Top sectors are tough to pin down in advance. Far more often, we look backward at market performance to identify trends and top sectors. Still, occasionally, early trends point to future top sectors and allow investors to jump in before a meteoric rise. For example, AI enthusiasm began bubbling up in late 2021, and smart money got in early to generate massive gains before retail traders caught on.
These three top sectors are already panning out to be some of 2024’s top performers and will likely maintain their momentum throughout the decade. Though each is likely already on your radar, it isn’t too late. Each has plenty of upside and room to run, creating a unique chance to get in on some of tomorrow’s top sectors today.
Artificial Intelligence (AI) Infrastructure
Earlier this week, I looked at how semiconductor supply companies may outperform the sector’s biggest names in 2024. For example, investors may begin shying away from Nvidia (NASDAQ:NVDA) as competitive moats begin closing and massive tech companies like Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) pivot to in-house chipmaking. Instead, they may move toward upstream suppliers that benefit from the wider market rather than betting the farm on a few solo semiconductor stocks.
The same holds true for AI.
Though a handful of companies currently dominate the industry, innovation and technical advancement mean there will be less differentiation over time. And this makes individual AI investments less appealing. Instead, smart money is looking into top sectors within AI, including upstream suppliers and peripheral support infrastructure, that benefit from AI overall.
In short, we’ll likely see the wider AI market diverge into consumer- and enterprise-facing segments. The consumer segment will be nimble and able to run on standard commercial equipment. The big money, though, will be in enterprise-level AI integration and management and its supporting infrastructure.
Stocks to watch: Equinix (NASDAQ:EQIX), Onto Innovation (NYSE:ONTO), Taiwan Semiconductor (NYSE:TSMC).
Anti-Obesity Drugs
Citigroup called anti-obesity drugs healthcare’s “AI” moment in their 2024 outlook report, and that trend seems to be holding steady.
As many as 15 million Americans may leverage anti-obesity drugs by 2030, creating a unique investment opportunity akin to AI’s early entrance in the mid-2010s. Some drugs even reportedly reduce opioid cravings and may prove viable when treating addiction.
In the same report, Citigroup acknowledged that valuations for anti-obesity drugmakers seem somewhat high but that “near-term demand and earnings prospects keep us cautiously bullish.” The high valuations within the anti-obesity market are a sure sign that investors consider it one of the top sectors in 2024. To be sure, there’s little sign that the trend will slow. Drug pricing remains high today, at about $1,000 per dose monthly. But that hasn’t stopped consumers from flocking to the pharma manufacturers. And, if prices fall over time, expect even greater tailwinds to propel their popularity.
Stocks to watch: Novo Nordisk (NYSE:NVO), Eli Lilly (NYSE:LLY).
American Manufacturing, Automation, and Robotics
We’re seeing a renewal in American manufacturing today. However, the current emphasis is on higher-end tech like semiconductors and advanced batteries rather than raw materials like steel that propelled past economies. The wide-ranging opportunities within the American manufacturing renaissance represent plenty of investment opportunities. But it’s also tough to pin down which is most likely to outperform others.
To that end, like AI infrastructure, finding stocks supporting the underlying trend is the best move. Most of that support upside comes from automation and robotics. Both are newfound staples within the manufacturing economy and ambivalent toward which firm wins, for example, the race for a smaller and more efficient battery.
At the same time, investment in automation and robotics that support manufacturing is an investment in diversified uses. For example, sensors and systems that help factory-based robotics ensure components are within tolerance also carry over to self-driving car developments. This makes the wider automation and robotics one of the top sectors to capture multiple segment upsides.
Stocks to watch: UiPath (NYSE:PATH), Rockwell Automation (NYSE:ROK), Intuitive Surgical (NASDAQ:ISRG).
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
