The Nasdaq 100 concluded 2024 with a remarkable 27% return, adding to the impressive 53.8% gain in 2023, its best performance since 1999. This two-year surge, totaling 95.3%, represents the index’s second-highest such performance since the late 1990s. While many stocks contributed to this growth, a select few significantly outperformed the market, driven by fundamental improvements and thematic tailwinds like AI, nuclear, and quantum computing. Analyzing these high-performing stocks provides valuable insights into potential market leaders for 2025.
AppLovin (APP) experienced a phenomenal 735% surge in 2024, propelling its valuation from $13 billion to over $110 billion. This resurgence in the mobile gaming ads industry was fueled by AppLovin’s AXON 2.0 AI advertising engine, which significantly improved revenue growth, margins, and cash flow. The company achieved four consecutive quarters of over 30% year-over-year revenue growth, a dramatic turnaround from the declining revenue trend in late 2022 and 2023. Furthermore, AppLovin’s margins more than doubled, with gross margin reaching 77.5% and operating margin exceeding 44% in Q3. This operational efficiency, coupled with robust revenue growth, sets AppLovin apart from its peers and positions it for continued success.
Palantir (PLTR) continued its strong performance from 2023, with a 356% increase in share price in 2024. Palantir’s Artificial Intelligence Platform (AIP) has been instrumental in driving this growth by facilitating revenue reacceleration and profitability expansion. AIP’s unique value proposition, scalability, and versatility have allowed Palantir to capitalize on the expanding AI software market, securing partnerships across diverse industries, from autonomous drone navigation to defense technology. This diversification, combined with strong government contracts, provides Palantir with a robust foundation for future growth. The company’s Q3 revenue grew by 30%, significantly exceeding initial projections, with its US commercial segment witnessing over 50% year-over-year growth in the past two quarters. Palantir also demonstrated impressive margin expansion, with adjusted operating margins exceeding 30% for four consecutive quarters and free cash flow margins reaching 60% in Q3.
IonQ (IONQ) experienced a 244% surge, driven by growing enthusiasm for quantum computing and a significant revenue reacceleration. The company’s Q3 revenue grew by 102% year-over-year, following a similar growth rate in Q2, and demonstrating a sharp increase from the 60% growth in Q4 2023. This accelerated growth is attributed to IonQ’s consistent delivery on its technical roadmap, often ahead of schedule. While IonQ is not yet profitable, analysts predict an impressive ~95% compound annual growth rate in revenue through 2027, highlighting the company’s strong growth potential in the burgeoning quantum computing sector.
Reddit (RDDT), despite its recent IPO in March, delivered a remarkable 224% return by year-end. Its Q3 results showcased strong performance, with a 68% year-over-year revenue increase and accelerating advertising revenue growth. Reddit also surprised the market by achieving GAAP net income in the high single-digit percentages, driven by significant operating leverage. The company’s cash flow generation has also improved, with operating and free cash flow margins reaching ~20% in Q3, double the previous quarter’s figures. These positive financial indicators, along with Reddit’s high gross margin and rapid revenue growth, suggest strong potential for future EPS growth.
Astera Labs (ALAB) concluded 2024 with a 128% gain, benefiting from its position as a key supplier to Nvidia and the broader growth of the AI semiconductor market. Astera’s strong connection to Nvidia, particularly with its PCIe5 retimers and components, positions it well for future growth as Nvidia’s data center revenue continues to outperform expectations. Astera reported record revenue in Q3, with a 206% year-over-year increase, and projected continued triple-digit growth in the following quarters. While still in its hypergrowth phase, Astera is demonstrating a push towards profitability, forecasting GAAP net income in Q4 and showing significant improvement in adjusted operating and net margins. The company’s high cash flow margins and rapid revenue growth further solidify its position as a promising investment in the burgeoning AI semiconductor industry.
These top-performing tech stocks of 2024 share certain common characteristics. First, they all participate in cutting-edge technological themes, such as AI and quantum computing, which are attracting significant investor interest. Second, they exhibit strong revenue acceleration and rapid growth, demonstrating market leadership and potential for future expansion. Third, they demonstrate strong operating leverage, leading to significant margin expansion and improved profitability. However, it’s important to note that the success of these companies has resulted in high valuations, with many trading at significantly higher revenue multiples compared to six months prior. This emphasizes the importance of carefully evaluating the risk-reward profile before investing in these high-growth, high-valuation companies. Examining the performance and characteristics of these 2024 leaders is crucial for identifying potential investment opportunities in 2025 and beyond.
