The “Magnificent 7” stocks, which include major tech giants, played a significant role in the S&P 500 and Nasdaq Composite’s impressive gains of 43% and 24% in 2023. However, 2024 may not be as favorable for these stocks. Investors should consider selling shares of Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Tesla (NASDAQ:TSLA) in the short term.
Apple’s stock increased nearly 50% in 2023, but recent challenges related to revenue growth in key product lines have cast doubt on the company’s future growth prospects. The mobile handset market is at capacity, and consumer demand for smartphones is decreasing. Additionally, uncertainty in the China market, which accounted for about 19% of Apple’s revenue at the end of its fiscal year 2023, is another reason for investor caution.
Microsoft’s billion-dollar investment in OpenAI initially generated excitement, but the AI-powered ChatGPT has not helped the company meaningfully break into the search browser market. Microsoft’s stock rose 58% last year, and its market cap now approaches $3 trillion. However, investors should be vigilant about when the AI hype will fizzle out.
Tesla is a dominant player in the global electric vehicle market, but the stock may face headwinds and underperform throughout 2024. Despite beating Wall Street’s estimates, Tesla’s Q4 2023 deliveries trailed behind Chinese competitor BYD (OTCMKTS:BYDDY). Investors will likely be watching whether Tesla can regain its lead in the international market.
In summary, while the “Magnificent 7” stocks experienced a great rally in 2023, investors should be cautious and consider selling shares of Apple, Microsoft, and Tesla in the short term.
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