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After a solid 2023, investors’ biggest question is whether the stock market rally will continue next year. So far, Wall Street analysts have come up with varied views on the S&P 500, indicating moderate upside (which translates into a record high, too) for the key U.S. equity gauge next year. Now, the question is what’s in store for the Nasdaq Composite in 2024. Let’s find out.
The Nasdaq Composite has surged a massive 40% this year, mainly buoyed by the tech rally. The tech rally in 2023 was led by a massive thrust toward artificial intelligence (AI), especially generative AI. The rapid penetration of digitization during the lockdown ushered in a significant adoption of AI. Moreover, a resilient consumer base has boosted consumer stocks, too, in 2023, pushing the index to a great height.
We expect the index to log gains even in 2024, although the quantum of gains will likely be less than this year. Against this backdrop, top-ranked Nasdaq stocks, including GigaCloud Technology Inc. (GCT - Free Report) , Carrols Restaurant Group (TAST - Free Report) , Limbach (LMB - Free Report) , Amphastar Pharmaceuticals (AMPH - Free Report) and Insight Enterprises Inc. (NSIT - Free Report) could emerge as winning picks.
Inside the Nasdaq Composite Index
The technology sector accounts for more than 55% of the index with 457 constituents. Consumer Discretionary comes second with 18.75% exposure and 458 stocks. Health Care takes about 7.87% of the index with 1044 stocks, followed by Industrials, which occupies 4.65% of the index (with 351 stocks).
The index’s top weight of 12.53% goes to Apple, followed by Microsoft (10.98% weight), Amazon (6.14% weight) and Nvidia (5.03%). The top-10 holdings of the index take about 50% of the basket (As of Sep 29, 2023).
Factors That Should Boost Nasdaq in 2024
Below we highlight several factors that should boost the Nasdaq in 2024.
A Less-Hawkish or Dovish Fed in 2024
The latest datapoints indicate that inflation is on the decline. This may lead to a less hawkish Fed in the near term. Market indicators showed about a 98.4% probability that the Federal Reserve would keep interest rates unchanged at 525-550 bps in December, as reflected in data from the CME Group. There is even a 45.6% chance of a 25-bp rate cut by March 2024.
Since the Nasdaq is a growth index and fares better in a low-rate environment, the index has every reason to hit further highs. Moreover, with the Fed being less-hawkish, the participation in the stock market is broadening out, which is a key tailwind for the sustenance of the bull market.
AI Boom Here to Stay
The year 2023 was crucial in the AI industry, characterized by dynamic company moves, groundbreaking initiatives, major product launches, substantial investments and strategic acquisitions. And a wider spread of AI among consumers is expected next year. Bob O’Donnell, president of TECHnalysis, believes 2024 will be pivotal for AI, integrating it into daily tools like PCs, smartphones and multimedia platforms, as quoted in a Yahoo Finance article.
Companies like Google, Microsoft and Amazon have introduced significant updates to their AI services lately. The year 2024 is likely to witness the launch of AI-equipped PCs and other devices, moving some cloud-based AI processes to local devices.
Apple to Hit $4 Trillion Market Cap?
Wedbush analyst Daniel Ives recently predicted that Apple will become the first $4 trillion company in 2024. This optimistic outlook arises from the likely pace of growth and monetization at the company in the coming year, as quoted on investing.com. The analyst foresees a robust holiday season for Apple, projecting iPhone growth to outperform expectations in the December quarter.
Strong upgrade activity in the United States and China is expected to contribute to this positive trend. As Apple is the key holding of the Nasdaq, such a milestone, if hit, would benefit the Nasdaq.
Biotech Stocks to Rebound in 2024?
The Nasdaq has solid exposure to the biotech space. Biotech stocks have staged a rebound lately and are being lifted by M&A activities. Novel drug launches, low rates and easy access to funds should buoy the zone in 2024.
