Tech stocks continued their market leadership in February, even with inflation numbers that came in higher than expected, dampening hopes of near-term rate cuts. The January 2024 Consumer Price Index report, released on Feb. 13 by the Bureau of Labor Statistics, indicated that inflation in the U.S. has not yet stabilized to the Federal Reserve's 2% target, showing a 0.3% increase for the month, driven by rising shelter costs. Counterbalancing the report, companies like Nvidia Corp. (NVDA) reported strong earnings. Nvidia reported in February that revenue was up 265% from a year ago, signaling no end in sight for the AI boom.

Strong earnings from Nvidia also imply that the Magnificent Seven might continue to lead the market, and investors should follow this sector closely through exchange-traded funds (ETFs), like the Technology Select Sector SPDR Fund (XLK). Thus far, the XLK has gained 46% in the last year, compared with 24% for the Russell 1000 Index.

Below is an analysis of the top tech stocks for March 2024, screened for best value, fastest
growth, and most momentum. All data are current as of Feb. 21, 2024.

Best-Value Tech Stocks

Value investing is an investing strategy that holds that investors can identify stocks that are trading below their true value. At the time the market corrects this mispricing, these undervalued names
may increase in value. Investors typically attempt to identify undervalued stocks using fundamental metrics like the price-to-earnings (P/E) ratio. Typically, a lower P/E ratio signals an undervalued stock because the company is valued less than its fundamental value. These stocks may offer a stronger return after the market adjusts.

Best-Value Tech Stocks
	Price ($)	Market Capitalization (Market Cap) ($B)	12-Month Trailing P/E Ratio
Consensus Cloud Solutions, Inc (CCSI)	18.3	0.4	4.7
SurgePays,Inc (SURG)	7.1	0.12	5
Immersion Corporation (IMMR)	6.9	0.22	6

·Consensus Cloud Solutions, Inc.: This company is a leading global digital fax provider, specializing in data transformation for regulated industries and government sectors. It offers a suite of advanced solutions including cloud faxing, digital signatures, AI-driven data extraction, robotic process automation, and healthcare connectivity.

·SurgePays, Inc.: SurgePays, Inc. operates as a tech and telecom enterprise focused on underserved populations. The SurgePays platform enables clerks in more than 8,000 convenience stores to offer an array of prepaid wireless and financial services, catering to over 250,000 low-income subscribers across the country.

·Immersion Corporation.: This company specializes in developing touch feedback technology to create immersive and realistic experiences in mobile, automotive, gaming, and consumer electronics. On Feb. 14, Immersion announced it had entered into a licensing agreement with Meta Platforms, Inc. (META) to incorporate Immersion's patented haptic technologies into Meta's array of hardware, software, virtual reality, and gaming products.

Fastest-Growing Tech Stocks

Growth investors believe that increases in a company's revenue and earnings per share (EPS) can be an indicator of a strong business that has the potential to increase in value. However, focusing on
just one or the other of these two metrics can give an incomplete picture of a company's growth potential. Circumstances unrelated to a company's fundamental business strength—such as tax law changes, mergers, or one-off gains—can skew these figures on their own.

Investopedia uses a dual-metric approach to reach a more balanced assessment of growth companies. We equally weight the latest year-over-year (YOY) percentage growth for both EPS and revenue. This approach aims to reduce the impact of those one-time anomalies to provide a better view of a company's true growth pattern and potential. Additionally, any companies with quarterly growth in excess of 1,000% are excluded as outliers.

Fastest-Growing Tech Stocks
	Price ($)	Market Cap ($B)	EPS Growth (%)	Revenue Growth (%)
Applied Digital Corporation (APLD)	4.4	0.5	66	242
Nvidia Corporation. (NVDA)	674.7	1,667	1262	206
Nu Holdings Ltd (NU)	10.1	47.3	3800	86

• Applied Digital Corporation.: Applied Digital designs, develops and operates data centers across North America for the high-performance computing industry. During its second-quarter earnings report for fiscal year 2024, Applied Digital announced it was energizing a 200-megawatt hosting facility in Texas and initiating the construction of a 100-megawatt high-performance computing facility in North Dakota.
• Nvidia Corporation.: One of the largest companies in the world by market cap, Nvidia hardly needs an introduction. The inventor of the graphic processing unit (GPU), Nvidia sparked the growth of PC gaming, refined computer graphics, and now powers the AI boom. Nvidia’s revenues grew 265% year-over-year, the company announced in February, and its EPS grew 409% over the same period.
•  Nu Holdings Ltd.: Nu, a leading digital financial services platform, serves approximately 90 million customers in Brazil, Mexico, and Colombia, using its proprietary technologies to offer innovative, simple, and low-cost financial solutions for individuals and small-medium enterprises. In its latest earnings report, Nu announced that revenue reached a record $2.1 billion, a 53% year-over-year increase, while gross profit doubled to $915 million, reflecting both customer growth and enhanced monetization.

