| Happy New Year’s Eve!
Before we jump into today’s Digest, a quick note…
We won’t be publishing the Digest tomorrow in light of New Year’s Day. We’ll pick back up on Tuesday the 2nd.
Also, our InvestorPlace offices will be closed tomorrow. If you need assistance from our Customer Service team, they’ll be glad to help you when our offices reopen on Tuesday January 2nd.
Have a wonderful New Year celebration with your friends and family! | | | 7 Stock Market Predictions for 2024 At the end of 2022, many of us at InvestorPlace predicted that markets would recover faster than anyone expected. Here’s from Eric Fry in November 2022 when markets panicked over a Fed rate-hike announcement: We may be approaching the silver-lining stage – the moment when investors begin to believe that the Fed has accomplished its task of taming inflation. I think that moment is very close…
Most important of all, there is now a greater chance that short-term losses will reverse and become 10%, 20%, 50%, or even bigger gains in the coming months and years – provided you’re investing in quality stocks, of course. It turns out they were right. 2023 would bring enormous stock market gains – surprising even top economists at the U.S. Federal Reserve. The group of high-quality “Magnificent 7” stocks would surge 110% in a year while inflation would fall to a mild 3.1%.
“How were so many economists so wrong about the recession,” quipped George Mason University professor Tyler Cowen in a recent Bloomberg op-ed. “They predicted a recession because that is what experts such as Yellen, Krugman, Romer and many others had been teaching for decades.”
We’re now seeing 2024 as another strong year. Inflation has been tamed… rates are set to fall… and, most importantly, our bottom-up research is showing a surprisingly strong outlook. According to FactSet, earnings growth should accelerate to over 20% by the end of 2024 – a rate only possible if consumers and corporations are both spending again.
This week, I’ll bring you seven predictions our editors and writers at InvestorPlace.com – our free news site – have come up with for 2024. sponsorship This $20 AI Company Could Be the Next Microsoft Ready for the artificial intelligence megaboom? Uncover the AI stocks set to soar. These trillion-dollar companies of tomorrow are trading for pennies today.
Discover My #1 AI Stock Prediction 1: Stocks Take a Breather... Then Rally After That Markets rarely move in a straight line. And a recent surge in stock prices now has Luke Lango predicting of a near-term pullback. For the first time in more than a year, the stock market became extremely technically overbought... After the market becomes this overbought for the first time in a year, stocks tend to pull back over the next month – then soar over the next 12 and 24 months. Historical data tells us the same thing. Studies have found that U.S. stocks show significant mean reversion tendencies, so strong January effects are often followed by weaker February performances.
Fortunately, history also tells us that stocks tend to do well after these pullbacks. In a new video, Luke details how...
In other words, in the 12 months after stocks become extremely overbought for the first time in a year, stocks rally 85% of the time.
Louis Navellier, too, is expecting large gains ahead. In his latest Growth Investor update (subscription required), he gives five more reasons why stocks should outperform next year. 2. Fixed Income Makes a Comeback After several years of stagnation, fixed-income securities are finally looking attractive again. As Muslim Farooque outlines in a recent InvestorPlace.com piece, the rise of treasury bill rates to 5.2% now makes bonds, REITs and preferred stocks viable alternatives.
“Higher yields on Treasury bills signal an attractive opportunity for income investors,” he writes. “Such strategies not only offer regular income, critical for retirees but also diversify portfolios and reduce risk.”
Additionally, falling rates in 2024 will help prices of longer-dated bonds and other long-duration assets. Bond prices and rates move in opposite directions, and a 1% decline in bond yields can increase the value of 30-year bonds by as much as 17%.
Farooque goes onto recommend several dividend-paying stocks and ETFs to take advantage of these falling rates. 3. Lithium and Clean Energy Return... 2023 was a terrible year for many clean energy stocks. Chinese prices of lithium collapsed 80%, sending shares of lithium miners and processors down double digits. 
