Last year marked an exceptional rebound for the technology sector. Rebounding from a slump in 2022, tech stocks have laid the groundwork for further growth in 2022.
The tech-centric Nasdaq composite surged by an impressive 43% in 2023, outperforming many top tech-themed exchange-traded funds. Investors who held tech stocks likely reaped substantial rewards.
2022 also heralded a solid start for tech, with the Nasdaq posting a 5% increase, in line with the performance of top tech ETFs. Investors are bullish on tech, drawn by advancements in artificial intelligence, machine learning, and the Internet of Things.
Tech stocks boast greater growth potential due to their disruptive nature. These companies are constantly seeking to pioneer new frontiers, develop cutting-edge products, and innovate new methods of task execution. Many tech stocks are classified as growth stocks, fueled by their aggressive pursuit of expansion, growth, and earnings.
Despite the plethora of impressive tech stocks in the market, we aim to utilize the Portfolio Grader to pinpoint the crème de la crème and identify the stocks with the highest potential for a breakout year in 2024.
This list includes both well-known and under-the-radar companies, each demonstrating substantial potential as we gear up for 2024.
Microsoft (MSFT)
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Microsoft (NASDAQ:MSFT) stands as one of the prominent names in the industry. It holds the title of the largest publicly traded company globally, boasting a market capitalization of over $3 trillion.
The company enjoyed a $1 billion upsurge in 2023, attributed to advancements in generative AI that propelled Microsoft stock by 56%. Microsoft funneled $13 million into OpenAI, the developer of ChatGPT, integrating this technology across its suite of products.
In the fiscal second quarter of 2024, Microsoft unveiled robust earnings, showcasing an 18% revenue surge to $62 billion, alongside a 33% uptick in earnings per share to $2.93. While MSFT stock has remained relatively static since then, analysts such as BNP Paribas’ Stefan Slowinski forecast significant free cash flow enhancements related to Microsoft’s commercialization of generative AI in the upcoming fiscal year.
MSFT stock is poised for a robust 2024, albeit unlikely to replicate another 50% gain. It maintains an “A” rating in the Portfolio Grader.
Synopsys (SNPS)
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Synopsys (NASDAQ:SNPS) is a leading technology company offering tools and services to firms engaged in semiconductor design and manufacturing.
The significance of semiconductors continues to grow, powering a myriad of electronic devices ranging from solar systems to electronics, computers, and electric vehicles. The advancement of AI hinges on the existence of high-powered semiconductors.
Synopsys holds a pivotal partnership with Nvidia (NASDAQ:NVDA), the foremost player in semiconductor chips for generative AI, alongside collaborations with major tech entities such as Microsoft.
Furthermore, Synopsys is positioning itself as a major industry player. In a substantial move, the company announced its intent to acquire Ansys (NASDAQ:ANSS) in a $35 billion deal, aiming to cement its leadership in the silicon-to-systems design solutions sector.
With the escalating importance of semiconductors, SNPS stock’s prospects are on the rise. The stock has soared by 54% in the past year and maintains an “A” rating in the Portfolio Grader.
Meta Platforms (META)
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While initially recognized as a social media conglomerate, Meta Platforms (NASDAQ:META) is evolving into a multifaceted entity, encompassing advertising, content, and emerging as a leading tech entity.
Meta leverages AI to optimize its monetization of the Facebook and Instagram platforms. Advertising plays a pivotal role for the company as it endeavors to sustain user engagement and tailor content and ads to maximize relevance.
The fourth quarter of 2023 delivered favorable results for Meta, with reported revenue of $40.1 billion, indicating a 25% upsurge from the previous year. Net income also experienced a significant spike, soaring to $14 billion from $4.6 billion in the same period the year prior.
Additionally, Meta observed an 8% increase in daily active users, reaching 3.19 billion.
META stock witnessed a remarkable 146% surge over the last 12 months, securing an “A” rating in the Portfolio Grader.
Yelp (YELP)
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Yelp (NYSE:YELP) wields the power to make or break businesses. The company offers a mobile app and website housing user-generated reviews of restaurants and businesses.
Yelp also operates an online service enabling users to make reservations at various establishments.
