This article looks at the 10 best NASDAQ stocks to invest in right now.
This year has been a healthy year for the American stock market, fueled by a strong performance from technology stocks. Several indices capped their best week of the year in early September as stocks rose ahead of the Federal Reserve meeting where the central bank was expected to cut interest rates. NASDAQ has led the charge and registered a 20% growth during the first half.
While the index lists over 3,100 companies from various sectors, the rally has been led by its top seven holdings which account for 52% of the index. All of them being tech stocks. There is a mix of optimism and skepticism among investors on whether NASDAQ will be able to continue its good run over the second half of the year. Historical data over the past decade shows that in most instances, NASDAQ has finished stronger during the back half of the year. There have only been two years between 2014 and 2023 during which NASDAQ’s year-end returns were lower than first-half returns.
However, Fundstrat Global Advisors’ Tom Lee, who is generally bullish on the stock market, told CNBC earlier this month that investors need to be cautious, as stocks could fall 10% during the next eight weeks amid interest rate cuts and the nervousness around the upcoming presidential elections. The co-founder of the research firm also suggested that if the dip is too strong, it should be viewed as a buying opportunity for investors. Lee has largely been on the money and nailed most stock calls this year.
Other analysts also anticipate market volatility ahead of the presidential elections. Liz Young Thomas, the head of investment strategy at SoFi, while talking to Business Insider noted that stock activity lags between June and August while traders are on vacation. This results in strong market performance aided by thinner trade volumes. The activity jumps up significantly in September when they return to their desks, which often leads to stock price volatility. According to her, a two percent shift in share price in either direction has become the norm in September. However, during election years, the volatility is at its peak in mid-October instead of September, and the market returns to normalcy after the results are announced.
LPL Financial’s Adam Turnquist also expects seasonal shakiness in the months ahead, but pointed out, like Lee did, that the dip presents an opportunity to buy when the share is trading low and earn high returns when the market stabilizes.
Buying the September or October lows has been a very good trade. October, things start to improve, and then you have this November, December, year-end rally, typically very high average returns and high positivity rates for those months.
Both Turnquist and Young Thomas agreed that existing portfolios should not be readjusted because of seasonal volatility because it is short-term and hard to forecast.
With that said, let’s head over to see some of the best NASDAQ stocks to buy right now, given the current trends and future projections.
Photo by Pascal Bernardon on Unsplash
Methodology
We scanned Insider Monkey’s database of 912 hedge funds for the second quarter of 2024 to look for stocks listed on NASDAQ and picked the top 10 companies with the highest number of hedge funds having stakes in them. We ranked them in ascending order of hedge fund holders in each company.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best NASDAQ Stocks To Invest In Right Now:
10. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 107
Adobe Inc. (NASDAQ:ADBE) is an American application software company headquartered in San Jose, California. It offers students and creative professionals various programs and services related to web design tools, digital art, content creation, and other services. It is one of the best NASDAQ stocks to invest in right now, with 107 hedge funds owning stakes in the company at the end of Q2 2024, as of Insider Monkey’s database.
During Q3 2024, it beat analysts’ expectations and reported an EPS of $4.65 compared to forecasts of $4.53 per share. Revenue for the quarter totaled $5.41 billion, representing an 11% increase year-over-year. The results were driven by strong performances across the Digital Media segment, in Creative Cloud, Document Cloud, and Experience Cloud. There has also been a growing number of users of new products and services launched by the company over the last 18 months, such as Adobe GenStudio and Firefly Services, with the latter adopting over 12 billion generations.
The introduction of AI Assistant has been a success as well and has transformed the way people extract value from documents on Adobe Acrobat and Reader. Significant advancements were released in Q3 including the ability for users to comprehend multiple documents in one go. This has translated to an increase in AI Assistant usage, resulting in a 70% surge in AI interactions, quarter-over-quarter. Adobe Inc. (NASDAQ:ADBE) has also secured key customer wins this year, both in the private and public sectors tied to PDF-based collaboration and the Content Credentials offering.
After a robust financial display in Q3, the company has revised its guidance for Q4 and now expects revenue of between $5.50 and $5.55 billion, and earnings per share in the range of $4.63 and $4.68. However, this is weaker than what analysts had forecast for Q4. As a result, Adobe Inc. (NASDAQ:ADBE)’s share price crashed 8% a day after the guidance was released on September 12. Another factor stirring investor concern is that the $550 million guidance for net new Digital Media ARR in Q4 is the lowest on record for the fourth quarter.
