Legendary investor & founder of Chaikin Analytics, Marc Chaikin remains bullish on a specific investment theme: companies utilizing AI to enhance productivity in their software. Chaikin sees these AI-driven companies as the ones to watch, especially as earnings season unfolds.
These and other valuable insights from Chaikin and his outlook for 2024 were shared in an exclusive interview with the Benzinga PreMarket Prep team.
January has particularly sparked Chaikin’s optimism, owing to forthcoming earnings reports. He observes an intriguing pattern: when the initial five days of the year exhibit a rising trend, it often indicates that around 25% of the year could see positive results. This ‘seasonality trade,’ initiated towards the end of November, has already proven beneficial for investors who have adopted a bullish approach.
Chaikin foresees the market’s current strength carrying through to 2024, and anticipates any pullback in the S&P 500 to be modest, in the range of 1.5% to 3% during the rally. While the end of the year witnessed some profit-taking in the “Magnificent 7,” the overall market rally is broadening.
Also Read: ‘Magnificent 7’ Widens Gap With Rest Of S&P 500, But That May Change In 2024
In terms of sectors, Chaikin highlights the importance of tech, emphasizing that companies leveraging AI for software productivity will likely fare well. Specific stocks such as ServiceNow Inc (NYSE:NOW), Synopsys Inc (NASDAQ:SNPS), Pure Storage Inc (NYSE:PSTG) and Procore Technologies Inc (NYSE:PCOR) stand out.
Pure Storage has a partnership with NVIDIA Corp (NASDAQ:NVDA) for Flash storage. Procore Technologies is a competitor to Autodesk Inc (NASDAQ:ADSK) and is integrating AI into their software.
Chaikin also points to what he called “secondary tech stocks” like Arista Networks Inc (NYSE:ANET) and CrowdStrike Holdings Inc (NASDAQ:CRWD) as potential winners in the coming months.
A key insight from Chaikin is the ongoing productivity cycle driven by AI. He projects the S&P 500 possibly reaching 5800 to 6000 in the next year, contingent on a change in interest rates, which he identifies as the real driver in the stock market.
Areas to watch include financials, consumer discretionary, and industrials, while caution is advised for energy and mega-cap tech, with a preference…
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