Will Growth Stocks Continue to Shine in 2024? Insights on Nvidia and CrowdStrike

The S&P 500 kicked off the year with strong momentum, marking a bull market that led to several record highs. The index is now on track for an annual gain of around 20%, building on last year’s impressive 24% increase. Growth stocks, known for their ability to outperform the broader market in terms of earnings, have been the main drivers of this trend.

If you haven’t invested in these stocks yet, there’s still time. While it’s uncertain how long this bull market will last, history suggests that bull markets tend to outlast bear markets. According to data from First Trust, the average bull market lasted nearly nine years from 1926 to 2017, while bear markets typically lasted less than two years.

Investing with a long-term perspective can allow growth stocks to enhance your portfolio across multiple bull markets. Thus, it is essential to choose the right companies. Which stocks position themselves well for 2024 and beyond? Here, we’ll explore two leading options.

Image source: Getty Images.

1. Nvidia: A Leader in AI Technology

Nvidia (NASDAQ: NVDA) has seen its stock surge by 2,500% over the past five years, with projected gains of over 170% for this year alone. What is driving this enthusiasm? Nvidia plays a crucial role in the booming field of artificial intelligence (AI), a market currently valued at $200 billion and expected to grow to $1 trillion by the end of the decade.

The company’s graphics processing units (GPUs) are essential for various AI tasks, such as model training and inference. Moreover, Nvidia has developed an extensive range of AI products and services that cater to businesses launching AI platforms.

These advancements have led to impressive results, with Nvidia reporting triple-digit earnings growth each quarter and achieving record revenues in the billions. In its most recent quarter, revenue reached $30 billion, alongside a gross margin exceeding 70%. This indicates not only high sales but also strong profitability. Nvidia’s commitment to annual innovation positions it well to fend off competition and maintain its market leadership.

Currently, Nvidia shares are trading at 47 times forward earnings estimates, which may seem pricey. However, many investors view this valuation as reasonable given the company’s remarkable growth trajectory and its revenue potential going forward.

2. CrowdStrike: Overcoming Challenges

CrowdStrike (NASDAQ: CRWD) faced a setback recently when a malfunctioning software update resulted in a significant IT outage. This disruption affected customer access to data, causing delays in operations like flights and surgeries. Nevertheless, CrowdStrike responded swiftly, resolving the issue in under an hour and implementing measures to prevent such incidents in the future.

The outage occurred toward the end of the second quarter, making the subsequent quarterly report critical in assessing CrowdStrike’s resilience. Although some deals were delayed, the company confirmed that most remained intact. In fact, CrowdStrike reported several deal expansions, with customers committing for extended periods.

Despite the ongoing impacts from the outage, CrowdStrike anticipates a recovery in the coming quarters, predicting an “acceleration of the business” in 2024. Its strong earnings performance reinforces optimism. In the last quarter, annual recurring revenue rose by 32%, totaling $3.86 billion, while new revenue added during the quarter exceeded $217 million. Additionally, CrowdStrike achieved a five-fold increase in GAAP net income year-over-year, along with record operating cash flow.

CrowdStrike’s stock has skyrocketed over 500% in the last five years. Prior to the July outage, shares were trading at more than 100 times forward earnings estimates. Following the event, they dropped to 83 times, creating an attractive buying opportunity for investors seeking to engage with this rising stock.

Should You Invest $1,000 in Nvidia Right Now?

Before making any decisions, consider this:

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Reflect on when Nvidia was previously recommended on April 15, 2005… If you had invested $1,000 then, you would have seen that grow to $833,729!*

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike and Nvidia. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.