Many market experts were surprised by the strength of tech stocks in 2023. Technology Select Sector SPDR Fund (NYSEARCA:XLK) has soared more than 55% since the beginning of the year despite headwinds from rising interest rates. Still, the sector is poised for further upside if a new bull market begins.
Investors typically view the technology sector as a growth sector. In fact, it has grown profits at a faster pace than any other sector over the past decade. UBS expects this trend to continue, forecasting the sector to grow at low double-digit growth rates in 2024.
There are bright signs for 2024, with third-quarter technology profits beating expectations. Especially with the advent of artificial intelligence (A.I.) and increasing cyber threats present opportunities for revenue growth. Chief technology officers want to invest in AI to improve customer experience and productivity. Moreover, given the rise in ransom attacks, cybersecurity has become a top priority.
The above themes will drive earnings growth for top tech stocks in 2024. The following companies are well positioned to benefit: It achieved solid revenue growth in 2023 and will maintain that momentum in 2024.
Through the Now platform, ServiceNow (New York Stock Exchange:now) has become the default productivity tool for large companies. We provide workflow automation tools across IT, customer service, human resources, and application development. As businesses seek to reduce costs, demand for software-as-a-service solutions is increasing.
As of this writing, ServiceNow is a large company with a market capitalization of over $140 billion and 12-month revenue of $8.4 billion. But despite its size, it has achieved the impressive growth rates you would expect from a startup.
In the third quarter of fiscal 2023, we exceeded all sales growth and profitability targets. Revenues increased 27% year over year (YoY) and 24.5% at constant currency. Due to strong demand, management expects subscription revenue growth to remain strong. In line with this view, management expects subscription revenue to increase by at least 25% in fiscal 2023.
Additionally, the company is finding new sources of revenue. Today, the company is a pioneering innovator integrating AI into workflows. In the third quarter, he released the Vancouver platform, bringing his AI capabilities to all workflows on the Now platform. These AI products represent new revenue opportunities that will drive growth in 2024.
Considering its AI products, ServiceNow is one of the top tech stocks of 2024. UBS Securities also predicts further upside and has a price target of $820. The company expects sales growth to exceed 20% in 2024, and believes the stock is reasonably valued. In fact, ServiceNow is a must-buy stock in 2024 given its solid execution.
microsoft (NASDAQ:MSFT) is one of the best tech stocks of 2024 because of the intersection of two major trends. First, Azure is the premier AI infrastructure platform, providing the compute and storage you need to train, build, and deploy language models at scale.
The company was also a pioneer in AI and quickly integrated the technology into its productivity tools. It launched Copilot for products such as Microsoft Office, Outlook, Teams, and GitHub. We are also leveraging AI to transform other industries. For example, Nuance Dax helps healthcare professionals automatically document interactions with patients.
wedbush Analyst Dan Ives is bullish on Microsoft’s AI prospects, with a price target of $450. He predicts that over the next three years, most of Microsoft’s customers will adopt the company’s AI solutions for their enterprises.
In addition to AI, the company is also a leading company in cybersecurity. As mentioned earlier, ransomware attacks are on the rise, causing significant financial and reputational damage to organizations. Now, new disclosure rules from the Securities and Exchange Commission (SEC) have made securing networks, applications, and data even more urgent.
As companies increase their security budgets, Microsoft’s security business will continue to grow. The company offers integrated security products in identity, compliance, device management, security and privacy. Microsoft Security generates more than $20 billion in annual revenue and is poised for even more growth.
Given Microsoft’s strong position in AI and cybersecurity, we expect its revenue to increase in 2024. In fact, the company has a stable earnings outlook, making it one of the most resilient tech stocks. Buy one of the most profitable tech stocks for new year profits.
This project management software company is a top tech stock of 2024. In particular, the underlying fundamentals are excellent and support further upside in the stock price. Additionally, new product launches are also supporting growth.
Monday.com (NASDAQ:Mundi) benefits from a multi-product strategy aimed at ensuring the platform supports cross-functional collaboration for customers. The company is rapidly innovating, bringing new products to market and creating cross-selling opportunities.
Revenues jumped 38% year-over-year to $189.2 million in the third quarter of fiscal 2023, as new products played a key role. Over 2,534 early work management accounts adopted his 1 new product this quarter. With the proliferation of these new products, management expects full-year revenue to increase his 39% to 40%.
Still, other factors make Monday.com one of the top tech stocks of 2024. First, management plans to roll out the new mondayDB and Monday sales CRM products to all customers by the end of the first quarter of fiscal 2024.
Second, the company is improving Monday’s AI features, specifically AI Formula Builder and AI Solution Builder. So far, these solutions have created meaningful value for customers. For example, Formula Builder has helped more than 5,000 users develop advanced formulas.
Finally, the company is on track to improve profitability. For example, his GAAP operating loss in the third quarter narrowed to $2.5 million from his $28.2 million loss in the year-ago period. Additionally, it posted an impressive free cash flow margin of 34%. Management has demonstrated the ability to scale efficiently, which should help drive investor interest.
On the date of publication, Charles Munyi did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing Guidelines.