7 Huge Stocks You Need to Watch in 2024

In 2023, the S&P 500 rose a whopping 24%. But did you know that just seven stocks made up 60% of that gain? These companies are dubbed the Magnificent 7, and in this video, we're going to explore how they're currently breaking the stock market and whether 2024 could be even bigger.

Now, before we start, I want to make clear that by discussing the businesses in this video, I'm by no means recommending that you should buy, hold, or sell any of these stocks. This video is just made out of my interest in business and is meant for educational and entertainment purposes only. Any advice is general in nature, and it might not be right for you. These are simply seven big stocks with big storylines across the next 12 months.

Coming in at number seven, we have an extremely popular stock, and that is NVIDIA. Nvidia had an absolutely huge 2023, ending the year as the S&P 500's best performing stock, up 239%. How did that happen? Well, with the release of OpenAI's ChatGPT in November of 2022, there's no secret that 2023 saw basically all of the world's biggest companies open their eyes to the power of AI. Across the last 12 months, we've now seen these companies—Meta, Google, Apple, Microsoft, Amazon, Tesla, and so on—announce new and exciting integrations of artificial intelligence with their products.

Now, how does this benefit Nvidia? Well, Nvidia is the company that designs the hardware to power a lot of the world's artificial intelligence. Their biggest clients include companies like Amazon, Microsoft, Google, Meta, and Dell. Over 2023, orders were going through the roof. In Q4 of 2022, their data center revenue was $3.62 billion. This is the business segment that encompasses their sales of AI-related hardware.

Now, fast forward three quarters, and their data center revenue hit $14.51 billion, with guidance of $20 billion in revenue in Q4. Nvidia CEO Jensen Huang has attributed all of Nvidia's growth to "broad industry transition to accelerated computing" and "generative AI," with the era of generative AI taking off. That trend is very much set to continue in 2024, and Nvidia is certainly in a box seat to capitalize.

The only question for investors now is the valuation. With the meteoric rise in share price over 2023, investors are now expecting Nvidia to grow into their $1.2 trillion market cap. I mean, despite all their successes in Q3, they did only report $9.2 billion in net income, and with a PE ratio of over 60, Nvidia will have to keep this pace of growth up over the next few years to satisfy investor expectations. No doubt, 2024 will be a very big year for the company.

Okay, coming in at number six is a company poised to benefit greatly from the ongoing AI buzz: we have Microsoft. Now, Microsoft's core business will likely remain very much unchanged in 2024, offering subscriptions to proprietary software such as Office 365 and Windows, offering cloud solutions through Microsoft Azure, and selling devices like the Surface Pro and Xbox consoles.

But what is going to change is Microsoft's continued integration of artificial intelligence into their products. As you might have seen, Microsoft is even adding a new co-pilot key to Windows PC keyboards. This is the first change to the keyboard since 1994, and what the key does is it opens up a suite of AI protocols to help you work more efficiently. It's no secret, a lot of this stems from their ongoing partnership with OpenAI. Back in 2019, Microsoft invested $1 billion into OpenAI, the creators of ChatGPT, and early last year, they doubled down by committing another $10 billion to the company.

Microsoft became the exclusive provider of computing power for OpenAI's research products and programming interfaces for developers, which turned out to be a very smart move due to the astronomical success of ChatGPT in 2023. Many startups and multinational companies alike are now rushing to integrate their products with ChatGPT, which is good news for Microsoft as it means massive workloads running on Microsoft's cloud servers.

But of course, that's not even the best bit. Not only does Microsoft gain extra business, they are also able to work with the OpenAI team very closely to integrate the functionality of ChatGPT into their own products. ChatGPT has already been integrated into their Bing search engine, their sales and marketing software, the Office 365 productivity bundle, and importantly, Azure.

Michael Churan from Wells Fargo last year estimated that this could all add up to over $30 billion in new annual revenue for Microsoft, with roughly half coming from Azure. Plus, with the infamous OpenAI board restructuring of late 2023, Satya Nadella and Microsoft seem well-poised to gain even more influence over the AI nonprofit in 2024 as the board looks to add some Microsoft representation alongside Brett Taylor, Larry Summers, and Adam D'Angelo. Either way, 2024 is certainly stacking up to be a big year for Microsoft's consolidation into AI.

