A handful of big tech players, including Apple and AMD , could end 2024 with strong returns after a slow start to the year, according to Melius Research. "In 1H23 we saw big moves in many of the stocks that were deemed 'AI winners' before some had a 2H23 pause..
..Could we be in for a replay where some laggards pick up? We think so," Melius analyst Ben Reitzes said in a research report on Monday.
"Once again, we are believers in a 'catch-up' trade for some in semis, hardware and even software — those with lower expectations." Melius noted that the VanEck Semiconductor ETF was up 50% in the first half of 2023, but only up another 15% in the second half of last year as "as expectations were digested." Underdogs from the first half of last year like Intel and IBM did well in the second half, however, Reitzes said, suggesting that this year's rally in semiconductors could herald a similar rebound in some lagging stocks.
For example, the semiconductor ETF similarly rallied 49% in the first half of 2024, while the software index ETF added 7%, the analyst pointed out. The S & P 500, meanwhile, jumped nearly 15% in this period. According to Reitzes, Advanced Micro Devices , Intel , Apple and IBM could benefit from a potential catch-up trade, as all four underperformed the broad-market index in the first half of this year.
Fresh product cycles and AI-tied hardware needs should also boost these names, he noted. Of Reitzes' picks, IBM looks best positioned to make a comeback this year .