The S&P 500 has clearly been on quite the winning streak this year, and is set to have one of its best years since the great financial crisis, if this trend continues through the end of December. Indeed, over the past decade and a half, investors who have concentrated a disproportionate amount of their portfolios into growth stocks have outperformed, with valuation multiples continuing to expand during this cycle and most of the benefits seen in the S&P 500 concentrated among some of the largest and fastest-growing companies in the market.

There’s certainly reason to believe that some sort of reversion trade will take place, in which so-called value stocks (or those which have lower multiples than sector averages) should outperform their high-flying growth counterparts. But thus far, 2024 has proven to be another year growth investors will have outperformed.

So, for those looking to retain a healthy weighting to higher-growth stocks, looking for quality matters a great deal. Here are three of the top S&P 500 growth stocks I think investors may want to hone in on right now, despite their relatively high valuations.

Key Points About This Article:

• Growth stocks have clearly outperformed their value counterparts over the better part of the past two decades, a trend which appears set to continue in 2024.
• While valuation-related risks exist, these three top S&P 500 growth stocks could still be among the best picks in the market right now for investors looking for increased exposure to growth right now.
• 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.

Nvidia (NVDA)

Nvidia (NASDAQ:NVDA) is a top growth stock that really doesn’t need much in the way of an introduction from most growth investors. Once primarily a gaming chip maker, Nvidia has evolved into a leader in providing high-performance computing chips driving forward various artificial intelligence technologies and increasingly important to data centers looking to provide the backbone for these high-growth areas of the economy to evolve.

Over the years, Nvidia’s status as the best-in-class chip maker has propelled the company to an impressive 88% market share in graphics cards, leading to strong performance in the company’s core data centers and gaming sectors. For those bullish on future demand from data centers, driven by increased development and adoption of AI technologies, Nvidia remains the premier picks-and-shovels way to play this growth. And with the company providing another quarter of incredible performance in Q3, with EPS more than doubling (rising 103%) to $0.81 per share, there are some analysts out there who are projecting $5 of earnings per share in 2025. If the company can hit this mark, it’s entirely possible that at a 40-times multiple, this stock is one that could trade toward a $200 valuation. 

Given the company’s past growth, I certainly wouldn’t put it past Nvidia to accomplish such a feat.

Now, Nvidia’s valuation remains high relative to its peers on a price-sales basis. But given the company’s incredible margins (another key factor investors will want to focus on in coming quarters), this is a company that on a fundamental earnings basis still looks attractive right now. We’ll have to see how demand for the company’s Hopper and Blackwell chips progress, but all indications are that more growth is ahead. If that’s the case, a solid bull case remains for why so many investors remain bulled up on this top S&P 500 growth stock right now.

Amazon (AMZN)

Amazon (NASDAQ:AMZN) is perhaps a much slower-growth company, when one compares this e-commerce and cloud computing leader to the likes of Nvidia. However, Amazon has also embraced AI to enhance efficiency and offer AI services through its Amazon Web Services (AWS) unit. In other words, this isn’t your average e-commerce giant – there are plenty of other growth catalysts on the horizon investors continue to price into this company’s valuation.

After AWS recently achieved a $110 billion annual revenue run rate, investors are clearly paying much closer attention to growth in the company’s AWS division. As such, Amazon’s forward price-earnings multiple is actually slightly higher than Nvidia’s. Thus, it’s arguable which of these two companies is the better pick from a valuation perspective, though both companies clearly have key growth drivers worth considering.

I think Amazon is a broader play on the rise of e-commerce globally and future demand for cloud-based solutions. With the company’s strong market share in both categories fueling a 52% EPS jump this past quarter (on “just” 11% revenue growth), it’s clear that Amazon is also becoming an earnings growth story, and one that’s compelling as margins expand.

Trees don’t grow to the sky and margins can’t expand forever. But until Amazon shows signs of growth slowing, or delivers less capital to shareholders via share buybacks in the future and/or lower investment in its AI initiatives, this is a company that could continue to soar from here.

Advanced Micro Devices (AMD)

If Nvidia is making this list as a top chip maker long-term growth investors want to consider, then adding increased exposure to another name such as Advanced Micro Devices (NASDAQ:AMD), the second-largest producer of x86 CPUs and discrete GPUs, certainly makes sense.

AMD has seen impressive growth under CEO Lisa Su, achieving a 17% CAGR in revenue from 2014 to 2023. While less AI-focused than Nvidia, AMD’s Instinct GPUs and Epyc CPUs have driven significant growth, with data center GPU revenue projections rising from $2 billion to $5 billion in 2024. Analysts forecast AMD’s revenue to grow at a 21% CAGR through 2026, with EPS projected to surge at 103% on a year-over-year basis in 2025. Such a move would position the company as a strong contender in the expanding AI market.

Now, AMD did recently confirm layoffs following its Q3 earnings, aligning resources with high-growth priorities amid competitive pressure with Intel. So, perhaps additional efficiencies could drive further margin expansion, and drive much of the same narrative with the previous two companies. We’ll have to see, because despite 17% revenue and 34% profit growth, AMD’s Q4 forecast missed estimates. This has pressured its stock of late, though I think a turnaround could be on the horizon as investors look for broader exposure to the chip sector via diversifying into growth stocks like AMD here. 

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