The Return of Big Tech 12/11/24
Halftime Report
Deep Dive
Why did the NASDAQ cross 20,000 for the first time?
The NASDAQ crossed 20,000 due to the strong performance of mega-cap tech stocks like Apple, Alphabet, Amazon, and Meta, which hit record highs. These stocks have been leading the market, driving significant gains.
What is the projected earnings growth for the mega-cap tech stocks (MAG7)?
Earnings for the MAG7 are projected to decelerate from 55% to 25% growth. However, Tesla is the only MAG7 stock expected to show meaningful earnings acceleration, while Nvidia and Amazon are projected to experience decelerating earnings growth.
Why are investors optimistic about the MAG7 stocks despite decelerating earnings growth?
Investors are optimistic because the MAG7 stocks remain core holdings for both retail and institutional investors. The market believes these stocks can continue to lead, even as growth slows, due to their strong fundamentals and leadership in key sectors like AI and cloud computing.
What role does AI play in the recent resurgence of tech stocks?
AI is a significant driver of the tech stock resurgence. Companies like Apple and Broadcom are working on AI chips, and software updates incorporating AI features are boosting investor confidence in tech innovation.
What is the outlook for the MAG7 stocks in 2025?
The outlook for the MAG7 in 2025 is mixed. While some expect them to continue leading, others believe their outperformance may compress as the market broadens to include other sectors and stocks.
Why has Amazon seen a breakout in its stock price?
Amazon's stock has seen a breakout due to strong fundamentals, including 54% growth in operating income and 22% growth in EBITDA. Additionally, AI is expected to reduce fulfillment costs by 25%, further boosting profitability.
What is the impact of NVIDIA's performance on the broader market?
NVIDIA's performance is less critical to the broader market now, as other mega-cap stocks like Apple and Alphabet have picked up the slack. NVIDIA has been a laggard, but its size and importance have diminished compared to the MAG7.
Why are some investors cautious about adding to MAG7 stocks now?
Some investors are cautious because the recent gains in MAG7 stocks may be driven by year-end equity flows into passive or index-based solutions, rather than fundamental improvements. This could make the stocks vulnerable to a pullback.
What is the significance of Andrew Ferguson's nomination to the FTC for tech stocks?
Andrew Ferguson's nomination to the FTC is seen as a positive catalyst for tech stocks, particularly the MAG7, as it signals a more business-friendly environment compared to the previous FTC leadership under Lena Khan.
What is the potential for small-cap stocks in 2025?
Small-cap stocks are expected to lead in 2025, according to analysts like Tom Lee, due to better earnings growth opportunities and a broadening of the market beyond the MAG7. This could create a more balanced market environment.
- Nasdaq hits 20,000 for the first time
- Mega-cap tech stocks at record highs
- Projected deceleration in earnings growth for MAG7
- Debate on future market leadership
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