EXCLUSIVE: Marc Chaikin Bullish On AI-Enhanced Software Companies, Forecasts S&P 500 Rally To Continue Into 2024

Legendary investor & founder of Chaikin Analytics, Marc Chaikin remains bullish on a specific investment theme: companies utilizing AI to enhance productivity in their software. Chaikin sees these AI-driven companies as the ones to watch, especially as earnings season unfolds.

These and other valuable insights from Chaikin and his outlook for 2024 were shared in an exclusive interview with the Benzinga PreMarket Prep team.

January has particularly sparked Chaikin’s optimism, owing to forthcoming earnings reports. He observes an intriguing pattern: when the initial five days of the year exhibit a rising trend, it often indicates that around 25% of the year could see positive results. This ‘seasonality trade,’ initiated towards the end of November, has already proven beneficial for investors who have adopted a bullish approach.

Chaikin foresees the market’s current strength carrying through to 2024, and anticipates any pullback in the S&P 500 to be modest, in the range of 1.5% to 3% during the rally. While the end of the year witnessed some profit-taking in the “Magnificent 7,” the overall market rally is broadening.

Also Read: ‘Magnificent 7’ Widens Gap With Rest Of S&P 500, But That May Change In 2024

In terms of sectors, Chaikin highlights the importance of tech, emphasizing that companies leveraging AI for software productivity will likely fare well. Specific stocks such as ServiceNow Inc NOW, Synopsys Inc SNPS, Pure Storage Inc PSTG and Procore Technologies Inc PCOR stand out.

Pure Storage has a partnership with NVIDIA Corp NVDA for Flash storage. Procore Technologies is a competitor to Autodesk Inc ADSK and is integrating AI into their software.

Chaikin also points to what he called “secondary tech stocks” like Arista Networks Inc ANET and CrowdStrike Holdings Inc CRWD as potential winners in the coming months.

A key insight from Chaikin is the ongoing productivity cycle driven by AI. He projects the S&P 500 possibly reaching 5800 to 6000 in the next year, contingent on a change in interest rates, which he identifies as the real driver in the stock market.

Areas to watch include financials, consumer discretionary, and industrials, while caution is advised for energy and mega-cap tech, with a preference for specialty tech.

In the semiconductor realm, Chaikin singles out Advanced Micro Devices Inc AMD as his pick, expressing confidence in its prospects.

As the bond market takes the lead, Chaikin warns of a potential sell-off if the Federal Reserve doesn’t cut rates in March. Additionally, he notes that China’s economic weakness could influence global inflation trends, emphasizing the importance of monitoring China’s impact on global supply chains.

In summary, Chaikin sees the dawn of a new bull market, propelled by AI-driven innovations and a cautiously optimistic outlook for key sectors, with a keen eye on macroeconomic factors shaping the market’s trajectory in 2024.

Now Read: S&P 500 Stuck In 4,600-4,800 Limbo For 2024? Wells Fargo Pinpoints 3 ‘Favored Sectors’ For Next Year