Buying a stock is very easy but picking the right stock is tough. As we embark on the second half of the year, it is time to reevaluate your stock investment portfolio. The first half has been incredible for several stocks as the Nasdaq and S&P 500 steadily hit new highs and now is the time to look for ideal second-half stocks. Having dealt with market uncertainty, war, and high inflation, the market turned in an incredible performance in the first half.
Several stocks hit 52-week highs in the first half and I believe the upward rally will continue this year. A Fed rate cut could also boost the market further and take stocks higher. If you want to make the most of this upside, here are three powerhouse stocks that can dominate the second half of the year. Let’s take a look at them.
Nvidia (NVDA)
A giant tech stock, Nvidia (NASDAQ:NVDA) is an industry darling that has proved its strength time and again. Investors who bought Nvidia in 2021 are enjoying massive gains today and if you missed that chance, the recent stock split is a good opportunity for you to accumulate the stock. Nvidia’s rally isn’t over yet and the upcoming quarterly results could give the stock another strong push.
Multiple catalysts are working for Nvidia. There was a time when it generated the majority of its revenue from the gaming segment but this has changed today. It is an artificial intelligence (AI) leader with a strong market share. No competitor has been able to come close to Nvidia’s glory and it is making the most of the imbalance between the demand and supply of AI chips.
The company launched the Blackwell platform which could drive growth in the current quarter. Its GPU architecture comes with six technologies that ensure accelerated computing. It is set to replace the H100 chip later this year and could deliver solid gains and higher revenue growth for the industry darling.
UBS analyst believes the stock could hit $150 per share citing a robust demand for Nvidia’s chips. Nvidia is one stock that has dominated throughout the first half of the year and is set to continue doing the same in the second half.
Trading at $131 today, Nvidia could see a strong momentum when it reports the second-quarter results next month.
Super Micro Computers (SMCI)
Since we are all obsessed with Nvidia, it makes sense to look out for a company that benefits every time Nvidia grows. Super Micro Computer (NASDAQ:SMCI) has exposure to AI and it specializes in equipment for data centers. The massive demand for its products has given a strong boost to the stock which is up 213% YTD and exchanging hands for $895.
Data centers have become an important aspect of AI and SMCI is set to benefit here. Whenever Nvidia reports impressive quarterly numbers, SMCI soars. However, this does not mean that its fundamentals aren’t impressive. The company saw net sales of $3.85 billion and a net income of $402 million in the third quarter. For the fourth quarter, it is aiming for sales in the range of $5.1 billion to $5.5 billion.
The close ties with Nvidia help the business move. Whenever Nvidia launches a new chip, SMCI will integrate the same into its products. The company can build new systems efficiently and quickly, catering to rising demand. It is working on expanding manufacturing and has invested in a new facility in Malaysia which will help increase the revenue capacity to $20 billion.
If the management decides to follow the footsteps of Nvidia, the stock will be an ideal candidate for a stock split. Considering the soaring stock price, investors might be discouraged to invest and this could lead to a stock split.
Spotify (SPOT)
An unstoppable stock, streaming giant Spotify (NYSE:SPOT) is up 65% YTD and is trading for $311 today. The stock could be on an incredible rally in the second half with over 239 million premium global subscribers. A dominant player in the industry, Spotify offers a free plan and a premium version for users.
Fundamentally, Spotify is only getting stronger with a 20% YOY jump in revenue and an impressive 184% YOY jump in EPS to 97 cents per share. The company is steadily working on global expansions and building a strong content library that will drive users. It has adequate cash flow to pursue expansion plans and invest in the platform to improve user experience.
The company has set itself apart by investing in some of the popular podcasts that draw listeners to the platform. It holds the second place in the global audiobook segment and has more than 375,000 titles.
It is also investing in AI to improve the platform and this investment will pay off in the coming years. Its new feature called AI DJ will create unique playlists for the listener based on their preferences. Besides AI, it is working on features that help improve user engagement and has ended the first quarter with 615 million monthly active users.
18 analysts on TipRanks have a buy rating with a price target of $355.
On the date of publication, Vandita Jadeja did not hold (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.