From a technical standpoint, the S&P 500 index has been in a bear market since its value decreased by over 20% from its zenith in 2022.
Certain Wall Street analysts have already proclaimed it the inception of a fresh bull market, as the S&P 500 has risen over 20% since its low point in October 2022. However, consensus cannot be achieved until the index records its highest level ever. The positive news is that it only needs to increase by 0.5% more to reach that point.
In light of this, historical evidence indicates that 2024 is virtually certain to be another bullish year for the S&P 500, which would virtually ensure a new bull market by any definition. Here are a few reasons why investors may wish to begin the year with Advanced Micro Devices (NASDAQ: AMD) and Alphabet (NASDAQ: GOOGL) shares.
Alphabet (Google) 1st
Google was established in 1998 and was valued at $23 billion when it went public in 2004. In 2015, the company commenced trading under the Alphabet symbol, as it had evolved into a conglomerate through acquisitions such as Waymo and YouTube, as well as a significant internal expansion into cloud computing.
Alphabet is presently valued at approximately $1.8 trillion; this phenomenal value creation has compelled management to implement two stock splits since 2014 in order to maintain the accessibility of its shares to small investors. Those investors may be gratified this year, as Alphabet’s 60% gain is more than double that of the S&P 500, and 2024 may be another prosperous year.
Google search continues to be the primary revenue generator for Alphabet. It has labored in the last eighteen months due to a difficult economic climate, but with interest rates expected to decline the following year, companies will likely increase their advertising expenditures once more. That has the potential to reignite Google’s search revenue and propel Alphabet’s overall growth.
However, artificial intelligence (AI) has presented an additional obstacle. In 2023, Alphabet encountered a setback when Microsoft acquired a controlling interest in leading startup OpenAI for $10 billion. Microsoft swiftly incorporated ChatGPT into its Bing search engine, posing a significant threat to the way in which individuals locate information on the web; conversing with a chatbot and receiving immediate responses is considerably more convenient than perusing through web pages.
2. Advanced Micro Devices
Following its 1969 founding, Advanced Micro Devices went public in 1972. Since then, the stock has experienced an extraordinary increase of 24,150%, which has compelled management to implement six stock splits since 1978 in order to maintain its accessibility to smaller investors. However, significant future profits are also possible as the company vies to surpass Nvidia (NASDAQ: NVDA) in the development of AI data center processors.
AMD is among the world’s major chip manufacturers. Some of the most popular consumer electronics are powered by its hardware, including the Sony PlayStation 5, which recently surpassed 50 million units sold. Additionally, the infotainment systems of Tesla’s electric vehicles contain AMD processors. However, the data center will likely present the industry’s greatest opportunity ever.
Existing data center infrastructure is valued at $1 trillion, according to Nvidia CEO Jensen Huang, and must be modernized to support accelerated computation and AI. His organization possesses a substantial market share in that particular sector owing to its forthcoming H200 and its formidable H100 graphics processing units (GPUs). However, AMD is presenting a formidable challenge with the MI300, a new line of data center processors specifically engineered for AI workloads.
There are several configurations available for this product: the MI300A integrates GPU and central processing unit (CPU) circuits to produce the world’s first accelerated processing unit (APU) for data centers, while the MI300X is a pure GPU. AMD has initiated shipments of the MI300A to the Lawrence Livermore National Laboratory in preparation for the deployment of its El Capitan supercomputer next year. This supercomputer is anticipated to surpass all others in capacity.
Indeed, 2024 may prove to be the most prosperous year ever for AMD’s data center division, as the company anticipates GPU sales in excess of $2 billion.
As a result of rising interest rates and high inflation, consumers reduced their spending on computers and devices in 2023, which negatively impacted AMD’s financial performance. However, Wall Street projects earnings per share of $3.73 in 2024, which represents a 40% increase in net income. This would result in AMD stock being valued at a forward P/E ratio of 37.4, surpassing the current P/E of the Nasdaq-100 of 29.6.
