Best Tech Stocks for July 2024

These are some of the best tech stocks based on best value, fastest growth, and most momentum

The technology sector, as tracked by the Technology Select Sector SPDR Fund (XLK) gained 6% in June, as names like Nvidia (NVDA)—whose market capitalization now exceeds $3 trillion—made all-time highs. Bullish sentiment around anything related to artificial intelligence (AI) also propelled Apple (AAPL) to all-time highs after the iPhone maker unveiled its generative AI initiatives, known as “Apple Intelligence,” on June 10. One key feature that was applauded by the market was the planned integration of ChatGPT directly into iPhones.

Below is an analysis of the top tech stocks for July 2024, screened for best value, fastest growth, and most momentum. All data are current as of June 24, 2024.

Best-Value Tech Stocks

Value investing is an investing strategy that holds that investors can identify stocks trading below their true value. At the time the market corrects this mispricing, these undervalued names may increase in value. Investors typically attempt to identify undervalued stocks using fundamental metrics like the price-to-earnings (P/E) ratio. Typically, a lower P/E ratio signals an undervalued stock because it means the company is valued less than its fundamental value. These stocks may offer a stronger return after the market adjusts.

• Yiren Digital Ltd.: Based out of China, Yiren operates a platform offering AI-driven
  financial services, insurance solutions, and lifestyle services. Yiren Digital offers payment processing, loan services, and insurance products. For its first quarter 2024 earnings, Yiren announced that its AI Lab initiative has started yielding early results, as the company integrated AI across all aspects of operations.
• Consensus Cloud Solutions.: Consensus Cloud Solutions is a leading digital fax provider and a
  global source for secure digital information exchange. The company offers advanced data transformation solutions for regulated industries, including healthcare, finance, and government, leveraging technologies like cloud faxing, digital signatures, and AI-driven data extraction.
• Perion Network Ltd.: Perion is a global digital advertising company. On May 8, Perion reported its first-quarter 2024 financial results, highlighting significant growth in retail media and advertising revenue, which increased by 134% and 108% year-over-year, respectively.

Fastest-Growing Tech Stocks

Growth investors believe that increases in a company’s revenue and earnings per share (EPS) can be an indicator of a strong business that has the potential to increase in value. However, focusing on just one or the other of these two metrics can give an incomplete picture of a company’s growth potential. Circumstances unrelated to a company’s fundamental business strength—such as tax law changes, mergers, or one-off gains—can skew these figures on their own.

Investopedia uses a dual-metric approach to reach a more balanced assessment of growth companies. We equally weight the latest year-over-year (YOY) percentage growth for both EPS and revenue. This approach aims to reduce the impact of those one-time anomalies to provide a better view of a company’s true growth pattern and potential. Additionally, any companies with quarterly growth in excess of 1,000% are excluded as outliers.

• EHang Holdings Limited.: EHang is a technology company focused on enabling safe, eco-friendly air mobility. The company provides unmanned aerial vehicle (UAV) systems for passenger transportation, logistics, smart city management, and aerial media solutions. Earlier in June, EHang announced an agreement with Wencheng County in China to develop an urban air mobility ecosystem.
• HIVE Digital Technologies Ltd.: HIVE owns and operates green energy-powered data centers in Canada, Sweden, and Iceland to mine digital assets like bitcoin. The company securely stores most of its mined BTC and offers investors exposure to digital currency mining margins and a Bitcoin portfolio. For May 2024, HIVE announced it produced 119 bitcoins.
• Sentinel One.: Sentinel One is a global leader in AI-powered digital security. On May 30, the company announced 40% revenue growth for the first quarter of fiscal year 2025, reaching $186.4 million, and achieved its first-ever positive free cash flow. SentinelOne’s customer base with annual recurring revenues (ARR) of $100,000 or more grew by 30%, and the company reported strong financial metrics.

