Usual Suspects Could Be AI Leaders Again in 2024 | ETF Trends

It’s fair to say that artificial intelligence (AI) was top of mind for many market participants in 2023.

It’s also accurate to say investors didn’t stretch into exotic, volatile stocks to access the AI theme because the magnificent seven cohort of Apple (AAPL), Alphabet (GOOGL), Meta Platforms (META), (AMZN), Nvidia (NVDA), Microsoft (MSFT), and Tesla (TSLA) were among the drivers of AI ebullience last year. That proved efficacious for the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM) because exchange traded funds are among those with the largest combined allocations to those seven revered growth stocks.

That trait helped QQQ and QQQM to 2023 gains of 54.54%. That’s a performance that clearly will be difficult to replicate this year. However, that doesn’t mean the Invesco ETFs can’t deliver for investors in 2024. That pair of ETFs could impress again this year with the assistance of some or all of the magnificent seven.

Some Magnificent Seven Members Could Be Marvelous in 2024

One of the most widely cited notions as it pertains to generative AI — the common form of this technology — is that it’s still in its infancy. As such, more gains could be on the way for investors this year.

“Despite clear market optimism, we actually think GenAI is still in the early innings,” Raymond James analyst Josh Beck wrote in a recent report. “We see GenAI developing into an embedded OS that may span nearly every consumer and business platform, providing an intelligent agent (aka copilot) to assist with everything from writing a business contract, organizing a trip with friends or providing in-depth accurate insights on a highly nuanced topic (like investing).”

In alphabetical order, the research firm’s top generative AI picks for 2024, all of which are buy rated, are Alphabet, Amazon, Facebook parent Meta Platforms, and Microsoft. They combine for over 22% of the QQQ/QQQM rosters. That’s a good thing because those could be among the names to drive more AI upside in 2024.

Beck noted Amazon’s Amazon Web Services (AWS) could be a platform through which millions of customers embrace AI. As for Meta, the analyst believes generative AI can be a boon for Facebook and Instagram.

“We see this more as a multi-year tailwind (i.e., not 1-time) across platform surfaces that should contribute to sustained secular growth and ad share gains,” Beck noted.

The analyst is similarly constructive on Microsoft, citing the company’s early investment in Open AI and possible AI intersections with the Azure cloud unit.

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