3 Tech Stock Giants Poised for Second-Half Domination

Stocks to buy

Tech stocks dominated the first half of 2024 with the Nasdaq Composite index rising 20% in the year’s first six months. Will the domination continue in the coming six months? The jury appears to be out on that question. Since the year’s second half began in July, investors have been rotating out of high-flying tech stocks in favor of value and small-cap securities.

The rotation has been prompted by a notable decline in inflation, which has cleared the way for the U.S. Federal Reserve to begin lowering interest rates this fall. Futures traders are now betting 100% that there will be an interest rate cut in September. This certainty has led investors to move capital out of tech stocks, at least temporarily. Time will tell if it lasts, especially as the second-quarter earnings season begins.

Regardless of the rotation that’s going on, some tech stocks look likely to continue outperforming. Here are three tech stock giants poised for second-half domination.

Netflix (NFLX)

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Netflix (NASDAQ:NFLX) has reported second-quarter financial results that beat Wall Street forecasts on the top and bottom lines. The strong results were primarily due to a 34% increase in ad-supported memberships at the streaming platform. Netflix announced an EPS of $4.88 versus the $4.74 expected by analysts. Revenue for the April through June quarter totaled $9.56 billion compared to $9.53 billion, the consensus expectation on Wall Street. Sales were up 17% from a year earlier.

Total memberships at Netflix rose 16.5% year-over-year to 277.65 million worldwide at the end of June. That number was better than the 274.4 million expected on Wall Street.
This earnings report marks one of the last times that Netflix will update its
membership figures as the company wants to focus on other financial metrics.
Management said its ad-supported tier has gained traction, with subscribers accounting for more than 45% of new sign-ups.

The company has also cracked down on password sharing over the last 18 months and is benefitting from the popularity of its sports content. This fall, Netflix will broadcast a live boxing match featuring Mike Tyson and air a live NFL football game on Christmas Day. In addition to attracting subscribers, live sports boost advertising on the platform. NFLX stock is up nearly 50% in the last 12 months.

Taiwan Semiconductor Manufacturing (TSM)

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Taiwan Semiconductor Manufacturing (NYSE:TSM) reported exceptionally strong second-quarter financial results due to rising demand for the artificial intelligence (AI) microchips it manufactures. TSMC, as the company is known, makes about 60% of all the world’s microchips and processors. Its dominant role in fabricating chips and semiconductors led TSMC to report that its revenue in Q2 rose 40.1% from a year earlier, while its profit increased 36.3% year-over-year.

Regarding forward guidance, TSMC expects revenue of $22.4 billion to $23.2 billion in the current third quarter of the year. CEO C.C. Wei said on an earnings call with analysts that he expects 2024 to be “a strong growth year for TSMC.” Interestingly, the company’s market share has been growing. According to data from Counterpoint Research, TSMC held a 62% share of the global foundry market in this year’s first quarter, up from 59% in the same period a year earlier.

TSM stock has risen 70% in the past 12 months as demand for AI chips skyrockets.

MicroStrategy (MSTR)

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Software firm turned Bitcoin (BTC-USD) owner MicroStrategy’s (NASDAQ:MSTR) stock dominated the first half of 2024, and there’s every reason to believe it can also dominate the remainder of the year, especially as cryptocurrency prices rebound. The company, the largest corporate holder of Bitcoin in the world, will benefit from Bitcoin’s price now being back above $67,000 and inching towards its all-time high.

MicroStrategy also announced a 10-for-1 stock split, which has boosted its share price. MSTR stock will begin trading on a split-adjusted basis on August 8. While technically a provider of enterprise software, MicroStrategy has switched its focus and adopted an aggressive Bitcoin-buying strategy. At the end of June, MicroStrategy owned 226,331 Bitcoin worth $15.2 billion based on the current price of the largest crypto.

The stock split comes as MicroStrategy’s stock has risen 307% over the last 12 months to trade at $1,778.50 per share. Based on the current price, the stock split will lower MicroStrategy’s share price to about $177.85 a share.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.