Buy 3 Internet-Centric Stocks for Stellar Returns Amid Rate Cut Hope

Nalak Das
5 min read

In This Article:

Last week, at the Jackson Hole Symposium, Fed Chairman Jerome Powell finally signaled that the much-awaited interest rate cut is around the corner. Although Powell did not say anything about the timing and magnitude of the rate cut, the CME FedWatch currently shows a 100% probability of 25-basis point cut in the benchmark lending rate in September. The interest rate derivative tool also shows a 65.3% chance of a full 1% rate cut in 2024.

An interest rate cut will benefit growth stocks like technology. Here, we have identified three Internet-centric stocks for investment to strengthen your portfolio. These are Datadog Inc. DDOG, Uber Technologies Inc. UBER and ACV Auctions Inc. ACVA.

Tech Stocks to Gain From the Rate Cut

A low market rate of interest always boosts growth stocks like technology. Investment in growth stocks creates wealth over a long period of time. A lower market interest rate will decrease the discount rate, which, in turn, will raise the net present value of investment. Moreover, many of these companies depend on the chip source of credit for their businesses to grow.

Moreover, the Internet Software and Services space is gathering momentum owing to robust IT spending on solutions that support hybrid operating environments. The level of technology adoption by businesses and the proliferation of connected consumer devices, which might help people connect and do business online, is also accelerating the industry’s growth.

At the same time, the Internet-Commerce industry is flourishing in 2024, buoyed by the convenience of online shopping. This particularly holds true for Gen-Z. Many of these buyers have grown up on the Internet and are accustomed to a high level of digitization.

Our Top Picks

We have narrowed our search to three Internet-centric stocks with strong upside potential for the rest of 2024. These stocks have seen positive earnings estimate revisions in the past 30 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Datadog Inc.

Datadog is benefiting from new customer additions and increased adoption of its cloud-based monitoring and analytics platform, driven by accelerated digital transformation and cloud migration across organizations. DDOG’s solid adoption of Synthetics and Network Performance Monitoring products is expected to aid customer wins in the near term.

Contributions from a solid cloud partner base, including Google Cloud, Microsoft Azure and Amazon Web Services, remain a key growth driver for DDOG besides an expanding portfolio. Considering the abovementioned factors, we expect 2024 net sales to increase 22% from 2023.

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