Stock Picks
Below we highlight five stocks from the Nasdaq that have solid upside left for 2024. These stocks have witnessed positive earnings estimate revisions for the upcoming quarter in the last 30 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has an has an upbeat VGM Score "A".
GigaCloud Technology Inc. is a pioneer of global end-to-end B2B e-commerce solutions for large parcel merchandise. The stock has seen 61.11% positive earnings estimate revisions for the upcoming quarter in the last 30 days. GCT hails from a top-ranked Zacks sector (top 31%) and industry (top 37%).
Carrols Restaurant Group is the largest BURGER KING franchisee in the United States, with over 800 restaurants. The stock has witnessed 33.33% positive earnings estimate revisions for the upcoming quarter in the last 30 days. The stock belongs to a top-ranked Zacks sector (top 50%) and industry (top 27%).
Limbach Holdings, Inc. provides building systems. The company engineers, constructs and services the mechanical, plumbing, air conditioning, heating, building automation, electrical and control systems. The stock has witnessed 21.21% positive earnings estimate revisions for the upcoming quarter in the last 30 days. The stock comes from a top-ranked Zacks sector (top 31%) and industry (top 1%).
Amphastar Pharmaceuticals is a specialty pharmaceutical company. It focuses primarily on developing, manufacturing, marketing, and selling generic and proprietary injectable and inhalation products. The stock has seen 15.49% positive earnings estimate revisions for the upcoming quarter in the last 30 days. The stock hails from a top-ranked Zacks sector (top 19%) and industry (top 18%).
Insight Enterprises Inc., is a global direct marketer of brand name computers, hardware and software. It is an Arizona-based publicly traded global technology company that focuses on business-to-business and information technology capabilities. The stock has witnessed 9.25% positive earnings estimate revisions for the upcoming quarter in the last 30 days. The stock comes from a top-ranked Zacks sector (top 50%) and industry (top 1%).
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What's in Store for Nasdaq in 2024? 5 Top Picks
After a solid 2023, investors’ biggest question is whether the stock market rally will continue next year. So far, Wall Street analysts have come up with varied views on the S&P 500, indicating moderate upside (which translates into a record high, too) for the key U.S. equity gauge next year. Now, the question is what’s in store for the Nasdaq Composite in 2024. Let’s find out.
The Nasdaq Composite has surged a massive 40% this year, mainly buoyed by the tech rally. The tech rally in 2023 was led by a massive thrust toward artificial intelligence (AI), especially generative AI. The rapid penetration of digitization during the lockdown ushered in a significant adoption of AI. Moreover, a resilient consumer base has boosted consumer stocks, too, in 2023, pushing the index to a great height.
We expect the index to log gains even in 2024, although the quantum of gains will likely be less than this year. Against this backdrop, top-ranked Nasdaq stocks, including GigaCloud Technology Inc. (GCT - Free Report) , Carrols Restaurant Group (TAST - Free Report) , Limbach (LMB - Free Report) , Amphastar Pharmaceuticals (AMPH - Free Report) and Insight Enterprises Inc. (NSIT - Free Report) could emerge as winning picks.
Inside the Nasdaq Composite Index
The technology sector accounts for more than 55% of the index with 457 constituents. Consumer Discretionary comes second with 18.75% exposure and 458 stocks. Health Care takes about 7.87% of the index with 1044 stocks, followed by Industrials, which occupies 4.65% of the index (with 351 stocks).
The index’s top weight of 12.53% goes to Apple, followed by Microsoft (10.98% weight), Amazon (6.14% weight) and Nvidia (5.03%). The top-10 holdings of the index take about 50% of the basket (As of Sep 29, 2023).
Factors That Should Boost Nasdaq in 2024
Below we highlight several factors that should boost the Nasdaq in 2024.
A Less-Hawkish or Dovish Fed in 2024
The latest datapoints indicate that inflation is on the decline. This may lead to a less hawkish Fed in the near term. Market indicators showed about a 98.4% probability that the Federal Reserve would keep interest rates unchanged at 525-550 bps in December, as reflected in data from the CME Group. There is even a 45.6% chance of a 25-bp rate cut by March 2024.
