A new year means a new start. Market optimism appears to be the order of the day as the beginning of 2024 leads a foray into the new era in which the slow recovery of Western economies signalled in 2023.
With tech stocks back in the limelight over the course of recent months, will market conditions favour these even more during the year ahead?
Given that there is a wide range of speculations and expectations relating to a potential change in central bank policy, which would see a move away from the ultra-conservative methods being used on both sides of the Atlantic that have been in place for a long period, with increases in interest rates continuing despite the backdrop of reducing inflation, it may be worth considering that dynamic, modern high-tech companies whose stocks are listed on North American stock exchanges are very responsive to such changes.
In circumstances where monthly commitments are high, a very different corporate policy is often considered at times when the cost of meeting such commitments is considerably lower, allowing companies to reinvest in growth.
The top five stocks to watch this year are largely dominated by the publicly listed tech giants, but there is one traditional company on the list, too!
NVIDIA has been a very interesting company to watch over recent years, let alone months. It is the only computer hardware manufacturer which has maintained its position as a gold-plated giant among corporate leviathans in America.
Perhaps even more remarkable is that much of this commercial success was a direct result of cryptocurrency miners having had to use powerful graphics cards for their enterprises for the past 13 years, with NVIDIA leading the pack as a preferred company for that industry. When the Chinese authorities swooped in during 2021 and closed down a lot of the large-scale miners, it was considered that NVIDIA might lose its crown, as used NVIDIA products flooded the market for a fraction of their original cost, as the country which conducted 70% of crypto mining was subject to government curtailing. This quickly levelled out, and NVIDIA maintained its high position.
In 2023, the company launched new products and began to unveil its strategy relating to AI products, as well as some entry-level graphics cards, which moved it into the mainstream.
Some speculation suggests that NVIDIA shares may increase by a staggering 33% next year, which would add almost $400 billion to the S&P 500 index’s overall value. Let’s see if that is an accurate prediction or not.
Now it’s time for that short diversion away from high-tech toward the more traditional members of the big hitters on the New York stock markets.
Berkshire Hathaway is the highest-valued company by individual share price in the world, by a very large margin, and as it heads into 2024, a year in which its founder and CEO Warren Buffett will celebrate his 94th birthday, it is still on the radar of shrewd investors as a potential market mover during the initial part of 2024.
At the end of last year, Charlie Munger, Vice Chairman of Berkshire Hathaway, passed away at the age of 99. He and Mr Buffett had enjoyed an incredible career and partnership, and in Mr Munger’s final months, many of Mr Munger’s wise adages were released into the public domain, adding weight to the shrewd nature by which Berkshire Hathaway has been run throughout the years.
In 2024, Warren Buffett’s success story is being held out as a potential big mover. What is particularly of interest is that 57.4% of Berkshire Hathaway's $367.5 billion stock portfolio is held in just two stocks, giving rise to the potential notion that the firm has its eggs in two baskets, but this would be a churlish assumption given Mr Buffett’s incredible ability to navigate the markets.
However, one of these is Apple, which has gone from strength to strength during 2023, so Berkshire Hathaway’s portfolio, along with its share price, has risen along with the overall support for Apple.
This brings us to Apple itself.
Apple has made tremendous ground during the course of the past year. In 2023, Apple’s revenue was $383 billion, which is actually down compared to the previous year in which it made $394 billion; however, when looking over a longer period of time, it is absolutely clear how a total domination of a market sector has benefitted Apple.
In 2014, when smartphones began to gain widespread adoption across the globe, Apple’s revenue was $183 billion; therefore, looking over a ten-year period during which the smartphone market reached saturation point, the elevation from $183 billion per year at the beginning of this phenomenon to $383 billion in 2023 is a remarkable, and more importantly steady achievement.
There are those who consider that Apple is poised to relinquish its title as the world's most valuable company, with Microsoft stepping into the lead. However, Microsoft’s stellar performance over the course of 2023 is more likely to be the cause of that rather than Apple’s slight downturn in annual revenue for last year. Watch this space as the two tech titans battle it out.
Amazon has had an interestingly volatile start to the new year, giving investors and analysts something of interest to consider.
During the course of 2023, Amazon stock made a steady overall upward direction, with a few dips during the early part of last year before resuming its increase in overall value.
At the end of the year, however, this began to falter, and the growth flatlined during the last week in December before slumping in the first week of January.
On January 2, the first fully operational day of Western financial markets, Amazon stock actually took a sudden dip, going from $152.20 per share to $148.24 at FXOpen during the trading session on January 2. This quickly resolved itself, and by the end of the trading session, Amazon stock was back up to $150. This blip is clear to see when looking at the five-day moving average and is unusual against the year-long backdrop of steadiness.
Amazon stock began 2023 at $85 per share, so the current value represents a huge increase. For this reason, investors are poised to see the movements of the household name in retail shopping and data hosting in 2024.
It would be perhaps an obvious conclusion that Microsoft would appear in a list of the most interesting big-cap stocks this year, and it certainly seems that it is currying favour among analysts and market participants as one to watch.
Microsoft is an evergreen computer software and hardware giant. However, 2023 was a year of trepidation and an uphill struggle for the company as it battled with American and British authorities who attempted to block the company's planned acquisition of games and entertainment giant Activision Blizzard.
On home turf, the US authorities began to loosen their initial criticism that such a merger would give Microsoft the opportunity to use Activision's popular games to suppress competition to its Xbox consoles and dominate fast-growing subscription and cloud gaming businesses. However, the US authorities began to regain their disdain for such a merger, opening up fresh critiques and cases for preventing it in December last year.
At this point, such a move by the US authorities was particularly interesting because Microsoft and Activision Blizzard had already closed the deal, and a lot of vested interest and capital expenditure in doing so had already taken place.
The British position was consistently hardline and remains so, with the Competition and Mergers Authority standing firm in its ruling that such a merger would constitute a monopolistic enterprise. However, Microsoft CEO Brad Smith has relaxed his view on the UK Competition and Mergers Authority's ruling. The CMA forced Microsoft to restructure its Activision Blizzard deal, giving up key cloud gaming rights in the UK and many other markets worldwide, driving Brad Smith to take the view that this has been the hardest thing to have had to deal with in four decades of operating in Britain.
In a recent interview on BBC Radio 4, Mr Smith said the ruling was 'tough and fair' and admitted to the press that “It pushed Microsoft to change the acquisition that we had proposed for Activision Blizzard, to spin out certain rights that the CMA was concerned about with respect to cloud gaming.”
Microsoft stock continues its stoicism as 2024 begins, and although the first few trading days of this year have been somewhat shaky, with a few downturns in play, the overall trajectory for last year was one of share value growth, and therefore, it is a stock to watch in 2024 especially as the company has turned its attention toward AI development.
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