3 Themes That Will Dominate the Stock Market This Year

Feb 11, 2024

The year has just begun, but already a handful of stock market trends are showing their important for the rest of 2024. These three trends – artificial intelligence, medical innovation, and emerging markets – are all part of a recent BlackRock BLK report covering important 2024 thematic stock market trends.

While the report itself raises many important points and deserves a read, this is only a brief overview of some of the top stock market trends. Experts see these patterns playing out today with (hopefully) some ideas on profiting most from them.

Artificial Intelligence

In 2023, artificial intelligence (AI) contributed mightily to the overall market’s gains, signaling the start of an expansive adoption phase. The upcoming year will witness a substantial leap in enterprise AI adoption and its integration into products. Notably, investors will see the advancement toward multi-modal AI and diversification of hardware beyond traditional GPUs. A substantial 70% of executives plan to increase their investment in AI during 2024. They are driven largely by the potential for cost savings through applications like legal document analysis, automation of repetitive tasks, and customer service enhancements.

The AI market landscape has favored mega-cap tech companies, and some of those stocks have contributed most to market gains. However, the focus may shift towards small and mid-cap firms in the new year, offering potentially attractive valuations for investors. Despite top AI stocks‘ impressive performance, many within the broader AI sector are undervalued. And this is especially true when compared to the mega-caps and the broader tech industry.

Medical Innovation

Recent advancements in Alzheimer’s treatments and AI-driven medical technologies offer significant potential to transform healthcare. Despite these innovations, concerns abound that investors may be overlooking opportunities in neuroscience and biotech sectors. By focusing too much on current revenues, some overlook the potential value these innovations could bring.

AI’s role in healthcare is expanding. With its ability to analyze vast amounts of data quickly, it aids in brain and gene mapping, and accelerating drug discovery processes. AI’s utility in drug discovery should significantly reduce the time and costs associated with bringing new drugs to market. These AI-driven developments in neuroscience, genomics, and biotech offer significant benefits for diagnosing and treating various conditions, highlighting the sector’s potential for investors.

Emerging Markets

Finally, emerging markets will become increasingly popular. Efforts to diversify supply chains and strengthen ties with strategic partners like Mexico characterize the newfound emphasis. Specifically, it is considered an attractive investment destination due to its proximity to the U.S., competitive salaries, and qualified labor force.

Additionally, India is emerging as a key player in the global supply chain and manufacturing sectors. Further, predictions place it as the world’s third-largest economy by the end of the decade. Other countries like Vietnam, Thailand, Indonesia, and Brazil are also gaining attention as significant emerging markets outside of China.

Given China’s substantial share of 30% in the emerging markets, investors are starting to segment their emerging market exposures. They are treating China as a distinct entity due to its unique opportunities, challenges, and nuances. This modular investment approach allows for more tailored strategies, enabling investors to adjust their China-specific exposures as needed, separate from their investments in other emerging markets.

On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.

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