As the curtain falls on 2024, UBS has spotlighted a selection of tech stocks poised to outperform in the final quarter, particularly in the wake of significant market shifts. Following a dramatic week that saw Nvidia’s market cap shrink by almost $300 billion—the largest one-day drop in U.S. history—the semiconductor industry has been left reeling. As other tech giants into a tailspin, UBS’s forecast provides a glimmer of hope for investors looking for opportunity during this chaotic period.
While Nvidia has long been the titan of the semiconductor market, UBS points to Advanced Micro Devices (AMD) as a formidable challenger. AMD’s competitive edge lies in its innovative approach to graphics processing units (GPUs), despite a timeline that lags behind Nvidia by approximately nine months in compute technology. Analyst Timothy Arcuri argues that AMD’s advantage in memory bandwidth is critical for artificial intelligence applications, particularly for inference tasks. With the market’s focus shifting towards “rack-scale” systems, AMD’s strategic acquisitions, such as ZT Systems, position it favorably to cater to this emerging demand.
UBS’s buy rating and a substantial price target of $210 suggest a promising 47% upside, reflecting confidence in AMD’s potential trajectory in the market. Similarly, Wall Street sentiment echoes this optimism, with an impressive 82% of analysts rating AMD as a strong buy or simply a buy. The anticipated average price target of $186.63 also indicates over 30% upside, reinforcing AMD’s competitive positioning in an evolving tech landscape.
UBS’s investment focus extends beyond semiconductors to include tech stalwarts like Dell Technologies. The firm highlights a forthcoming PC refresh cycle and an emerging strength in AI-optimized servers as catalysts for growth. Dell’s ability to tap into the growing demand for efficient data storage solutions predicts a compound annual growth rate of at least 7% through 2027.
The announcement of Dell’s inclusion in the S&P 500 has further invigorated market sentiment—its stock witnessed a significant uptick, marking a 39% year-to-date increase. With a price target that suggests a potential upside of over 48%, UBS views this momentum as reflective of a broader recovery trajectory in the IT hardware and manufacturing sector.
Among UBS’s favorites is Spotify, the streaming giant that continues to dominate the digital service provider landscape. With expectations of mid-teen revenue growth through 2027, the company’s trajectory is fueled by persistent subscriber growth and improved monetization strategies for its existing user base. This comes at a time when the music industry is experiencing a renaissance in monetization, further bolstered by listener habits evolving towards subscriptions.
Having surged approximately 74% in 2024, Spotify’s stock reflects a recovery narrative that positions it favorably against the backdrop of its competitors. UBS’s endorsement suggests that Spotify can maintain not just its market position but also leverage its strengths as the industry continues to rebound.
In a broader context, these picks from UBS highlight a pivotal moment for technology stocks as the market grapples with both opportunity and adversity. While Nvidia’s historic drop serves as a cautionary tale, the dynamics of competition within this sector are shifting, suggesting that companies like AMD and Dell could harness fresh opportunities to capture market share.
The prevailing sentiment from UBS indicates a cautious but optimistic horizon for select tech stocks as they head into year-end. While challenges abound, the combination of strategic acquisitions, innovation, and emerging market trends creates the potential for robust performances even in turbulent times. For investors, the fourth quarter may provide a vital window to capitalize on these forecasted shifts, particularly among the tech stocks that show clear signs of life amidst the chaos.
In a market defined by rapid evolution, the keen insights from UBS pave the way for a new phase of investment opportunities as 2024 draws to a close.