These 2 Dow Stocks Are Set to Skyrocket After 2024

The U.S. stock market showed impressive performance in 2023, S&P 500, Nasdaq Compositeand Dow Jones Industrial Average They reported profits of 24.2%, 43.4%, and 14%, respectively. This was a commendable achievement considering that it was a year of heightened concerns about rising inflation and a possible U.S. default on its debt.

Current U.S. inflation levels remain above the Federal Reserve’s annual target of 2%, but have eased significantly compared to early 2023. The central bank has since proposed three interest rate cuts in 2024. This bodes well for the whole. The stock market, including many Dow stocks such as: microsoft (MSFT -0.48%) and Visa (V -0.21%). Here’s why these two stocks appear well-positioned to skyrocket in 2024 and beyond.

1. Microsoft

Tech giant Microsoft has built a diverse business that caters to both enterprise and consumer customers. Previously known primarily for its Windows operating system and Office productivity suite, the company has recently been in the news for its Azure cloud computing platform, gaming business, and partnership with ChatGPT developer OpenAI. Microsoft’s strategy to integrate AI capabilities across its entire technology stack is now starting to bear fruit.

Azure saw a slowdown in 2022 and early 2023 as enterprises optimized their cloud spending, but the impact of the optimization cycle has now somewhat normalized. However, Azure is now benefiting from higher-than-expected demand for AI services.

Azure is also seeing a significant expansion in its customer base thanks to its comprehensive footprint (60 data center regions worldwide), increased GPU capacity, and the introduction of next-generation virtual machine foundations. Nvidia’s The H100 AI chip and access to multiple proprietary and open source large-scale language models for custom application development. Additionally, Azure OpenAI services are already used by more than 18,000 organizations, including customers who are new to Azure.

Microsoft’s office productivity business continues to be a key growth driver. More and more customers are choosing cloud-based Microsoft 365 subscriptions over perpetual licenses. In the third quarter, Microsoft 365 commercial revenue increased 18% year-over-year. This was driven by an increase in average revenue per user related to a healthy pace of subscription renewals and strong demand for Microsoft 365 E5 products (advanced security, compliance, voice, and analytics).

Additionally, Microsoft has integrated its AI assistant Copilot into the Microsoft 365 ecosystem, GitHub, and Outlook. The company is leveraging Copilot’s cutting-edge generative AI technology to automate and manage a variety of business tasks. Microsoft 365 Copilot, priced at $30 per user per month, could bring significant revenue to the company in the coming months.

Several secular tailwinds make Microsoft a top pick for 2024.

2. Visa

Visa, the undisputed leader in the global payments landscape, has demonstrated remarkable resilience in a 2023 marked by high inflation and significant economic uncertainty. Revenues for fiscal 2023 (ended September 30) increased 11% compared to the previous year. The company completed 276 billion transactions in fiscal 2023, and Visa credentials were used 757 million times per day.

Visa differentiates itself from its competitors based on its extensive global payments network, which includes 130 million merchants and approximately 14,500 financial institutions. The company also signed approximately 500 commercial partnerships with fintech companies in fiscal 2023, a 25% increase from the previous year. This allowed the company to expand its geographic reach and enter new markets and customer segments.

Additionally, unlike many prominent financial companies, Visa is not involved in the direct lending business and instead focuses solely on facilitating payments. The company operates a relatively asset-light business model because it does not require capital to cover potential delinquencies.

Visa is focused on strengthening its consumer payments business by strengthening system security and expanding overall customer engagement. The company also sees broad scope in areas such as peer-to-peer payments, cross-border remittances and new payment flows, as well as in underbanked regions of the Middle East, Africa and Southeast Asia.

The company is also investing in innovative solutions for risk management, fraud detection and prevention, and tokenization to help minimize liability for e-commerce sellers. All these initiatives could help further strengthen Visa’s overall business.

There’s no denying that Visa is a cyclical stock that relies heavily on consumer spending and transaction volume. But with investors remaining fairly optimistic about the economy in 2024 (due to cooling inflation, the potential for interest rate cuts, and a rebound in corporate earnings), Visa may now be an attractive choice.