While some tech stocks snooze, a new wave of innovative players are poised to shake up the industry. These hidden gems operate in sectors experiencing explosive growth, like streaming, e-commerce, and artificial intelligence.
The buzzwords are focused on ‘’wake up’’ stocks, and with the new bull market set investors must be prepared for the future that awaits. The companies mentioned are heavily integrating AI, creating solutions that are faster, smarter, and more efficient, giving them a formidable edge. As AI reshapes the world as we know it, these 3 tech stocks have solidified themselves as sleeping giants.
Now, let’s unpack the 3 best tech stocks that are primed to charge ahead in 2024!
Netflix (NFLX)
Netflix (NASDAQ:NFLX) closed off a strong 2023 fiscal year as price increases and new ad plan memberships boost profitability. The company ended off the year with 12% revenue growth with strong operating margin expansion. Furthermore, they saw record FCF of $6.9 billion, up from their latest forecast of $6.9 billion in Q3 2023.
Netflix is currently making all of the right steps as they battle with a tougher macroeconomic environment over the last 24 months. Consumers had heavily cut back on discretionary spending, impacting their top and bottom line. However, their strategic moves to create a new ad plan membership and crack down on password sharing has been working.
The adoption of their ad plan membership translating to 70% growth quarter over quarter. This has created tremendous revenue growth opportunities, as the company aims to scale their advertising revenue platform. Netflix has guided $9.24 billion in revenue in Q1 FY24, reflecting approximately 13% YOY growth. With operating margin expected to expand by 520 bps in the quarter, Netflix is one of the best tech stocks to buy for 2024.
Shopify (SHOP)
Shopify (NYSE:SHOP) is a leading ecommerce company that is setting up for a monster year in 2024. After employing cost-cutting measures in 2023, their profitability and gross margins continue to trend in the right direction.
Shopify’s stock price has rebounded significantly in recent months, up more than 80% since November 2023. Investors are bullish on management’s execution and the ability to grow their top and bottom line in FY24. After cutting 20% of their workforce in 2023 and selling their logistics business to Flexport, Shopify’s liquidity is stronger than ever.
They are set to report their Q4 and full year results on February 12, 2024. The company forecasts Q4 revenue growth in the low to mid teens, with full year revenue growth in the mid-twenties. Additionally, Shopify expects Q4 gross margins at 46% up 300-400 basis points from Q4 2022. With a net cash position of more than $4 billion, Shopify is well positioned to accelerate growth in 2024 and beyond.
Spotify (SPOT)
Spotify (NYSE:SPOT) is the global leader in music streaming, and has emerged as a tech darling in 2024. As of Q4 2023, the company boasts 602 million MAU’s and is on pace to hit 1 billion MAU’s in the next few years.
Spotify has had itself a strong 2023 fiscal year, and management is confident in their ability to deliver continued growth in 2024. The company hit a very clear inflection point in Q3 2023, and Wall Street is becoming increasingly bullish. During the quarter Spotify declared a surprise profit of $0.33 cents per share. They continue to see gross margin expansion, with FCF up sequentially. In Q4 2023, Spotify’s FCF swelled to $396 million.
Beyond the financials, Spotify offers other unique competitive advantages. Their first mover advantage in music streaming and aggressive expansion into podcasts solidifies their market position. Furthermore, they are also leveraging data and AI to personalize experiences. This will allow them to drive user engagement and increase advertising revenue. With profitability set to accelerate in FY24, Spotify is one of the best tech stocks to buy for 2024.
On the date of publication, Terel Miles did not have (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.