Solar companies, too, saw a massive reversal in demand after European buyers cut back and California’s subsidies expired. Companies like Enphase Energy Inc. (ENPH) lost as much as 70% of their value this year, while stock prices of firms like Sunworks Inc. (SUNW) now look more like rounding errors.
Fortunately, we’re seeing a turnaround happening next year. As Ian Cooper writes this week, at InvestorPlace.com, about lithium industry giant Albemarle Corp. (ALB): Albemarle expects global lithium demand to exceed supply by 500,000 metric tons in 2030. Various consultancies and other producers have slightly different projections, but all warn of a looming shortage. He also notes that upcoming interest rate cuts in 2024 will help solar companies, since most projects are debt-financed. Companies like First Solar Inc. (FSLR) are already beginning to push higher, and even some wind power firms, like Vestas Wind Systems A/S (VWDRY), have seen shares rise over 50% since November. sponsorship The #1 Stock for the AI Revolution (Not TSLA) According to Wall Street Legend – Louis Navellier – the AI tech boom has arrived, and it’s poised to create a new class of ultra-wealthy Americans. Click here to discover how to gain access to his #1 AI recommendation. Hint: It’s not TSLA or NVDA. 4. … But Not All Are Winners However, the resurgence of cleantech in 2024 won’t help all green technologies. That’s because higher borrowing costs and lower oil prices will pressure marginal players. Dana Blankenhorn writes, at InvestorPlace.com, that Plug Power Inc. (PLUG) was recently dropped to underweight on cost issues
“All hydrogen is chemically identical. The costs are not,” Blankenhorn notes. “Plug Power must adapt to new sources of hydrogen supply. I don’t see how it makes that turn absent a major reorganization, which could include bankruptcy.”
Moonshot technologies will also see their funding dry up. Small-scale reactor company NuScale Power Corp. (SMR) has begun to conserve cash, since its low share price makes raising capital more expensive. At InvestorPlace.com, Thomas Neil also highlights how scathing short reports are adding pressure.
That means investors should either concentrate their bets on proven technologies or focus on “picks-and-shovels” players that are agnostic to green energy sources. InvestorPlace.com’s Larry Ramer suggests investors consider Stem Inc. (STEM) for its leading position in energy storage. 5. AI Makes Things Weird 2023 was the year of ChatGPT, a hallucination-prone chatbot that nevertheless kicked off an arms race in generative AI. Today, virtually all major U.S. tech companies are pursuing some form of the technology.
We’re already seeing some effects of this arms race. On December 21, AI art generation firm Midjourney released “V6,” its latest version, which creates images almost indistinguishable from real life. And companies like Google parent Alphabet Inc. (GOOG, GOOGL) are using reinforcement-learning techniques in real time to improve chatbot outputs. Its upcoming Gemini model will supposedly rewrite your prompt for better results.
2024 will bring even more of these innovations. Augmented-reality retail could become a reality, as Ian Bezek reports at InvestorPlace.com. He picks out Unity Software Inc. (U), Matterport Inc. (MTTR), and Qualcomm Inc. (QCOM) as three potential winners. Chris MacDonald writes at InvestorPlace.com how AI meeting tools could bring digital assistants to your Zoom Video Communications Inc. (ZM) meetings. And improvements in AI images could bring AI video sooner than we might expect. 6. Blue Chips Gain Favor The Dow Jones Industrial Average has underperformed the broader stock market this year. The index has only risen 13% this year (compared to a 45% gain in the tech-heavy Nasdaq Composite), and 10 of its 30 constituents have seen shares go down.
But Eric and Louis see a turnaround in the making. In a recent Smart Money special report, Eric outlines his Top 7 Stocks for 2024, which includes names like glassmaker Corning Inc. (GLW) and chipmaker Intel Corp. (INTC). These blue-chip firms are riding big-picture megatrends and furiously innovating to avoid getting left behind.
