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Proprietary Data Insights Top Financial Professional Stock Searches This Monthq
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Will The Stocks That Crushed 2023 Dominate 2024? |
It’s interesting to compare the Trackstar top five from Monday’s Juice to today’s. On Monday, we looked at the stocks generating the most search interest from retail investors. Today, we isolate it to financial professionals. The big differences:
Interesting. This makes us wonder if NVDA is falling out of favor, particularly among the pros. In fact, the more time that goes by since Nvidia’s monster rally, the less interest we see among both classifications of investors. Maybe they don’t see much more upside. We’ll consider that in a second. AMC showing up among the pros reinforces something we observed in Trackstar during Q3: There’s renewed interest in former ‘theme and meme’ stocks. Between Q2 and Q3, interest in AMC skyrocketed 280% among financial pros, making it the stock with the third largest surge in the advisor category. Maybe they know something we don’t? Probably not, though. Down roughly 75% YTD and showing few, if any signs of life, The Juice doesn’t consider AMC fit for long-term investing. On other meme stocks that have actually popped a bit recently, such as Canopy Growth (CPC). Straight from our Q3 Trackstar report, it could be that major funds, which incurred losses, might be selling into these rebounds to mitigate their losses. In terms of stocks absolutely worthy of a look if you’re a long-term investor, we start with tech. Check out the approximate YTD returns of the most searched tech names among financial pros:
And, of course, the leader of the group, NVDA, up around 244 freaking percent! Throw in Alphabet (GOOG)(GOOGL) (up +53%) and Meta Platforms (META) (+169%) and you have the Magnificent Seven stocks that led/lead the stock market in 2023. The Juice wonders, could these be the new flights to safety? Sounds weird to say, but the modern day versions of consumer staples stocks. Consider Apple. The stock continues to crush it among relatively tepid growth and a lack of recent, real innovation (where’s the actual Apple TV or Apple Car?). Our sister newsletter The Spill said it best: It’s weird to go against the grain like this, but quite simply, we believe there are better investments than Apple right now. The company’s immensely profitable with tons of cash. Yet, we don’t see how they plan to transform that into growth over the next several years. Once that becomes clearer, we’d reevaluate our stance. Maybe the strength we see in Apple (it’s up about 8% over the last month) indicates that investors do view it as a safe place to keep capital even amid slow growth, thanks to its profitability, cash position and small, but growing dividend. An amplified, new school 2023 version of the old school consumer staples names such as Procter & Gamble (PG), which is basically flat YTD, or Coca-Cola (KO), which is off about 9% YTD. Put another way, having seen them deliver so strongly for so long, maybe investors feel more confident in traditionally more risky and volatile tech, even if everybody anticipates growth will slow, than they do in a PG or KO. The Juice is just thinking out loud. Take Nvidia for example. As we pointed out in August, via a Wisdom Tree analysis: Allowing a forward-looking P/S ratio for Nvidia puts it into the >25 P/S bucket, where winners have, on average, grown their sales by more than 50% a year. For the 12 months prior to April 30, 2023, Nvidia had total sales of around $26 billion. Growing that at 50% a year means that in 2028, its annual sales would reach more than $197 billion a year—a staggering sales number that only about 30 companies worldwide surpass currently. This number becomes even more daunting when we consider the fact that estimates put the total size of the AI GPU market at between $120 billion and $150 billion by 2028.2 This makes it very unlikely that Nvidia can grow its sales by 50% a year, even if it has 100% of the market, if demand doesn’t grow at that rate. Speaking of Wisdom Tree, the fund firm recently suggested broadening the scope of stocks you consider to play an AI trend it thinks is in the early innings: But what does all this mean for an investor thinking about initiating a position in AI? Maybe they are paying attention to the recent case of Microsoft offering a version of Copilot in Office 365 and considering that this could represent a platform of hundreds of millions of users that might access this software in the coming months or years … We believe AI represents potentially the biggest boon to productivity we have seen in decades and we are only just beginning in seeing this play out. We encourage investors to consider a broad range of companies that may benefit from the growth in this megatrend over coming years … The Bottom Line: The Juice agrees with this sentiment. While we still think NVDA has an albeit rebalanced place in many long-term portfolios, names like MSFT might scream buy more loudly. Microsoft recently unveiled its own AI chip for use in its Copilot service. While the company said it won’t sell its AI chip, it does make it less reliant on Nvidia. Plus, it could eventually use it to compete with Nvidia. Stay tuned. Then there’s Meta, which our partner, BarChart, called the “Top AI Stock to Watch Right Now” and “the one to watch among the Magnificent Seven”: On the third-quarter earnings call, Mark Zuckerberg stated that AI will be Meta’s most important investment area in 2024. The verdict: Right now, we expect a Santa Claus rally to end 2023 and a bull market to start and maybe persist in 2024. We think other sectors will rebound and show strength, however tech, particularly AI leaders, and even Apple, which basically has blue chip status, will continue to lead the way. |
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