Blue chip stocks are generally a strong investment for any stage of the economic cycle and tend to take advantage of overarching trends. That remains as true today as it was yesterday and will be tomorrow. Today’s economy is marked by a lot of unsteadiness. Prices and inflation continue to be high but appear to be improving.
The labor sector is particularly unique at the moment. Trends, including remote work, the gig economy and more, are affecting the sector in profound ways. Perhaps most importantly, artificial intelligence (AI) is here to stay. AI promises to change the economy of today and the future in profound ways. The best blue-chip stocks listed below are well-positioned for the current economy.
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Microsoft (NASDAQ:MSFT) has truly emerged as one of the very best blue chip stocks and stocks period for investors. The firm continues to dominate with products that are an integral part of the economy. Its Office Suite continues to be the gold standard and is ubiquitous among workers across all sectors and industries. Furthermore, the company has carved out a very strong space in the cloud with its Azure product suite.
You can’t mention Microsoft without mentioning AI, OpenAI and its strong pivot into artificial intelligence overall. Microsoft famously invested $13 billion in OpenAI early in 2023. That gave the company an early position in the generative AI sector that will persist.
In short, few firms are better positioned for today’s economy. Its Office Suite is essential for workers who stay in the office or work remotely. The company has applied AI to that suite of products, which promises to increase efficiency across the greater economy. Its position in all things generative AI simply makes the company a very strong choice for any investor thinking about the changes occurring across the economic realm.
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It’s fairly easy to argue that no stock is better positioned for today’s economy than Nvidia (NASDAQ:NVDA). I say that because if you ask the average person about the most important force in today’s economy, they’ll probably say AI.
Of course, Nvidia is the dominant force when it comes to artificial intelligence. Its chips, simply put, are the best for almost every AI application. That’s why the company’s H100 chips continue to be the gold standard and benefit from such strong demand.
Nvidia’s competitors had been playing catch up but none could seriously challenge its H100 chips. The gap between Nvidia and its competition is likely to widen. The company very recently announced the H200 chip. That chip is likely to be commercially available in the second quarter of 2024. That means NVDA’s strength in everything generative AI and large language models is only going to get stronger, making it arguably the number one stock of today.
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3M (NYSE:MMM) isn’t particularly well aligned with today’s economic market trends. However, it is especially undervalued among blue chip stocks. It’s worth looking at for that reason because the company is managing the situation quite well.
Anyone familiar with 3M is aware that it is facing a series of lawsuits. Those legal cases threaten to cut deeply into its earnings and have caused share prices to plummet in 2023. In fact, share prices have fallen by roughly 20% throughout the year.
The company’s earnings fell recently too, partly due to settlements for its faulty earplug lawsuit. 3M has also reached preliminary approval for a PFAS settlement. The thrust of the entire saga is that the company is largely out of the woods. Further, 3M’s dividend remains intact. That’s vitally important to its stock and overall attractiveness. Investors who can look past the moral arguments against 3M will find a lot to like in terms of value at the moment.
AbbVie (NYSE:ABBV) exemplifies how pharmaceutical firms can best navigate the inherent product cycles within the sector. The company’s ability to deftly maneuver as its blockbuster drug Humira begins to fade is the primary reason to invest in the stock.
Certainly, it isn’t out of danger yet but the company continues to move in the right direction. Humira sales, which accounted for $3.55 billion of the firm’s $13.93 billion in revenues, declined by 36% in the period. The drug anchors AbbVie’s rheumatology segment, which declined by 11.3%. While that might sound negative, Skyrizi and Rinvoq, the company’s two up-and-coming rheumatology drugs, grew at rates of 52% and 59%, respectively.
The point here is simple: AbbVie posted better-than-expected results during the quarter. It continues to show improvement and an ability to find rheumatology revenues that promise to fill the gap left as Humira comes off patent. Investing in the stock is a wise idea for income investors. ABBV shares include a dividend yielding 4.5% and the company just increased its payments by 4.7%.
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Fiverr (NYSE:FVRR) is a great stock investment for those interested in the drastic shifts in the labor market. The company runs an e-commerce platform that allows freelancers and other gig workers to bid for jobs.
Investors may be wary of Fiverr given that remote work stocks including WeWork (OTCMKTS:WEWKQ) have failed so spectacularly. But Fiverr is fundamentally different from WeWork. The companies have unique business models and most importantly, Fiverr is pivoting into profitability. WeWork was never close to it.
Fiverr released earnings a few weeks ago. Those earnings showed that revenues grew by more than 12%, reaching $92.5 million. The companies that buy services through Fiverr’s platform are spending more money. That suggests demand for gig economy workers is strengthening. It also speaks to a strong underlying business overall.
In short, there is no better stock for the gig economy than Fiverr as the company pivots into profitability — $3 million worth in Q3.
American Express (AXP)
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American Express (NYSE:AXP) benefits from a few trends that are vitally important in today’s economy. The company serves a more affluent customer base that is becoming stronger and stronger. Further, AXP services credit cards used at historic rates as cash-strapped consumers continue to charge more and more on their cards.
Investors would be hard-pressed to find a better credit card stock to invest in at the moment. American Express’ recent earnings report speaks strongly to that notion. The company reported its 6th straight quarter of record revenues, reaching $15.4 billion during the period.
The company increased its provision for credit loss by 58% to $1.23 billion. Despite that, American Express saw its income increase by 30%, reaching $2.45 billion. As American credit card debt surpasses the $1 trillion threshold, there is no firm better positioned to take advantage. AXP shares continue to prove worthiness quarter after quarter.
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Salesforce (NYSE:CRM) continues to be a strong blue chip stock choice because it is very well positioned in relation to multiple economic trends.
For one, we’ve likely reached peak interest rates. That means we could soon see interest rate cuts from the Federal Reserve. In fact, the current expectation is that the Fed will cut interest rates in early to mid-2024. In doing so, the Federal Reserve will spur a period of rapid investment as cheaper lending ensues.
As a result, enterprises of all sizes will heavily invest in customer relationship management tools. Salesforce is the predominant name in that space and accounts for roughly 20% of the market. Additionally, Salesforce has invested heavily in AI and is collaborating with predominant firms in Silicon Valley to develop those tools.
It isn’t difficult to see the potential positive outcome here: Salesforce’s AI investment should lead to an increased ability to manage customer relationships. In turn, companies using its software should be able to increase their top-line results. Thus, more and more firms will buy Salesforce’s CRM, resulting in increased top-line results for the company.
On the date of publication, Alex Sirois did not hold (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.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
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