THE Nasdaq-100 The tech index plunged 33% in 2022. In times of uncertainty, investors often look to historical data to help them predict the market’s next move. The Nasdaq-100 has only fallen once in consecutive years since its inception in 1986 – during the Internet sector’s tech crash of 2000 to 2002 – so the odds were in favor of a rebound in 2023 .
True to form, the index has climbed 55% this year. And while history is no guarantee, rebound years like 2023 have historically always was followed by a positive second year. The Nasdaq-100 has generated an average gain of 21.5% in the four occurrences since 1986, so that’s the return investors could expect in 2024 based on history alone.
here’s why Confluence (NASDAQ:CFLT) And Elastic NV (NYSE:ESTC) could be the two best-performing stocks if history repeats itself.
1. Confluent is mission critical for thousands of companies
Demand for data streaming is growing rapidly, so it’s a technology that all investors should become familiar with. It allows businesses to leverage all the valuable data they generate and make real-time adjustments to increase efficiency and deliver the best possible experience to their customers. Confluent is the industry leader in data streaming.
So how does it work? Companies rent computing power in centralized data centers run by tech giants like Amazon And Microsoft — it’s called cloud computing. The most critical websites, sales channels and applications are now hosted in the cloud, meaning mountains of data are generated every day in real time.
In the past, companies stored this data and came back to analyze it later. But streaming data allows them to ingest, process and analyze it instantly, which creates all sorts of opportunities. When an investor buys a stock using an online brokerage platform, for example, live price information is transmitted to them via data streaming technology.
Similarly, data streaming allows online sportsbooks to calculate odds, transmit them to a potential bettor, and accept bets on live games. Dick’s Sporting Goods also uses Confluent for inventory management. Instead of updating data once a day, data streaming allows customers to view real-time inventory information so they know which Dick’s stores carry the products they’re looking for.
Confluent now serves 4,910 businesses, and that number is growing. During the recent third quarter 2023 (ended September 30), the company also saw a high net revenue retention rate of 130%, meaning existing customers were spending 30% more on the platform than one year ago.
New customer acquisitions, combined with existing customers spending more money, mean Confluent is on track to generate a record $769 million in revenue for 2023. But that’s only a fraction of that. which management sees as a $60 billion opportunity today. growth.
Confluent stock is trading 74% below its all-time high, set during the tech frenzy of 2021. Investors got a little carried away by its valuation at the time, but the company is now in a better position that she ever was. At least one Wall Street analyst thinks Confluent’s revenue could top $1 billion in 2024, so its falling stock price represents an opportunity for today’s investors.
2. Elastic NV elevates its flagship product with artificial intelligence
Elastic helps organizations harness the power of their information in another way, with the help of artificial intelligence (AI). As I mentioned earlier, modern businesses generate mountains of data, and it can be difficult to access once it’s stored on their networks. Elasticsearch solves this problem by creating a comprehensive search experience for employees.
For example, let’s say an employee is looking for information related to their company’s workplace policies. Instead of manually going through dozens of files, they can simply query Elasticsearch, which will retrieve the information instantly. But it’s not just for staff members: Elasticsearch also works with a company’s websites and sales channels, so customers can quickly find product information.
But AI elevates Elasticsearch’s capabilities. The Elasticsearch Relevance Engine (ESRE) allows developers to integrate AI into their organization’s search experience, reducing the need for specificity and transforming its capabilities.
Here’s a real-world example: If a customer is doing a DIY construction project at home, they can use an Internet search engine to find instructions and then visit their favorite hardware store’s website to find the products they need. But if this hardware website is running on ESRE, the client can simply explain what they want to create, and it will display all the necessary products and tools without having to visit an external search engine.
According to the International Data Corporation, we will create 480 exabytes of data every day starting in 2025 (one exabyte is 1 million terabytes). Elastic currently serves 20,700 companies, but based on this estimate, the number of organizations needing tools like Elasticsearch to manage their data will likely explode in the coming years.
Elastic stocks have more than doubled this year as investors rushed to buy a stake in AI companies, gaining 45% in December alone on better-than-expected second-quarter financial results. financial year 2024 (ended October 31). The company’s revenue of $311 million beat its forecast of $304 million, and its non-GAAP earnings per share of $0.37 were 54% higher than the $0.24 expected.
Elastic is now on track to generate record annual revenue of $1.25 billion for fiscal 2024, and at its current stock price it’s cheaper than many other popular names in the elastic space. ‘AI in terms of selling price. This represents an opportunity for investors.
Should you invest $1,000 in Confluent right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool features and recommends Amazon, Confluent, Elastic, and Microsoft. The Mad Motley has a disclosure policy.
History says the Nasdaq could jump 21% in 2024. Here are 2 great growth stocks to buy now. was originally published by The Motley Fool
