AI and crypto drove gains in this year’s top 5 tech stocks

Artificial intelligence is still an abstract concept for many everyday consumers unsure about how it will change their lives. But there’s no question about whether businesses are finding value in it.

Some of the biggest winners in this year’s stock market rally that’s seen the Nasdaq jump 33% and other U.S. indexes notch double-digit gains have direct ties to the rapid advancements in AI. Chipmaker Nvidia is among them, but it’s not alone.

The other standout theme that’s driven this year’s outperformers is crypto. Starting with the launch of spot bitcoin exchange-traded funds in January, cryptocurrencies had a big 2024, punctuated by Donald Trump’s election victory, which was funded heavily by the crypto industry. A number of stocks tied to crypto got a big boost.

With four trading days left in the year, here are the five best-performing U.S. tech stocks of 2024 among companies valued at $5 billion or more.

AppLovin entered the year with a market cap of about $13 billion and was best known for investing in a collection of mobile gaming studios that had produced titles like “Woody Block Puzzle,” “Clockmaker” and “Bingo Story.”

As it exits the year, AppLovin’s valuation has soared past $110 billion, making it worth more than Starbucks, Intel and Airbnb. At Tuesday’s close, AppLovin shares are up 758% this year, far surpassing all other tech companies.

While AppLovin went public in 2021, riding a Covid-era wave of excitement in online games, the business is now centered around online ads and booming profits from advancements in AI.

Last year, AppLovin released the updated 2.0 version of its ad search engine called AXON, which helps put more targeted ads on the gaming apps the company owns and is also used by studios that license the technology. Software platform revenue in the third quarter increased 66% to $835 million, outpacing total growth of 39%.

Net income in the quarter soared 300%, lifting the company’s profit margin to 36.3% from 12.6% in the course of a year.

AppLovin CEO Adam Foroughi, whose net worth has swelled past $10 billion, is even more excited about what’s coming. On the company’s earnings call in November, Foroughi raved about a test e-commerce project that allows businesses to offer targeted ads in games.

“In all my years, It’s the best product I’ve ever seen released by us, fastest growing, but it’s still in pilot,” he said.

After climbing 346% in 2023, it was hard to imagine MicroStrategy’s stock finding another gear. But it did.

The company’s share price has jumped 467% this year on the back of a bitcoin-buying strategy that’s made founder Michael Saylor a crypto cult hero.

In mid-2020, the company announced a plan to start buying bitcoin. Up to that point, MicroStrategy had been a middling business intelligence software vendor, but since then, its purchased over 444,000 bitcoins, using its ever-increasing share price as a way to sell stock, raise debt and buy more coin.

It’s now the world’s fourth-largest holder of bitcoin, behind only creator Satoshi Nakamoto, BlackRock’s iShares Bitcoin Trust and crypto exchange Binance, with a stockpile valued at close to $44 billion. MicroStrategy’s market cap has swelled from about $1.1 billion when it was just a software company to $80 billion today.

While the rally was long underway prior to November, Trump’s election victory last month added fuel. The stock is up 57% since then while bitcoin has gained about 44%. Trump once called bitcoin a “scam,” but he was the industry’s preferred choice in this election and was backed heavily by some of the leading players, including Coinbase.

“With the red sweep, Bitcoin is surging up with tailwinds, and the rest of the digital assets will also begin to surge,” Saylor told CNBC soon after the election. He said bitcoin remains the “safe trade” in the crypto space, but as a “digital assets framework” is put into place for the broader crypto market, “there’ll be a surge in the entire digital assets industry.”

Palantir had a lot of big runs in 2024 on its way to a 380% gain in its stock price. One of its best stretches came last month, when the software company boosted its revenue outlook a day ahead of the presidential election.

The company, which sells data analytics tools to defense agencies, bumped up its target for 2024, with fourth-quarter guidance that blew away analysts’ estimates. Palantir also topped results for the third quarter, leading CEO Alex Karp to declare in the earnings release, “We absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down.”

