😍 Why Goldman loves US stocks

👀 WHAT JUST HAPPENED?

US

Europe

Asia

✍️ WHAT DOES ALL THIS MEAN?

Goldman Sachs has already made two revisions to its full-year forecast – and it’s not even March. The investment bank now sees the S&P 500 hitting 5,200 by the end of 2024, one of the most optimistic calls on Wall Street. Now, that’s a whopping increase over the 4,700 prediction it made back in November, but with the index already trading near 5,100, that new goal isn’t too far off. The upgrade was triggered mainly by stronger economic growth and higher profit expectations for S&P 500 companies, particularly within the tech sector. See, the bank now expects the index’s 2024 earnings-per-share to come in at $241, which would represent roughly 9% growth over last year – a big improvement from the stagnation seen in 2023.

Nvidia just keeps dropping people’s jaws to the floor, like the AI technologies its computer chips power. Its sales more than tripled from a year ago, hitting $22.1 billion in the fourth quarter and trouncing consensus estimates. And the next round of results will be even more eye-popping, the company said, sending analysts back to their forecasts with pencils and erasers. The earnings and the outlook suggest there’s no slowing down Nvidia’s streak of overachievement, driven by firms’ relentless demand for its AI chips.

HSBC saw its fourth-quarter profit tumble to $1 billion – just a fifth of what it was a year ago. The plunge was mainly driven by several one-off accounting charges, including a huge loss on its stake in a Chinese bank, a hefty hit from selling its French lending business, and a whack of cash it set aside to cover potential losses from China’s slumping real estate sector. That overshadowed what was otherwise a good year, with rising interest rates globally elevating HSBC’s full-year earnings to a record high. And despite a newly announced $2 billion in share buybacks, investors – fixated on the bank’s troubles in China – sent HSBC’s shares tumbling.

China’s troubles were on full display last week after a report showed foreign direct investment (FDI) in the country crumbled to a 30-year low. This isn’t a case of shrinking speculative investments: FDI captures all the investments – initial and continuing – in China by multinational firms with ongoing operations in the country. Total FDI into the nation was just $33 billion last year – 82% less than the previous year and the lowest since 1993. There’s probably never a good time for this kind of dropoff in the economy, but this one comes at a particularly inconvenient moment for China, which is dealing with a property crisis, anemic domestic demand, and paltry investor confidence.

But the country got some good news last week, with a new report showing travel and spending during the Lunar New Year holiday topped pre-pandemic levels. Tourist trips increased by 19% and spending by 8% this year, compared to 2019. Though, to be fair, this year’s festival was eight days long, instead of seven. Still, the nation’s most important holiday is a key barometer of consumer spending, and the upbeat spending does suggest a potential rebound in domestic demand.

SPONSORED BY ARCHAX

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.

Check out the crypto platform that always keeps it moving

Crypto is always changing. It’s essentially in the digital currencies’ nature.

So even if you’re on your game today, the next regulation, scandal, or approval could send you back to square one.

Unless you use Archax. The investing platform has cutting-edge trading tools, sure, but that’s just the start. Take a tour, and you’ll find a ton of ways to sharpen your know-how and strategies.

Plus, Archax is always adding new coins, meaning you can explore smaller, innovative options alongside the traditional big guys.

Discover a crypto investment platform that actually betters your strategy.

🔍 This week’s focus: A rosy outlook

There’s no question that Goldman is optimistic about the prospects for US stocks, and that outlook extends beyond this year. Its economists estimate that AI could add a chunky 1.5 percentage point to US productivity growth every year over the next ten years. And based on the historical relationship between productivity growth and corporate profitability, this boost could lift S&P 500 profit margins by roughly four percentage points over the next decade, all else being equal. In other words, that’d take S&P 500 profit margins from around 12% today to 16% in a decade. That’s massive: on an annualized basis, that would represent a 3% boost to earnings growth, which alone could push up stock market returns by a similar amount.

And it’s all booming big for the US. Its market is, after all, home to many AI-focused software and hardware firms. That said, the buzz surrounding the technology has already driven US shares to record highs, leaving their valuations way above historical averages. And that suggests you might find more attractive, affordably priced investment opportunities in other places that are positioned to benefit from the latest tech revolution. The UK stands out here: it’s expected to get the third-biggest uplift from AI, according to a Capital Economics report that ranked 33 different countries based on how much they stand to benefit from the technology. What’s more, the UK’s stock market valuation is sitting below its historical average.

📅 THE WEEK AHEAD

Stay classy ✌️

Your Finimize Analyst team

SPONSORED BY AMERICAN ASSOCIATION OF INDIVIDUAL INVESTORS (AAII)

See the 50 top-rated funds and ETFs in the tech sector this year

The world moves fast, and financial markets are dragged along with it.

So the second you feel like you’ve caught up on the news, a powerful handshake somewhere around the globe throws everything through a loop again, pushing you back to square one.

Now, you can stay informed without the tedious groundwork. Each year, the AAII Journal publishes its annual Mutual Fund and ETF Guides. These guides assist fellow investors in discovering noteworthy investment opportunities in the technology sector.

You’ll be guided through top-rated mutual funds and exchange-traded funds (ETFs) for tech-minded investors, according to the AAII Team.

Not just that, but you’ll close the tab equipped with the tools you need to navigate complex markets, and the confidence to make smart decisions by picking out the right information.

Forget your usual magazine of the month: if you want a solid grip of the tech sector, the annual AAII Mutual Fund & ETF guides could be your new go-to read.

📍 Be in the right place at the right time.

And by right place, we mean right here.

SPONSORED BY HEALTHWORDS.AI