The tech sector is up 12% year-to-date and a remarkable 48% over the past 12 months, powering the broader markets. Particularly, the semiconductor industry is growing, with Nvidia (NASDAQ:NVDA) leading the charge; its stock is up around three-fourths this year. The best tech stocks are expected to maintain this momentum, according to Deloitte’s 2024 technology industry outlook.
The three best tech stocks we will examine are those involved in the electric vehicle (EV) industry and the streaming sphere.
In both cases, the proprietary software and offerings of the respective companies will help them navigate their fields. In addition, all three are also down this year, giving you plenty of upside to exploit, making them sure-fire picks among the best tech stocks.
Rivian Automotive (RIVN)
Rivian Automotive (NASDAQ:RIVN) stock is down 48% year to date (YTD), facing downward pressure due to overall bearishness in the EV market. Reports of a possible bankruptcy filing by a troubled EV maker, California-based startup Fisker (NYSE:FSR), is adding to the dour outlook of the markets.
However, RIVN, on a positive note, has received 68,000 reservations for its self-driving electric R2 SUV model. The EV company is raising production guidance as it moves to mass market the Rivian R2 and R3. RIVN is also moving past its agreement with Amazon (NASDAQ:AMZN) to sell its electric vans commercially.
Despite being unprofitable, Rivian has also beaten analyst estimates in three out of the past four quarters. The company intends to become gross profit positive this year, and the latest quarterly figures show it narrowing losses.
However, Tesla’s (NASDAQ:TSLA) aggressive price cuts can impact RIVN’s timeline toward profitability if it decides to counter these moves. A delay in building a $5 billion manufacturing factory in Georgia will also cause anxiety despite RIVN halting production. The move is to save costs and produce more affordable vehicles.
However, as D. A. Davidson analyst Michael Shlisky notes, the stock holds upside considering all factors. He assigned RIVN stock a $19 price target. The view aligns with a consensus estimate of a “moderate buy,” with an average price target of $18 per share, suggesting a potential upside of about 65% from the last price of $11 per share.
XPeng (XPEV)
XPeng (NYSE:XPEV) is aggressively developing its advanced driver-assistance systems (ADAS) for a line of driverless cars. Touted as the most cutting-edge technology in the nation, the business has started implementing it in key Chinese cities.
Moreover, XPeng is advancing in intelligent driving technologies with its XNGP (Xpeng Navigation-guided Pilot) and XBrain architecture, covering a wide range of driving scenarios.
XPeng wants to become an important cog in the smart EV revolution by offering an all-scenario ADAS solution, especially through its proprietary software. The autonomous vehicle market is valued at almost $54 billion as of 2023, and according to Grand View Research, it will rise to around $214 billion by 2030, reflecting a compound annual growth rate (CAGR) of 22%.
On the EV front, XPeng delivered 20,115 EVs in December 2023, a new company record for a single month and a 78% increase year over year. Due to this spike, the number of cars supplied in Q4 increased to 60,158, up 171% from the year before. This resulted in an annual total of 141,601 vehicles, up 17% year over year.
However, the stock is down 31% this year due to geopolitical tensions, weakening demand and aggressive price cuts. Nevertheless, the recent initiatives from XPeng will lead to a comeback in the coming months and analyst predictions affirm this thesis. The average price target is set at $13 per share, indicating a 32% potential rise from the recent price of $10 per share.
Roku (ROKU)
Considering streaming is taking the place of traditional pay TV, Roku‘s (NASDAQ:ROKU) strategy shift towards internet-distributed television makes sense. This is why it makes my list of the best tech stocks.
After beginning as a video aggregator, Roku is now producing its own content and generating more advertising income. In key markets and demographics, Roku boasts healthy metrics, having recently exceeded 80 million active users and achieved over 100 billion streaming hours.
Roku is also looking to cut costs aggressively. A streamlined operating model and layoffs freed up plenty of cash flow for 2023. Roku anticipates revenue growth of 15% in Q1 2024 and aims to achieve break-even adjusted EBITDA based on forecasts of around $850 million.
However, despite these positive factors, the stock is down 28% due to concerns regarding near-term headwinds. Walmart (NYSE:WMT), for instance, is the latest to get into the space after acquiring Vizio for $2.3 billion, putting it into direct competition with ROKU.
Plus, Roku is cutting back media and entertainment expenditures because, in the company’s opinion, these costs have already reached unsustainable levels.
Nevertheless, on balance, analysts are bullish on Roku stock. There is a “moderate buy” consensus with a price target of $87, reflecting a 35% upside potential.
On the publication date, Faizan Farooque did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
