 50 cents per share – and pledged to pay out a quarterly dividend moving forward.
META stock is up 146% in the last 12 months and gets an “A” rating in the Portfolio Grader.
Yelp (YELP)
Yelp (NYSE:YELP) can make or break business. The company has a mobile app and a website that hosts crowd-sourced reviews about restaurants and businesses.
It operates an online service that allows users to make reservations at restaurants.
It uses AI-powered large language models to highlight reviews for customers, and to suggest businesses. And it recently launched over 20 new features, including improved home feeds and business summaries.
The continued investment is paying off in improved revenue and growth. The third quarter saw revenue of $345.1 million, up from $308.8 million a year ago. Income of $58.2 million or 79 cents per share, was a dramatic improvement from $9.1 million and 13 cents per share in the same period a year ago.
Yelp has now seen revenue grow by double digits for 10 consecutive quarters. The stock is up 33% in the last year and gets an “A” rating in the Portfolio Grader.
AppFolio (APPF)
AppFolio (NASDAQ:APPF) is a tech company in the real estate business. The company offers software-as-a-service applications to property managers to help them manage relationships with residents and investors.
The platform provides everything from banking statements to bill pay, provides assistance with leasing tasks and maintenance, and even helps generate marketing descriptions when it’s time to list a property for rent.
Fourth-quarter earnings were a blowout, with revenue of $171.8 million up 39% from a year ago. Income of $28.2 million was a huge increase from an operating loss of $20 million in the same quarter a year ago.
For the full year, AppFolio recorded revenue of $620 million, and it issued guidance for 2024 revenue to be in the range of $755 million to $765 million.
AppFolio stock is up 82% in the last year, including a big 33% jump following its Q4 earnings report. It gets an “A” rating in the Portfolio Grader.
CleanSpark (CLSK)
CleanSpark (NASDAQ:CLSK) is one of the smaller stocks on this list, but it also proves that you can find great tech stocks to buy no matter what the market capitalization.
CleanSpark is a mining company for Bitcoin (BTC-USD), owning nearly 89,000 miners with plans to buy another 160,000 units.
CleanSpark currently has a mining rate of 10 exahashes per second and hopes its expansion will push that to 50 exahashes. And the quicker it can mine Bitcoin, the more profits the company will earn.
The company just announced a new deal for three new Bitcoin mining facilities in Mississippi that will give it another 2.4 exahashes per second in mining capacity. It’s also expanding its Sandersville, Georgia, location and doubling the hash rate of its facility in Dalton, Georgia.
In January alone, CleanSpark mined 577 Bitcoin, and sold 6.4 for $44,800 per Bitcoin. CleanSpark currently has 3,573 in Bitcoin, which at today’s prices holds a value of $160 million.
CleanSpark is literally in the business of making money. The stock is up 119% in the last year and gets an “A” rating in the Portfolio Grader.
Verisk Analytics (VRSK)
Verisk Analytics (NASDAQ:VRSK) is a data analytics and risk assessment firm. It uses AI and machine learning to analyze records to create insights that help its clients manage risk.
The result is insights that help companies improve underwriting, manage claims and make decisions about climate risks and other potentially costly events.
Its MSP navigator provides casualty insurance companies with an AI-powered tool to report treatments, settlements, awards and other payments as required by Medicare and Medicaid.
The third quarter showed revenue of $677.6 million, up 11.1% from a year ago. Net income of $221.2 million improved 17% from the same period a year ago. EPS of $1.52 was up 26% from last year.
VRSK stock is up 39% in the last year and gets an “A” rating in the Portfolio Grader.
— Louis Navellier and the Investor Place Research Staff
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Source: Investor Place