A leading technology stock analyst is out with 10 predictions about the sector heading into 2024, including some of the most valuable companies worldwide hitting some new market capitalization milestones.
Here's a look at the predictions and what investors need to know from Wedbush analyst Daniel Ives.
AI Goes Mainstream: Artificial intelligence was one of the most talked about terms in 2023 thanks to a $10 billion investment in ChatGPT parent OpenAI by Microsoft Corporation MSFT and the rising use cases. Ives thinks the growth of AI is just getting started.
"We believe AI is the biggest transformation in the tech sector in the last 30 years and is a ‘1995 Moment' not seen since the start of the internet in 1995," Ives said.
Ives said that artificial intelligence could make up 8% to 10% of IT budgets in 2024, which would be up from less than 1% of budgets in 2023. The AI sector could see over $1 trillion in spending over the next decade.
Apple Introduces the AI App Store: The app store from Apple Inc AAPL has helped boost its services revenue over the years. Ives said that Apple may introduce its AI App Store at the Worldwide Developers Conference (WWDC) in 2024, which will likely be held in June.
Ives said Apple’s services revenue could hit $5 billion annually once the new app store is introduced.
M&A Ramps in Big Tech: A prediction from Ives calls for mergers and acquisitions to happen in the technology sector, led by some of the biggest names.
"We believe 2024 is set for a massive year of M&A in Big Tech with Microsoft, Amazon, Alphabet all aggressively going after public and/or private companies to boost their product footprint."
Ives said software companies could lead the way in acquisition activity in 2024.
Related Link: Apple Set for Unprecedented Growth, Analyst Predicts Stellar Rise Amid Market Turbulence
Tesla Introduces A Sub-$30K Vehicle By The End Of 2024: Electric vehicle enthusiasts have been hoping for Tesla Inc TSLA to introduce a vehicle that has a starting price of under $30,000. Experts believe this introduction could lead to mass adoption of electric vehicles.
"We believe Tesla will introduce a sub $30k vehicle produced out of Mexico that could drastically change the unit volume game for Musk & Co. looking ahead."
Tesla CEO Elon Musk wouldn't give an update on the timeline of the vehicle, but shared in an interview that the vehicle would be made at Giga Texas first and later to be produced at Giga Mexico.
"The revolution in manufacturing that will be represented by that car will blow people's minds," Musk said.
Musk said the technological advancements in the production of the next vehicle will surpass that of any automotive company on the planet.
Tech Stocks are Up 25% in 2024: Ives predicts that the technology sector will see a strong 2024. The prediction comes with the Invesco QQQ Trust QQQ, which tracks the Nasdaq 100, up over 50% year-to-date in 2023. The ETF includes the top 100 non-financial stocks on the Nasdaq exchange and is heavily weighted to the technology sector.
Apple Buys ESPN: Ives predicts that Apple will acquire leading sports brand ESPN from The Walt Disney Company DIS, which comes as the media company could be looking to trim non-core assets.
"We believe the answer and the shoe that fits Apple is the golden ESPN assets which potentially may be on the table in one form or another as Iger and the Board strategically and carefully look at Disney's core assets."
In recent remarks, Disney CEO Bob Iger has shown a stronger inclination towards exploring potential partnerships for ESPN, rather than considering its acquisition.
Cyber Security is the Best Sub-Sector of Tech: While Ives is bullish on most areas of technology in 2024, the predictions highlight the potential of the cybersecurity market.
Top picks from Ives for exposure to cybersecurity include Zscaler Inc ZS, CrowdStrike Holdings CRWD, CyberArk Software CYBR, Palo Alto Networks PANW and Tenable Holdings TENB.
Magnificent 7 Will Lead Tech Higher: The large technology stocks, which are collectively known as the Magnificent 7, have been among the top performers in 2024 and helped boost several stock indexes higher. The seven stocks are Apple, Microsoft, Amazon.com Inc AMZN, Meta Platforms META, NVIDIA Corp NVDA, Alphabet Inc GOOGGOOGL and Tesla.
"We believe the Magnificent 7 will have another robust year in 2024 and lead tech higher with this core group of stocks set to be up 30% in 2024 with AI front and center."
Roundhill Investments rebranded its big technology ETF to the Roundhill Magnificent Seven ETF MAGS to offer investors direct exposure to the seven companies.
Musk Raises Additional Capital For X, Goes For Super-App Concept: Musk bought social media platform Twitter, now rebranded as X, for $44 billion in 2022. Ives thinks 2024 sees more progress on Musk's plan to create a super-app with the platform. The plan and growth could include Musk raising more money from investors, which comes as existing investors like Fidelity have been lowering their valuation on the company.
Microsoft And Apple Hit $4 Trillion Market Capitalization: Apple became the first public company to hit a market capitalization of both $2 trillion and $3 trillion. Ives thinks Apple hits its next milestone and passes $4 trillion in 2024. Apple is currently valued at a market capitalization of nearly $3 trillion.
Ives also sees Microsoft, which is valued at $2.76 trillion, coming close to $4 trillion in 2024 and potentially passing the milestone in early 2025 "as the AI Revolution fully takes hold."
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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