NEW YORK, NY – The ever-changing landscape of the U.S. stock market has once again showcased the emergence of new leaders. Historically, the stock market has always seen new highs, but the stocks leading the charge are not always the same. To identify the new leaders, Wall Street often groups them together to separate them from the rest of the market.
In 2017, CNBC financial analyst Jim Cramer coined the “FAANG” acronym to describe the five largest technology companies at the time: Meta Platforms (formerly Facebook), Apple, Amazon, Netflix, and Alphabet (formerly Google). However, by 2023, another group of stocks, dubbed the “Magnificent Seven,” took over the spotlight and drove the S&P 500 index to an annual return double its historical average. This group included Meta Platforms, Apple, Amazon, Alphabet, Microsoft, Nvidia, and Tesla.
The shifting dynamics prompted Bank of America analyst Michael Hartnett to recognize these stocks as the new leaders in the market. However, as 2024 unfolds, the surge in alternative energy and sluggish electric vehicle sales has led financial analyst Jim Cramer to suggest that Tesla should be removed from the Magnificent Seven. Simultaneously, another analyst, Glen Kacher from Light Street Capital, has identified a new group of stocks and named it the “AI Five” in response to the growing importance of artificial intelligence in the stock market.
This newly identified group includes Nvidia, Microsoft, Taiwan Semiconductor Manufacturing, Advanced Micro Devices, and Broadcom. Each company plays a significant role in the development of the hardware and software necessary to bring AI to life. Investors are now encouraged to consider investing in the stocks of these companies as the focus shifts towards the AI industry.