2024 projections for major tech stocks: Victors and underperformers

The Future of Tech Stocks: Leading AI Players, Contenders, and Trends

Greg Halter, the Director of Research at Carnegie Investment Counsel, also contemplates the future of AI and its influence on major tech players shaping the Fortune 500.

Offering a tech stock forecast for 2024, he stated:

“Certainly, AI will have an impact on companies such as Apple, Microsoft, Alphabet, Amazon, NVIDIA, Meta Platforms, Tesla, Salesforce, Advanced Micro Devices, and Intel.”

The pivotal question revolves around the extent to which perceived leaders like NVIDIA, Microsoft, and Alphabet will extend their dominance or if other players will catch up.

“We must acknowledge that AI is not a new concept; it has been present for decades. What's new is the industry reaching a 'tipping point' where adoption is gaining momentum, and use cases are experiencing exponential growth.”

Halter anticipates that industry leaders will leverage their size to continue growing.

Conversely, historical technological advancements have shown instances where early leaders did not maintain their position (e.g., Smartphones -> Blackberry; Social Media -> Myspace; Internet Service Providers -> AOL).

A factor that could impede, or at least slow down, development is regulation, a significant variable. However, the more time it takes for potential regulations to materialize, the more advanced these companies and their initiatives will become.

The Grand Journey of the Seven

This formidable alliance retained four original FAANG members and expanded its roster to encompass Microsoft, Tesla, and the chip-making giant NVIDIA. NVIDIA (NVDA) notably emerged as a dominant force, experiencing an extraordinary 216.65% surge in its stock over the preceding 12 months as of January 18, 2024. This notable upswing underscored NVIDIA's pivotal role in the tech sector, emphasizing the increasing significance of advanced semiconductor technology across various industries.

Despite widely perceived setbacks in its Metaverse pursuits, Meta Platforms (META) charted an impressive trajectory, witnessing a 172.14% increase in its stock value.

However, the narrative of the stock market in 2023 extended beyond these tech giants. Companies such as Uber Technologies, Builders Firstsource, and even those outside the tech realm, like Royal Caribbean Group, achieved notable gains.

As the Super Seven ventures into 2024, what are the most recent predictions for tech stocks amid a dynamically shifting global economic landscape?

Consensus Predictions by Analysts for Major Tech Stocks in 2024

As of January 19, 2024, MarketBeat's compilation of consensus analyst ratings suggests that the "Magnificent Seven" are expected to largely maintain their current standings over the next 12 months, with a moderate potential for an upward trajectory. However, significant price surges are not anticipated, based on the forecasts.

Top Picks

According to Rice, Qraft has high conviction ratings for "Apple, Google, Microsoft, Amazon, NVIDIA, and Meta," not only among AI stocks but across all stocks. This confidence is attributed to these companies possessing the necessary software capabilities, user base, or chip offerings to commercialize AI effectively. The AI model anticipates potential market value increases and enhanced cash flow quality, making these companies attractive picks for 2024.

Low Conviction

Conversely, Qraft expresses lower conviction in stocks like Salesforce, Intel, Tesla, and Advanced Micro Devices:

"While these companies will undoubtedly play a role in the AI arms race, many have either part or much of their business outside of AI. For example, Advanced Micro Devices has around 51% of its revenue coming from personal computer chips rather than from chips made for AI models. Contrast that with NVIDIA, which gets around 80% of its revenue from chips for AI models, making it better positioned to take advantage of growth in AI use. The model focuses on the quality of earnings, making stocks like Tesla less attractive as its car orders can heavily impact earnings," Rice explained.

He added that Qraft utilizes AI actively to navigate the market, with monthly updates to holdings that adapt to changing market conditions. The mentioned assets represent convictions from their flagship AI model, guiding stocks for QRFT, the Qraft AI-enhanced Large Cap ETF, currently outperforming the S&P 500 tracking ETF, SPY, by around 1.4% annually.

The Ascendance of Cryptocurrency in 2024: Surpassing the Performance of Major Technology Stocks

In 2023, the Magnificent Seven experienced a remarkable 75% surge, constituting approximately 30% of the S&P 500. However, the question looms: can other technology stocks rebound and match the performance of these leaders? In stark contrast, the remaining 493 companies struggled to gain momentum, highlighting the challenge they face in replicating the extraordinary success and market influence of their tech counterparts. This disparity underscores the increasing dominance of big tech within the stock market.

