Investing

Got $500? Buy These 3 Tech Stocks

Rich Duprey

Published: September 11, 2024 9:49 am

The technology sector has gone from setting the world on fire to cooling its heels in the corner. The Nasdaq 100 gained more than 80% between November 2022 and this past July but since hitting its all-time peak has lost nearly 10% of its value.

Analysts at Goldman Sachs (NYSE:GS) predicted the sector rotation earlier this year, saying the run-up in tech stocks was nearly over and to look elsewhere for investments. It was a prescient call. Former laggards are now shining. 

Utilities are the best performing stocks this year and over the past three months, real estate stocks have also shone. In contrast, semiconductor stocks plunged 15% during that brief period. But that doesn’t mean investors should throw in the towel on tech stocks. There are still some real gems to buy even if you don’t have a lot of money.

The three tech all-stars below are some of the best investments still to be made. So if you have just $500 to invest, and don’t need it for emergencies or to pay bills, these might be just the stocks for you to pick up today.

Key Points About This Article:

• The sector rotation under way in the stock market is seeing former high-fliers like semiconductor stocks fall while market laggards like utility stocks soar.
• While the tech sector has been hit especially hard by the change in sentiment, don’t throw out the baby with the bathwater. There are still tech growth stocks to buy for substantial gains.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Nutanix (NTNX)

Enterprise cloud platform provider Nutanix (NASDAQ:NTNX) is the first tech stock to consider buying with your $500 grubstake. Nutanix offers hyper-converged infrastructure (HCI) solutions, which takes commodity, off-the-shelf servers and other data center hardware and allows businesses to locally attach storage, compute, networking, and management options. In between is a software layer that distributes all operating functions, which provides superior performance.

A temporary hiccup in growth caused Nutanix stock to tumble earlier this year, but the platform provider was running true to form again in its fiscal fourth quarter last month. It reported revenue rose 11% to $548 million and adjusted earnings of $0.27 per share. Even better, guidance for the coming year indicates 12% growth at the midpoint.

Although Nutanix isn’t an artificial intelligence stock like many of its peers, its infrastructure solutions allow companies integrating AI into their operations to utilize the technology. It partnered with Nvidia (NASDAQ:NVDA) to validate its architecture’s capabilities. That allows Nutanix to benefit from AI’s uptake without the risk of deploying it itself.

NTNX stock is up 26% year-to-date and more than 80% above its 52-week low. CEO Rajiv Ramaswami told analysts Nutanix garnered its highest number of new customers in three years in the fourth quarter. With earnings expected to grow 50% annually for the next five years, Nutanix is an AI-adjacent stock to buy today.

Gitlab (GTLB)

Software development platform Gitlab (NASDAQ:GTLB) is much more of an AI stock than Nutanix, deploying the technology to help companies write better code. For companies looking to build more powerful AI applications, its Code Suggestion tool lets AI suggest code that is tailored to the company’s workflow. Gitlab is finding a receptive audience, too, particularly amongst customers willing to spend up.

Fiscal 2025 second-quarter earnings last week saw its customers with more than $100,000 in annual recurring revenue (ARR) reached 1,076, a 33% increase from the year-ago period. Total revenue surged 31% to $183 million as adjusted earnings of $0.15 per share rocketed from the penny per share it earned last year. On a GAAP basis it earned $0.08 per share versus the $0.33 per share loss one year ago.

Because GitLab offers a cloud-neutral DevSecOps platform, or development, security, and operations, it doesn’t matter where its customers’ data resides, its software works seamlessly.

GTLB stock has wallowed in losses for most of the year and shares are down 15% year-to-date. However, it has bounced 33% off the lows hit a month ago and the company looks poised for further growth. Wall Street has a consensus $66 per share price target on the stock implying 24% upside over the next year.

Trade Desk (TTD)

The ongoing rebound in digital advertising is benefiting Trade Desk (NYSE:TTD), an agnostic platform for advertisers and ad agencies to purchase advertising from publishers and content creators. Unlike some platforms, such as Amazon (NASDAQ:AMZN), which sell advertising for its own site, Trade Desk lets marketing departments buy ads where they want to display them. That has allowed it to develop significant trust amongst buyers and most clients stay with it. TTD has a better than 95% retention rate.

Revenue jumped 26% year-over-year in the second quarter as net income surged 157% from last year. Adjusted EBITDA margin also improved to 41% from 39% last year, driven by strong growth in the connected TV market.

Industry analysts at eMarketer estimate CTV ad spend will enjoy double-digit growth through 2027 with spending forecast to surpass $42 billion. Trade Desk says it offers the largest CTV inventory marketplace in the industry.

Unlike Nutanix or GitLab, TTD stock has been rising all year long and is up 39% in 2024. With earnings expected to continue climbing 26% annually long term, Trade Desk is a perfect spot to park your $500 investment.