AI, crypto high-tech stocks: AppLovin, MicroStrategy, Palantir, Nvidia

Artificial intelligence is still an abstract concept for many everyday consumers unsure of how it will change their lives. But there is no doubt that businesses are finding value in it.

Some of the biggest winners in this year’s stock market rally that saw the Nasdaq jump 33% and other US indexes post double-digit gains have direct ties to rapid advances in AI. Chipmaker Nvidia it is among them, but it is not alone.

The other prominent theme that has fueled this year’s top performers is crypto. Starting with the launch of bitcoin spot exchange-traded funds in January, cryptocurrencies had a big 2024, marked by Donald Trump’s election victory, which was heavily funded by the crypto industry. A number of crypto-related stocks took a big hit.

With four trading days left in the year, here are the five best-performing US tech stocks of 2024 among companies valued at $5 billion or more.

AppLovin entered the year with a market cap of about $13 billion and was best known for investing in a collection of mobile game studios that had produced titles such as Woody Block Puzzle, Clockmaker and Bingo Story.

As the year ended, AppLovin’s valuation had crossed $110 billion, making it worth more than Starbucks, Intel AND Airbnb. As of Tuesday’s close, AppLovin’s stock is up 758% this year, far outpacing other tech companies.

While AppLovin went public in 2021, riding a wave of Covid-era excitement in online gaming, the business is now centered around online advertising and growing profits from advances in AI.

Last year, AppLovin released the updated version 2.0 of its ad search engine called AXON, which helps place more targeted ads in game apps that the company owns and is also used by studios that license the technology. Software platform revenue in the third quarter rose 66% to $835 million, outpacing total growth of 39%.

Net income in the quarter rose 300%, boosting the company’s profit margin to 36.3% from 12.6% a year ago.

AppLovin CEO Adam Foroughi, whose net worth has grown to over $10 billion, is even more excited about what’s to come. On the company’s earnings call in November, Foroughi talked about an e-commerce test project that allows businesses to offer targeted advertising in games.

“In all my years, it’s the best product I’ve ever seen us launch, the fastest growing, but it’s still in pilot,” he said.

After growing by 346% in 2023, it was hard to imagine Microstrategy stock finding another device. But it was done.

The company’s stock price has risen 467% this year on the back of a bitcoin buying strategy that has made founder Michael Saylor a crypto cult hero.

In mid-2020, the company announced a plan to start buying bitcoins. Up until that point, MicroStrategy had been an average business intelligence software vendor, but since then, it has bought over 444,000 bitcoins, using its ever-rising stock price as a way to sell stock, raise debt and buy more coins.

It is now the world’s fourth-largest holder of bitcoin, behind only creator Satoshi Nakamoto, the iShares Bitcoin Trust and BlackRock’s Binance crypto exchange, with a reserve estimated at roughly $44 billion. MicroStrategy’s market cap has grown from about $1.1 billion when it was just a software company to $80 billion today.

While the rally was well under way before November, Trump’s election victory last month added fuel. The stock is up 57% since then, while bitcoin has gained about 44%. Trump once called bitcoin a “fraud,” but he was the industry’s favorite choice in this election and was heavily supported by some of the major players, including Coinbase.

“With the red sweep, Bitcoin is going up with tailwinds and the rest of the digital assets are going to start going up as well,” Saylor told CNBC shortly after the election. He said bitcoin remains the “safe-trade” in the crypto space, but once a “digital asset framework” is in place for the broader crypto market, “there will be an uptick in the entire digital asset industry.”

Palantir had many big moves in 2024 on its way to a 380% gain in its share price. One of its best stretches came last month, when the software company raised its earnings outlook a day before the presidential election.

The company, which sells data analytics tools to defense agencies, raised its target for 2024 with fourth-quarter guidance that beat analysts’ estimates. Palantir also topped third-quarter results, prompting CEO Alex Karp to declare in the earnings release, “We absolutely rocked this quarter, driven by relentless AI demand that won’t slow down.”

The stock jumped 23% on the earnings report and then another 8.6% the day after Trump’s victory. Palantir co-founder and board member Peter Thiel was a big Trump booster in the 2016 campaign and helped organize a meeting with tech executives at Trump Tower shortly after that election. Karp was one of those present.

Karp, however, openly endorsed Vice President Kamala Harris, the Democratic nominee, in the 2024 campaign. He told the New York Times in a story published in August that Thiel’s previous support for Trump and the backlash that followed made him “actually more hard to do things”.

However, Wall Street has rallied behind Palantir after the election on optimism that more military spending will flow to the company.

Karp’s comments in the earnings report before the election suggest the company would be fine either way.

“Our business growth is accelerating and our financial performance is exceeding expectations as we meet unwavering demand for cutting-edge artificial intelligence technologies from the US government and our commercial customers,” Karp said in a letter to shareholders.

Analysts expect revenue growth in 2025 of about 24% to $3.5 billion, according to LSEG.

Robinhood shares have tripled in value this year, despite a 17% decline on Oct. 31, following disappointing earnings.

Investors surpassed those numbers a few days later, sending the stock up 20% after Trump’s election victory as all things crypto rallied. One of Robinhood’s biggest growth engines is crypto, which retail investors can easily buy in the app, along with their stocks.

Revenue from crypto transactions grew 165% in the third quarter from a year ago to $61 million, accounting for 10% of total net revenue.

In addition to bitcoin, Robinhood users can easily buy about 20 other cryptocurrencies, ranging from popular digital assets like ethereum to altcoins like dogecoin, Shiba Inu, and Bonk. At the company’s investor day in November, Robinhood CEO Vlad Tenev said that crypto is more than just an investment, but also a “disruptive technology that will change the underlying infrastructure underlying payments, lending and a wide variety of assets.” tradable”.

For the fourth quarter, analysts expect Robinhood to report revenue growth of more than 70% to $805.7 million, according to LSEG, which would be the fastest growth rate for any quarter since 2021, the year the company became public.

Robinhood’s rally this year has outpaced that of Coinbase, which has jumped 61%. But with a market cap of $70 billion, Coinbase is still twice as valuable.

of Nvidia the astonishing run has continued.

After last year’s 239% gain, powered by enthusiasm around generative artificial intelligence, Nvidia is up another 183% this year, adding a $2.2 trillion market cap.

Twice this year Nvidia grabbed the title of the world’s most valuable publicly traded company. Apple has jumped ahead again and is approaching $4 trillion, with Nvidia at $3.4 trillion and Microsoft to 3.3 trillion dollars.

Nvidia remains the biggest beneficiary of the AI ​​boom, as the biggest cloud vendors and internet companies snap up all the graphics processing units they can find. Annual revenue has grown by at least 94% in each of the past six quarters, with growth exceeding 200% three times in that stretch.

CEO Jensen Huang said in the company’s latest earnings report that the next-generation AI chip called Blackwell is in “full production.” Chief Financial Officer Colette Kress said the company is on track for “several billion dollars” in revenue from Blackwell in its fourth quarter.

“Every customer is competing to be first to market,” Kress said. “Blackwell is now in the hands of all our key partners and they are working to set up their data centers.”

While growth is expected to remain strong for a company of Nvidia’s size, the inevitable slowdown is coming. Analysts are predicting a year-over-year slowdown over the next few quarters, with the decline increasing in the mid-40s by the second half of next year.

Nvidia relies on a large amount of revenue from a handful of tech giants, so any economic swings pose significant risk to investors.

That helps explain why Nvidia likes to tell Wall Street about the extensive list of companies that are building new AI services and “racing to accelerate the development of these applications with the potential for billions of agents to be deployed in years next,” Kress said. on the earnings call.

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