Tech stocks rebounded strongly in 2023, spurred by waning recession fears and amplified investor enthusiasm over advances in artificial intelligence (AI) technology.
Looking ahead to 2024, the positive trajectory of tech stocks is expected to persist due to the anticipated decline in interest rates and the overall robustness of the economy.
Spotify Technology Stock
Spotify, the leading audio streaming subscription service provider, has showcased exceptional performance with robust metrics across the board.
For example, Spotify’s monthly active users (MAU) surged by 26% year-over-year in Q3, reaching 574 million and surpassing guidance. Premium Subscribers also increased by 16%, totaling 226 million. The company’s gross margin climbed to 26.4%, exceeding expectations.
Anticipating more than 600 million MAUs in 2023 and aiming for 1 billion global users by 2030, Spotify’s growth potential is substantial. Additionally, the company has implemented price increases in over 50 markets, strengthening its revenue and margin outlook for 2024.
Expansion and Challenges
Moreover, Spotify ventures into audiobooks and has streamlined its cost structure following significant workforce reductions. While the company’s stock has doubled over the past year, some analysts remain circumspect. Of the 26 analysts covering Spotify stock, 14 have a “Strong Buy” recommendation, two recommend “Moderate Buy,” and 10 maintain a “Hold,” with an average price target of $210.42.
Advanced Micro Devices Stock
Advanced Micro Devices has positioned itself to capitalize on the increasing adoption of AI technology, boasting a wide-ranging portfolio of energy-efficient GPUs, CPUs, and adaptive computing solutions for AI training and inference.
The company’s leadership recognizes AI as a highly lucrative growth opportunity, particularly in the data center accelerator segment, which is estimated to reach a staggering $400 billion by 2027.
Industry Shift and Projections
To seize this tremendous growth potential, AMD has launched its highest-performance accelerator, the MI300X, and intensified its investments in AI-related research and development. Furthermore, the company foresees Data Center GPU revenue hitting around $400 million in the fourth quarter and exceeding $2 billion in 2024.
Market View
Analysts reflect the optimistic sentiment, with 24 out of 30 recommending a “Strong Buy” for AMD stock. Its current market price, having doubled over the past year, surpasses the average price target.
Bottom Line
Both Spotify and AMD stocks have experienced substantial value appreciation, prompting valid concerns regarding their valuations. However, their strong positioning for exceptional revenue growth and margin expansion in 2024 justifies their premium valuation.
