The stock market always presents opportunities for investors. Even when the markets are filled with fear, many stocks end up rising from their low points as financial growth returns. Investors have witnessed several stocks rise to prominence after disappointing 2022 performances.
Meta Platforms (NASDAQ:META) is a notable standout for this trend. The company was reporting year-over-year declines in revenue and net income in multiple 2022 quarters. Just a year later, profitability reached all-time highs. The tech giant now offers a dividend.
Other stocks rebounded nicely in 2023 and look like they can gain momentum in 2024 and beyond. These are some of the top tech stocks to consider.
Microsoft (MSFT)
It’s hard to go wrong with Microsoft (NASDAQ:MSFT). The firm is leading in important, high-growth industries like cloud computing and artificial intelligence. Microsoft Cloud is the main revenue driver and accounted for nearly half of the firm’s total sales in Q2 FY24. The segment’s revenue was 24% higher than the same period last year.
Microsoft continues to achieve double-digit revenue growth rates, and net income came in even better. A 33% year-over-year increase means profit margins are rising, and the company is poised to hike its dividend for many years to come. Microsoft has already done a good job on that front, with a 10.3% year-over-year dividend hike in 2023.
The company’s expansion into artificial intelligence is also winning plenty of attention. ChatGPT and Copilot are two high-profile AI initiatives generating more tailwinds for the firm. Microsoft is also incorporating AI throughout its product offerings to increase value and retention rates.
Duolingo (DUOL)
Growth is the theme for the educational tech company. Duolingo (NASDAQ:DUOL) grew its daily active users by 65% year-over-year in the fourth quarter of 2023 and achieved record profitability. Net income was previously an issue for the company based on its $13.9 million net loss in Q3 2023. The company flipped the script with $12.1 million in net income for Q4 2023.
The shocking turnaround indicates the company’s power of scale and cost-cutting efforts. Investors responded well to the news and pushed the stock up by 22% on the day Duolingo reported earnings. Shares have since entered a correction as investors grapple with a high valuation.
Duolingo’s only weakness is its valuation. Investors who can wait 5 to 10 years will have an easier time overlooking the valuation since revenue and net income growth have been incredible. Duolingo delivered 45% year-over-year revenue growth in the fourth quarter and increased total bookings by 51% year-over-year.
The app has been a great platform for people who want to learn new languages. Recent expansions into math, music and other subjects will increase the app’s appeal and total addressable market.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) reminds me of Meta Platforms in 2022. The stock has fallen out of favor and is down 5% year-to-date. The company’s 40% gain over the past year doesn’t even outperform the Nasdaq 100.
Multiple missteps with artificial intelligence have led to the company falling behind in the AI race. Microsoft has a commanding lead, and others are right behind. The current stock market seems to judge companies entirely based on their AI initiatives, and that has presented a great buy-the-dip opportunity for Alphabet shares.
The stock trades at an astonishing 23 P/E ratio and a 20 forward P/E ratio. These are low valuation ratios for a company that delivered double-digit revenue growth and net income growth that exceeded 50% year-over-year in Q4 2023.
Alphabet’s advertising channel and cloud platform were still big winners. The company is vast, and the recent Gemini debacle can result in a much-needed cultural shakeup. Calls for CEO Sundar Pichai to step down are gaining momentum, which can help the company regain ground in AI. Even if Alphabet falls behind on this front, the company’s financials are still strong, and it’s the largest search engine on the web.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) got its start with its online marketplace. That part of the business is still growing and helped the company achieve 14% year-over-year revenue growth in Q4 2023. However, that’s not the only reason to feel bullish about Amazon.
The tech giant is a cloud computing leader with Amazon Web Services. That highly profitable segment exhibited 12% year-over-year sales growth to close out Q4. Shares experienced a resurgence in 2023 that carried into 2024. The 1-year gain currently stands at 84%.
Rising profit margins have also resulted in a more attractive valuation. The stock only trades at a 41-forward P/E ratio while offering exposure to promising verticals. Amazon is also using AI to strengthen its cloud computing platform.
Amazon is a reliable long-term stock that is still growing and rewarding investors. The company’s leadership knows how to capitalize on innovative trends and is well-positioned for the future.
Visa (V)
Visa (NYSE:V) makes money from numerous credit and debit card transactions. The fintech company has been a consistent performer with high profit margins and rising dividend payouts. Visa has maintained a compounded annual growth rate of 18.18% for its dividend over the past 10 years.
Consumers change their preferences, and brands go in and out of style, which creates uncertainty for many companies. Competitors can also gobble up market share and ramp up their marketing efforts.
There’s a lot of uncertainty, but Visa benefits from it. As long as consumers are buying goods and services with their credit and debit cards, Visa will continue to report solid earnings. The hot sneaker of the year may go out of style, but people will continue to use Visa cards for the rest of their lives.
The fintech firm continued its trend of solid earnings reports with a 9% year-over-year jump in revenue in Q1 FY24. Net income was up by 17% year-over-year. Visa has healthy profit margins that regularly exceed 50%.
Intuit (INTU)
Intuit (NASDAQ:INTU) has outperformed the stock market for a while and is up by 163% over the past five years. The fintech company generates recurring revenue from popular business software products like Quickbooks, Turbotax and Mailchimp.
People will always look for ways to make the tax season more convenient. Business owners will also seek various tools that go beyond finances. That’s where platforms like Mailchimp come into play. Intuit is well-diversified and continues to report solid financials.
Profit margins have been increasing and reached double-digits in the second quarter of fiscal 2024. Intuit used this quarter to reiterate full-year guidance. The firm reported 11% year-over-year revenue growth.
Intuit increased shareholder value by repurchasing $536 million in shares. Investors can realize additional gains from buybacks as Intuit has $2.7 billion remaining for share repurchase authorization. Any pullbacks can present an enticing long-term buying opportunity.
Semrush (SEMR)
Billions of people use search engines each month to find relevant information. Google and other search engines have to filter through countless articles in less than a second and display results.
There is a science behind search engine optimization (SEO), and businesses are jostling for better placements for Google search results. The SEO services market is expected to grow at 17.6% each year from now until 2030 to reach $234.8 billion.
Few firms are poised to benefit from the healthy growth of SEO services as much as Semrush (NYSE:SEMR). Shares are up by roughly 30% over the past year. The firm is small and only has a $1.6 billion market cap.
Semrush shares dove after this earnings report, which was actually pretty good. Q4 revenue increased by 21% year-over-year, the same number as its full-year revenue growth. The firm also generated $6.9 million in net income compared to a $13.9 million net loss in the same period last year.
Brian Mulroy, CFO of Semrush, hinted profits will continue to grow as the company scales.
“Looking ahead to 2024, we are confident in our ability to grow and to continue to scale our business to capitalize on the market opportunity. We remain committed to a disciplined and balanced approach to spending to improve efficiency and profitability, even while we invest in future growth opportunities that we expect will continue to create long-term, durable growth and value for our shareholders.”
The company is using AI to enhance its software, which can lead to higher prices and improved retention. The software has over one million free active customers after increasing this free customer base by nearly 30% year-over-year. The post-earnings drop presents a buying opportunity.
On this date of publication, Marc Guberti held long positions in MSFT and GOOG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
