The U.S. stock markets have been on a remarkable upswing, with a stellar first quarter in 2024 following the awe-inspiring performance of 2023. Against all odds, the bulls are still charging ahead in the face of widespread warnings of overvaluation. The burning question on everyone’s mind now is: what’s next? Our belief is that the bullish momentum will persist, fueled by the robust U.S. economy.

Sturdy Foundations of the U.S. Economy

In 2023, the U.S. Gross Domestic Product (GDP) saw a 2.5% increase, a significant jump from the 1.9% rise in 2022. Forecasts at the beginning of 2023 had pegged full-year GDP growth at 2%. Recent projections from the Atlanta Fed GDPNow tracker indicate a 2.3% growth rate for the first quarter of 2024, suggesting a recession is not imminent. Additionally, the Federal Reserve revised its 2024 GDP forecast to 2.1% in the March FOMC meeting, up from 1.4% in December 2023.

Core PCE inflation, a key metric for the Fed, rose 0.3% in February on a monthly basis, slightly lower than the 0.5% rise in the previous month. Year over year, core PCE inflation ticked up to 2.8% in February from 2.9% in January, aligning with the central bank’s expectations as articulated by Fed Chairman Jerome Powell.

AI Innovation Unleashed

The tech sector’s upward trajectory from the start of 2023 has been underpinned by a fervent embrace of artificial intelligence (AI), especially generative AI. The widespread adoption of AI during the global lockdown period accelerated the penetration of digital technologies and the Internet, paving the way for significant AI applications.

The AI landscape in the United States and overseas is primed for further evolution, presenting lucrative business prospects for tech firms specializing in cutting-edge products. Demand for smart devices with advanced capabilities like face detection, image recognition, and video analytics is driving the growth of the AI-powered semiconductor sector.

Bright Projections for Q1 2024 Earnings

The forthcoming first-quarter 2024 earnings season is anticipated to kick off with a positive momentum, marking the third consecutive quarter of favorable results on Wall Street. Projections suggest that S&P 500 earnings for Q1 2024 will rise by 2.5% compared to the same period last year, with revenues up by 3.5%.

This follows a 6.7% year-over-year growth in earnings on 3.9% higher revenues in Q4 2023, and a 3.8% year-over-year earnings increase on 2.1% higher revenues in Q3 2023.

Fed’s Signal of Rate Cuts

Following the recent FOMC meeting on Mar 20, the Fed opted to maintain the benchmark lending rate within the range of 5.25-5.5%, unchanged since July 2023. However, the latest “dot-plot” from the FOMC indicates a potential decrease in the benchmark lending rate to 4.625% by the end of 2024, signaling three 25-basis-point rate cuts from the current mid-point of 5.375%.

Top Tech Picks for Investors

Despite lofty valuations, the tech surge is anticipated to gain further traction in 2024, fueled by the attractiveness of growth stocks in a low-interest rate environment. Our focus narrows down to five tech giants with market capitalizations exceeding $100 billion that have already delivered double-digit returns this year. These firms boast sturdy business models, robust financial positions, and globally recognized brand identities.

These select stocks exhibit significant growth potential for 2024, accompanied by positive earnings estimate revisions in the past 60 days. Each of our featured picks holds either a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Find the chart below displaying the year-to-date price performance of our five highlighted selections.

Image Source: Zacks Investment Research

NVIDIA Corp. has experienced growth in Compute & Networking revenues driven by the expansion of AI, high-performance computing, and accelerated computing. The company’s data center end-market segment is poised to benefit from the increasing demand for generative AI and large language models utilizing graphic processing units based on NVIDIA Hopper and Ampere architectures.

A boost in hyperscale demand and heightened sell-ins to partners across Gaming and ProViz end markets, following channel inventory normalization, are serving as tailwinds for NVIDIA. Collaborations with industry players like Mercedes-Benz and Audi are set to enhance NVIDIA’s footprint in the realm of autonomous vehicles and automotive electronics.

With a Zacks Rank #1, NVIDIA anticipates a whopping 72.6% revenue growth and an impressive 84% earnings growth for the current fiscal year ending January 2025. The Zacks Consensus Estimate for current-year earnings has inched up by 0.1% in the last seven days. Year to date, NVIDIA’s stock price has soared by 82.5%.

