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🏆 The Street's Favorite Stock

🏆 The Street's Favorite Stock

Plus, chip stocks to snack on.

January 21, 2024

Happy Sunday to everyone on The Street.

Guys, last week’s poll results were wild. As a quick refresher, we asked if you think Bitcoin will hit $1.5 million by 2030. Remember, this is Cathie Wood's bull case for the cryptocurrency by the end of the decade.

There were roughly 600 votes, a majority of which said no (73%). I think I tend to agree with you, but then again you never know. Take, for example, Wall Street’s favorite stock, which we write about below.

This company went public on May 15, 1997, and the IPO price was $18.00, or $0.075 adjusted for the stocks splits that occurred on June 2, 1998 (2-for-1 split), January 5, 1999 (3-for-1 split), and September 1, 1999 (2-for-1 split), and June 3, 2022 (20-for-1 split).

Now it’s trading at $155. This gain didn’t happen over the same time period that Cathie is projecting Bitcoin to pop, but as Lloyd Christmas famously said, “So you’re telling me there’s a chance.”

If I decide to shun Bitcoin and it does go to $1.5 million in six years, I’ll definitely feel like Dumb and Dumber. Scroll down for more on Wall Street’s favorite stock, in case you couldn’t have guessed which one it is already.

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Review

The S&P 500 Index, as tracked by the SPDR S&P 500 ETF Trust (SPY), achieved historic all-time highs during the last session of the week, marking a significant milestone following more than two years since its previous peak.

Major tech stocks led the broader U.S. stock market's rebound this week, buoyed by investor optimism surrounding advancements in artificial intelligence and strong consumer demand.

The Nasdaq 100, as monitored through the Invesco QQQ Trust (QQQ), has notched its eleventh week of gains in the last 12, also setting new all-time records and eclipsing the 17,000-point mark.

December's retail sales rose at the highest pace in 10 months, up 5.6% compared to a year ago, indicating a strong holiday season for U.S. consumers.

Preliminary data from the University of Michigan revealed that consumer confidence reached a two-and-a-half-year high in January, sharply exceeding expectations.

Speaking at the World Economic Forum in Davos, Switzerland, OpenAI CEO Sam Altman predicted that more individuals will be conversing with computers in 2024, hinting at a future intertwined with artificial intelligence. This aligns with the broader trend of AI integration into daily life, reinforcing the notion that AI-driven communication is on the cusp of becoming the new norm.

At Davos, leaders underscored the “massively destabilizing” potential of AI, advocating for increased human oversight. The dialogue highlighted the urgency for ethical frameworks as AI becomes more autonomous, influencing decisions from global economics to everyday life, and the need for stringent governance to manage its societal impact.

Facebook owner Meta Platforms’ chief product officer equated the significance of the metaverse to that of smartphones, envisioning a future where virtual spaces become an indispensable part of daily life. CEO Mark Zuckerberg announced major AI initiatives aimed at creating an interconnected virtual experience.

Markets have tempered expectations for a Federal Reserve interest rate cut in March following better-than-anticipated economic data and now assign a 50% probability. A chorus of Fed officials hinted that rate reductions could occur in the second half of the year.

At Davos, Goldman Sachs CEO David Solomon suggested the market might be too optimistic about several rate cuts in 2024. David Rubenstein, co-founder of The Carlyle Group, forecasted three Federal Reserve rate cuts, possibly before the November election.

Preview

Economic Data

Monday: December U.S. leading economic indicators
Tuesday: None scheduled
Wednesday: January S&P flash U.S. services and manufacturing PMI
Thursday: Initial jobless claims, New home sales, Advanced retail inventories.
Friday: Personal income, Personal spending, PCE Index, Pending home sales

Earnings

Monday: United Airlines, Microsoft
Tuesday: 3M, United Airlines, General Electric, Proctor and Gamble, Raytheon Technologies, Lockheed Martin
Wednesday: Abbott Labs, AT&T, AppFolio, IBM, Baker Hughes
Thursday: American Airlines, Southwest Airlines, Blackstone
Friday: Booz Allen Hamilton Holding Corp, Volvo, American Express

The Street’s Favorite Stock

A Familiar Name Is Getting Attention

Analysts are throwing their support behind a stock that every investor has heard of: Amazon (AMZN).

