AI Stocks Set to Shine in 2024Under-The-Radar AI Stocks Could Outperform In 2024

By: Alex Freidmen

In this new year, the investment scene has shifted. After a stellar performance by the Magnificent 7 mega-cap tech stocks, industry experts are steering towards smaller market cap companies for growth. Deepwater Asset Management’s Gene Munster has identified two underappreciated AI beneficiaries poised for potential growth in 2024.

The Evolution: Last year witnessed remarkable gains in the Magnificent 7, with Nvidia Corp securing the top spot with over 235% gains. Apple Inc trailed but still managed a jump of nearly 50% in 2023.

Transitioning into 2024, the market is tilting towards the underdogs. According to Munster, there is a “seismic shift” underway in AI, and smaller market cap companies are in prime position to benefit, potentially leading the Russell 2000 to outperform the S&P 500 in 2024.

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Why It Matters: Munster predicts a three- to five-year bull run for tech stocks, with a new focus on underappreciated AI names, encouraging investors to diversify their portfolio with a mix of mega caps and hidden gems like Unity Software Inc and Etsy Inc.

Unity, renowned for game development, is venturing into building spatial environments using AI technology, giving the stock potential for growth. Meanwhile, Etsy is set to implement AI for creative product building, promising an upward trajectory for the company.

On the flip side, Munster recommends Alphabet Inc and Apple as top picks within the Magnificent 7 for 2024.

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Stock Performance: At the time of publication, Unity shares were down 5.5% at $38.62, and Etsy shares were down 0.3% at $80.73.

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Photo: Mohamed Hassan from Pixabay.