Stock Market

A handful of growth stocks have led the market gains achieved so far in 2023. The rally that characterized the first half of 2023 was uneven and highly concentrated in fewer than 10 technology stocks. Each of these has some exposure to artificial intelligence (AI). While the hype surrounding AI died down throughotu the summer, the technology behind chatbots and enhanced online search queries continues to be a catalyst for the market. Stocks are volatile to start the fourth quarter as treasury yields and energy prices march higher. However, it likely won’t be long until growth stocks are once again in the driver’s seat and leading the market to new heights. Given their outperformance since the 2008-09 financial crisis, it would be foolish to count out the large cap tech stocks that have grown the market in recent years. Here are the three top growth stocks to watch in Q4 2023.

Nvidia (NVDA)

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After tripling in the year’s first half, shares of microchip and semiconductor giant Nvidia (NASDAQ:NVDA) have pulled back recently. Throughout the last month, NVDA stock has declined 10%. However, any decline is likely to be only temporary. Already it looks like NVDA stock bottomed on September 21 and the share price has been trending upwards since. Plus, even though it slumped in September, Nvidia’s stock is still up 205% on the year. Investors would be smart to buy into weakness.

Investment bank Goldman Sachs (NYSE:GS) just added NVDA stock to its “Conviction Buy List” to start the year’s fourth quarter. Goldman Sachs sees it as a top pick for the final three months of the year. The upgrade comes after Nvidia issued blowout financial results that crushed Wall Street expectations. For the second quarter, the chipmaker reported earnings per share (EPS) of $2.70 versus $2.09 that was expected among analysts. Revenue in Q2 totaled $13.51 billion compared to the forecasted $11.22 billion.

The AI momentum behind NVDA stock shows no signs of slowing down. NVDA cements itself as a top growth stock to watch in Q4 2023.

Tesla (TSLA)

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There was some recent bad news at Tesla (NASDAQ:TSLA). The electric vehicle maker reported Q3 delivery figures that missed Wall Street expectations. The automaker, which reports quarterly results on October 18, delivered 435,059 vehicles in the three months ended September 30, down 7% from the previous quarter. Analysts who cover the company had forecast deliveries of 459,949 vehicles for Q3, according to an LSEG poll.

Tesla executives blamed the lower-than-expected deliveries on planned maintenance shutdowns and upgrades at its manufacturing plants. Specifically, Tesla carried out planned upgrades at its factories to roll out a newer version of its Model 3 electric sedan. TSLA stock actually rose on news of the missed delivery figures. Analysts say the updated and higher-priced Model 3 that’s expected to go on sale in the current fourth quarter should boost future revenue. Tesla is also expected to begin selling the highly anticipated Cybertruck by year’s end.

Despite its Q3 miss, Tesla maintained its target to deliver 1.8 million vehicles for all of this year. TSLA stock is up 128% on the year, but has fallen 18% from its 52-week high since the market selloff began in August. Buy the dip.

Meta Platforms (META)

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Meta Platforms’ (NASDAQ:META) stock has been a runaway train this year. Meta gained 142% in the last nine months. In the first half of the year, the share price was lifted by efficiencies achieved at the company. Headcount was reduced and spending was scaled back. As we start Q4, Meta has a new catalyst in the electronic devices it just introduced at its latest developer conference. Many of these integrate generative AI technologies.

The most consequential new item from Meta is its new Quest 3 virtual reality headset that is geared towards gamers and retails for $499. The big news is that the Quest 3 headset will, for the first time, support games from Microsoft’s (NASDAQ:MSFT) Xbox video game unit, which should provide the device with a built-in audience of avid gamers. Meta also introduced several generative AI applications as the company positions itself as a competitor to OpenAI’s ChatGPT. META stock was flat in September, but the share price isn’t likely to stagnate for long.

On the date of publication, Joel Baglole held long positions in NVDA and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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.

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