Jensen Huang, co-founder and CEO of Nvidia Corp., holds up the company's data center AI accelerator chips while speaking during the Nvidia AI Summit Japan on Nov. 13, 2024 in Tokyo.
Akio Kon | Bloomberg | Getty Images
Artificial intelligence is still an abstract concept for many everyday consumers and uncertain about how it will change their lives. But there is no doubt that companies find value in it.
Some of the biggest winners from this year's stock market rally, which saw the Nasdaq gain 33% and other US indices post double-digit gains, are directly linked to rapid advances in AI. chip manufacturer Nvidia is among them, but it is not alone.
The other prominent theme driving this year's outperformers is crypto. Starting with the launch of spot Bitcoin exchange-traded funds in January, cryptocurrencies had a big 2024, marked by the election victory of Donald Trump, who was heavily funded by the crypto industry. A number of stocks linked to cryptocurrencies experienced a major boost.
With four trading days left in the year, here are the five best-performing U.S. tech stocks of 2024 among companies valued at $5 billion or more.
AppLovin
Adam Foroughi, CEO of AppLovin.
CNBC
AppLovin started the year with a market capitalization of around $13 billion and was best known for its investments in a number of mobile gaming studios that had produced titles such as Woody Block Puzzle, Clockmaker and Bingo Story.
As of year-end, AppLovin's valuation has risen to over $110 billion, making the company more than worth it Starbucks, Intel And Airbnb. As of Tuesday's close, shares of AppLovin were up 758% this year, far outperforming all other tech companies.
While AppLovin went public in 2021 riding on a wave of coronavirus-era online gaming enthusiasm, the business is now focused on online advertising and booming profits from advances in AI.
Last year, AppLovin released updated version 2.0 of its ad search engine called AXON, which helps serve more targeted ads on the company's gaming apps and is also used by studios that license the technology. Software platform revenue rose 66% to $835 million in the third quarter, outpacing overall growth of 39%.
Net income rose 300% in the quarter, increasing the company's profit margin to 36.3% from 12.6% over a year.
AppLovin CEO Adam Foroughi, whose net worth has grown to over $10 billion, is even more excited about what's to come. At the company's earnings call in November, Foroughi raved about a test e-commerce project that allows companies to offer targeted advertising in games.
“In all my years, it is the best product I have ever seen us bring to market, with the fastest growth, but it is still in the pilot phase,” he said.
Microstrategy
CostPhoto | Photo only | Getty Images
After a 346% increase in 2023, that was hard to imagine MicroStrategys Camp finds another gear. But it happened.
The company's stock price has risen 467% this year, fueled by a Bitcoin buying strategy that has made founder Michael Saylor a hero of the crypto cult.
In mid-2020, the company announced a plan to begin purchasing Bitcoin. Up until that point, MicroStrategy was a mediocre provider of business intelligence software, but since then the company has purchased over 444,000 Bitcoins and used its ever-rising stock price to sell stocks, take on debt, and buy more coins.
It is now the fourth-largest Bitcoin holder in the world, behind only inventor Satoshi Nakamoto, BlackRock's iShares Bitcoin Trust and crypto exchange Binance, with holdings worth nearly $44 billion. MicroStrategy's market capitalization has grown from around $1.1 billion when it was a pure software company to $80 billion today.
While the rally was underway well before November, Trump's victory last month provided additional impetus. The stock is up 57% since then, while Bitcoin has gained about 44%. Trump once called Bitcoin a “fraud,” but it was the industry's preferred choice this election and was criticized by some of the leading players, including Coinbase.
“With the red momentum, Bitcoin is rising with tailwinds, and the rest of the digital assets will start to rise as well,” Saylor told CNBC shortly after the election. He said Bitcoin remains the “safe trade” in the crypto space, but as a “digital asset framework” is created for the broader crypto market, “there will be an uptick in the entire digital asset industry.”
Palantir
Alex Karp, CEO of Palantir Technologies, walks into the morning session of the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, on July 10, 2024.
David Paul Morris | Bloomberg | Getty Images
Palantir had many big successes in 2024 on the way to a 380% increase in share price. The software company achieved one of its best wins last month when it raised its revenue outlook a day before the presidential election.
