In this piece, we will take a look at the 12 best breakout stocks to buy right now. If you want to skip our coverage of the latest stock market news, then you can skip ahead to 5 Best Breakout Stocks To Buy Right Now.
The stock market in 2024 is more optimistic and forward looking than it was at the start of last year. Back then, investors were fretting about the state of the U.S. economy and the impact that high interest rates from the Federal Reserve would have on it. Yet, as 2023 demonstrated, and much to everyone’s surprise, neither did the U.S. economy tip into recession and nor did the stock markets fall and wipe out wealth.
Instead, AI prevailed everywhere as NVIDIA Corporation (NASDAQ:NVDA), Microsoft Corporation (NASDAQ:MSFT) and other big ticket technology names soared after OpenAI’s ChatGPT convinced the world that A.I. now roams among us.
In fact, February 2024 is the first time in its history that the flagship S&P 500 index has crossed 5,000 points. As if this weren’t enough, the month has also seen the NASDAQ Composite, dominated by the technology industry, near its all time high levels before paring back the breakout. At the heart of this stunning performance is, you guessed it, A.I. The start of the year has seen industry bigwigs the likes of Meta Platforms, Inc. (NASDAQ:META) chief Mr. Mark Zuckerberg, NVIDIA boss Jensen Huang, and of course, OpenAI’s eccentric Sam Altman all take the stage and reaffirm their optimism for the artificial intelligence industry.
It was Zuckerberg who got the ball rolling, as he shared his firm’s plans for buying hundreds of thousands of GPUs from NVIDIA this year in order to beef up Meta’s computational capacity. Since we’ll be talking about breakout stocks in this piece, Meta is particularly important as far as 2024 is concerned. This is because its shares have shown the classic trait of a sudden breakout in the wake of a catalyst. While the Meta chief’s GPU comments were nevertheless welcome, the true surge in the firm’s shares came after its earnings report for the fourth quarter of 2023. This report saw the firm report a surprise dividend of 50 cents. Since the earnings report, Meta’s shares are up by 18%, making it a classical example of a breakout stock.
Yet, when we talk about breakout stocks in the A.I. era, the crown is still firmly placed on NVIDIA and Mr. Huang’s head. NVIDIA’s shares are already up by 49.9% year to date in a blistering set of results that saw NVIDIA briefly become more valuable than big ticket technology stocks Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc. (NASDAQ:GOOG).
Similarly, another breakout stock that has soared recently is also related to artificial intelligence and also has a close relationship with NVIDIA. This stock is none other than the British semiconductor design house Arm Holdings plc (NASDAQ:ARM). Arm is one of the youngest entrants on the stock market, and before its shares were publicly listed, NVIDIA was on its way to buy the firm before regulators marred the plans. Well, the decision to go public seems to have served Arm well, since it’s a breakout stock that is now up by 145% since its IPO.
So why is Arm soaring? Well, all the company had to do was to convince investors that there were A.I. related orders down in the pipeline, and off the shares went. Arm’s latest earnings call saw plenty of AI mentions, with the management commenting:
From the most complex devices on the planet for training and inference, the NVIDIA Grace Hopper 200 to edge devices such as the Gemini Nano Pixel 6 from Google or the Samsung Galaxy S24, more and more AI is running on more end devices, and that’s all running on Arm. And what that has done is driven a very strong set of tailwinds for our licensing growth. When we look at demand for new products from a licensing standpoint, what we are finding from the end market is that we’ve reached nowhere near good enough relative to the capability of the technology, and end customers for new designs are needing more and more Arm technology to keep up, particularly with the AI demands.
Looking at these trends, it appears that the gods of the stock market are plenty favorable when it comes to breakout stocks. Therefore, we made a list of some such stocks today and the top picks are Salesforce, Inc. (NYSE:CRM), NVIDIA Corporation (NASDAQ:NVDA), and Adobe Inc. (NASDAQ:ADBE).
Image by Gerd Altmann from Pixabay
Our Methodology
To make our list of the best breakout stocks, we ranked the holdings of the IBD Breakout Opportunities ETF by the number of hedge funds that had bought the shares during Q4 2023. Out of these, the top breakout stocks were selected.
For these best breakout stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock…
Read More: 12 Best Breakout Stocks To Buy Right Now