Many anticipate that the crypto winter is coming to a close and foresees significant returns in 2024. Nathan Leung, a crypto educator and lead content creator at Cryptonauts, a YouTube channel covering blockchain and cryptocurrencies, suggests that cryptocurrency has the potential to surpass the performance of some of the largest tech stocks.

"Investors in both the stock market and crypto are optimistic about market behavior in 2024. However, this particular year could see crypto outpacing the stock market. The approval and live trading of the first-ever Bitcoin ETF in January have garnered attention and instilled trust among new investors.

"Additionally, with the Bitcoin halving, which historically marks the beginning of a bull market cycle, it promises to be an exciting year. Nevertheless, it is crucial to conduct thorough research and secure profits," Leung advised.

AI is ‘A Multi-Trillion-Dollar Market Opportunity’

Finance expert David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business, is bullish on the outlook for technology stocks in 2024. He anticipates a positive trajectory for these stocks, citing the combination of expected lower interest rates throughout the year and ongoing advancements in artificial intelligence (AI) by tech companies.

As of the current year, five out of the "super seven" tech stocks have significantly outperformed major market indexes. Notably, NVIDIA has seen a substantial increase of +10.5%, Meta Platforms +5.8%, Microsoft +3.3%, Alphabet +2.1%, and Amazon +1.8%. On the flip side, Apple has experienced a decline of -3.4%, and Tesla is down by -11.9%. Salesforce has also outperformed the market with a +3.5% increase, while Advanced Micro Devices and Intel have shown underperformance at -0.6% and -6.2%, respectively. Despite these fluctuations, Kass expects these companies to achieve substantial earnings growth in 2024.

Kass underscores the multi-trillion-dollar market opportunity in the field of artificial intelligence, with the mentioned tech stocks positioned as key players. His predictions for individual tech stocks in 2024 include anticipated outperformance by NVIDIA, Alphabet, Amazon, Meta Platforms, Microsoft, Apple, Salesforce, and Advanced Micro Devices. However, he expresses a more cautious stance regarding Tesla and Intel.

Defence Giant BAE Systems is 2023’s Most Searched FTSE 100 Stock

BAE Systems (BA.) has secured the top position as the most searched FTSE 100 stock in the UK for the year 2023, indicating a notable surge in investor interest. According to an analysis of Google search data conducted by Investing Reviews, BAE Systems accumulated an impressive average of 961,349 monthly searches.

Simon Jones, the CEO of Investing Reviews, emphasized the value of understanding which stocks attract the most attention, as it can offer insights into potential higher trading volumes and price fluctuations.

In 20 out of 58 surveyed UK locales, BAE Systems emerged as the most searched FTSE 100 stock. This heightened interest is attributed to the significant rise in the company's stock price since the commencement of the Russian invasion of Ukraine in February 2022. BAE Systems, as a key player among the UK's primary defense companies, has played a crucial role in producing a substantial portion of the military equipment provided to Ukraine as part of the UK's military aid efforts.

The Bottom Line

In 2023, the Nasdaq-100 Index experienced an impressive 53% surge, marking one of the most significant performances in the past two decades. However, it is essential to recognize that the "Magnificent Seven" represent only a fraction of the overall tech stock landscape, with other companies displaying less favorable results.

The commencement of 2024 introduced the prevailing theme of "AI Everywhere," evident at CES and the active trading of the inaugural Bitcoin ETF. These early indicators suggest that the upcoming year holds substantial promise for tech investments.

While the allure of significant returns from established Big Tech stocks is apparent, relying solely on them may not deliver the anticipated outcomes. This potential scenario could prompt investors to explore the fast-paced and volatile realm of cryptocurrencies for quicker returns.

Nevertheless, before committing to investment decisions in 2024, whether in Big Tech stocks or cryptocurrencies, prudent traders should engage in comprehensive fundamental and technical analyses of the stocks or digital assets under consideration. Despite the precision of tech stock predictions, it's crucial to acknowledge the inherent volatility of stock markets.