Despite a slight dip in share value and some investor concerns about Q4 guidance, most analysts are still bullish on the stock and believe that the company’s outlook for the coming quarter is likely conservative. Street analysts have maintained a consensus Buy rating on the stock with an average price target of $608.28, representing a 19.71% upside from its current trading level.
9. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 108
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the world’s leading computer processors and related technologies manufacturers. Its main products include microprocessors, graphic processors, personal computers, workstations, and embedded system applications. The company has also recently expanded to new markets such as high-performance computing and data centers.
During the second quarter of 2024, Advanced Micro Devices, Inc. (NASDAQ:AMD) reported a revenue of $5.8 billion, up 9% year-over-year, driven by higher-than-anticipated sales of Instinct, Ryzen, and EPYC processors. Data center sales represented over half of all revenue. The segment had a 115% growth in revenue, totaling $2.8 billion. The company’s gross margin also grew by 3%, while EPS registered a 19% increase to total $0.69, beating forecasts of $0.678 per share.
A steep rise in Instinct MI300 GPU shipments and increased deployment of EPYC CPUs significantly contributed to the data center’s revenue, with several hyperscalers selecting EPYC processors to power major portions of their applications. The company is looking forward to launching Instinct MI325X soon, which will offer twice the memory capacity of MI300 and 1.3 times improved performance than competitive offerings. The Zen-5 Turin CPU processors, publicly reviewed in June this year, are also likely to boost sales during the second half of the year.
For Q3, Advanced Micro Devices, Inc. (NASDAQ:AMD) anticipates revenue in the range of $6.4 billion to $7 billion, sequentially growing 15%. Since the announcement of results for Q2 and guidance for the following quarter on July 30, the stock has surged 38% and has an average share price target of $195.93, representing a further 24% upside from its current level. There is also a consensus among Street analysts on the stock’s Strong Buy rating. Advanced Micro Devices, Inc. (NASDAQ:AMD) is among the best NASDAQ stocks to invest in right now, with 108 hedge funds having investments in the company according to Insider Monkey’s database for Q2 2024.
However, the company does face some tests in the gaming segment, where revenue declined 59% to $648 million for the quarter, due to a drop in semi-custom SoC sales. Demand for these continues to remain flat, and revenue is set for further decline during the second half of 2024. The embedded segment also reported a 41% slide in revenue but is expected to improve in the quarters ahead. Despite these challenges, the company’s overall outlook is positive amid a strong trajectory in the data center space. The planned acquisition of Silo AI, the largest private AI lab in Europe, in Q3 is also set to further boost the bullish sentiment around the stock.
8. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 120
Micron Technology, Inc. (NASDAQ:MU) is an American manufacturer of computer memory and computer data storage, including random-access memory, flash memory, and USB drives. Its products and services are used in servers, smartphones, tablets, and laptops. The company is considered a major player in the memory market and is recognized for its technological advancements.
The company delivered strong financial results during Q3 2024, reporting a revenue of $6.8 billion, up 82% compared to last year. It also comfortably beat analysts estimates, registering EPS of $0.62 against expectations of $0.48. President and CEO, Sanjay Mehrotra, credited the robust performance to better pricing, a strengthened product mix, and an improvement in the demand and supply conditions in the industry. Data center revenue grew 50% sequentially, as the company expanded its market share in high-margin AI segments such as high-bandwidth memory (HBM) chips, high-capacity DIMMs, and data center SSDs.
Despite a strong financial quarter, Micron Technology, Inc. (NASDAQ:MU)’s share price has fallen by over 41% since the announcement of these results on June 26 as guidance for the remainder of the year failed to impress investors who were expecting outsized returns. For Q4, the company expects a total revenue of $7.6 billion, with gross margin in the range of 34.5%. Operating expenses are forecast to be around $1.06 billion. The company also plans on spending $3 billion in capital expenditure during the quarter to reach $8 billion in capital investments for FY24.
While the drop in share price has led to some bearish sentiment around the stock, Micron Technology, Inc. (NASDAQ:MU)’s shares are still trading at roughly double the level they were at the beginning of 2023. Moreover, the volatile trend in share price for the company mirrors its peers in the semiconductor industry which is still in its transitionary period with high obsolescence and shrinking product life cycles. Most analysts still maintain a Strong Buy rating for Micron, and expect the share to regain its lost value, with the stock having an average share price target of $149.20, representing an upside of 67% from current trading levels. According to Insider Monkey, 120 hedge funds had investments in the company as of Q2 2024, making it one of the best NASDAQ stocks to invest in right now.
