Seven gunfighters defend a town from thieves in the 1960 northern The Magnificent Seven. At the end of the film, just three are left to ride out of town.
After dominating US investment markets in 2023, the seven tech companies just dubbed the beautiful seven have much better odds. However, there are issues that may surprise some of these businesses in 2024.
In 2023, US securities have risen thanks to Apple, Alphabet, Microsoft, Amazon, Meta, Tesla, and Nvidia. They now account for almost a third of the largest listed US companies ‘ S&, P 500 measure, which has increased by more than 20 % since January.
By the middle of November, these tech stocks had given shareholders a whopping 71 % return, while the other 493 names had only added 6 %.
Michael Hartnett, an analyst for Bank of America, named these businesses the wonderful seven earlier this year as a result of this outstanding achievement. Shortly after, Goldman Sachs declared their enormous outperformance to be the “defining feature” of the 2023 ownership industry.
However, despite how dramatic this performance has been and the fact that they are all essentially tech companies, do n’t mistakenly believe that all of them are the same. In fact, there are conflicting expectations for the beautiful seven in the coming year, especially in light of anticipated changes in their primary markets.
The EV industry is becoming more competitive.
This begin with the unfavorable information. Tesla Motors, a manufacturer of electric vehicles ( EV ), will continue to lose market share in 2024.
Over the first three quarters of this year, Tesla’s US market dominance decreased from 62 % to just over 50 % of the market, while CEO Elon Musk has been dealing with advertising issues on X ( previously Twitter ), one of his other businesses. Mercedes-Benz Autos and the BMW Group have both increased their traces.
And over the coming years, the expanding size of Taiwanese manufacturers on a global scale appears to be difficult to match. In 2022, Chinese EV players like BYD, Nio, Wuling, and Xpeng produced nearly 60 % of the world’s electric vehicles ( EVs ), and they did so at a very low cost.
The average price of an EV in China in the first half of 2023 was$ 33, 000, which is more than twice what the$ 70,700 and$ 72, 000 spent on them in Europe and the US, respectively.
By 2032, nearly two-thirds of all new vehicles sold in the US will be energy, according to a tight new car pollution control proposal put forth by US President Joe Biden. However, the price of EVs will need to decrease if they are to be popular in the large industry.
Optimal future for sky computing
Two-thirds of the cloud computing industry, which has seven people and is dominated by Amazon, Microsoft, and Alphabet, will continue to expand in 2024, though perhaps not quite as much as in the past.
However, it is anticipated that the market for sky equipment companies will grow from$ 122 billion in 2023 to$ 446 billion by 2032. In recent years, some customers have concentrated on using the cloud more to reduce costs as a result of worries about the economic environment, though this has yet to include any discernible effect on revenues.
Additionally, there are some unanswered questions about Amazon’s future. Although its sky business is still strong, its original e-commerce business has just faced increasing competition, particularly from rival wholesale behemoth Walmart, which is squeezing into its US operations.
According to my calculations, holding Amazon stock has yielded an annual profit of 16.7 % over the last two years as of early December.
Unstoppable AI
California-based chip manufacturer Nvidia Corporation, which is also connected to the cloud computing sector, has been the resounding victory of the beautiful seven this year. This is entirely attributable to its dominance in cloud-based AI workload control. Nvidia graphics processing units ( GPUs ) are primarily used by cloud players.
Although its two-year transfer of 43.3 % is the most spectacular of the seven technology firms, there are potential rivals that may eat up some market share.
AMD, Nvidia’s closest rival, attracted attention with its most recent chip offering in 2023 and predicts that the market will be worth$ 400 billion by 2027. Numerous other start-ups are also creating cards for specialized AI areas.
You Nvidia keep its hegemony? If it does, AI’s development may cause its revenue to soar. However, the AI market will continue to grow for years even if it loses some business communicate.
The unusual
That only leaves two more people of the beautiful seven, for those who are keeping track.
According to my calculations, Apple Inc., the largest company in the world by market capitalization, has consistently produced strong results over the past two decades.
The only member of the group to have demonstrated an basically flat property market performance over the past two years is social media firm Meta, the owner of Facebook, Instagram, Threads, and WhatsApp.
Although Meta’s revenues and income have consistently exceeded expectations this time, the company is still in danger from anti-trust laws in the US and Europe, as well as from a declining advertising business. The profit outlook for Meta for the upcoming year could be negatively impacted by both of these problems.
The beautiful seven have all made it out of town by the end of 2023, but it is obvious that not everyone will enjoy a leisurely ride on horseback in 2024. Get on your horses, companions!
International Institute for Management Development ( IMD) Professor of Finance KarlSchmedders
Under a Creative Commons license, this article is republished from The Conversation. read the article in its entirety.