It's almost the end of the first quarter of the calendar year, and the good news for investors is that the S&P 500 index has delivered steady gains of 9% in 2024. More importantly, the stock market seems set for more upside as the year progresses thanks to strong earnings performances from major names in the index.
Not surprisingly, analysts have been quickly raising their forecasts about where the S&P 500 could be at the end of the year. Bank of America now expects the S&P 500 to hit 5,400 by the end of 2024 as compared to its earlier forecast of 5,000. Goldman Sachs lifted its forecast to 5,200 last month from 4,700 in December, but it looks like the investment bank will have to further raise its expectations as the index is already past that mark.
This broader stock market rally is going to be a big tailwind for the likes of Nvidia (NVDA 0.19%), The Trade Desk (TTD -0.09%), and Micron Technology (MU -0.17%). All three companies are benefiting from a major catalyst that could help them maintain impressive levels of growth in 2024 and beyond.
Let's look at the reasons all three stocks are likely to head higher as the year progresses.
1. Nvidia
Nvidia stock has delivered impressive gains of 87% in 2024 as of this writing. And it still has the potential to deliver more gains this year thanks to its aggressive product road map that should allow it to maintain its dominance in the lucrative artificial intelligence (AI) chip market.
Nvidia estimates that data centers are on track to spend $250 billion this year on accelerated computing chips like the graphics processing units (GPUs) that the company sells.
CEO Jensen Huang says this addressable revenue opportunity in data centers is growing at an annual pace of 25%. Nvidia sold $47.5 billion worth of data center chips in fiscal 2024 (which ended in January this year).
Its revenue from this segment more than tripled year over year in fiscal 2024. And the massive revenue opportunity that Huang sees means that the company's data center business still has a lot of room for growth, especially considering that it reportedly has a near monopoly in the AI chip market with an estimated market share of 95%.
The arrival of the company's next-generation Blackwell AI GPUs later this year could help Nvidia maintain its tight grip over this market. The upcoming chips are four times faster than the current-generation Hopper chips for AI training, and they are said to be 30 times faster in AI inference workloads.
The new graphics cards are reportedly going to be priced between $30,000 and $40,000, which would be a bump from the $20,000 to $30,000 price range of the current H100 graphics cards. Given that these new chips reportedly cost $6,000 to manufacture, Nvidia is likely to make a solid profit on its next-generation AI chips.
All this explains why 10 analysts have raised their earnings estimate for the current fiscal year in the past month. The company is expected to finish the year with $22.73 per share in earnings as compared to $12.96 last year.
As a result, there is a strong probability of Nvidia stock heading higher in 2024 thanks to its improved pricing power, which is why it would be a good idea to buy this AI stock right now at 35 times forward earnings, a discount to its five-year average of 39.
2. The Trade Desk
The Trade Desk stock is up 21% this year, and there is a good chance it could end 2024 with much stronger gains. The company's growth is accelerating due to higher spending on digital advertising as well as the increasing adoption of its programmatic advertising platform.
There is robust demand for The Trade Desk's AI-enabled cloud-based platform because it allows marketers to purchase ad inventory, create campaigns, and optimize them using real-time data to drive stronger returns on the ad dollars spent. That led to a 23% year-over-year increase in revenue in the fourth quarter of 2023 to $606 million.
The Trade Desk's guidance of $478 million in revenue for the current quarter means that its top line is on track to jump 25% compared to the year-ago period. That would be an improvement over the growth it delivered in the previous quarter.
It is not surprising to see why The Trade Desk is witnessing an acceleration in growth. According to the analytical firm eMarketer, programmatic ad spending is expected to grow at three times the pace of nonprogrammatic spending. More specifically, the firm expects programmatic ad spending in the U.S. to increase by almost 16% in 2024, up from 11.4% last year.
The reason behind the faster growth in programmatic ad spending is that this method of advertising automates the media buying process with the help of real-time data. Advertisers can bid for ad inventory in real time to keep their costs low and display their ads across different channels depending on where they can improve audience targeting.
The Trade Desk, therefore, could end 2024 with stronger revenue growth as compared to the 23% top-line jump it delivered last year to $1.95 billion. Investors looking for a growth stock would do well to buy its shares right now because it seems built for more upside in 2024.
3. Micron Technology
Shares of Micron Technology have jumped 39% this year, and the company's latest results suggest that its bull run is just getting started. The memory specialist crushed Wall Street's expectations in the second quarter of fiscal 2024 (for the three months ended Feb. 29) with $5.8 billion in revenue and $0.42 per share in adjusted earnings.
Consensus estimates were projecting a loss of $0.25 per share on $5.35 billion in revenue. Micron, however, posted a surprise profit as its top line jumped 58% year over year.
And the $6.6 billion revenue estimate for the current quarter indicates that its top line is on track to increase at a faster pace of 76% from the year-ago quarter.
The massive increases in the chipmaker's top and bottom lines stem from the improvement in the memory-chip market's dynamics. According to Micron, "the supply-demand balance tightened" in the memory industry last quarter, driven by strong demand from AI servers and improving conditions in the personal computer (PC) and smartphone markets.
And supply reductions by memory manufacturers should ensure that Micron continues to take advantage of a strong pricing environment.
In all, the memory industry is expected to generate nearly $130 billion in revenue in 2024, up 45% from last year, according to Statista.
As a result, analysts are forecasting a 56% increase in Micron's revenue this year to $24 billion, followed by another jump of 43% in fiscal 2025 to $34.5 billion. This tremendous revenue growth should also translate into stronger earnings power, which is why it would be a good idea to buy shares before they soar higher following its post-earnings pop.