Then coming into our fifth position, a very big company to watch, particularly in 2024, is surprisingly Apple. It's no secret that Apple aren't really the company of innovation and excitement anymore, with each year's products looking almost exactly the same as last year, and Tim Cook focused more on share buybacks than innovation. But in 2024, Apple are finally bucking the trend, returning to their Steve Jobs roots with their first new product in years.

While you can most definitely expect Apple's financial performance in 2024 to be a result of the usual suspects—iPhone, Mac, iPad, their wearables and accessories, and of course, their huge services business—one new product category that investors will be watching very closely is Apple's Vision Pro headset. This is Apple's first foray into the world of augmented and virtual reality. While it definitely won't add much, if anything, to Apple's bottom line in 2024, it could just set the stage for a massive new product category of the future.

After about a decade of persistence, it's only really been in the last few years that Meta has gotten the ball rolling in AR/VR technology with their Meta Quest headsets, with reports of 20 million units being sold up until early last year. And, as is usually the case with Apple, it's now their turn to jump on the bandwagon, releasing the most advanced and expensive headset the market has seen at $3,500.

There's no doubt this is a premium product, and investors will be watching closely as to how many choose to adopt this new technology. Early reviews are that it is a truly magical experience, but will the price be too prohibitive for this product category to flourish? Well, we're about to find out, as Apple have recently announced that the Vision Pro will be available in the US from February 2nd, with pre-orders starting on January 19th.

Before we get into the next company, I wanted to say a big thank you to Mumu for sponsoring this video. Have you ever struggled to analyze stocks or felt uncertain about where to find investment opportunities? It's easy to get information overload these days, and that's where Mumu comes in to streamline the process.

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Another big technology business set to have a monster 2024 is America's largest car company by market cap: Tesla. There's no doubt Tesla has now cemented themselves firmly into the auto industry, producing 1.81 million cars in 2023, and with the Model Y at times rating as the world's highest-selling car. But now, Tesla is entering a new period of company growth, with Elon Musk unveiling Tesla's master plan part three at Tesla's Investor Day in March last year.

The company is now set to embark on one of the most ambitious growth plans ever put forward. Elon Musk has said many times in the past he now believes Tesla will become the world's most valuable company. But in order to achieve this, some key developments need to be made, and it starts in 2024.

Firstly, Cybertruck—love it or hate it—Tesla has over 2 million pre-orders for this truck that they need to fill. Given their total production in 2023 was 1.81 million cars, this tells me that the Cybertruck production ramp will no doubt keep them very busy, not just in 2024, but well into 2025 and 2026 as well.

On top of that, Tesla is also set to unveil their next-generation vehicle sometime this year. This vehicle, colloquially named the Model 2, is designed for huge scale and is set to be compact and easy to manufacture. This vehicle, slated to begin production in 2025 at the Texas and soon-to-be-Mexico Gigafactories, is a key puzzle piece in Tesla's plans for an autonomous taxi fleet that will eventually rival the likes of Uber and Lyft.

And that brings us to full self-driving, supposedly one year away for the better part of five years now. 2024 is a high-pressure year for the autopilot team. Full self-driving beta is now available to all customers across the United States, but its functionality has been both praised and criticized from drivers. However, with Tesla's Dojo supercomputer set to fire up towards the end of 2024, in addition to the exponential growth of Tesla drivers, and thus Tesla driving data, 2024 could be a very important year for the future improvement of the platform.

Then lastly, battery cells. It's been over three years now since the automaker announced that they would be joining the battery manufacturing business with their 4680 battery cell. After being hamstrung with limited supply of cells for many years, it looks like 2024 could be a pivotal year in Tesla escaping their trap. Last October, Tesla announced they completed their 20 millionth 4680 battery cell, and with Model Y and Cybertrucks now leaving the Texas Gigafactory sporting these new cells, this could be the year that Tesla can unleash the true manufacturing speed of their vehicle production lines.

Then coming in at number three, we have Amazon. Amazon's 2024 looks set to be less flashy than some other businesses, but still a very important one for the e-commerce giant. Under Andy Jassy, in 2024, the company will continue to shift its focus from Jeff Bezos's original growth-over-profit mentality to a more balanced approach after the company ran into several over-expansion issues, such as an excess in warehouses and staff at the end of Bezos's tenure.

Under Jassy's more balanced approach, Amazon is set to continue shifting focus away from its core e-commerce business to a more services-focused business. While its online stores still make up about 45% of total sales, this business is only growing at around a 7% pace, whereas, on the other hand, one of its fastest-growing segments, third-party seller services, may only make up 27% of Amazon's revenue, but is growing at a 20% pace. This shows that Amazon's focus is now much more around selling its giant platform to other commerce companies to do business on while it handles the payment transactions and delivery.

