2024 is beginning the same way 2023 ended: with the Magnificent 7 stocks performing exceptionally well. Prognosticators expect that at least six of the seven firms included in the group will be the top contributors to fourth-quarter earnings of the S&P 500 Index. Let’s take a look at some of the top Magnificent 7 predictions to be well aware of. In addition, these stocks are expected to be very strong in 2024 but where will they be in five years?
Apple (AAPL)
Apple (NASDAQ:AAPL) shares are currently expected to grow to a price of around $230 in 2024. That same price forecast suggests that Apple shares will trade for $445 in 2029. For shares to double that would imply an 18% annual yield over those four years based on the Rule of 72. Given that Apple has grown by 19% each year on average since it became publicly available, it’s possible.
The company is very clearly going through issues, especially as they relate to iPhone sales in major markets, namely China. Yet Apple has so many opportunities at the same time. There’s little reason to discount it given its history.
Amazon (AMZN)
E-commerce and cloud giant Amazon (NASDAQ:AMZN) saw its stock gain 81% last year. The company dominates online shopping and the burgeoning world of cloud computing. However, it also faces significant competition in both of those areas. Walmart (NYSE:WMT) continues to grow its online shopping presence and Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG, GOOGL) continue to threaten its cloud dominance.
At the same time, that’s the same narrative that has followed the company for several years. 2023’s exceptional performance showed that Amazon is not giving up ground easily, if at all. So it should come as no surprise that analysts continue to rate the company exceptionally highly. Of the 59 analysts covering Amazon, 98% rate it a buy.
Amazon’s AWS Cloud division is expected to grow by more than 13% in the fourth quarter. The company is deep in a pitched battle against Microsoft for generative AI cloud dollars.
In addition, Amazon’s AI opportunity is going to continue to dominate headlines surrounding its growth. Currently, many analysts believe Microsoft has the edge in that realm. The consensus is that Amazon stock will increase by approximately 250% in value by 2029. Short of a massive government intervention and a breakup it’s difficult to see why Amazon won’t continue to provide massive returns.
Alphabet (GOOG, GOOGL)
Alphabet rebounded well last year. However, it’s again facing issues after posting earnings that failed to meet expectations. Advertising sales increased by 11% in the fourth quarter, reaching $65.5 billion. Overall, sales grew by 13% during the time frame, reaching $86.3 billion.
The company’s ad revenues – although lower than hoped for – are still growing. The pandemic was especially difficult on the company and rate cuts to combat a long period of quantitative easing made it worse. Alphabet also suffers from the perception that it is behind other Silicon Valley firms in AI.
Analysts currently expect the stock to trade above $300 by 2029. That implies a return above 100% for those who invest today. Those figures are relatively muted compared to other Silicon Valley firms precisely because analysts currently view Alphabet’s AI efforts as lackluster. A lot can happen over the next few years. Alphabet has vast resources that could flip that narrative on its ear.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) is expected to grow by approximately 15% in 2024. By 2029, it could be approaching $900 per share.
Like Alphabet, Meta Platforms is primarily an ad company. It is also continuing its expansion into other growth areas, namely the metaverse. The company’s 2021 rebrand to take advantage of the Metaverse was seen as a flop but the tides are quickly changing.
The reason is simple: Apple’s launch of its Vision Pro headset has set the stage for a headset war between the two Silicon Valley firms. Meta Platforms has invested $50 billion in its build out and vision for the metaverse. Products are now being commercialized and that will make measurement of the return on those investments much easier. The rubber is hitting the road in other words.
Realistically speaking, the only thing that will slow meta platforms down in 2024 is a wider economic collapse. A soft landing is the much more likely outcome and that sets the stage for strong growth over the next few years.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) propelled itself from an all-around slam dunk stock investment to something even bigger in 2023. Its early investment in OpenAI is likely to be one of the best strategic moves of the artificial intelligence era.
It has propelled the company from one that dominated cloud and office software as just a few of its strategic strengths to something even bigger. Bullish forecasts suggest that its stock could grow by 50% in 2024 alone. A $1,000 per share price seems to be the overriding expectation by 2029.
OpenAI is clearly looking to develop chips of its own. Sam Altman and his management team recently took meetings with leading Hardware firms in Asia to strengthen potential alliances. Altman and his team met with Samsung and SK Hynix in Seoul recently. The potential Alliance would combine ChatGPT’s software strengths with the two Korean firms’ strengths in high bandwidth memory hardware.
OpenAI Is also collaborating with Taiwan Semiconductor Manufacturing (NYSE:TSM) regarding similar development of chips. Thus, it’s logical to assume that growth could be even stronger over the next coming years.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) has clearly won the biggest battles in the early stages of the artificial intelligence war. No other company has managed to monetize AI like Nvidia. As a consequence, its stock has exploded over the past year. That is not expected to stop: In 2024 it is expected that NVDA shares could rise to $1,100.
The prognosticators expect that share prices will rise to $1,900 by 2029. In addition, CEO Jensen Huang is optimistic about 2024 and why shouldn’t he be? The company continues to benefit from massive demand dynamics.
Just about every firm with any connection to AI continues to scramble to secure Nvidia’s chips. Huang notes that the issue is really with its suppliers. The company continues to struggle to serve the massive demand for its AI chips with bottlenecks throughout its supply chain.
Tesla (TSLA)
The current consensus view for Tesla (NASDAQ:TSLA) stock isn’t very good, at least not in relation to the other Magnificent 7. It doesn’t offer that much growth per the consensus view at present.
CEO Elon Musk is either a genius or a troubled Visionary depending on the day. When things go well, the business world loves him and his eccentricities. When they don’t, you start to hear about ideas like the Reality Distortion Field (RDF) and its negative effects. RDF is simply another way of stating that an individual has a magnetic charisma that can make people believe in things that are seemingly impossible.
Tesla could see a massive upside between now and 2029 based on target prices five years from now. A tripling in price seems to be impossible. If Tesla’s current issues are simply the product of the normal adoption curve then those prices start to make much more sense.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
