/shutterstock_584787934.jpg)
Artificial intelligence (AI), autonomous systems, and other breakthroughs continue to drive investor interest toward the tech sector. So far this year, the tech-heavy Nasdaq-100 Index ($IUXX) is up more than 46%, easily overshadowing a gain of 18% for the broad-based S&P 500 Index ($SPX).
Heading into 2024, a continued cooling trend in inflation - and a possible shift toward more accommodative Fed policy - could provide an even more supportive environment for growth stocks, particularly in tech. With this in mind, here's a look at three market-leading stocks analysts expect to keep climbing into 2024.
Nvidia
Semiconductor designer Nvidia (NVDA) has been the talk of the year, up 227% YTD. It’s one of those stocks that still enjoys its early mover advantage in the artificial intelligence space - making it one of the best picks for 2024, as well.
The Santa Clara-based giant entered the market with its gaming components, and has since emerged as a key player in the booming AI industry. Nvidia designs and sells graphics processing units (GPUs), which serve as the foundation for computers that create AI models. With AI on the rise, the demand for these GPUs has spiked, resulting in strong revenue for the company.
In last night's Q3 earnings report, NVDA once again crushed Wall Street's expectations by reporting adjusted EPS of $4.02 per share on revenue of $18.12 billion - more than triple its year-ago revenue. Data center revenue alone surged 279% to $14.51 billion.
Despite the strong quarterly report, Nvidia stock is lower today after the company noted impacts from chip export restrictions to China - even as management guided for another quarter of over 200% revenue growth for fiscal Q4. The post-event dip in the shares could present a buying opportunity for investors looking to take part in NVDA's next leg higher.
Analysts are quite bullish on Nvidia, with a consensus “Strong Buy” rating and a healthy mean price target of $631.41 - indicating expected upside of nearly 30% from current levels. Out of the 35 analysts covering the stock, 31 have a “Strong Buy” rating, 3 have a “Moderate Buy,” and 1 has a “Hold” rating.
Palo Alto Networks
Palo Alto Networks (PANW) is one of the leaders in the thriving cybersecurity sector, and offers a diverse range of products, from advanced cloud security solutions to next-generation firewalls.
The California-based cybersecurity company is up 89% YTD, and carries a market cap of $83.24 billion.
PANW has a solid history of beating Wall Street's earnings expectations, and last week's fiscal Q1 report was no exception. Revenues rose 20% YOY to $1.88 billion, while adjusted EPS arrived at $1.38.
The stock sold off sharply post-event as investors zeroed in on weak billings guidance, but PANW shares have already filled that bear gap and are moving higher again.
Notably, PANW spends upwards of $1 billion each year in research and development, making it one of the bigger spenders in the R&D department. However, the company has robust free cash flow metrics.
Analysts have a “Strong Buy” consensus rating for Palo Alto stock, with a mean target price of $279.85 - signifying an upside potential of 5% from current levels. Out of 37 analysts who cover the stock, 31 have a “Strong Buy” rating, 3 have a “Moderate Buy” rating, and 3 have a “Hold” rating.
Teledyne Technologies
Teledyne Technologies (TDY) provides digital imaging sensors, cameras and systems within the visible, infrared and X-ray spectra; monitoring and control instrumentation; electronic test and measurement equipment; aircraft information management systems; and defense electronics and satellite communication subsystems for a variety of industries - including aerospace and defense, air and water quality environmental monitoring, and oil and gas exploration.
TDY shares are roughly flat on a YTD basis, but analysts have high hopes for the stock to rally over the next year.
In its late-October earnings report, Teledyne reported record Q3 sales of $1.4 billion, and an all-time high non-GAAP operating margin of 22.8%, with earnings of $5.05 per diluted share. The adjusted EPS beat Wall Street's expectations, continuing a trend for TDY.
Teledyne has a “Strong Buy” consensus rating from analysts, with a mean target price of $482.25 - signifying potential upside of more than 21% from current levels. Out of the 8 analysts who currently cover this stock, 6 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 1 has a “Hold” rating.
