Our summary of the standout stocks in the first half of 2024, with large cap and tech stocks flourishing in particular
The first half of 2024 saw the market exceed the expectations of most Wall Street analysts. Through July 2, the S&P 500 is up 15.3% while the Nasdaq has gained 19.9%, signaling that the bull market that began in late 2022 is still running.
In the first half of 2024, large caps and tech stocks have dominated, while smaller caps and value stocks have not performed as well. The Dow Jones Industrial Average has risen 4.3% year to date YTD while the S&P MidCap 400 is up 4.6%, and the small cap Russell 2000 is down 2.5% YTD.
There had been a trend in the fourth quarter of 2023 toward the bull market broadening out beyond large caps to mid and small-cap stocks. However, that did not materialize in 2024 as large caps continue to dominate, specifically tech stocks.
Here is a look at some of the best stocks in the first half of 2024.
Tech stocks lead the way
Given the performance of the Nasdaq, it should come as no surprise that technology stocks are leading the way once again.
Within the S&P 500, the information technology sector returned 29.5% in the first half through July 2, while tech-adjacent communication services rose 26.2%.
Financials were the best non-tech sector, rising 9.5%, followed by energy with a 9.1% gain. Utilities and consumer staples have each climbed 6.8% YTD, while healthcare stocks have risen 6.3%. Further, the consumer discretionary sector is up 6%, while industrials are up 5.8%.
The two worst-performing sectors so far this year are materials, up 1.5%, and real estate, down 5.1% YTD. Real estate is the only sector in the red at this point.
Overall, one of the key investment themes is AI stocks, which continue to outperform. As was the case in 2023, stocks that focus on artificial intelligence are driving the markets higher.
In fact, the top two stocks thus far in 2024 are AI-related.
The 3 best stocks in H1 2024
The best-performing stock so far this year is Super Micro Computer (NASDAQ:SMCI), which is up 194.5% YTD.
Super Micro Computer, or Supermicro as it is often called, provides software for high-performance computing servers at data centers. The company’s software can be customized to handle different workloads, including AI computing. In fact, one of its biggest partners is NVIDIA.
NVIDIA (NASDAQ:NVDA) is the second-best performer this year, as its stock has risen 147.7% through July 2.
NVIDIA is a semiconductor company that develops graphics processing unit (GPU) chips for computers, video games and high-performance computing data centers. It is by far the dominant player in AI-enabled chips for data centers, with a massive 98% market share. This area of NVIDIA’s business has driven its success over the past 10 years.
The third-best performer in 2024 is Vistra (NYSE:VST), which has seen its stock price rise 127.7% YTD.
Vistra is a Texas-based energy company that provides electric power to some 5 million customers throughout the U.S., specializing in nuclear, natural gas and solar power.
While not an AI stock, Vistra is also expected to benefit from the AI boom by powering data centers that require a lot of electricity to handle high-performance computing and AI-related tasks.
Among several Wall Street analysts, Vistra is viewed as well-positioned to take advantage of this trend.
Will they keep winning?
Of course, while these stocks were winners in the first half, it does not mean they will continue to outperform. Investors should do their own research on valuations, earnings history and potential catalysts for growth.
Analysts are bullish on all three of these stocks, particularly Supermicro and Vistra, which have more reasonable forward P/E ratios.
NVIDIA has a higher P/E ratio as it has been the hottest stock on the market for two years, and investors keep piling in. However, it is still a great long-term holding with massive advantages in a growing industry.
Although these were the best stocks from the first half of 2024, it would be wise to do a deeper dive into all three of them before investing.
