The year is swiftly coming to an end, making now an excellent time to set new investment goals and potentially expand your portfolio with companies likely to soar in 2024.
The stock market has been volatile over the last five years, with the COVID-19 pandemic sending countless stocks skyrocketing as homebound consumers invested in home entertainment and offices. Then, in 2022, macroeconomic headwinds triggered a sell-off that saw many companies lose the gains they’d made the year before.
Easing inflation and excitement over high-growth industries like artificial intelligence (AI) have allowed for a recovery this year, with the Nasdaq Composite index up 41% since Jan. 1. However, after last year’s unexpected market downturn, it might be a good idea to invest in companies that are not only likely to flourish next year but also well into the future.
Tech shares are an attractive option known for their long-term reliability, with the industry expanding rapidly. Here are three growth stocks to buy in 2024 and hold forever.
1. Nvidia
Nvidia‘s (NVDA -0.33%) business has exploded this year and has shown no signs of slowing. The company’s shares are up 230% year to date, as its graphics processing units (GPUs) have become the preferred hardware for AI developers worldwide.
Other chipmakers have scrambled to catch up, striving to develop AI chips that could be competitive with Nvidia’s by next year. Meanwhile, Nvidia’s years of dominance in GPUs perfectly positioned it to supply its hardware to the entire market and snap up an estimated 90% market share in AI chips.
As a result, the company’s earnings have surged in recent quarters alongside a spike in AI GPU sales. In the third quarter of its fiscal 2024 (ended October 2023), Nvidia posted revenue growth of 206% year over year, with operating income up more than 1,600%.
Data by YCharts
Nvidia is an excellent long-term option, with its chips used in multiple tech markets, from AI to cloud computing, video games, consumer products, and more. However, at its current valuation, it’s also an attractive option ahead of the new year.
The chart above shows that Nvidia’s price-to-sales, price-to-free cash flow, and price-to-earnings (P/E) ratios have plunged since July, indicating that its stock is currently trading at its cheapest position in months.
2. Microsoft
As the world’s second-most valuable company, with a market capitalization of $2.8 trillion, Microsoft (MSFT 0.28%) has a long history of delivering consistent stock gains. The company’s shares are up 268% since 2018. Meanwhile, annual revenue has risen 68%, and operating income has climbed 106%.
Potent brands like Windows, Office, Xbox, and Azure have given Microsoft a powerful position in tech and the funds to continue investing in high-growth markets. In 2023, the company has carved out a lucrative role in AI, achieving a 49% stake in ChatGPT developer OpenAI.
Microsoft has used the start-up’s technology to upgrade its product lineup with AI. Elements of ChatGPT have been integrated into its search engine Bing, a range of AI cloud tools have been added to Azure, and its various productivity platforms have received new features, such as Microsoft 365’s AI assistant Copilot.
The smart assistant is available as a $30 add-on to a 365 subscription and is an early sign of Microsoft’s long-term plan to monetize its venture into AI. The company has built a massive user base between its various services, presenting almost endless earning opportunities for its AI offerings.
The stock’s P/E ratio of 36 suggests Microsoft’s stock is slightly expensive. However, its command of the tech market and significant growth potential in AI mean it has earned its high valuation. As a result, Microsoft is an exciting growth stock to buy in 2024 and hold forever.
3. Alphabet
Like Microsoft, Alphabet (GOOG 0.65%) (GOOGL 0.76%) has amassed a substantial user base between its different services. In fact, nine of its products have achieved over 1 billion users, with Google Search and Android topping the list with 3.6 billion and 3 billion users, respectively.
The company has used the immense popularity of its platforms to become king of the $680 billion digital advertising market, with a 25% market share. Alphabet’s ad business has seen its annual revenue climb 107% over the last five years, with operating income soaring 130%.
On Dec. 20, shares in Alphabet hit a 52-week high after news broke that the company would be restructuring its business to lean more on AI and offer more efficient advertising.
Over the past year, Alphabet has been developing what it calls its most advanced AI model ever, Gemini. The model debuted earlier this month and has the potential to bolster Alphabet’s position in the sector, with the technology looking to be more competitive against the likes of Microsoft and Amazon.
Data by YCharts
The chart shows Alphabet’s P/E and price-to-free cash flow ratios are lower than some of the biggest names in AI, potentially making it the best bargain of the bunch. Alongside a lucrative position in digital advertising, Alphabet is a growth stock too good to ignore ahead of 2024 and for anyone looking for an investment to hold indefinitely.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
