A Bull Market Is Coming: 2 Stock-Split Stocks to Buy as Part of Your New Year’s Resolution | The Motley Fool

The reference point S&P 500 The index plunged into a bear market in 2022 when it fell more than 20% from its all-time high. But after a solid 2023, he recovered almost all the lost ground.

The index is about to set a new record, which would officially mark the beginning of a new bull market. You only need a 0.5% gain to get there.

History Suggests 2024 Will Likely Be Another Positive Year for the Stock Market, which would practically guarantee that the S&P 500 enters bullish territory. With that in mind, here's why investors might want to start the year with shares of the world's two largest companies: microsoft (MSFT 0.07%) and Apple (AAPL -0.75%).

1.Microsoft

Microsoft was founded in 1975 as a software company and went public in 1986 valued at $777 million. After expanding into hardware, gaming, Cloud Computing, and artificial intelligence (AI) over the past 48 years, Microsoft amassed a valuation of $2.8 trillion. It is only behind Apple for the title of largest company in the world.

That significant value creation prompted Microsoft to execute nine stock split since 1987 to ensure its stock remained accessible to small investors, who might be grateful right now, considering it soared 57% in 2023, doubling the stock's performance. S&P 500. And 2024 could be another strong year as the company ramps up efforts to monetize its growing portfolio of AI products.

Management started 2023 strong when it agreed to invest $10 billion in Generative AI Startup OpenAI, responsible for the ChatGPT chatbot. Microsoft has since integrated that technology into its Windows operating system, its Edge Internet browser, its Bing search engine, its Microsoft 365 document suite, and its Azure cloud computing platform.

The Azure OpenAI service allows businesses to access the latest OpenAI GPT-4 models to help them build their own AI applications. The service began in calendar year 2023 with just 200 customers, but within nine months, more than 18,000 organizations had signed up. I anticipate that number will increase significantly this year as companies rush to incorporate AI into their operations to increase efficiency.

Microsoft is also running an early access program for its ChatGPT-powered Copilot technology in Microsoft 365 apps. Now, businesses can leverage the power of AI in Word, Excel, PowerPoint, Outlook, and Teams for $30 per employee per month. The company says that 40% of Fortune 500 Companies are participating in the early access program, including giants like Visa and KPMG.

According to Statista, more than 1.3 million businesses use Microsoft 365, so the ability to charge them more for AI-enabled versions could be a dramatic financial opportunity.

Microsoft's fiscal year 2024 will end on June 30 of this year. Wall Street analysts estimate the company will generate $243 billion in revenue, an increase of 14.8% year over year. Its earnings per share are expected to rise 14.5% to $11.24.

Place the stock in term. price-earnings ratio (P/E) of 33.5, which is a slight premium compared to the Nasdaq-100 technology index. However, the company's presence in the AI ​​space could still guarantee greater profits. Prominent Wall Street technology analyst Dan Ives of Wedbush recently named Microsoft his top pick and believes the stock could hit $450 by 2024 thanks to artificial intelligence. That implies an increase of almost 20%.

2. apple

Apple was founded in 1976 and went public in 1980 with a value of $1.8 billion. It now generates that amount of revenue every 40 hours and became the first company in history to amass a $3 trillion valuation.

Like Microsoft, it has created so much value that its management executed five stock splits since 1987 to keep its shares accessible to small investors.

The catalyst behind most of Apple's market value is the iPhone, which was introduced in 2007. It has taken consumers on a journey full of innovation, such as the smartphone's high-resolution displays, its camera technology and your application ecosystem. But the latest iPhone 15 lineup sets the stage for what could be the next big value creator: on the device. artificial intelligence.

iPhone 15 is equipped with the Apple-designed A17 Pro processor, the smartphone industry's first 3-nanometer processor. chip. Simply put, the iPhone's brain is now smaller, faster and more efficient than ever.

Its Neural Engine, which processes AI and machine learning workloads, offers a two-fold increase in performance over its predecessor, the A16 Bionic. This allows iPhone to handle AI workloads independently of the cloud or third-party computing services, which many AI applications currently rely on.

It will open the door to powerful advancements in features like the Siri voice assistant, predictive text, and Visual Lookup, a camera tool capable of identifying faces, plants, and even famous landmarks.

However, Apple is rumored to be working on its own large language models and even a generative AI application called Apple GPT. Details remain scarce, but imagine having a ChatGPT-Styling tool woven into every aspect of your iPhone, processed using the device's own chip hardware. The possibilities will be endless; could craft your messages and emails, or even create image and video content for you.

AI It's not the only area where Apple is innovating. It is preparing to launch its new virtual reality headset, Vision Pro, early this year. It's priced at $3,499, so it probably won't sell in large volumes initially, but it's Apple's first new product category since it launched its Watch in 2015. It gives developers the opportunity to create new gaming and entertainment experiences. , which could attract consumers. this new platform.

Wall Street estimates that Apple will generate $396 billion in revenue in fiscal 2024 (ending September 30, 2024), which would mark a gain of just 3.5% year over year. While it sounds slow, there is an even bigger force that will likely keep Apple stock afloat: the company continues to return large amounts of money to shareholders. It bought back $77.5 billion of its own shares in fiscal 2023 and paid $15 billion in dividends. That's music to the ears of your biggest investors, including Warren Buffett.

Apple has always been a long-term story. It is not very agile given its enormous size; It's more like an aircraft carrier that needs time to maneuver. But 2024 It will likely be one of the company's most exciting years as it lays more groundwork for its AI initiatives and consumers interact with the Vision Pro platform at scale for the first time.