After the Federal Reserve announced its last resolution of the year, US stocks ushered in a new round of buying, driving the three major stock indexes to rise for seven weeks. The Dow reached new record highs for three consecutive trading days.
It is worth noting that it has the title of “global technology stock trendsetter”$NASDAQ 100 Index (.NDX.US)$It also reached a new closing high. This year's increase was as high as 52%, far above the technical bull market threshold of 20%, and is even expected to be the best year since 2009.
The “epic rebound” of US technology stocks this year was inseparable from the global AI boom. Spurred by the generative AI trend among global companies, investors have high expectations for the technology industry.
This AI boom has made the Magnificent Seven (“Mag7” for short) a synonym for this bull market. This AI boom has directly pushed the top seven tech giants in the US stock market back to a bright moment. Overall, it has almost leveled off the decline since 2022.
Among them, none had the most outstanding performance than the “AI Shovel Seller” —$NVIDIA (NVDA.US)$It has more than doubled since this year, and the “big brother” of technology stocks$Apple (AAPL.US)$The market capitalization has also returned to more than 3 trillion US dollars.
According to calculations, Nvidia's contribution to the increase in the Nasdaq 100 index is as high as 14.2%.$Microsoft (MSFT.US)$and Apple, on the other hand, are around 12%.$Amazon (AMZN.US)$und$Meta Platforms (META.US)$More than 8%,$Alphabet-C (GOOG.US)$und$Tesla (TSLA.US)$It is close to 7% and 6%, respectively.
Looking ahead to 2024, can the NASDAQ 100 Index “continue to play music and dance”?
The flow of capital shows that after investors expect the Fed's current tightening cycle to be over, capital has begun to flow back into US stocks. According to Bank of America data, in the past week, US stock funds have flowed in 21.9 billion US dollars.
Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas, Texas, said
The general environment of declining benchmark interest rates provided huge support for the Nasdaq 100 index, which has long-term investment properties. If you look at the fundamentals of the index, you'll see that the fundamentals of major technology companies and other companies in the index are strong, which should support the index's further upward trend.
Michael O'Rourke, JoneStrading's chief market strategist, even said,
The market has gone too far and too fast, and the Fed's instantaneous reversal of the dovish stance may trigger capitulative buying power.
Wall Street investment bank Wedbush recently released a report saying that even after achieving an “epic rebound” this year, US technology stocks as a whole are expected to rise by at least 20% in 2024. The agency expects,
As artificial intelligence (AI) application scenarios continue to expand from next year, spending on artificial intelligence and cloud computing will increase dramatically next year, and the global technology industry is showing a prosperous development trend.
According to our recent survey data in this area, the fundamentals of growth tech companies are rock-solid. A new tech bull market can be said to have begun. Technology stocks are ready for strong performance in 2024. As the wave of artificial intelligence spending hits the broader technology industry, it is expected that the US technology stock benchmark, the Nasdaq 100 Index, will soar by more than 20% next year, led by major technology companies.
However, Credit Suisse believes that the question now is whether investors are too optimistic about the prospects for a soft landing and the potential for profit growth next year. Another potential concern is that, given the recent easing of financial conditions, inflation remains more sticky than expected, and the Fed may change its view of the market at some point. According to the agency,
On the technical side, stock indexes are still under bullish control, market breadth is increasing, and monetary policy prospects and seasonal factors are still biased towards a bull market.
However, in the short term, the rally may have gone a little too far and too fast, and the US stock market may once again enter a narrow range of fluctuations in the coming week. While digesting policy expectations, the market will either consolidate sideways or continue to fluctuate upward.
Looking at the medium term, the market environment is favorable to the bull market, but the restoration of technical indicators may mean that the market needs some rest period.
Under the wave of AI, where do you look for investment opportunities next year?
Many Wall Street analysts and investors believe that artificial intelligence will unfold in several waves over the next few years. The first phase covers many infrastructure, cloud computing, data centers, etc., and these fields will occupy a monopoly position in 2023.
Many Wall Street people believe that 2024 is still a big investment year for artificial intelligence, and the leaders of this wave of AI are still expected to perform well.
Analysts from Oppenheimer, an established asset management agency in the US, expect that between 2024 and 2025, the second wave will unfold and expand to software application companies, such as$Cloudflare (NET.US)$,$Amazon (AMZN.US)$,$Snowflake (SNOW.US)$und$Shopify (SHOP.US)$And other companies will benefit from it. The bank said in a recent report that it will then gradually enter the industry terminal market adoption cycle starting in 2026.
Albert Tsuei, an analyst at UBS Asset Management, expects a few underrated and overlooked companies in the software sector to find a foothold as demand for front-office automation grows. In his opinion,$Salesforce (CRM.US)$It is an “underrecognized” artificial intelligence company because its profitability continues to improve and its long-term strategy is stable.
Also, with the advent of the era of complex cyber attacks,$Palo Alto Networks (PANW.US)$Other cybersecurity software companies may also be at the forefront of investments focusing on artificial intelligence.
Barclays Bank also believes in its latest report that technology stocks will once again outperform other industries in 2024. Among them, the cybersecurity and cloud computing sectors may be the most prominent. The bank's preferred stocks include cybersecurity companies$CrowdStrike (CRWD.US)$und$Gen Digital (GEN.US)$。 The bank believes
Not only has CrowdStrike achieved tremendous growth in the security sector, but it also has strong free cash flow support and is diversifying its business. It reminds me of Palo Alto Networks 18 to 24 months ago... Investors love diversification, which will continue the CrowdStrike story in 2024.
Gen Digital's predecessor was NortonLifeLock (NortonLifeLock), a well-known security software developer, and Avast. The stock is also another preferred target for the Barclays team. The bank believes that the company's operating profit margin is close to 60%. , and its transaction valuation is very reasonable.
In addition to pure cybersecurity stocks, Barclays Bank's Long believes that cloud computing network equipment companies$Arista Networks (ANET.US)$It will also become a popular stock in the artificial intelligence boom next year. The analyst explained,
Arista is a leader in artificial intelligence. They produce switches and routers — the networking elements of these data centers, which usually account for around 10% of AI data center spending.
Cow friends,
Is now still a good time to buy AI concept stocks?
Which company do you like the most?
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Editor/Somer