Prime subscriptions also grew 14% in Q3, and throughout 2024, Amazon is set to focus heavily on its ad services division after it showed 26% growth in Q3. Overall, the ongoing shift towards services, which naturally come with higher margins, has already helped Amazon's gross margins grow north of 177%, and with Jassy at the helm, this trend only looks to continue in 2024.

With that said, we now hit the advertising giants. Coming in at number two is Meta. As we know, Meta's revenue is about 99% ads and less than 1% sales of VR headsets. The metaverse might take off one day, but today is not that day. For Meta, 2024 will very much be centered around bolstering their core ad business.

There's no doubt they faced many challenges over the last few years in this space. Advertisers have been spending less on the platform, TikTok has been a massive competitive threat in short form, and let's not forget Apple has restricted the amount of data Meta can collect from iOS users for ad tracking. Three big problems that have led Mark Zuckerberg to invest very heavily in artificial intelligence.

Particularly, Meta is using AI to optimize the ad experience with less data collection, but they've also gone deep in using AI to increase engagement across their apps, as well as creating LLaMA and LLaMA 2, a family of generative text models that have seen widespread use and development within the developer community.

Another challenge Meta faces that will likely be a very big talking point in 2024 is the monetization of short-form content. There's obviously a dramatic shift towards short-form content, much of which has been captured by Instagram Reels, but the problem remains that getting ad clicks from short-form content is proving much harder than traditional in-feed advertising.

One positive, however, is what CEO Mark Zuckerberg noted in the Q3 earnings call—that “Reels has now driven a more than 40% increase in time spent on Instagram since launch, and we estimate that Reels is now net neutral to overall company ad revenue." So again, another company whose 2024 will likely be defined by the integration of AI.

But of course, we couldn't finish this segment without talking about the US presidential election. With Facebook mired in privacy, security, and political scandals over the past decade or so, in 2024 the company is set to be proactive in its preparation for the election. The company has outlined its comprehensive approach to handling major elections, emphasizing transparency and security.

This includes measures like blocking new political ads during the final week of the US election campaign, and requiring disclosure for ads created or altered using AI or digital methods. But beyond privacy and security, investors also expect the 2024 election to be a boon to Meta, with the company expected to benefit from the anticipated surge in political advertising expenditure, which could positively impact its revenue growth in the digital advertising domain.

And then finally, last but not least, we have Alphabet, the other monster advertising giant in the bunch. Google is a little more diversified than Meta, generating 77% of their revenue from advertising, while the other 23% comes from their apps, physical products, subscriptions, and cloud business.

Similarly to Meta, in 2024 Google is putting a heavy emphasis on AI, partially to answer ChatGPT's integration into Microsoft's own search platform, Bing, but also to improve efficiency across their various businesses and to offer new functionality to Google's wide suite of software products.

The company, which is already known for its innovation in AI and machine learning with products like Google Search, Google Assistant, and Google DeepMind, plans to continue its investment in AI research and development across 2024, applying AI across various sectors such as healthcare, education, transportation, and entertainment.

Beyond AI and search, Google also enters 2024 with a strong focus on their cloud business. While Google advertising revenue grew only 4% in the first nine months of 2023 versus 2022, their cloud business managed 26% revenue growth across that same time period and has finally turned profitable. With this revenue category still relatively small for Google and its potential for strong growth across the next decade, Google's cloud business will be a very strong focus in 2024.

In other news, Alphabet is also looking to capitalize on growth opportunities in emerging markets like India, Southeast Asia, and Africa, where internet penetration and digital adoption rates are far lower. The company is focusing specifically on tailoring its products and services to these markets, focusing on aspects such as offline access, data saving, local language support, and the key metric: affordability.

Long story short, Google is yet another tech behemoth that has a massive focus on AI integration in 2024, both to improve overall company efficiency, but ultimately to improve their core products and offer new features to their customers.

Overall, that is the 2024 outlook for the Magnificent 7. Hope you enjoyed this video. Please leave a like, and if you're interested in learning how to analyze stocks like these step by step, including reading financial statements and running three very common valuation methods, then check out Introduction to Stock Analysis on New Money Education.

Also, you can now use the coupon code SAVE50 at checkout to score a $50 discount. Overall, thanks for watching, and I'll see you guys in the next video.