9 tech stocks to buy as AI spending increases in 2024: Wedbush

If you thought tech stocks did well last year, wait until you see what happens in 2024.

The artificial intelligence race could officially begin in November 2022. OpenAI makes ChatGPT publicly available. But it wasn’t until March 2023, when Nvidia revealed how high demand really was for the semiconductor chips that power AI programs, that investors realized what they were witnessing. It was from. Birth of an intergenerational technology shift — and invested accordingly.

The result has been an incredible stock price rise for what has become known as the Magnificent Seven, a group of top tech stocks at the forefront of AI innovation. Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla were collectively responsible for much of the S&P 500’s rise last year, and the group is now valuable. more than the Canadian, Japanese and British stock markets combined.

While these seven stocks dominated most of last year’s attention, the technology industry as a whole performed well in 2023: the communications services and information technology sectors. It rose more than 50% last year.. Dan Ives, senior equity research analyst at Wedbush Securities, expects further gains this year.

“As 2024 arrives, we think the streets and the tech world are waiting for the ‘Year of AI’ to take shape and ultimately drive tech stocks higher,” he said. I wrote this in a memo dated January 1st.

Tech stocks to rise 25% in 2024

The key to Ives’ bullish outlook is, of course, AI.

“In our view, a new tech bull market has begun, with tech stocks poised to do well in 2024, led by Big Tech, software, and the entire chip sector as a tsunami of AI spending hits broad tech sectors. I will,” Ives wrote. “We now believe the rest of the tech sector will join the Magnificent Seven in this rally for 2024, with the tailwinds of AI in full swing.”

The biggest tailwind is spending across the technology industry on AI upgrades at every level of the business. In conversations with executives across the industry, we say: Ives has found that a common theme is leaders’ focus on leveraging AI in a variety of ways.

“More than 50% of all companies we recently surveyed have experienced 20 or more use cases for Generative AI, and more than 80% of all companies have used Generative AI for data analysis, marketing content creation, document editing/summarization, etc. We have experienced more than 10 use cases to improve our business, and the benefits of using Generative AI are becoming increasingly clear by increasing operational efficiency and creating a more cost-effective capital structure.” writes Ives.

The main beneficiaries of this waste are Microsoft and Alphabet. Ives specifically pointed out that Microsoft is a true leader in this field thanks to new developments in its cloud computing platform Azure, such as his Co-Pilot AI companion.

But the two tech giants won’t be the only winners as AI spending increases over the next year.

“A key theme from our recent December quarter-end field survey was that AI monetization is starting to have a positive impact on the technology sector, with Nvidia, Microsoft, Google, Datadog, and Palantir all “We show that AI use cases are on the rise across the enterprise and consumer landscape,” Ives wrote.

And as these AI tailwinds spread across industries, the entire technology industry stands to benefit. Ives thinks the Nasdaq could reach new highs by the end of the year.

“Given the Fed jawbone/macro factors, we will see ebbs and flows over the coming months, but the market has yet to significantly estimate how quickly this will rise, so tech stocks are bullish at the Nasdaq 20,000 level.” “We believe the AI ​​monetization cycle is unfolding across companies in this space,” Ives wrote.

There are many ways to capture these tailwinds yourself and make a profit. For those who want to keep it simple, his technology-focused ETFs like the SPDR NYSE Technology ETF (XNTK), Invesco S&P 500 Equal Weight Tech ETF (RSPT), or Vanguard Information Technology ETF (VGT) are all viable options.

But Ives has some more specific investment recommendations. Here are his favorite tech stocks to buy in 2024. apple, microsoft, Google, palo alto networks, Palantir, Z scaler, cyber ark, cloud strikeand Mongo DB. All nine companies are rated Outperform by Wedbush Securities, and all are expected to benefit from this year’s AI-driven rally in the tech sector.

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