Ride the Rate Cut Rally: 3 Growth Stocks to Own Before the Fed Makes a Move

Stocks to buy

This April, investors continue to chase after record-high growth stocks. While many of these companies offer pathways to wealth, many may be hurt by a coming economic shock. Thus, picking the right growth stocks to own before the Fed rate cut is important.

Focus on growth stocks with solid fundamentals and skilled management teams. These companies promise substantial long-term returns despite occasional setbacks. Diversification and strategic placement can maximize wealth accumulation opportunities in portfolios.

Here are three of the best stocks to buy as the Federal Reserve potentially steps back from its tight monetary policy stance and begins cutting.

Shopify (SHOP)

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Baird recently upgraded Shopify (NYSE:SHOP) to outperform and raised their price target to $87. This upgrade was driven by positive operational trends, with Shopify showing steady growth in net active stores. This growth was notably seen in strategic sectors like Shopify Plus and international markets, bolstering the company’s long-term outlook. Indeed, I agree with the analysts that these segments will play a vital role in Shopify’s business strategy moving forward.

The firm’s revised e-commerce platform survey aligns with the company’s focus, prompting the price target adjustment. Analysts noted stable market conditions with revenue estimates slightly above consensus but profitability lagging.

Shopify boasts a market cap of $96 billion, affirming its top e-commerce platform provider dominance. Despite a high price-earnings and price-sales multiple relative to previous results, investors are pricing in much better forward numbers. The company’s recent revenue growth of more than 26% and solid bottom-line growth support such a view.

Zoom Video (ZM)

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As the star of video conferencing during the pandemic, Zoom Video (NASDAQ:ZM) still wows the public with its AI innovations. Its most recent AI integration is the Zoom Workplace, an AI collaboration platform that helps workforces enhance teamwork. The launch includes features like Ask AI Companion, a refreshed app interface, and improvements to the Zoom Contact Center for improved customer engagement.

Smita Hashim, Zoom’s product chief, emphasized the significant benefits of Zoom AI Companion in enhancing collaborative workflows. Introducing Zoom Workplace with AI Companion aims to address user needs by integrating core collaboration tools into a unified AI-powered platform, improving productivity and efficiency. The latest AI Companion features, including Ask AI Companion and Zoom Phone and Team Chat enhancements, offer added value at no extra cost.

Following pressure from European regulators, Microsoft (NASDAQ:MSFT) announced a division of its Teams and Office bundles on Monday, relieving competitors. Despite struggles against Microsoft’s communication suite, Zoom saw its video chat app soar during the pandemic. Mizuho analysts suggest separating MS Teams may ease enterprise churn, recommending buying Zoom shares. 

Nvidia (NVDA)

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This past year was one of the best for semiconductor giant Nvidia (NASDAQ:NVDA). The company saw excellent growth, leading to a stock price that surged 259%. The main catalyst behind this rise? A surge of interest in artificial intelligence and related companies.

As the key purveyor of high-performance chips used by AI companies and those developing applications, Nvidia has absolutely been on a rocket ship higher. This year alone, the stock is up roughly 80%, signaling just how powerful investors see this company’s future earnings coming in.

At its recent GTC conference, Nvidia unveiled its Blackwell chip, ushering in a new computing era. The architecture offers six transformative technologies, enabling real-time generative AI at significantly lower costs and energy usage. CEO Jensen Huang sees Blackwell as pivotal for industries like deep learning and quantum computing, driving AI’s widespread adoption.

Aside from the tech sector, Nvidia has expanded into healthcare by collaborating with the startup Hippocratic AI. Hippocratic AI develops virtual agents using Nvidia’s technology to streamline patient care tasks like appointment scheduling and post-discharge follow-ups. Leveraging Nvidia’s Avatar Cloud and NIM microservices, Hippocratic AI aims to enhance its health-focused large language model.

For those looking for AI exposure, Nvidia remains the best option in this space. And while its stock isn’t cheap, on a forward basis, its valuation isn’t insane either. This stock remains a buy until the company shows its growth is slowing.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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