The company, which sells data analysis tools to defense agencies, raised its 2024 target, with its fourth-quarter forecast beating analysts' estimates. Palantir also beat third-quarter results, prompting CEO Alex Karp to declare in the earnings release, “We absolutely crushed this quarter, driven by relentless AI demand that shows no signs of slowing down.”
The stock rose 23% in the earnings report and another 8.6% the next day after Trump's victory. Palantir co-founder and board member Peter Thiel was a big Trump supporter during the 2016 campaign and helped organize a meeting with technology executives at Trump Tower shortly after the election. Karp was one of the participants.
However, Karp openly supported Vice President Kamala Harris, the Democratic nominee, in the 2024 campaign. He told The New York Times in an article published in August that Thiel's past support of Trump and the backlash that followed “actually made it harder to get things done.”
Still, Wall Street has backed Palantir following the election, optimistic that the company will receive more military spending.
Karp's comments in the earnings report before the election suggest the company would do well no matter what.
“Our business growth is accelerating and our financial performance is exceeding expectations as we meet continued demand from our U.S. government and commercial customers for the most advanced artificial intelligence technologies,” Karp said in a letter to shareholders.
Analysts expect revenue to grow about 24% to $3.5 billion in 2025, according to LSEG.
Robinhood
Robinhood The shares have more than tripled in value this year, despite a 17% decline on October 31 following disappointing earnings.
A few days later, investors left those numbers behind, sending the stock up 20% following Trump's election victory as everything related to cryptocurrencies rose. One of Robinhood's biggest growth engines is crypto, which retail investors can easily buy through the app alongside their stocks.
Crypto transaction revenue increased 165% year over year to $61 million in the third quarter and accounted for 10% of total net revenue.
In addition to Bitcoin, Robinhood users can easily purchase about 20 other cryptocurrencies, from popular digital assets like Etherium to altcoins like Dogecoin, Shiba Inu, and Bonk. At the company's investor day in November, Robinhood CEO Vlad Tenev said that crypto is more than just an investment but also a “disruptive technology that will transform the underlying infrastructure for payments, lending and a variety of tradable assets.”
For the fourth quarter, analysts expect Robinhood's revenue to grow by over 70% to $805.7 million, according to LSEG. That would be the fastest quarterly growth rate since 2021, the year the company went public.
Robinhood's rally this year exceeded that of Coinbase, which gained 61%. But with a market capitalization of $70 billion, Coinbase is still twice as valuable.
Nvidia
Nvidia's The amazing run continued.
After last year's 239% gain driven by enthusiasm for generative AI, Nvidia rose another 183% this year, adding a whopping $2.2 trillion to its market cap.
Twice this year, Nvidia secured the title of most valuable listed company in the world. Apple has jumped back forward and is approaching $4 trillion, while Nvidia is at $3.4 trillion Microsoft at $3.3 trillion.
Nvidia remains the biggest beneficiary of the AI boom, as the biggest cloud providers and internet companies snap up all the graphics processors they can find. Annual revenue has increased at least 94% in each of the last six quarters, with growth exceeding 200% three times during that period.
CEO Jensen Huang said in the company's latest earnings report that its next-generation AI chip, called Blackwell, is in “full production.” Chief Financial Officer Colette Kress said the company was on track to generate “multibillions of dollars” in Blackwell revenue in the fourth quarter.
“Every customer is fighting to be first to market,” Kress said. “Blackwell is now in the hands of all of our major partners and they are working to bring their data centers into shape.”
While growth is expected to remain robust for a company of Nvidia's size, the inevitable slowdown is coming. Analysts are forecasting a year-on-year slowdown in the next few quarters, with growth falling to the mid-40s by the second half of next year.
Nvidia expects outsized revenue from a handful of tech giants, so economic fluctuations pose significant risk for investors.
That explains why Nvidia likes to tell Wall Street about the extensive list of companies developing new AI services and “accelerating the development of these applications, with the potential to deploy billions of agents in the coming years,” Kress said on the earnings call .
REGARD: Next year is a “stock picker market”
Comments are closed.