• Goldman Sachs says obesity drugs, AI and manufacturing will be key market themes this year.
• Obesity drugs and generative AI emerged in 2023, but were still in their “early stages”.
• Strategists shared stock picks for the bank’s seven big market themes for 2024.

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According to Goldman Sachs, there will be some important trends for the markets to keep a close eye on this year.

Overall, Goldman says the US economy looks to be progressing well following the Federal Reserve’s interest rate hikes, and markets have outperformed expectations by a wide margin in 2023.

The bank’s strategists say they largely expect this to continue in 2024.

“The coast looks clear for the US economy,” the bank’s strategists said Tuesday. They agreed with low Treasury yields, the Fed’s upcoming pivot toward easy monetary policy and GDP growth expectations above consensus.

Looking ahead to the rest of the year, Goldman has its sights set on seven big themes that could shape the market.

Here’s a look at the key market trends the Wall Street giant foresees for the coming 12 months, from artificial intelligence to obesity drugs to green energy.

1. Generative AI

The bank expects AI technology and innovation to eventually increase productivity and boost annual GDP growth by 0.4%.

“AI is likely to prove a big boom for companies that can provide the compute power and platforms to support AI initiatives,” the strategists said.

According to Goldman Sachs, stocks the bank recommends under this theme include Amazon and Nvidia.

2. Green energy expenditure

Goldman Sachs strategists wrote, “The world’s need to respond to climate change is becoming increasingly clear and corporations are responding to the opportunity that is emerging as governments step up efforts to help transition from fossil fuels to renewable energy sources.” are encouraging a wave of new growth for the Note.

Companies in the solar sector, which can harness methane gas from waste, and names in nuclear energy could benefit from this trend.

Strategists have named First Solar, Republic Services and Southern Company as stocks to watch in the sector.

3. Personal Loan

Goldman Sachs said investors will look to private debt deals to beat public market returns, and private credit retail products offered by asset managers have gained traction over the past year.

“Insurance companies are increasingly allocating capital to private markets, creating a reliable and large source of funding for this market,” the strategists said.

To this theme, the bank says shares of Blue Owl Capital could benefit.

4. “Echoes of the post-pandemic era”

This topic may be on its last legs as the world adjusts to the new normal of the post-pandemic years.

Various sectors such as transportation and travel are still adjusting after the multi-year anomaly of the COVID-19 era, but strategists said two notable sectors include financials and technology, which could be vulnerable to regional bank crises and the bursting of the tech bubble in 2023. recovering from. In 2021 respectively.

,[H]Heading into 2024, the tone appears to be changing, strategists said.

He said that hiring is increasing rapidly, especially in software companies, which is often followed by a growth spurt.

Stocks exposed to this theme include Amazon, OKTA, JB Hunt, Textron, JP Morgan, and Jefferies Financial Group.

5. Obesity medicines

The bank says that the stock market gets Ozempic in 2023 and the craze of weight loss drugs will be a topic worth watching this year.

Eli Lilly gained nearly 60% last year on the popularity of its weight-loss drug. It became the 9th largest company by market cap in the S&P 500, and was recognized as one of the major winners of the year.

Goldman Sachs said that in 2024, similar drugs from competitors addressing many issues beyond obesity will come to market, but strategists expect demand for GLP-1 drugs to remain a major trend to watch.

6. A manufacturing renaissance

According to Goldman, climate change, the after-effects of the pandemic, and deglobalization will all contribute to a manufacturing renaissance in the US.

New projects are scheduled to come online this year, and Goldman estimates that U.S. industrial trends in semiconductors, EVs and charging stations could drive up to $600 billion in incremental capital spending by 2030.

Stocks exposed to the theme include Nvidia, Cintas, TE Connectivity, First Solar, JB Hunt, Parker-Hannifin and PPG Industries.

7. More mature Internet development and blurred business model

Finally, Goldman Sachs said the development for Internet companies is becoming more mature than it was a decade ago. Growth is slowing down and this is pushing companies to explore new sectors and sub-sectors to continue expanding.

“This is a discovery that is resulting in a blurring of the operational lines between advertising and commerce, consumption habits, and overall consumer behavior within a scaled ecosystem,” the strategists said.

Amazon is one of the companies poised to thrive in this scenario, Goldman said, while WW International and Constellation Brands also have experience with the subject.

Source: markets.businessinsider.com