Tech Stocks With the Most Momentum

Momentum investing is a strategy aiming to capitalize on pre-existing market trends by focusing on stocks that have outpaced their peers or the broader market on returns. This investment principal holds that stocks on an upward path are likely to continue to outperform, as long as fundamental aspects of the business, industry, or sector do not change.

Momentum investing is a common strategy applied to tech stocks because they regularly experience significant market disruptions. As companies launch new products, announce technological breakthroughs, and gain rapid popularity, investors have the potential to climb on board while these stocks are still ascending. Here are the tech stocks with the highest total return in the last 12 months. We've excluded stocks with a share price of under a dollar.

Tech Stocks With the Most Momentum
	Price ($)	Market Cap ($B)	12-Month Trailing Total Return (%)
Super Micro Computer, Inc (SMCI)	734.2	41	733
Applied Optoelectronics, Inc (AAOI)	19.2	0.68	606
Alarum Technologies, Inc. (ALAR)	11.8	0.07	456

• Super Micro Computer, Inc.: Super Micro provides application-optimized IT solutions, catering to enterprise, cloud, AI, and 5G IT infrastructure. Super Micro has benefitted from the AI boom, through the expansion of its AI infrastructure offerings, including the integration of new NVIDIA, AMD, and Intel platforms.
• Applied Optoelectronics, Inc.: Applied Optoelectronics is a frontrunner in creating optical products, such as components, modules, and equipment, crucial for building broadband fiber access networks globally. Much like Super Micro, Applied Optoelectronic’s stock has seen a strong lift due to the rising AI tide.
• Alarum Technologies, Inc.: Based on the world’s fastest and most advanced secured hybrid proxy network, Alarum enables its customers to collect data anonymously at any scale from any public source on the web. Alarum reported a significant financial improvement in 2023, with a $2.8 million increase in operating cash flow for the fourth quarter and a notable rise in annual revenue to $26.5 million, marking a 41% increase from the previous year. CEO Shachar Daniel highlighted the performance of its subsidiary NetNut, which contributed to over $21 million in revenue, a 150% increase from 2022.

Advantages of Tech Stocks

Growth potential

Tech stocks, particularly those in emerging areas, are known for experiencing some of the sharpest growth of any publicly traded company. Anticipating this, investors have sought periods in which the sector underperforms to invest heavily, as they expect significant growth over the long term.

But growth among tech stocks can vary dramatically. Many of the larger firms have limited growth potential because their market saturation and capitalization are already very high. Small-cap or penny tech stocks that experience technological breakthroughs or suddenly become incredibly popular may have periods of massive growth. Unusually, some of the biggest names in tech—including Amazon.com Inc. (AMZN), Meta Platforms Inc. (META), and Alphabet Inc. (GOOGL)—have continued to grow at significant rates.

Advanced innovation

Tech trends are always changing, with companies aiming to capitalize on the latest technology and to guide and follow developments in innovation. This makes the sector primed for breakthroughs. One of the most recent major trends to sweep the tech sector has been AI-related technologies, which are increasingly integrated into companies across many industries and sectors. To the extent that some tech companies continue to play a role in making this possible, they stand to benefit from the ongoing AI trend.

Disadvantages of Tech Stocks

Fluctuations in the tech sector

Tech stocks are known for their high volatility, where rapid technological changes and competitive pressures can lead to significant price fluctuations. They often carry high valuations based on growth expectations, making them susceptible to market corrections if they fail to meet these projections. Furthermore, regulatory challenges and geopolitical tensions can impact the sector, introducing additional risks and uncertainties for investors.

Trends shift quickly

The sharp gains of many tech firms can prove tempting to investors who may not be well-versed in the technologies themselves. With rapid innovation characterizing the sector, trends and prospects shift very quickly as well. Investors who are unprepared for this pace or who lack knowledge of the fundamental strengths of different tech companies may find themselves following a trend that has already changed.

The Bottom Line

The tech sector's performance in 2024 is poised to be significantly influenced by advancements in AI, which is expected to drive long-term growth. The adoption of AI, along with ongoing digitization and cloud computing, offers promising opportunities, particularly for companies involved in semiconductor production and cloud software services.  However, the macroeconomic environment will also play a key role in determining the sector's short-term performance, with the potential for volatility depending on interest-rate policies and economic conditions​.

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As of the date this article was written, the author does not own any of the above securities.