2024-01-04 14:56:19
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It was an exceptional year for stocks, which overcame considerable geopolitical uncertainty to deliver strong long-term performance for patient investors. Most major indexes managed to emerge from the considerable losses recorded in 2022. The S&P 500 closed out 2023 with a strong performance of 24%, while the technology-heavy Nasdaq Composite Index rose by 43%, thanks to gains made by big tech names, and the Dow Jones Industrial Average jumped more than 13% during the same period.
While a large number of stocks were able to recoup much of their losses from the previous year, the top performers achieved returns in excess of 300%, paving the way for exceptional performance in 2024.
Several names from across the sectors covered by Morningstar emerged at the top, each posting returns above 100% and finishing the year among the top performers. Here are three.
Nvidia
Nvidia (NVDA) is a leading developer of graphics processing units (GPUs) that have become key semiconductors used in artificial intelligence (AI). Besides GPUs, the company also offers a software platform, Cuda, used for developing and training artificial intelligence models.
The stock has returned an impressive 239% in 2023.
Nvidia is also expanding its data center networking offering, allowing GPUs to be linked together to handle complex tasks. “Parallel processing has emerged as a near-requirement for accelerating AI task flows,” a Morningstar stock report says, adding that, for better or worse, Nvidia’s prospects will be linked to the AI market for a long time to come.
The company prides itself on a strong economic moat built on intangible assets around its graphics processing units and, increasingly, transfer costs around its proprietary software, such as its Cuda platform for graphics tools. AI.
Nvidia has “clear leadership in the GPUs, hardware and software tools needed to enable the exponential growth of the artificial intelligence market,” says Brian Colello, an equity analyst at Morningstar, who estimates the fair value of the stock at US$480, implying an equity value of over US$1.1 trillion.
The chipmaker’s fate will depend on its prospects in data centers and GPUs for artificial intelligence. “We expect the AI processor market to expand massively over the coming decade, and believe Nvidia has the opportunity to significantly grow its revenue,” notes Brian Colello, who says the company can stay ahead in the face of growing competition.
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