Tech Stocks With the Most Momentum

Momentum investing is a strategy aiming to capitalize on pre-existing market trends by focusing on stocks that have outpaced their peers or the broader market on returns. This investment principal holds that stocks on an upward path are likely to continue to outperform, as long as fundamental aspects of the business, industry, or sector do not change.

Momentum investing is a common strategy applied to tech stocks because they regularly experience significant market disruptions. As companies launch new products, announce technological breakthroughs, and gain rapid popularity, investors have the potential to climb on board while these stocks are still ascending.

Here are the tech stocks with the highest total return in the last 12 months. We’ve excluded stocks with a share price of under $5.

• MoneyLion, Inc.: MoneyLion offers a consumer finance app, providing personalized financial products, content, and marketing technology. The company’s mission is to empower everyone to make informed financial decisions through innovative tools and a tailored content feed, supported by a network of over 1,100 enterprise partners. For the first quarter of 2024, MoneyLion reported record revenue of $121 million, up 29% year-over-year.
• MicroStrategy Incorporated.: Self-styled as the world’s first bitcoin development company, MicroStrategy is a technology solutions provider, and serial accumulator of bitcoin. As of the first quarter of 2024, the company held 214,400 bitcoin in its treasury, at an average price per coin of $35,180. Given its sizable cryptocurrency holdings, the company’s stock has tracked the rally in bitcoin prices.
• CleanSpark, Inc.: CleanSpark, which describes itself as “America’s Bitcoin Miner,” owns bitcoin mining sites in Georgia, New York, and Mississippi. Similar to MicroStrategy, CleanSpark’s stock has rallied along with bitcoin prices. As of May 2024, the company holds a total of 6,154 bitcoins.

Advantages of Tech Stocks

Growth potential

Tech stocks, particularly those in emerging areas, are known for experiencing some of the sharpest growth of any publicly traded company. Anticipating this, investors have sought periods in which the sector underperforms to invest heavily, as they expect significant growth over the long term.

But growth among tech stocks can vary dramatically. Many of the larger firms have limited growth potential because their market saturation and capitalization are already very high. Small-cap or penny tech stocks that experience technological breakthroughs or suddenly become incredibly popular may have periods of massive growth. Unusually, some of the biggest names in tech—including Amazon.com Inc. (AMZN), Meta Platforms Inc. (META), and Alphabet Inc. (GOOGL)—have continued to grow at significant rates.

Advanced innovation

Tech trends are always changing, with companies aiming to capitalize on the latest technology and to guide and follow developments in innovation. This makes the sector primed for breakthroughs. One of the most recent major trends to sweep the tech sector has been AI-related technologies, which are increasingly integrated into companies across many industries and sectors. To the extent that some tech companies continue to play a role in making this possible, they stand to benefit from the ongoing AI trend.

Disadvantages of Tech Stocks

Fluctuations in the tech sector

Tech stocks are known for their high volatility, where rapid technological changes and competitive pressures can lead to significant price fluctuations. They often carry high valuations based on growth expectations, making them susceptible to market corrections if they fail to meet these projections. Furthermore, regulatory challenges and geopolitical tensions can impact the sector, introducing additional risks and uncertainties for investors.

Trends shift quickly

The sharp gains of many tech firms can prove tempting to investors who may not be well-versed in the technologies themselves. With rapid innovation characterizing the sector, trends and prospects shift very quickly as well. Investors who are unprepared for this pace or who lack knowledge of the fundamental strengths of different tech companies may find themselves following a trend that has already changed.

Advantages

• Growth potential

• Advanced innovation

Disadvantages

• Tech sector turbulence and rich valuations

• Investors may be left behind with rapidly shifting trends

The Bottom Line

The tech sector’s performance in 2024 is poised to be significantly influenced by advancements in AI, which is expected to drive long-term growth. The adoption of AI, along with ongoing digitization and cloud computing, offers promising opportunities, particularly for companies involved in semiconductor production and cloud software services.  However, the macroeconomic environment will also play a key role in determining the sector’s short-term performance, with the potential for volatility depending on interest-rate policies and economic conditions​.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

Read the original article on Investopedia.