All of us investors are on the lookout for different ways to maximize profits. Whether you want to double your money or take home a higher dividend, these three mega-cap stocks will help achieve your goals. As industry leaders, these companies are known for innovation, steady growth and stability. While it is not possible to time the stock market, these companies are set to benefit from their investments in artificial intelligence (AI) this year.
If you have already invested in them, hold on to these stocks for the next three to five years, and if you haven’t, grab them before they hit record highs in the coming months. There is no stopping the growth of these three mega-cap stocks for profits. Let’s take a look at them in detail.
Mega-Cap Stocks for Profits: Microsoft (MSFT)
One of the Magnificent Seven stocks, Microsoft (NASDAQ:MSFT) recently hit an all-time high, and for the right reasons. Trading at $421, the stock is up 13% year-to-date (YTD) and 50% in the year. A tech dinosaur, Microsoft is thriving from its AI investments, and 2024 could be one of the best years for the company. It has incorporated AI in its products and services and recently introduced a new AI-powered cyber security service for professionals from April 1.
Copilot and the cloud segment are two of its biggest revenue generators and there’s evidence in the numbers. In the second quarter results, the cloud segment revenue increased 22% year-over-year (YoY), generating $27.1 billion out of the total revenue of $52.7 billion.
The company did not stop at Copilot but also released a suite of products specific for sales, finance, service and IT. I believe AI will help Microsoft thrive and hit record revenue this year.
While the stock is already trading at a premium, I think there is an upside from here. KeyBanc analyst has an Overweight rating for the stock with a target price of $490. Microsoft has a modest dividend yield of 0.71%, but we could see that going up in the coming years as revenue increases.
Let’s not forget that Microsoft is an undisputed leader in the tech industry and known for the best gaming consoles. Looking at the bigger picture, the company enjoys multiple growth areas and has all it takes to generate supersized profits.
Nvidia (NVDA)
A familiar name today, Nvidia (NASDAQ:NVDA) has been the hot stock for 2023, and its rally has continued this year. Up 88% YTD and 245% in the year, the stock is on a rally and steadily hitting new highs. The company could have an exceptional 2024.
It is inching closer to $1,000, and I think it can go well beyond that. I recommended the stock in 2021 when it was trading for $222. If you had invested then, you would have already taken home supersized profits of over 300%. However, with Nvidia, it is never too late to invest. While the stock is expensive, it will give you what you pay for. The company has passed the $2 trillion market cap and seen its revenue triple.
As long as there is more demand than supply for AI chips, Nvidia will continue to benefit. There is also an extraordinary demand for its graphic processing units, and the company has been expanding its market share over the past year.
While the competition is growing in the AI industry, Nvidia is a leader today, and I am certain it will beat analyst expectations in the coming quarter. The company recently unveiled the world’s most powerful chip, B200, which will have a 30-fold increase in speed compared to its predecessor, aiming to continue its market domination.
Meta Platforms (META)
Up 41% YTD and 142% in the year, Meta Platforms (NASDAQ:META) is on a wild ride. The company has seen tremendous success in user growth, up 8% YOY in daily active users and 6% YOY in monthly active users for the fourth quarter.
These numbers prove that Meta continues to see higher user engagement, which could boost its ad business. Meta’s user base growth is directly related to the ad segment, and both are doing very well. It is one of the best mega-cap stocks for profits.
The company had a difficult 2022 due to the excessive cash burn in the Reality Labs division, and the stock dropped to $90. However, it has bounced back and is hitting new highs this year. With the adoption of AI, Meta’s long-term vision is gaining the limelight. The company is working on Ego, an AI tool that will be integrated into AR glasses.
Its ad division reported record sales in the fourth quarter and hit $38.7 billion in revenue, up 24% YOY. This segment is a cash-generation machine, allowing Meta to declare a quarterly dividend of $0.50 per share.
Already a success with social media products and a big player in the AI segment, Meta is ready to scale higher this year. Cathie Wood’s ARK Invest purchased 90K shares of Meta recently. Mizuho Securities analyst calls META its “top pick.” The stock has a Buy rating with a target price of $575.
On the date of publication, Vandita Jadeja did not hold (either 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.
