Investors should look for top-quality stocks for the remainder of the year.
With plenty of uncertainties, a nearing presidential election, geopolitical issues, and a lack of a clear economic trajectory, you want to make sure the stock you’re jumping into is top-quality and fundamentally solid.
Look at artificial intelligence stocks, like Nvidia (NASDAQ:NVDA), for example.
For one, AI could be worth $1.81 trillion by 2030, according to Grand View Research. Two, according to Goldman Sachs, big tech companies – like Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG), Meta Platforms (NASDAQ:META) and Amazon (NASDAQ:AMZN) – could spend about $1 trillion on AI over the next four years.
Just about every industry is jumping on the AI bandwagon, including cybersecurity, e-commerce, and communication services. This makes Nvidia one of the most stable, top-quality stocks to buy and hold.
Including Nvidia, here are even more top-quality stocks to buy now.
Nvidia (NVDA)
Nvidia is the pioneering force behind AI.
So far, earnings have been explosive. In its first quarter, the company saw record revenue of $26 billion, up 18% from the fourth quarter. It was also up 262% from a year ago. Earnings per share of $5.98 was up 629% from last year. It also saw data center revenue of $22.6 billion, which was up 427%.
“The next industrial revolution has begun — companies and countries are partnering with Nvidia to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center — AI factories — to produce a new commodity: artificial intelligence,” said founder and CEO Jensen Huang.
We also have to consider Nvidia is seeing massive growth with data centers – where it has 80% share of the market. All thanks to the massive, growing demand for AI GPUs.
Also, following its 10-to-1 stock split, NVDA stock won’t stay this cheap for long. Last trading at $129, I’d buy it here, with a near-term price target of $150 a share.
Taiwan Semiconductor (TSM)
Another one of the top-quality stocks to buy now is Taiwan Semiconductor (NYSE:TSM).
For one, according to Bank of America analysts, TSMC is an “indispensable and reliable partner” to Apple (NASDAQ:AAPL), says CNBC.
“We believe the semi-demand upside from Apple can get bigger with its widening AI service, from a relatively low base,” added the firm. “TSMC is Apple’s supplier for the A- and M-series semiconductors and is well poised to benefit from multi-year growth.”
Two, earnings will only get stronger for TSMC.
In its most recent quarter, the company’s revenue soared 34.3% year over year to $6.1 billion – the fastest pace of growth since November 2022, says CNBC.
Moving forward, the company is expected to see a massive surge in the second quarter by nearly 40%. Even better, analysts at Bernstein just reiterated an “outperform” rating on the TSM stock. Even Morgan Stanley expects TSMC to boost revenue growth guidance for the third quarter.
Digital Realty (DLR)
One of the best ways to generate consistent income is with real estate investment trusts like Digital Realty (NYSE:DLR), which also yields about 3.1%.
What makes DLR even more attractive is the big demand for data centers for artificial intelligence projects. Thanks to artificial intelligence, data center demand is expected to rise at a 15% compound annual growth rate until 2030, according to Goldman Sachs.
“Almost every industry is now looking for new AI functionality that can streamline processes and improve results. In this new digital landscape, data centers are uniquely positioned to both provide and benefit from AI applications,” says Digital Realty.
Analysts at BMO Capital just upgraded DLR to an outperform rating, believing that the REIT is positioned as a play on the AI boom. JPMorgan upgraded DLR to an “overweight” rating with a price target of $175. Analysts at Mizuho just initiated coverage of DLR with an “outperform” rating.
Equinix (EQIX)
With a yield of 2.1%, data center REIT Equinix (NASDAQ:EQIX) provides the data center backbone that fuels Nvidia operations. Better, Nvidia’s dominance with artificial intelligence puts Equinix at the top of the list of top data center REITs to buy and hold for the long term.
Barclays’ analysts just raised their price target on the REIT to $671 with an equal weight rating. And, as noted by Benzinga, “Equinix’s global network of interconnected data centers forms the backbone of digital business, enabling seamless data exchange and supporting the high-performance computing demands of Nvidia’s AI platforms.”
Analysts at Mizuho initiated coverage of EQIX with an outperform rating. Plus, earnings haven’t been too shabby and are only expected to get better.
In its most recent quarter, the company’s EBITDA was up 5% year over year to $992 million. Adjusted funds from operations were up 5.1% to $843 million. Both were better than expected. EPS of $2.43 did miss estimates. Revenue of $2.13 billion, up 6.5% year over year, was in line with expectations.
Eli Lilly (LLY)
Outside of AI, other top-quality stocks to buy now can be found in biotech, most notably with obesity drugs, like the ones offered by Eli Lilly (NYSE:LLY).
That includes Mounjaro and Zepound, which have brought in billions for the company. In the first quarter of 2024, Mounjaro sales more than tripled to $1.81 billion from $568 million year over year. Zepbound sales totaled $517 million.
Better, sales are only expected to soar with a fast-growing market.
According to Goldman Sachs, the global obesity treatment market could grow to $130 billion by 2030. Morgan Stanley expects the global obesity drug treatment market to reach $105 billion by 2030 from $77 billion. All of which could force sales of Mounjaro and Zepound even higher, with growing demand.
Granted, LLY is nearing $1,000 a share at the moment. But demand shows no clear signs of slowing, and it could race even higher. I’m thinking the company may want to split its shares to make its stock even more attractive.
Novo Nordisk (NVO)
At $140 a share, Novo Nordisk (NYSE:NVO) is another one of the top-quality stocks to buy.
Focusing on obesity, the company has two glucagon-like peptide-1 drugs, including Wegovy and Ozempic. Both produced substantial sales.
In 2023, Wegovy sales were up to $4.5 billion. In the first quarter of 2024, sales were already up to $1.35 billion. Ozempic saw 2023 sales of $13.9 billion. In the first quarter of 2024, sales were up 35% year over year to $4.3 billion.
Better, NVO could push aggressively higher on U.S. growth, with Goldman Sachs arguing that the number of Americans on anti-obesity drugs could reach 19 million by 2030. We also have to consider that China just approved the use of Wegovy.
Considering that more than half of Chinese people age 18 and older are obese or overweight, according to China’s National Health Commission, there’s substantial room for Wegovy growth moving forward.
Occidental Petroleum (OXY)
We can also find top-quality stocks to buy in the oil sector, such as Occidental Petroleum (NYSE:OXY).
With a yield of 1.4%, Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) has been investing heavily in the stock, now owning about 29% of the company. With the acquisition of Crown Rock, OXY could easily strengthen its position in the Permian Basin.
As OXY generates greater free cash flow, it could return a great deal of cash and growth to its investors.
Buffett also believes OXY is being run the “right way,” he mentioned to CNBC. “I read every word [of its earnings call], and said this is exactly what I would be doing.”
Also, with a diverse asset portfolio, including a position in the Permian Basin, Occidental is well-positioned to benefit from higher oil prices – especially with geopolitical tensions flaring.
OXY is a buy at $62. I’d like to see it retest $68 a share initially.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held a LONG position in NVDA, AMZN and AAPL.