The company harnesses AI-powered language models to spotlight customer reviews and suggest businesses. Moreover, it recently launched over 20 new features, including enhanced home feeds and business summaries.
Continued investments have paid off handsomely, reflected in improved revenue and growth. The third quarter witnessed a revenue surge to $345.1 million from $308.8 million a year earlier. Income amounted to $58.2 million or 79%
Top-Performing Tech Stocks Defy Market Expectations
Yelp Inc. (YELP)
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Yelp Inc. (NYSE:YELP) has defied market expectations with its earnings report for the fourth quarter of the year. The company, known for its popular review platform, reported a net income of $11.2 million, which translated to 16 cents per share. This marked a significant improvement from the same period a year ago, where the company reported $9.1 million and 13 cents per share.
Yelp has demonstrated remarkable financial resilience, as it has achieved revenue growth for 10 consecutive quarters. Additionally, the company’s stock has surged by 33% over the past year, reflecting investor confidence and market resilience. In fact, Yelp is currently graded with an “A” rating in the Portfolio Grader.
AppFolio Inc. (APPF)
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AppFolio (NASDAQ:APPF) has emerged as a prominent player in the real estate technology sector. The company offers software-as-a-service applications tailored to property managers, facilitating seamless management of resident and investor relationships. AppFolio’s platform provides a comprehensive suite of services, including banking statements, bill payment, leasing assistance, maintenance support, and property listing descriptions.
The company recently reported a stellar performance for the fourth quarter, achieving a revenue of $171.8 million, signifying a remarkable 39% increase from the previous year. Notably, the company recorded a substantial income of $28.2 million, a significant positive deviation from an operating loss of $20 million in the corresponding quarter of the previous year. Moreover, AppFolio anticipates robust revenue guidance, projecting a range of $755 million to $765 million for the fiscal year 2024.
AppFolio’s stock has experienced an impressive surge of 82% over the past year, with a substantial 33% jump following its Q4 earnings announcement. These outstanding results have contributed to the company’s “A” rating in the Portfolio Grader.
CleanSpark Inc. (CLSK)
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CleanSpark (NASDAQ:CLSK) has made a significant impact despite being a smaller stock. The company has established itself as a leading player in the technology sector, particularly in its involvement with Bitcoin mining. CleanSpark currently possesses approximately 89,000 miners, with plans to acquire an additional 160,000 units, showcasing its commitment to expanding its operations.
With a current mining rate of 10 exahashes per second, CleanSpark aims to elevate this capacity to 50 exahashes, emphasizing its dedication to maximizing profitability. The company recently announced the acquisition of three new Bitcoin mining facilities in Mississippi, which is expected to enhance its mining capacity by 2.4 exahashes per second. Furthermore, CleanSpark is bolstering its existing facilities and aims to double the hash rate of its Dalton, Georgia operations.
CleanSpark’s strong financial performance is evident from its recent mining activity, where the company mined 577 Bitcoin in January and sold 6.4 Bitcoin at an impressive $44,800 per Bitcoin. As of now, CleanSpark holds 3,573 Bitcoin, equivalent to a valuation of $160 million at current market prices. These consistent achievements have driven the company’s stock price up by 119% over the past year and have secured it an “A” rating in the Portfolio Grader.
Verisk Analytics Inc. (VRSK)
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Verisk Analytics (NASDAQ:VRSK) holds a prominent position in the data analytics and risk assessment industry. Leveraging advanced technologies such as AI and machine learning, the company specializes in analyzing data to generate valuable insights that assist clients in mitigating risks. Its offerings encompass a wide range of solutions, including insurance underwriting, claims management, and climate risk assessment.
The financial performance of Verisk Analytics has been robust, with the third quarter demonstrating a year-over-year revenue increase of 11.1%, amounting to $677.6 million. The company’s net income of $221.2 million reflects a substantial 17% improvement from the corresponding period in the previous year. Additionally, Verisk Analytics achieved an impressive EPS of $1.52, marking a remarkable 26% increase from the previous year.
Verisk Analytics’ stock has surged by 39% over the past year, underscoring its resilience and stability in the market. The company’s consistent performance has earned it an “A” rating in the Portfolio Grader, reflecting investor confidence and market recognition.
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