Since the Nasdaq is a growth index and fares better in a low-rate environment, the index has every reason to hit further highs. Moreover, with the Fed being less-hawkish, the participation in the stock market is broadening out, which is a key tailwind for the sustenance of the bull market.
AI Boom Here to Stay
The year 2023 was crucial in the AI industry, characterized by dynamic company moves, groundbreaking initiatives, major product launches, substantial investments and strategic acquisitions. And a wider spread of AI among consumers is expected next year. Bob O’Donnell, president of TECHnalysis, believes 2024 will be pivotal for AI, integrating it into daily tools like PCs, smartphones and multimedia platforms, as quoted in a Yahoo Finance article.
Companies like Google, Microsoft and Amazon have introduced significant updates to their AI services lately. The year 2024 is likely to witness the launch of AI-equipped PCs and other devices, moving some cloud-based AI processes to local devices.
Apple to Hit $4 Trillion Market Cap?
Wedbush analyst Daniel Ives recently predicted that Apple will become the first $4 trillion company in 2024. This optimistic outlook arises from the likely pace of growth and monetization at the company in the coming year, as quoted on investing.com. The analyst foresees a robust holiday season for Apple, projecting iPhone growth to outperform expectations in the December quarter.
Strong upgrade activity in the United States and China is expected to contribute to this positive trend. As Apple is the key holding of the Nasdaq, such a milestone, if hit, would benefit the Nasdaq.
Biotech Stocks to Rebound in 2024?
The Nasdaq has solid exposure to the biotech space. Biotech stocks have staged a rebound lately and are being lifted by M&A activities. Novel drug launches, low rates and easy access to funds should buoy the zone in 2024.
Stock Picks
Below we highlight five stocks from the Nasdaq that have solid upside left for 2024. These stocks have witnessed positive earnings estimate revisions for the upcoming quarter in the last 30 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has an has an upbeat VGM Score "A".
GigaCloud Technology Inc. (GCT - Free Report)
GigaCloud Technology Inc. is a pioneer of global end-to-end B2B e-commerce solutions for large parcel merchandise. The stock has seen 61.11% positive earnings estimate revisions for the upcoming quarter in the last 30 days. GCT hails from a top-ranked Zacks sector (top 31%) and industry (top 37%).
Carrols Restaurant Group (TAST - Free Report)
Carrols Restaurant Group is the largest BURGER KING franchisee in the United States, with over 800 restaurants. The stock has witnessed 33.33% positive earnings estimate revisions for the upcoming quarter in the last 30 days. The stock belongs to a top-ranked Zacks sector (top 50%) and industry (top 27%).
Limbach (LMB - Free Report)
Limbach Holdings, Inc. provides building systems. The company engineers, constructs and services the mechanical, plumbing, air conditioning, heating, building automation, electrical and control systems. The stock has witnessed 21.21% positive earnings estimate revisions for the upcoming quarter in the last 30 days. The stock comes from a top-ranked Zacks sector (top 31%) and industry (top 1%).
Amphastar Pharmaceuticals (AMPH - Free Report)
Amphastar Pharmaceuticals is a specialty pharmaceutical company. It focuses primarily on developing, manufacturing, marketing, and selling generic and proprietary injectable and inhalation products. The stock has seen 15.49% positive earnings estimate revisions for the upcoming quarter in the last 30 days. The stock hails from a top-ranked Zacks sector (top 19%) and industry (top 18%).
Insight Enterprises Inc. (NSIT - Free Report)
Insight Enterprises Inc., is a global direct marketer of brand name computers, hardware and software. It is an Arizona-based publicly traded global technology company that focuses on business-to-business and information technology capabilities. The stock has witnessed 9.25% positive earnings estimate revisions for the upcoming quarter in the last 30 days. The stock comes from a top-ranked Zacks sector (top 50%) and industry (top 1%).