Tech stocks are propelling the S&P 500 index toward a new record high, originally set in January 2022. However, not all companies are from the small group of mega caps that led the final quarter rally in 2023.
The index is within 30 points of the 4,818.6 intraday high reached on Jan. 4, 2022, with the top five stocks all sporting double-digit percentage gains after the first few weeks of the year.
Juniper Networks: Takeover Premium
Heading the table is Juniper Networks (NYSE:JNPR). The software networks and cybersecurity company gained nearly 27% in January. Most of that gain was on Jan. 9 after it received a $14 billion, all-cash takeover offer from Hewlett Packard Enterprise (NYSE:HPE).
HP is looking to expand its footprint in artificial intelligence (AI).
“AI will continue to be the most disruptive workload for companies,” the company stated. The HPE portfolio will “capitalize on these substantial IT trends with networking as a critical connective component.”
Nvidia: High Valuation But Still Going Strong
In second place on the year-to-date gainers table is last year’s runaway winner Nvidia (NASDAQ:NVDA), with January gains of 15%.
The semiconductor maker gained an astonishing 220% in 2023 and, as the stock market rally faltered into the New Year, many were questioning whether its valuation had become pushed too high.
Nvidia has a price/earnings ratio of a whopping 75.4, compared to 30 for the semiconductor sector and 25.8 for the S&P 500 as a whole — and even this is above the S&P’s long-term average of 16.
Zacks rates Nvidia a Strong Buy and said: “We are expecting an above average return from the NVDA shares relative to the market in the next few months. Recent price changes and earnings estimate revisions indicate this would be a good stock for momentum investors.”
And as AI is widely tipped to be the major markets theme in 2024, Nvidia stands to be a major winner with its market-leading technology and firm grasp on a reported 90% of the AI graphics processing unit (GPU) market.
Indeed, on Thursday it was announced that Facebook owner Meta Platforms (NASDAQ:META) plans to purchase 350,000 of Nvidia’s H100 GPU’s to enhance its AI…
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