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Technology stocks are at it again! The Nasdaq 100 rallied to another record high, closing up +1.47%. Indeed, Taiwan Semiconductor Manufacturing Co.'s optimistic stance for this latest quarter is one of the driving forces for this new bullish momentum—and it might be a sign of better things to come.
Investors who want to capitalize on this potential rally could consider “The Magnificent Seven” - the nickname given to some of the most valuable companies in the world. The list includes Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. These seven heavy hitters carried the market collectively in 2023, contributing around 60% of the S&P500’s total returns.
It's now 2024, and the market is open to new opportunities. The question is: will the Seven continue to lead the pack? While we don’t have working crystal balls in our offices, these three, which I call the “Tech Trifecta,” are my favorites. Allow me to explain why.
Microsoft Corporation (MSFT)
YTD Performance: 4.74%
Microsoft is one of the most influential tech companies of the 21st century. Its products include software, hardware, cloud computing, personal computing, and other tech industry segments. Its recent resurgence in the PC market has shown its enduring dominance in the personal computer operating systems. The company is also a leading proponent of developing and advancing artificial intelligence (AI), as shown by its heavy investment in OpenAI last January. The investment sent shockwaves through the tech industry, and as ChatGPT became a household name, Microsoft soared to even greater heights.
Microsoft's efforts to further develop AI helped raise the company’s status and helped it surpass as the world's most valuable publicly traded company. Microsoft is further investing in AI development by integrating Copilot on upcoming Windows PCs and other flagship products. In other news, CEO Satya Nadella was also awarded CNN’s CEO of the Year, citing him as a significant driving force for the company’s success. MSFT’s leading role and commitment to commercializing and monetizing AI technologies is reshaping the tech industry. No wonder analysts are bullish on MSFT.
Meta Platforms Inc.(META)
YTD Performance: 6.26%
Meta Platforms, Inc., better known for its social media platform, Facebook, is arguably the company that pioneered the blueprint of what social media is today. Meta also owns other popular platforms like Instagram, WhatsApp, and Messenger. The company expanded its operations by tapping into augmented and VR-related consumer hardware and software. The goal is to establish an interconnected metaverse allowing users to export a virtual reality space through its proprietary devices and programs.
While the company may be known for social media, it’s not to be scoffed at in terms of its visibility in AI. It has had recent successes with AI-powered products like Ray-Ban glasses (which I think are pretty darn cool), Meta AI assistant, and AI integration across its apps. The company’s proprietary LLaMA and LLaMA 2 large language models (LLM) are generating waves in the industry, making META a strong contender in AI.
Even analysts see more upside in the company with their “Strong Buy” recommendations and peg a high target price of $470, 24.96% above current levels—a massive room for growth for a company of its size.
NVIDIA Corporation (NVDA)
YTD Performance: 15.3%
The final company on our list is Nvidia Corporation, a dominant gaming GPU and AI chip player. Its main products include graphics cards, enterprise workstations, software for cloud-based visual and virtual computing, cryptocurrency mining processors, gaming streaming services through GeForce NOW, and omniverse software. The company dominates the AI chip market for cloud and data centers with an approximately 80% market share. Its TensorRT software and CUDA platform are two of the critical features of NVDA’s products that help facilitate the creation and efficient deployment of AI applications.
The stock has experienced notable gains since last year and recently reached another high. Some may say that it's now quite expensive. However, Nvidia's market dominance and vital importance in AI development can’t be ignored. In our view, NVDA is just getting started.
Statistica expects the AI industry to grow to $738.80 billion by 2030, with a CAGR of 15.38%. From self-driving cars to edge and cloud computing, Nvidia is positioned to be a key beneficiary of AI’s continued development and increased adoption. Tech fans should consider NVDA for a top spot in their long-term portfolios.
Final Thoughts
Despite promising signs, always remember that any investment carries risks. Top stocks like The Magnificent Seven don’t stay at the top forever, and stocks that rise fast can fall even faster. Always conduct due diligence to know when to buy, sell, or stay on the sidelines while waiting for better opportunities.
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On the date of publication, Rick Orford had a position in: MSFT . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.