After falling more than 25% in 2022, the stock market came roaring back in 2023, and history suggests there’s more to come. The S&P 500 closed just shy of its all-time high as of market close on Tuesday. When it does finally hit a new record high, that event combined with a more than 20% increase from its recent low will mark the start of the next bull market.
So why does it matter? Well, since 1957, bull markets on average have lasted nearly five years, rewarding investors with average gains of just over 169%. Going back to the beginning of trading for the Nasdaq Composite in 1972, history shows that in every year following a market recovery, the tech-centric index has generated average annual gains of 19%.
The economy is generally unpredictable, so things could still get worse before they get better, but the historical data suggests a good year is ahead for investors.
There are many reasons to buy a stock, and many of them include the expectation that the stock will ultimately make investors money. One of those reasons is a bull market tends to benefit a lot of stocks. Here are my top 10 growth stocks to buy for 2024 before the bull market charges ahead.
1. Alphabet
A significant decline in digital advertising in 2022 and a pause in the growth of cloud spending hit Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) hard, but the improving economy is sparking a rebound. Google remains the global search leader, the world’s largest online advertiser, and a “Big Three” cloud infrastructure provider, which will continue to buoy its fortunes.
Perhaps the biggest catalyst will be Alphabet’s efforts involving artificial intelligence (AI). Alphabet recently rolled out Gemini, a program it claims is the most advanced generative AI system yet. It also offers more than 100 prebuilt AI models via Google Cloud and custom tools to make users more productive.
This gives Alphabet multiple catalysts to boost its stock in 2024. Trading at 4 times forward sales, the stock is historically cheap.
2. Amazon
Economic headwinds, led by soaring inflation, weighed heavily on Amazon (NASDAQ: AMZN) in 2022, but green shoots of growth are appearing across its vast operations. Digital retail is bouncing back, and AI is boosting cloud spending, fueling its two largest growth areas.
The company has also planted its stake in AI, providing cloud customers with all the top generative AI models via Amazon Web Services (AWS). The company continues to integrate AI into every aspect of its operations, improving productivity along the way.
The twin tailwinds of an improving economy and AI will drive Alphabet higher. Trading at just 2 times forward sales, the stock is a steal.
3. MercadoLibre
MercadoLibre (NASDAQ: MELI) is likely the least well-known company on this list. It’s the leading provider of e-commerce and digital payments services in Latin America, and business is brisk. In the third quarter, revenue climbed 69%, while operating income surged 194% — despite generating record-setting growth last year.
This trend is expected to continue. The adoption of e-commerce in the region is among the fastest in the world, and with a population of nearly 668 million, it’s twice the size of the U.S., so its pool of potential customers is much larger.
Add to that MercadoLibre’s margin expansion and strong cash flow, and investors shouldn’t sleep on this Latin American powerhouse.
4. Microsoft
Microsoft (NASDAQ: MSFT) suffered from the same headwinds as its tech rivals but responded by kicking off the AI gold rush with a $13 billion investment in ChatGPT creator OpenAI. What followed was a flurry of activity, integrating generative AI tools across its suite of products and services and AI cloud offerings. Its AI-fueled digital assistant Copilot is seeing robust demand, the headliner in the “fastest-growing $10 billion business” in Microsoft’s history.
The demand is unmistakable. Microsoft’s Azure cloud revenue growth outpaced rivals in the calendar third quarter, with three percentage points of that growth attributable to demand for AI.
The stock is selling for 32 times forward earnings, particularly reasonable in light of its prospects.
5. Nvidia
Nvidia (NASDAQ: NVDA) processors have long been the gold standard for gaming, data center, and artificial intelligence (AI) use cases, capitalizing on the generative AI boom that hit last year. The resulting shortage of AI chips is expected to persist through 2024. Nvidia ramped up production to meet the accelerating demand and continues pouring money into research and development, creating ever-improving solutions.
The company has generated triple-digit year-over-year revenue and profit growth in each of the past two quarters, and soaring demand for AI is expected to continue. Nvidia’s…