In this article, we share three stocks to watch in 2024, as they could easily outperform the broader market next year due to company-specific catalysts.
While economists continue to anticipate a limited risk of an imminent global recession, they still foresee the conclusion of global expansion in the coming year or two.
“As we approach 2024, we expect both inflation data and economic demand to soften, as the tailwinds for growth and risk markets are fading. Overall, we are cautious on the performance of risky assets and the broader macro outlook over the next 12 months, due to building monetary headwinds, geopolitical risks and expensive asset valuations,” Marko Kolanovic, chief global markets strategist and global co-head of research at JPMorgan (NYSE:JPM) said.
While the Federal Reserve recently hinted it will stop hiking rates, the market will continue to focus on the number of rate cuts next year, with the current consensus calling for as many as six — the Fed expects just three.
As a result, the outlook for equity markets in 2024 is challenging because of uncertainties in monetary policy, earnings growth and geopolitics. Notably, 90% of traders fail to make money in the stock market, with 80% losing over time, 10% breaking even and only 10% consistently profiting.
That stark reality underscores the importance of focused stock-picking and identifies companies with strong positive catalysts, as those could help offset the potential headwinds from macroeconomic and geopolitical factors.
Here are the three such stocks to watch in 2024.
Take-Two Interactive Software (TTWO)
Take-Two Interactive Software (NASDAQ:TTWO) is a leading video game publisher renowned for blockbuster franchises like Grand Theft Auto (GTA), Red Dead Redemption and NBA 2K. With subsidiaries like Rockstar Games and 2K, Take-Two boasts a diverse portfolio spanning action-adventure, sports and simulation genres. GTA V — one of the highest-grossing games ever — exemplifies the company’s success.
TTWO is positioned towards the conclusion of its investment cycle with multiple AAA+ games anticipated in the next 2 to 3 years. The company boasts distinctive catalysts in 2024 as details on its pipeline timing emerge. Investor confidence in TTWO is likely to increase from here as insights into GTA VI unfold, including pricing, structural innovations and potential surprises.
“A February/March 2025 release date could indeed deliver Take-Two’s guidance of about $8 billion in bookings in [the] financial year 2025 and growth in 2026,” Jefferies (NYSE:JEF) analyst Andrew Uerkwitz said.
Earlier in December, TTWO’s Rockstar Games said GTA VI is heading for the 2025 launch after the franchise released the first trailer for its blockbuster video game. That development timeline, though later than some investors anticipated, smoothly aligns TTWO as one of the key stocks to watch in 2024, given the potential for significant growth and positive market sentiment building up to the video game’s release.
GTA V generated about $7.68 billion in sales since it was first launched in 2013. Back in November, Take-Two guided for Q3 net bookings of $1.3 to $1.35 billion, while full-year net bookings are seen at $5.5 billion.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is one of the biggest stories in 2023. Its game-changing partnership with ChatGPT developer OpenAI positioned the company at the forefront of the GenAI revolution. The technology giant offers a broad spectrum of products that shape the digital landscape, including Windows, Office, Azure, Dynamics 365, Xbox and LinkedIn.
For 2024, the investor focus is firmly on Microsoft 365 Copilot, the GenAI-powered virtual assistant. The company unveiled hybrid work capabilities integrated with GenAI across various Microsoft 365 applications. Copilot seamlessly integrates with Teams, Word, PowerPoint, Excel, Outlook, Loop and Viva, offering diverse functionalities.
Particularly noteworthy is Copilot Studio, a low-code tool allowing users to customize Copilot features in Microsoft 365 apps and create personalized copilots — a unique offering among competitors. This customization includes connecting with various data sources, be it pre-built or custom plugins, chatbots or proprietary company sources.
Microsoft’s focus on GenAI is likely to yield a unique market position for the Redmond-based titan. Macquarie’s analysis showed that Microsoft’s Copilot product could potentially bring in around $9.1 billion in additional revenue, delivering a $0.49 EPS boost by the fiscal year 2026.
“In our base case, we estimate that Microsoft could generate ~$7.3bn of incremental ARR from M365 Copilot by the end of FY’25E from the ~20mn users that our 5% uptake rate implies,” analysts said.
Intel (INTC)
Intel (NASDAQ:INTC) is a key player in semiconductor innovation. Renowned for its CPUs, Intel powers a vast range of devices, from PCs to data centers. The company’s Core processors are known for high performance and reliability. In addition, Intel’s Xeon processors are industry leaders in server applications.
Recently, Intel has ventured into AI with products like the AI-optimized Core Ultra and server CPUs like Emerald Rapids. Due to the AI push, Intel shares rose about 71% year-to-date and are set to continue rising as investors hope the corner is finally turned after years of underperformance.
At the recent AI-focused event, Intel showcased several new products and provided updates on the company’s product pipeline. The event featured the Gaudi 3 accelerator and the launch of new chips, emphasizing the company’s focus on building an AI ecosystem. Gaudi 3 is reportedly faster than Nvidia’s (NASDAQ:NVDA) H100 accelerator, although the latter is yet to release its newest high-end AI chip.
Meteor Lake, an AI-optimized Core Ultra, and Emerald Rapids for cloud applications were highlights of the event, which also showcased Intel’s commitment to its AI strategy despite Intel’s management emphasizing the fierce competition in this sector, which Nvidia completely dominates. Moreover, the management sounded high conviction in Intel’s foundry business and processors as Intel hopes to be well-positioned for the upcoming recovery in the PC market.
Intel has $2 billion worth of orders for Gaudi AI accelerators, the company disclosed. Back in October, Intel reported third-quarter revenue of $14.2 billion, which easily topped analyst expectations for $13.5 billion.
On the date of publication, Shane Neagle did not hold (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.
