The stock market has generally had an excellent year so far — Standard & Poor’s 500 U.S. stocks are up 17%. Of course, some hot stocks have outpaced this growth, and while it may seem counterintuitive, some of the stocks that have already made big gains may still be among the best places for investors to put their money to work right now.
Here are three growth stocks that have outperformed the market year-to-date, but also have strong competitive positions that make them worth buying today and holding into the future.
Microsoft
since artificial intelligence Artificial intelligence has become the hottest topic on Wall Street, and most of the attention has been directed at high-end semiconductor companies like Nvidiawhich has been posting impressive results quarter after quarter. However, investors should not forget that Microsoft (NASDAQ: MSFT) Apple is leading the AI boom largely thanks to its investment in OpenAI, the company behind Chat GPT.
Microsoft has already added AI features to many of its products, and because its product portfolio is so widespread, many consumers are already starting to see these features in action. For example, the Copilot tool it has added to productivity apps like Word, Excel, and PowerPoint can help users draft documents and analyze data more easily.
AI is impacting Microsoft’s business in other ways, too. In the company’s most recent fiscal quarter, revenue from its Azure cloud unit grew 31% year over year, with AI alone accounting for 7 percentage points of growth. Overall revenue grew 17% to $62 billion, while earnings per share increased 20%.
Microsoft is a leader in software and cloud infrastructure, and its investments in AI are likely to strengthen its position for years to come.
apple
At first, it seemed like apple (NASDAQ:AAPL) Apple has been a latecomer to AI. While other tech companies have been making headlines for their AI-related activities, there hasn’t been much news coming from the iPhone maker. That all changed last month when it held its annual developers conference, where it unveiled Apple Intelligence, which will launch later this year.
The most important aspect of Apple’s foray into AI is how it will enhance its ecosystem. New AI features will only be available on newer devices, which could lead to a somewhat staggered upgrade cycle. Additionally, while these features will be free when they first appear, one could envision a scenario where some aspects of the AI offering become part of a subscription service. This could give a boost to Apple’s fast-growing services segment, which is currently the second-largest source of revenue after iPhone sales.
Apple is already one of the world’s largest companies and boasts one of the most recognizable brands. If its AI efforts can continue to drive consumers to buy more of its devices and sign up for more of its services, the stock could continue to reward shareholders.
Texas Instruments
With so much attention focused on the few companies that make the kinds of advanced semiconductor chips capable of powering AI, it’s easy to overlook a company like Texas Instruments (NASDAQ: TXN)Texas Instruments produces a wide range of less powerful chips that are used in everyday applications and products. From your microwave oven to your car’s entertainment center, chips are just about everywhere, and Texas Instruments makes a lot of them.
Year-to-date, Texas Instruments stock is up 18%. However, that rally has only brought the stock back to its late-2021 level, reflecting the struggles the company has faced over the past few years.
It’s important to remember that the semiconductor industry is a cyclical one, and with the exception of the high-power AI chip, the industry has been in a cyclical downturn over the past year or so. Texas Instruments’ revenue and net income have declined, which is typical during these types of downturns.
The bottom line is that Texas Instruments is a vital player in the semiconductor space, and down cycles like this one are normal. The fact that the stock has risen year-to-date despite the company’s earnings and dividend declines shows Wall Street believes these market conditions will present a short-term challenge. Over the long term, Texas Instruments remains a solid company that is worth buying now and holding into the future.
Should you invest $1,000 in Microsoft now?
Before you buy Microsoft stock, keep this in mind:
the Motley Fool Stock Advisor The team of analysts has just identified what they believe to be Top 10 Stocks There are 10 stocks for investors to buy right now… and Microsoft isn’t one of them. The 10 stocks that do make it could deliver massive returns in the years ahead.
Think about when Nvidia I made this list on April 15, 2005… If you invested $1,000 at the time of our recommendation, You will have $780,654.!*
Stock Advisor It provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. Stock Advisor The service has More than four times S&P 500 Index Return Since 2002*.
*Stock Advisor returns as of July 8, 2024
Jeff Santoro The Motley Fool has positions in Apple, Microsoft, Nvidia, and Texas Instruments. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, and Texas Instruments. The Motley Fool recommends the following options: Buy $395 Jan 2026 Microsoft and Sell $405 Jan 2026 Microsoft. The Motley Fool has Disclosure Policy.
3 Great Growth Stocks Worth Buying in 2024 and Beyond Originally posted by The Motley Fool