Meta Platforms Inc. is reaping the rewards of consistent user growth across all regions, particularly in the Asia Pacific. The company’s offerings like Instagram, WhatsApp, Messenger, and Facebook are witnessing increased engagement, propelling its growth trajectory. Leveraging AI to recommend Reels content has been a key driver of traffic on Instagram and Facebook.

Meta Platforms’ innovative lineup, featuring products like Threads, Reels, Llama 2, Ray-Ban Meta smart glass, and mixed reality device Quest 3, is expected to fuel its growth further. The strong performance of Reels on Instagram and Facebook is a testament to users’ engagement, with 3.5 billion daily Reels shares during the fourth quarter.

With a Zacks Rank #1, Meta Platforms foresees a revenue growth of 17.7% and an earnings growth of 34.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 1.6% in the past 60 days. Year to date, Meta Platforms’ stock has surged by 37.2%.

Micron Technology Inc. has elevated its chip packages with AI capabilities, machine learning, and deep learning technologies. Leveraging AI and analytics, Micron has developed hardware offering increased storage capacity, faster memory, and superior data filtering.

The expected normalization of supply by mid-2024 is anticipated to stimulate pricing,

AI Boom Boosting Demand for Data Center Chips

In the ever-evolving landscape of technological progress, the current boom in AI spending is poised to ignite a surge in demand for chips, particularly targeting the data center end market. This upswing in demand is expected to fuel the growth trajectory of Micron Technology’s chips.

Memory and Storage Demand Soaring with 5G Adoption

Moreover, as the world transitions towards wider adoption of 5G technology in IoT devices and wireless infrastructure, Micron’s memory and storage solutions are set to experience a substantial uptick in demand. This trend positions the company to capitalize on the burgeoning opportunities in the tech market.

Micron Technology’s Meteoric Rise

Zacks Rank #2 Micron Technology has been on a meteoric rise, with an impressive revenue growth rate of 55.6% and an astounding earnings growth rate exceeding 100% for the current year ending in August 2024. The market consensus has also reflected this optimism with a staggering improvement of over 100% in the current-year earnings estimate over the last 30 days. Notably, the stock price of MU has surged by 38.2% year to date, further solidifying its position as a top contender in the tech sector.

Microsoft Corp.’s Sturdy Growth Trajectory

Steering the course of technology, Microsoft Corp. has been leveraging its strong growth drivers, namely Intelligent Cloud and Productivity and Business Processes. The robust growth in Intelligent Cloud revenues, powered by the expansion of Azure and other cloud services, along with the continued success of Productivity and Business Processes, has positioned MSFT as a leader in the tech realm.

Microsoft’s Strategic Advancements in AI

Amid the fierce competition in the AI sphere, Microsoft has taken significant strides, particularly with its early lead in generative AI, thanks to its collaboration with OpenAI. Furthermore, innovations like Copilot for Security promise a bright future for the tech giant. The company’s anticipated net sales growth of 14.6% from fiscal 2023 to fiscal 2024 underscores its steady upward trajectory.

Amazon.com Inc.’s Resilience and Expansion

Not to be outdone, Amazon.com Inc. has demonstrated remarkable resilience and unwavering momentum, propelled by the success of Prime and AWS. The continuous enhancement of AWS services and their growing adoption rate have played a pivotal role in the company’s overall performance. Furthermore, Amazon’s robust advertising business and flourishing relationships with third-party sellers have bolstered its position in the market.

Amazon’s Diverse Growth Catalysts

With advancements in Alexa skills, a diverse array of smart home products, and a solid presence among small and medium businesses, Amazon continues to diversify its growth catalysts. The company’s foray into various sectors such as grocery, pharmacy, healthcare, and autonomous driving, coupled with a strategic focus on generative AI, further underscores its commitment to innovation and expansion.

Amazon’s Encouraging Financial Outlook

As a testament to its growth trajectory, Zacks Rank #2 Amazon is poised for significant revenue and earnings growth rates of 11.6% and 40.7%, respectively, for the current year. With a recent surge of 18.8% in its stock price year to date, Amazon continues to be a frontrunner in the tech industry, captivating investor confidence with its promising financial outlook.