A number of notable analysts now believe that the Federal Reserve would start cutting interest rates, albeit slowly, in the second half of 2024. But there are a few financial services firms that have a different opinion. T. Rowe Price, for example, in its 2024 market outlook report has said that it believes the central bank will hold interest rates steady next year. The firm said that it takes time to see the real effects of rate hikes. The Eurozone is already in recession and China’s post-COVID recovery was disappointing. However, the T. Rowe Price report said that the “tectonic” shifts in the global financial markets have created new opportunities for investors.
The report also said that in 2023 most of the stock market gains were concentrated in the tech sector. But T. Rowe Price is hopeful that 2024 would see new opportunities arise in other sectors, including healthcare and energy.
T. Rowe Price said that major economic stimulus after the COVID-19 pandemic and excess cash amassed by consumers provided a lot of support to the economy, which is why the market remained resilient despite incessant rate hikes. Another factor behind the market’s strength is the strong labor market. The report noted that as of the end of September 2023, there were 9.6 million open jobs available for the 6.4 million unemployed workers in the U.S.
Unlike many other financial services firms, T. Rowe Price does not believe there would be major rate cuts in 2024.
"As of late November, futures markets were pricing in four Fed rate cuts in 2024, anticipating that the U.S. central bank will ride to the rescue if the U.S. economy falls into recession. However, we believe the failure of the Fed and most other developed market central banks to get ahead of inflation following the pandemic makes them more likely to keep policy rates at relatively high levels through much of 2024. Structural forces such as deglobalization, lower labor force participation rates, and energy price pressures also could make inflation stickier than in past economic slowdowns, further discouraging central banks from easing monetary policy."
The Changing Retail Investing Landscape
The AI-led rally in 2023 had everyone swooning over major tech stocks and just about any company that said it would use AI in its business. Retail investors on Reddit, which is now keenly followed by even professional financial services firms, saw similar trends. Also, huge volatility and ever-changing situation of financial markets have infused a strange wisdom and composure in Reddit's investing communities, where everyone is no longer just YOLOing their life savings into meme stocks. Redditors kept piling into safe, mature stocks and broader market ETFs this year, as we will see in this article.
Methodology
For this article, we scoured Reddit’s WallStreetBets subreddit to see which stocks retail investors on the social media platform have been piling into lately. These are the stocks that also remained trending on r/WallStreetBets throughout most of the year and have a positive sentiment on the platform. Some top names include Nvidia Corp (NASDAQ:NVDA), Meta Platforms Inc (NASDAQ:META) and Microsoft Corp (NASDAQ:MSFT).
Forget AMC and Gamestop: 10 New Stocks Reddit’s WallStreetBets Is Buying
Retail investors at Reddit are excited about gene editing giant Crispr Therapeutics AG (NASDAQ:CRSP). The stock is up by about 57% year to date. During the third quarter, Crispr Therapeutics AG’s (NASDAQ:CRSP) GAAP EPS came in at -$1.41, beating estimates by $0.57.
Lululemon Athletica Inc (NASDAQ:LULU) is one of the new stocks Reddit’s WallStreetBets has been talking about. Earlier this month Redditors were excited about Lululemon Athletica Inc’s (NASDAQ:LULU) third quarter results which came in above expectations. Adjusted EPS in the quarter came in at $2.53, beating estimates by $0.25. Revenue jumped about 18.3% year over year to $2.2 billion, surpassing estimates by $10 million. Total comp. sales in the quarter increased by 13%. However, the stock fell as Lululemon Athletica Inc’s (NASDAQ:LULU) Q4 guidance was softer than expected.
As of the end of the third quarter of 2023, 61 hedge funds tracked by Insider Monkey had stakes in Lululemon Athletica Inc (NASDAQ:LULU). The biggest hedge fund stakeholder of Lululemon Athletica Inc (NASDAQ:LULU) was Andreas Halvorsen’s Viking Global which owns a $299 million stake in Lululemon Athletica Inc (NASDAQ:LULU).