Louis highlights this fact in a report on Intel and its efforts to catch up in artificial intelligence. Though rival Nvidia Corp. (NVDA) “remains the better AI buy,” he says, Intel is making inroads with its 5th Gen Intel Xeon processor, the only mainstream data center processor with built-in AI acceleration. “The hope is that this accelerator will attract AI companies away from NVIDIA, whose H100 Tensor Core accelerator dominates the market,” Louis says.
Essentially, blue-chip firms still have enormous research budgets that can compete in areas beyond what the “Magnificent 7” do. Intel alone has spent $16.5 billion in R&D this year, twice as much as Nvidia, and much of it will go into production facilities that Nvidia lack. Given the relatively cheap starting price of blue chips this year, investors should expect these quality firms to do well in 2024. 7. A New AI Hardware Arms Race Emerges Finally, Luke writes in Hypergrowth Investing how the coming year will bring significant advances in AI hardware. Major tech companies, for instance, are developing their own custom AI chips to optimize their specific services and reduce dependency on Nvidia. This "custom AI revolution” will bring a new generation of task-specific AI hardware that outperforms general models. Here he picks out several winners of this emerging trend.
Meanwhile, he also sees the PC market undergoing a similar shift toward dedicated hardware: In 2024, both Dell and HP plan to launch the first generation of what they’re calling “AI PCs” – PCs with artificial intelligence built into them... According to research firm Canalys, the global PC market is set to grow by 8% in 2024 after contracting in both 2022 and ‘23. Then it’s expected to rise another ~20% in 2025. Essentially, AI demands will become so specific that firms like Dell Technologies Inc. (DELL) and HP Inc. (HP) will find enormous new markets for specialized products. A similar trend happened with smartphones, when companies like Apple Inc. (AAPL) began contracting with hundreds of suppliers to get the best parts. A wireless modem maker, for instance, will rarely produce the best microphone as well.
The result is that hundreds of hardware suppliers will gain. Don’t write off long-forgotten suppliers quite yet; the AI hardware arms race is just beginning. ADVERTISEMENT Elon’s Project Dojo: The Silicon Valley Story No One’s Telling You will NOT believe what Elon Musk is doing next. I’ve seen the masterplan for Elon’s “endgame”:
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Full Details Here. Predicting the Future In the 1900s, French authorities assembled series of paintings for the 1900 World Exhibition titled “France in the Year 2000.” In it, they asked artists to imagine what life might be like 100 years in the future.
Unsurprisingly, most of the artists pictured a slightly advanced version of what already existed. Wooden brooms were replaced by mechanical arms holding wooden brooms. Orchestras replaced by... mechanical arms holding musical instruments. Barbers replaced by (you guessed it) mechanical arms holding razors and shaving brushes. 
Source Future artists would do the same. Every generation of artists predicting the year 2000 would create a world that looked much like their own... with minor additions to make things look more futuristic.
That’s because each new year looks much like the last. Most upcoming car models look similar to their predecessors. Smartphones only get slightly faster. And kids only grow a little bit older. It’s hard to imagine what happens 100 years into the future.
However, some years create enormous step changes. The introduction of the Model T Ford in 1908 meant that there were almost 200,000 cars on the road two years later. The launch of the iPhone in 2007 made flip phones obsolete almost overnight. (You can often tell a movie’s age by the type of phones they use.) And 2023 marks the year when AI finally “arrived.”
That’s why we can be sure that 2024 will see an acceleration of change. We know that PC makers like Dell and HP will look entirely different a year from now. We know that cleantech will make a comeback. And we know that many of the top blue-chip companies (and their enormous R&D budgets) will be the ones to push things forward.
So, perhaps even French artists of the 1900s might have been right all along. Given how quickly AI and robotic technologies are advancing today, perhaps we will see robot arms playing music someday soon.
We hope you have a wonderful New Year. See you back here next Sunday, after the holidays! Regards, Thomas Yeung, CFA
Markets Analyst, InvestorPlace.com | 
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