JPMorgan chosen Amazon and Alphabet stocks as the most probable front-runners for 2024.
With 2023 gradually coming to an end, investors are eagerly awaiting insights from industry experts regarding the financial prospects of internet stocks in the coming year. According to a recent note by JPMorgan on December 13, tech stocks are set to continue their positive trajectory, with mega-cap tech companies expected to maintain their leadership, a trend observed throughout the year.
Top Picks of the Year
The bank expects its “coverage universe”, referring to the internet companies tracked by the company, to experience a broad re-acceleration in revenue growth to more normalized levels. Among the mega-cap companies tracked by JPMorgan, three are expected to return to achieving low double-digit percentage growth year-on-year, propelling their growth into 2024.
JPMorgan has placed Amazon and Alphabet among the three frontrunners during the forecast period, labeling them as the “top picks” for the year.
The financial institution predicted a 13% revenue increase for Amazon.com Inc (NASDAQ: AMZN) for 2024 compared to growth of 9% in 2023. The market experts suggest the stock could achieve a new pinnacle at $190 per share, signifying a substantial 29% surge from the present price level.
According to the company, the growth will be driven by increased same-day delivery, growth in third-party fulfillment, and pricing power. In terms of its cloud services, JPMorgan projected growth of over 17% against the 13% it generated in revenue this year.
“For cloud, we model AWS growth of +17% (vs +13% in 2023) supported by strong secular growth, new workload deployment, easier year-over-year comparisons, and growing Gen AI contribution,” JPMorgan said.
JP Morgan Predicts Alphabet to Grow by 11% Next Year
Alphabet, on the other hand, is projected to attain a $160 price target next year, indicating a potential 21% upswing from the current valuation. The inclusion of Alphabet Inc (NASDAQ: GOOGL) in JPMorgan’s top pick is attributed to the company’s commendable strides in “improving ad growth, securing larger margin gains, and Gemini’s role in narrowing the Gen AI gap.”
Analysts at JPMorgan anticipate an 11% uptick in revenue for Alphabet in 2024, primarily attributed to the robust performance of its Google Cloud division and revenue generated from YouTube ads.
“We expect improving Search and YouTube growth on AI ad tools, secular shift, YouTube Shorts monetization, and favorable comparisons,” JPMorgan said.
Additionally, the bank projects a 175 basis points expansion in profit margins for 2024 as Alphabet continues to optimize its cost structure. The company’s commitment to artificial intelligence initiatives positions it as a frontrunner in the AI landscape.
“Although in the early stages, we believe the introduction of Gemini Ultra represents a significant leap in innovation and is expected to contribute to closing the Gen AI gap as it unfolds in early 2024.”