Kinsman Oak Capital Partners made the following comment about Lululemon Athletica Inc (NASDAQ:LULU) in its first quarter 2023 investor letter:
“What is relatively new, however, is that we are beginning to see substantial write-downs and impairment charges. For instance, Lululemon Athletica Inc. (NASDAQ:LULU) is already exploring a sale of Mirror, the struggling fitness technology company it bought less than three years ago for half a billion dollars. Lululemon executives recently announced a $433 million impairment charge on the business (-89%). That is not an insignificant amount of money.”
Perhaps Reddit’s WallStreetBets has become quite mature and took the advice of wise investors who recommend piling into broader market funds for long-term gains. SPY SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is in the list of the most-talked about and mentioned tickers in the WSB community as of December 8. Investing in broader market ETFs give retail investors easy and affordable exposure to big companies like Nvidia Corp (NASDAQ:NVDA), Meta Platforms Inc (NASDAQ: META) and Microsoft Corp (NASDAQ:MSFT).
Redditors have been piling into stocks that are expected to gain on the back of the AI-fueled rally in the markets. Broadcom Inc (NASDAQ:AVGO) is one of these stocks. Broadcom Inc (NASDAQ:AVGO) recently gave guidance for 2024. Research firm Summit Insights Group upgraded the stock to Buy. While the firm thinks the stock could face headwinds in the first half of 2024, it believes Broadcom Inc (NASDAQ:AVGO) can outperform its outlook for the full year.
"We think the upcoming new product cycles will allow the company to drive financial outperformance in [the second-half of 2024]," Summit Insights said.
ClearBridge Multi Cap Growth Strategy made the following comment about Broadcom Inc. (NASDAQ:AVGO) in its Q2 2023 investor letter:
“While the ClearBridge Multi Cap Growth Strategy has limited mega cap exposure, which has been a recent headwind to relative performance, we own several companies that stand to benefit from the explosive growth in generative AI. These holdings play key roles in building out the necessary infrastructure and helping customers leverage capabilities enabled by this emerging technology.
Redditors on the WSB community cheered Advanced Micro Devices, Inc’s (NASDAQ:AMD) reveal of new MI300x AI accelerator which was also welcomed by the Wall Street. Advanced Micro Devices, Inc (NASDAQ:AMD) says its estimated total addressable market estimate is now roughly $400 billion by 2027, up from the $150 billion given in August. Deutsche Bank said the latest Advanced Micro Devices, Inc (NASDAQ:AMD) event shows Advanced Micro Devices, Inc (NASDAQ:AMD) remains well positioned to take advantage of the AI boom.
In our article titled “10 Stocks that will Skyrocket” in November, we said that it was just a matter of time Advanced Micro Devices, Inc (NASDAQ:AMD) caught up with Nvidia Corp (NASDAQ:NVDA) since Advanced Micro Devices, Inc (NASDAQ:AMD) has a history of speedy innovation and beating others in competition.
As of the end of the third quarter of 2023, 110 hedge funds had stakes in Advanced Micro Devices, Inc (NASDAQ:AMD).
Artisan Global Opportunities Fund made the following comment about Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2023 investor letter:
“Among our top contributors were Advanced Micro Devices, Inc. (NASDAQ:AMD), NU Holdings and Netflix. AMD’s data center CPUs are used in the cloud service provider (CSP) servers. In addition to the broader secular tailwind from cloud adoption, the company has a performance and pricing advantage over Intel, which we believe will enable it to continue capturing market share. However, the recent stock price rally was due to growing excitement around the company’s AI exposure. It will launch its new MI300 graphics processing unit (GPU) chip later this year to compete against the dominant market leader NVIDIA. Similar to its approach that won market share from Intel within the CPU market, AMD’s product will aim to provide similar performance at a more attractive price. AMD is already working with Microsoft and Meta, while Amazon publicly stated that it is evaluating AMD’s inferencing chips. Using assumptions around the total GPU market size, potential market share gains and price points, our research indicates this could be a $20 billion opportunity for AMD. That would nearly double its revenue. While the company has not historically missed many deadlines, there is execution risk as it works to manufacture and distribute these complex chips at scale, which, combined with an elevated valuation after the stock’s strong performance run, led us to trim the position.”
Like AMD, Redditors are also piling into Nvidia Corp (NASDAQ:NVDA), Meta Platforms Inc (NASDAQ: META) and Microsoft Corp (NASDAQ:MSFT).
