GNAI Visual Synopsis: A split roadway, symbolizing a decision point in tech investment, with one road leading towards a sunny skyline emblazoned with logos of Big Tech companies, and the other heading into a less-traveled landscape with a sign pointing towards IBM.
One-Sentence Summary
A recent InvestorPlace article discusses whether the extraordinary 2023 stock performance of AI/Big Tech giants, dubbed the “Magnificent 7,” can be sustained in 2024 amid predictions of recession and emerging investment opportunities in overlooked sectors like IBM. Read The Full Article
Key Points
- 1. In 2023, the “Magnificent 7” tech companies (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla) saw an average return of nearly 99%, vastly outperforming the average stock in the S&P 500, which is actually down 1.3% when measured by the S&P 500 Equal Weight Index.
- 2. Experts are divided on whether these Big Tech and AI stocks will continue to outperform in 2024, with notable investors like Jeffrey Gundlach suggesting an impending recession will hit these companies hard, while others like Callie Cox see Big Tech durability as an advantage in tough economic times.
- 3. Eric Fry, a seasoned macro investor, highlights IBM as an under-the-radar Big Tech company poised for growth in AI and hybrid cloud markets, which are expected to see significant expansion by 2030.
Key Insight
The debate surrounding the continued success of the “Magnificent 7” AI/Big Tech stocks contrasts sharply with the potential of certain undervalued companies like IBM, suggesting a more nuanced and selective approach to tech investment as the industry faces future economic uncertainties.
Why This Matters
The article points to a critical junction in tech investing where the previous high performers may not guarantee future success due to market saturation and potential economic downturns, underlining the importance of the broader market trend analysis and diversified investment strategies for individual investors.
Notable Quote
“Most of the [AI related] big money has already been made for Microsoft, Alphabet, Nvidia, and Amazon. That’s why I’m zeroed in on the less obvious choices… And they carry far more profit potential…” – Eric Fry.
