Benzinga - by Zacks, Benzinga Contributor.
The Nasdaq rally is in full swing after a brief pause in April as concerns over inflation and uncertainty over rate cuts grew. However, Nasdaq has been the least impacted by these and has continued its dream run after a solid 2023.
On May 24, the tech-heavy Nasdaq closed at an all-time high of 16,920.79. This was Nasdaq's 12th all-time high of 2024. In fact, Nasdaq has been driving the broader market rally since the past year.
Rally Driven by AI Optimism The Nasdaq has gained 12.7% year to date after rallying 43.4% in 2023 to record its best year since 2023. The rally is primarily being driven by the optimism surrounding artificial intelligence, especially generative AI.
The AI revolution is being spearheaded by NVIDIA Corporation (NASDAQ: NVDA), the largest manufacturer of generative AI chipsets, which has led several big and small tech players to explore the space.
NVIDIA's robust first-quarter earnings have further fueled the expectations of investors surrounding AI and its potential. Several experts believe that AI is still in its nascent stage, and its full potential is yet to be realized.
This has seen other tech companies shift focus toward AI.
Additionally, the advancement of smart devices is driving the expansion of the AI space, as they necessitate computing and learning capabilities for tasks such as face detection, image recognition and video analytics.
These functions demand high processing power, speed, memory, low power consumption, and improved graphics processors and solutions, all of which foster favorable conditions for the semiconductor industry's growth.
Moreover, while uncertainties about rate cuts have caused concerns, the Federal Reserve stated earlier this month that further interest rate hikes are unlikely. High-interest rates typically have a negative impact on growth assets like technology stocks, and the Federal Reserve's comments were well received by investors.
Our Choices Given this scenario, it would be ideal to invest in Nasdaq stocks such as NVIDIA Corporation, Alphabet Inc. (NASDAQ: GOOGL), Netflix, Inc. (NASDAQ: NFLX) and Palo Alto Networks, Inc. (NASDAQ: PANW) that have a strong potential in 2024. These stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and assure good returns.
NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Over the years, NVDA's focus has evolved from PC graphics to artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.
NVIDIA has an expected earnings growth rate of 893.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.7% over the last 60 days. NVDA presently sports a Zacks Rank #1.
Alphabet Inc. is one of the most innovative companies in the modern technological age. Over the last few years, GOOGL has evolved from primarily being a search-engine provider to cloud computing, ad-based video and music streaming, autonomous vehicles, and healthcare and others.
Alphabet's expected earnings growth rate for next year is 31.2%. The Zacks Consensus Estimate for current-year earnings has improved 12.4% over the past 60 days. GOOGL presently sports a Zacks Rank #1.
Netflix, Inc. is considered a pioneer in the streaming space. NFLX has been spending aggressively on building its portfolio of original shows. This is helping Netflix sustain its leading position despite the launch of new services like Disney+ and Apple TV+, as well as existing services like Amazon Prime Video.
Netflix's expected earnings growth rate for the current year is 52.2%. The Zacks Consensus Estimate for the current-year earnings has improved 7.5% over the past 60 days. NFLX currently sports a Zacks Rank #1.
Palo Alto Networks, Inc. offers network security solutions to enterprises, service providers and government entities worldwide. PANW's next-generation firewall products deliver natively integrated application, user, and content visibility and control through its operating system, hardware and software architecture.
Palo Alto Networks' expected earnings growth rate for the current year is 23.9%. PANW's shares have gained 10.4% over the past 30 days. PANW currently carries a Zacks Rank #2.
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