With the kick-off of the year’s second half underway, investors may wonder if the same themes that outperformed in the first half will continue to work. Undoubtedly, AI chip stocks will still stand out as exciting growth bets for investors looking to play the technological revolution.
Given the likelihood that the artificial intelligence (AI) boom will extend for many years, it’s probably a tad too soon to dump your biggest AI winners just because the first half saw a slight uptick in volatility.
Indeed, for long-term benefit growth in AI, investors will need to face volatility head on. This is not just on a weekly basis, but perhaps over a quarterly basis.
Staying invested in the top AI stocks will entail plenty of turbulence along the way. An example is the odd 15-20% correction like the one recently experienced by Nvidia (NASDAQ:NVDA). Perhaps expect the near halving of a stock if fear becomes the main emotion on Wall Street.
Either way, let’s examine three stocks that have defied recent tech turbulence and could continue doing for 2024’s second half.
Apple (AAPL)
Despite posting a remarkably strong finish to the second half, Apple (NASDAQ:AAPL) shares still trailed the performance of the Nasdaq 100 year-to-date (YTD). With an explosive first day to the second half, with AAPL stock surging close to 5% on July 1, perhaps Apple could be in a position to lead tech higher.
Today, AAPL shares are at new all-time highs, $220 per share, while NVDA stock is off more than 8% after running into a speed bump in June. Indeed, Nvidia was in the driver’s seat of tech and AI in the first half. For the second half, I view Apple as having the better, perhaps less-appreciated catalysts. And these may fuel a second-half surge that could be tops for the Magnificent Seven.
It’s not just the coming AI features on iOS 18 and the positive impact on iPhone sales, either. Apple seems to be catching a break in China for a change. A Bloomberg report recently noted that iPhone shipments rose 40% for the month of May. Prior discounts seem to have worked in a big way.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is another tech titan that’s stood tall in the face of slight turbulence. MSFT stock is at new highs of $458.79 per share, with June turbulence barely affecting the $3.4 trillion tech and AI behemoth.
Wedbush analyst Dan Ives views Microsoft (as well as Nvidia) as driving the AI revolution. He’s certainly not wrong. These two AI stocks are at the very top of their class right now.
Ives sees Microsoft as driving a “Bugatti” (a really, really fast car) at “100 mph” in the AI race, where most of its peers drive markedly slower cars. Specifically, Ives noted that Amazon (NASDAQ:AMZN) drives a mere “minivan.” That’s an interesting analogy that tells the story of current happenings in AI.
As AI supercharges the Azure cloud business, Amazon may struggle to stay atop the cloud. Recently, Amazon Web Services (AWS) doubled the value of credits for startups, which may suggest worry over Microsoft’s cloud momentum. In any case, Microsoft looks unstoppable and perhaps still somewhat affordable, even as the trailing price-to-earnings (P/E) ratio flirts with 40 times.
Hewlett Packard Enterprises (HPE)
Hewlett Packard Enterprises (NYSE:HPE) stock has been holding strong after some late-June turbulence.
Over the past month, HPE stock has risen more than 18%, marking an impressive finish to the first half, which saw HPE surge close to 25%. Shares are just 3% off their all-time highs, just shy of $22 per share. Perhaps the under-the-radar AI beneficiary is worth watching as the market faces critical tests in the second half.
With more investor focus shifting to data center plays, HPE stock looks as timely as it does cheap. The stock trades at just 15.45 times trailing P/E, quite a bargain for a firm that could soon feel the full force of AI tailwinds.
Truly, HP Enterprises’ partnership with Nvidia could pay major dividends as enterprise customers look to buy into the new service “Nvidia AI Computing by HPE.” The HPE-Nvidia collaboration is a massive deal that could supercharge HPE’s growth, putting it on the AI fast track.
On the date of publication, Joey Frenette held shares of Apple and Microsoft. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