The stock jumped 23% on the earnings report and then another 8.6% the next day after Trump’s win. Palantir co-founder and board member Peter Thiel was a big Trump booster in the 2016 campaign and helped organize a meeting with tech execs at Trump Tower soon after that election. Karp was one of the attendees.

Karp, however, openly backed Vice President Kamala Harris, the Democratic nominee, in the 2024 campaign. He told The New York Times in a story published in August that Thiel’s earlier support of Trump and the backlash that followed made it “actually harder to get things done.”

Still, Wall Street has rallied behind Palantir following the election on optimism that more military spending will flow to the company.

Karp’s comments in the earnings report ahead of the election suggest the company would be fine either way.

“The growth of our business is accelerating, and our financial performance is exceeding expectations as we meet an unwavering demand for the most advanced artificial intelligence technologies from our U.S. government and commercial customers,” Karp said in a letter to shareholders.

Analysts expect revenue growth in 2025 of about 24% to $3.5 billion, according to LSEG.

Robinhood shares more than tripled in value this year, despite a 17% drop on Oct. 31, following disappointing earnings.

Investors looked past those numbers a few days later, driving the stock up 20% after Trump’s election win, as all things tied to crypto rallied. One of Robinhood’s biggest growth engines is crypto, which retail investors can easily purchase on the app, alongside their stocks.

Revenue from crypto transactions jumped 165% in the third quarter from a year earlier to $61 million, accounting for 10% of total net revenue.

In addition to bitcoin, Robinhood users can easily buy about 20 other cryptocurrencies, ranging from popular digital assets like etherium to alt-coins such as dogecoin, Shiba Inu and Bonk. At the company’s investor day in November, Robinhood CEO Vlad Tenev said that crypto is more than just an investment but also a “disruptive technology that will change the underlying infrastructure beneath payments, loans and a wide variety of tradable assets.”

For the fourth quarter, analysts are expecting Robinhood to report revenue growth of over 70% to $805.7 million, according to LSEG, which would be the fastest rate of growth for any quarter since 2021, the year the company went public.

Robinhood’s rally this year has exceeded that of Coinbase, which has jumped 61%. But with a market cap of $70 billion, Coinbase is still twice as valuable.

Nvidia’s astounding run has continued.

Following last year’s 239% gain, powered by excitement around generative AI, Nvidia soared another 183% this year, adding a whopping $2.2 trillion in market cap.

Twice this year Nvidia grabbed the title of world’s most valuable publicly traded company. Apple has jumped back ahead and is approaching $4 trillion, with Nvidia at $3.4 trillion and Microsoft at $3.3 trillion.

Nvidia remains the biggest beneficiary of the AI boom, as the largest cloud vendors and internet companies snap up all the graphics processing units they can find. Annual revenue has increased by at least 94% in each of the past six quarters, with growth exceeding 200% three times in that stretch.

CEO Jensen Huang said in the company’s latest earnings report that the next-generation AI chip called Blackwell is in “full production.” Finance chief Colette Kress said the company is on track for “several billion dollars” of Blackwell revenue in its fourth quarter.

“Every customer is racing to be the first to market,” Kress said. “Blackwell is now in the hands of all of our major partners, and they are working to bring up their data centers.”

While growth is expected to remain robust for a company of Nvidia’s size, the inevitable slowdown is coming. Analysts are projecting year-over-year deceleration over the next several quarters with growth dipping into the mid-40s by the second half of next year.

Nvidia counts on an outsized amount of revenue from a handful of tech giants, so any economic swings present significant risk to investors.

That helps explain why Nvidia likes to tell Wall Street about the extensive roster of companies that are building new AI services and “are racing to accelerate development of these applications with the potential for billions of agents to be deployed in the coming years,” Kress said on the earnings call.

WATCH: Next year is a ‘stock-picker’s market’