{"id":13094,"date":"2024-08-01T06:30:25","date_gmt":"2024-08-01T06:30:25","guid":{"rendered":"https:\/\/www.vtmarketseu.com\/fr\/?p=13094"},"modified":"2025-04-03T09:59:20","modified_gmt":"2025-04-03T09:59:20","slug":"ai-stocks-lead-q3-with-value-plays-rising-for-2024","status":"publish","type":"post","link":"https:\/\/www.vtmarketseu.com\/fr\/week_ahead\/ai-stocks-lead-q3-with-value-plays-rising-for-2024\/","title":{"rendered":"AI Stocks Lead Q3 with Value Plays Rising for 2024"},"content":{"rendered":"\n
Key points:<\/strong><\/p>\n\n\n\n The third quarter of 2024 has seen intriguing developments in the US equities market, with attention on the performance of AI-related stocks.<\/p>\n\n\n\n As we approach the end of the quarter, investors are questioning whether the AI stock trade has reached its peak.<\/p>\n\n\n\n Q3 US Equity Market Boosted by AI-Driven Growth<\/strong><\/p>\n\n\n\n As of June 24, the Morningstar US Market Index, representing the broad US equity market, increased by 3.20% for the quarter and 13.77% year-to-date.<\/p>\n\n\n\n This rise has been largely fueled by the performance of stocks related to artificial intelligence.<\/p>\n\n\n\n AI Stocks Leading the Charge<\/strong><\/p>\n\n\n\n The second quarter’s gains were concentrated in a handful of AI-related stocks, including Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), and Broadcom (AVGO).<\/p>\n\n\n\n An attribution analysis reveals that without these gains, the broad market index would have declined. This trend raises questions about the sustainability of the AI-driven rally.<\/p>\n\n\n\n Market Valuation Concerns<\/strong><\/p>\n\n\n\n The US stock market’s price-to-fair value ratio rose to 1.03, reflecting a 3% premium over fair value estimates as of June 24.<\/p>\n\n\n\n While this doesn’t yet signal an overvalued market, it places it near the higher end of the fair value range seen since 2010.<\/p>\n\n\n\n Historically, the market has only traded at this premium or higher 10% of the time.<\/p>\n\n\n\n The AI Surge and Its Implications<\/strong><\/p>\n\n\n\n AI-related stocks continued to surge, heavily influencing the Morningstar US Growth Index and, to a lesser extent, the Morningstar US Core Index. Both indexes outperformed the Morningstar US Value Index.<\/p>\n\n\n\n However, based on current valuations, the outperformance of these AI stocks appears to be waning.<\/p>\n\n\n\n Growth vs. Value Stocks<\/strong><\/p>\n\n\n\n Growth stocks traded at a 6% premium to Morningstar’s composite valuations, and core stocks at a 7% premium as of June 24. In contrast, value stocks remain attractively priced at a 9% discount.<\/p>\n\n\n\n This disparity suggests that long-term investors may benefit from shifting focus from overextended growth and core stocks to undervalued value stocks.<\/p>\n\n\n\n Given the current market dynamics, we recommend adjusting your investment strategy.<\/p>\n\n\n\n Growth and core stocks have become overextended due to the AI-driven surge, making it prudent to underweight these stocks. In contrast, value stocks present a better margin of safety and potential for future gains, warranting an overweight position.<\/p>\n\n\n\n Additionally, focusing on small-cap and mid-cap stocks is advisable, as these categories offer attractive valuations compared to the increasingly overvalued large-cap stocks.<\/p>\n\n\n\n Specific Sector Opportunities<\/strong><\/p>\n\n\n\n While the broad market shows signs of overvaluation, there are specific sectors with promising opportunities:<\/p>\n\n\n\n Shifting Focus to Value Stocks and Small Caps for Better Returns in 2024<\/strong><\/p>\n\n\n\n The concentrated rally in AI stocks during the third quarter of 2024 has sparked worries about market overvaluation.<\/p>\n\n\n\n As we look forward, shifting focus from overvalued growth and core stocks to undervalued value stocks and smaller-cap opportunities may provide better investment returns. Stay informed and strategic to navigate this evolving market landscape effectively.<\/p>\n","protected":false},"excerpt":{"rendered":" Key points: The third quarter of 2024 has seen intriguing developments in the US equities market, with attention on the performance of AI-related stocks. As we approach the end of the quarter, investors are questioning whether the AI stock trade has reached its peak. Q3 US Equity Market Boosted by AI-Driven Growth As of June Continue Reading<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[20],"tags":[],"class_list":["post-13094","post","type-post","status-publish","format-standard","hentry","category-week_ahead"],"acf":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n
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<\/figure>\n\n\n\nSector Analysis and Investment Strategy<\/strong><\/strong><\/h4>\n\n\n\n
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