Here are the 10 best-performing S&P 500 stocks in 2023 and the single best stock to buy in 2024, according to Wall Street.

of S&P500 We ended 2023 in a spectacular way. The index rose for nine straight weeks, marking its longest winning streak since 2004. The S&P 500 index soared a total of 24% last year as market sentiment improved amid signs of economic recovery.

Four sectors primarily drove the market’s gains. The technology sector rose 56% and the communications services sector rose 53%, often driven by excitement around artificial intelligence. Consumer discretionary spending rose 40% as lower inflation led to faster spending. Finally, the industrial sector increased by his 18% as business investment in structures and equipment recovered.

Not surprisingly, the 10 best-performing S&P 500 stocks in 2023 were from these four sectors, as detailed below.

1. Nvidia: 239% — Technology
2. meta platform: 194% — Communication services
3. royal caribbean: 162% — Consumer discretionary
4. Builder’s First Source: 157% — Industrial
5. Uber: 149% — Industrial
6. carnival: 133% — Consumer discretionary
7. Advanced Micro Devices: 128% — Technology
8. pluto group: 127% — Consumer discretionary
9. palo alto networks: 111% — Technology
10. tesla: 102% — Consumer discretionary

Nine of the stocks listed above have consensus buy ratings among Wall Street analysts (Tesla is the only exception with a consensus hold rating).But analysts believe Nvidia (NVDA 2.29%) The company is one of the best stocks to buy in 2024. His median 12-month price target for the stock is $650 per share, implying a 37% upside from the stock’s current price at the time of writing.

Carnival currently ranks No. 2, with a 12-month median price target of $21.50 per share, implying a 32% upside. And Meta Platforms is his No. 3, with a 12-month median price target of $385 per share, suggesting a 12% upside.

Here’s what investors need to know about Nvidia.

Nvidia is shaping the artificial intelligence boom

Nvidia is an accelerated computing company that provides hardware, software, and services across four end markets: gaming, professional visualization, data center, and automotive. The invention of the graphics processing unit (GPU) in 1999 brought innovative visual effects to video games and movies, and the company still holds its 90% market share in workstation graphics processors today.

But Nvidia redefined itself in 2006 with the introduction of CUDA, a programming model that allows its GPUs to act as general-purpose processors. This innovation allowed the company to find purchases in data centers. In data centers, the company’s GPUs are the gold standard for accelerating complex workloads such as scientific computing and artificial intelligence (AI).

in fact, forrester research Nvidia GPUs are synonymous with AI infrastructure, and the company says they consistently achieve superior results in the MLPerf benchmark, which evaluates the training and inference performance of AI hardware, software, and services. According to analysts, that advantage has allowed Nvidia to gain a market share in machine learning (ML) processors from 80% to 95%. The company also has a 95% market share in data center accelerators, according to CFRA analyst Angelo Gino.

Nvidia has solidified its position as the gold standard for AI chips by expanding into subscription software and cloud services. The company recently launched DGX Cloud, which provides on-demand access to supercomputing infrastructure, software, and pre-trained ML models to support the development and deployment of AI applications, including generative AI applications. The service also provides frameworks for specific use cases across a variety of industries, from manufacturing and logistics to retail and cybersecurity.

DGX Cloud is a particularly important development as it unifies and democratizes access to Nvidia AI technology. In the words of Argus analyst Jim Kelleher: “In our view, what makes Nvidia stand out is that it not only participates in so many parts of the dynamic AI economy, but also Because we are integrating our products with a first-of-its-kind AI-services delivered through the cloud.”

Nvidia reports record results in Q3

Nvidia’s fiscal third quarter of 2024 (ending October 29) looked very strong. Revenue surged 206% to $18.1 billion due to record sales in the Data Center segment, and non-GAAP net income rose 588% to $10.0 billion as high-margin software and services accounted for the bulk of total revenue. It became.

The company also reported strong sales growth in the gaming and professional visualization segments, as detailed below.

• data center Revenue increased 279% to $14.5 billion.
• game Revenue increased 81% to $2.9 billion.
• professional visualization Sales increased 108% to $416 million.
• car Sales increased 4% to $261 million.

Nvidia currently values ​​its addressable market at $1 trillion, but that number is set to explode as more companies turn to AI to improve productivity. In fact, a report from Bloomberg Intelligence estimates that spending on generative AI alone will increase by 42% every year, reaching $1.3 trillion by 2032.

Nvidia stock is trading at a fair price

As AI becomes woven into the fabric of daily life, NVIDIA is well-positioned to grow its business. In fact, Wall Street consensus calls for the company to increase its earnings per share by 42% annually over the next three to five years. For this reason, his current valuation of 63 times earnings is easily acceptable. In fact, given its impressive growth, its numbers look cheap compared to competing chipmakers and cloud infrastructure providers.

Specifically, NVIDIA’s PEG ratio (price-to-earnings ratio divided by expected annual earnings growth) is currently 1.5.This is the semiconductor stock AMD intel, which boast PEG ratios of 35.6 and 3.6, respectively.There are also discounts for cloud providers Amazon and microsoftwith PEG ratios of 2.8 and 2.5, respectively.

It should be noted that a P/E ratio of 63 times itself is not cheap. However, the price-to-earnings ratio must be considered in context. Nvidia is expected to grow its earnings at a much faster pace than its peers, so the stock deserves a higher valuation. That said, it’s still a risky investment, as the stock could plummet if Nvidia doesn’t meet expectations.

Patient investors should consider buying a small position today as well. Shareholders aren’t sure if they can expect his 37% return in 2024 that analysts predict, but Nvidia is at the center of his current AI boom. That will almost certainly translate into shareholder value over the next five years or more.