The technology-laden Nasdaq Composite Index is at an all-time high, as corporate earnings come in stronger-than-expected and U.S. Federal Reserve Chair Jerome Powell reassures markets that further interest rate hikes are unlikely.
The Nasdaq is approaching the 17,000 level after another blockbuster earnings report from Nvidia (NASDAQ:NVDA). The market moving print has reignited investor confidence in the artificial intelligence trade.
Year-to-date, the Nasdaq Composite has risen 15%. The index is up 30% over the last 12 months, leading the overall market higher. As has been the case for the past 18 months, the rally is being powered largely by a handful of names that are enjoying exponential growth and delivering outsized returns to their shareholders.
This trend looks likely to continue, which is why we’re looking at three tech superstars destined for stratospheric returns.
Nvidia (NVDA)
We can’t talk about tech superstars without acknowledging the elephant in the room that is chipmaker Nvidia. Currently, NVDA stock is up 3% after the company issued blowout quarterly financial results, raised its dividend by 150% and announced a 10-for-1 stock split.
The company is already providing stratospheric returns to shareholders with its share price having risen 165% over the last 12 months and more than 3,000% in the past five years.
Nvidia’s first-quarter print was epic. The company’s revenue rose 268% year-over-year to $26.04 billion. Profits increased more than 600% from a year earlier to $6.12 per share. The top and bottom line figures crushed Wall Street’s lofty forecasts.
Management attributed the meteoric sales growth to its data center unit, which includes its AI microchips, which rose 427% year-over-year to $22.6 billion. Demand shows no signs of slowing, especially with the launch of Nvidia’s new Blackwell series of AI chips.
The 10-for-1 stock split will occur on June 7, with holders of common stock receiving nine additional shares. Trading of the stock on a split-adjusted basis will begin on June 10. The quarterly dividend has been raised to 10 cents a share on a pre-split basis from 4 cents previously. After the stock split, the dividend will be one penny per share.
Dell Technologies (DELL)
Dell Technologies‘ (NYSE:DELL) stock continues to run hot, as it too benefits from the AI boom. The company best-known for its laptop computers has seen its share price more than double — up 114% — so far in 2024.
Over the last 12 months, DELL stock has risen 238%. The company is growing not only from strong earnings and a recovery in computer sales, but also from rising demand for the servers it makes that run AI applications. It’s the same narrative that has driven the stock of Super Micro Computer (NASDAQ:SMCI).
DELL stock rose 5% the day after Nvidia’s latest earnings print, as investors expect demand for the company’s servers to grow alongside AI chips and semiconductors.
The stock also surged nearly 30% higher on March 1 after its earnings report showed that it is starting to benefit from the AI boom. More recently, analysts at Morgan Stanley (NYSE:MS) raised their price target on Dell’s shares and named the company a “top pick.” Dell next reports earnings on May 30.
Netflix (NFLX)
Netflix (NASDAQ:NFLX) looks likely to dominate the streaming sector for the foreseeable future. With most of its competitors in disarray, the streaming crown looks like it’s Netflix’s to lose.
The company also has a catalyst forming, as it pushes further into live sporting events. NFLX stock is up 65% over the last 12 months, including a 38% gain year-to-date. Netflix remains a tech stock with high return potential.
While some controversy came with Netflix’s plan to no longer report quarterly membership numbers and average revenue per member, the company continues to post strong results. For the year’s first quarter, Netflix reported EPS of $5.28, versus the $4.52 that was expected on Wall Street.
Revenue totaled $9.37 billion, compared to $9.28 billion that was the consensus estimate of analysts. Subscribers at Netflix totaled 269.6 million in Q1, up 16% from a year ago and ahead of expectations for 264.2 million subscribers.
On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
