Many market participants have become weary of the new all-time highs being pushed out by the market indices, such as the broader S&P 500 or the technology-heavy NASDAQ. The law of the market stood firm with tech names that mentioned the word' Artificial Intelligence' as much as they could in their earnings calls and projected hyper-optimistic growth.

Today, as the FED is gearing up to roll out its proposed interest rate cuts for 2024, the story and market preferences may also pivot. When looking into the tech space, it is wise to line up a potential purchase with the momentum of other areas in the economy, especially in the manufacturing sector, but more on why later.

This is why, within the world of tech stocks, names like SoFi Technologies (NASDAQ: SOFI) prove to be the ones with huge potential growth. In the case of SoFi, the success of the Vanguard Real Estate ETF (NYSEARCA: VNQ) and profits in construction stocks, like the ones Warren Buffett expects, have pushed analysts to project massive earnings per share growth.

Power and peril

Over the past twelve months, the Technology Select Sector SPDR Fund (NYSEARCA: XLK) outperformed all other areas of the economy, with its gap over the S&P 500 as wide as 27.8%. Because of this massive overextension above the rest of the economy, some are worried that a top may be forming soon.

You have to give these bears some credit here, as most tech names depend on consumer discretionary spending, such as Netflix (NASDAQ: NFLX) and Amazon.com (NASDAQ: AMZN). However, not all tech stocks are created equal. SoFi is part of a particular breed in that it also depends on the real estate market.

If the FED was to lower rates this year as proposed, then one thing is sure. The stagnated housing market in the United States will likely see a revival state, as nobody wants to get rid of their homes today (which have mortgages locked in at an average 3.25% rate).

At the same time, nobody is particularly excited about buying a new home at all-time high prices and mortgages nearing 7.0% today. So, the only way to really stimulate a stable market and get new buyers and sellers incentivized is to build new inventory that can be sold at attractive financing rates.

This is why Buffett decided to invest in homebuilding stocks, names like D.R. Horton (NYSE: DHI) and others, betting that this would be in the cards soon. Now, even analysts at The Goldman Sachs Group (NYSE: GS) have expressed their expectation of a manufacturing breakout this year, as found in their 2024 macro outlook report.

So look, a breakout in manufacturing will, of course, be great for the economy (and construction). Lower rates will help move construction loans and make new homebuyers more keen to finance a home; plus, a weaker dollar (due to lower rates) can also make tangible assets like property a more attractive place to be in.

Odds in your favor

Remember how the tech sector is virtually at its all-time high, right? Again, not all tech stocks are created equal. SoFi stock trades at 66.0% of its 52-week high prices, falling severely behind due to the dynamics explained previously. However, this stock has a huge gap to close, and it likely will once the FED pulls the trigger.

Competitors in the consumer financing space, like Affirm (NASDAQ: AFRM) and payment facilitators like Block (NYSE: SQ), both of which depend on consumer activity to turn a profit, have an interesting dynamic in the market today.

SoFi analysts see the stock's earnings per share jumping by as much as 118.0% in the next twelve months, while Affirm projections show a more significant advance of 130.3%. Lastly, Block analysts considered a 53.67% growth in EPS, leaving Affirm (the true consumer discretionary play) to be the 'favorite' today.

Hold your horses, though, because the market has something else to say. On a forward price-to-earnings basis, which is the way markets place a value today on tomorrow's earnings, tells a different story. SoFi can be bought for 110.4x forward P/E, while Affirm trades at a lower 54.4x multiple… what?

Why would SoFi trade at a 102.9% premium to Affirm when Affirm is set to grow its earnings by a lot more? After all, markets are always willing to pay a higher price for more promising growth, right?

Well, this is the market's way of telling you they aren't confident in Affirm's growth projections. After all, the consumer is getting tapped out in credit card delinquencies. Instead, they feel more optimistic about SoFi's growth, which, as you now know, will likely ride the tailwind that is to come in FED cuts and real estate activity, eliciting a mortgage boom.