The mega-cap tech company surged around 80% in 2023, and the Street sees more gains ahead in 2024.

The stock was named a top pick by five different analysts on a single day at the start of the year. The experts point to several reasons behind their belief that Amazon will see growth this year.

Advertising and AI

Amazon advocates believe advertising will be a major tailwind.

The Olympics this summer and a US election in November present two major opportunities to drive more advertising spend.

Artificial intelligence is another sector analysts are highlighting, since Amazon came out with its own AI training chip. D.A. Davidson argues that Amazon will eventually close the gap with Microsoft in the AI race.

Aim High

The Street has set lofty price targets for Amazon, with the highest target at $230 per share. The stock currently trades at about $155 per share.

The average price target is around $182 per share, a roughly 18% gain compared to current levels.

Amazon is covered by 56 analysts and there isn’t a single bear. Only one analyst doesn’t name it a buy, giving it a hold rating instead.

The Street was also bullish on Amazon going into 2022, a year when shares were nearly cut in half. Investors will be interested to see what 2024 holds for Amazon.

Where will Amazon (AMZN) shares finish in 2024?

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The result: individual investors confined to the public markets are missing out on a substantial portion of the returns generated by the next generation of industry leaders.

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Chips to Snack On

Favorite Semiconductor Stocks for 2024

Investors showed a lot of love to chip stocks last year. The iShares Semiconductor ETF (SOXX) more than doubled the S&P 500’s return in 2023.

Analysts think that momentum could continue, thanks to artificial intelligence.

UBS is telling clients that AI is here to stay, expecting demand for more high-performance chips. BofA is also a believer. It’s telling clients the sector might be in the early innings of a multi-year upcycle.

Stick With What’s Working

The Street is tapping two longtime winners among its 2024 picks.

NVIDIA (NVDA) popped around 240% last year and has seen shares go from $39 to over $550 in the last five years. Analysts argue the company is dominating the AI space and will continue to grow as AI is more widely adopted.

Broadcom (AVGO) has gone from $260 per share to over $1,100 per share in the last five years. Broadcom has several revenue streams, including software and networking tech.

Study Abroad

TSMC (TSM) also made varsity.

Bernstein supports the stock, claiming it has better tech than its closest competitors like Intel (INTC).

Analysts note that TSMC has excellent positioning in the smartphone space, given its relationships in that sector. In the past, TSMC has underperformed when compared to peers due to tension with China.

Whichever stocks investors choose, analysts think the semiconductor sector is in for a good year.

Which stock will have the best 2024?

The Apple of My AI

AI Application

2024 could be a big year for AI, and Canaccord Genuity has come up with a list of companies with the opportunity to take advantage.

According to analyst Susan Anderson, this year we will see a shift from organizations just creating AI strategies. 2024 is expected to see companies implementing and using AI strategies, as well as measuring outcomes.

That Was Then, This Is Now

Last year, companies that engineered AI technology dominated the investing world. Alphabet (GOOGL), Microsoft (MSFT), and Nvidia (NVDA) had stellar years, propelling the Nasdaq’s gains.

But that was last year, and analysts believe we are still in the early stages of AI development.

Who Stands to Benefit

According to Canaccord Genuity, several stocks could take advantage of the changing AI scene in 2024.

Software vendor HubSpot (HUBS) is in a unique position to help companies implement AI into processes. MongoDB (MDB) provides infrastructure for things like data quality, scalability, and model running. Both companies could be in for a great 2024, thanks to AI implementation opportunities.

Cybersecurity and healthcare companies like Dexcom (DXCM) and Illumina (ILMN) could also be beneficiaries of the new age of AI.

The world of AI is ever-changing. According to analysts, these stocks could give investors the opportunity to capitalize on that change.