In the fourth quarter of 2023, Tesla relinquished its position as the leading electric vehicle (EV) manufacturer to BYD. BYD managed to outperform Tesla by delivering 8% more EV cars during that period. BYD’s success can be attributed to its competitive advantages, such as offering more affordable vehicles, leveraging advanced technology, and utilizing in-house built batteries. Interestingly, BYD often refers to itself as the “biggest electric vehicle company you have never heard of.”
While this development may be seen as a setback for Tesla, it also highlights the rapid growth and widespread adoption of EVs in the market. By the end of the fourth quarter of 2023, the 15 largest EV manufacturers had collectively delivered over 2 million EVs. This significant milestone indicates that approximately 10% of all new passenger vehicles in 2024 are projected to be EVs.
Another noteworthy factor impacting the EV market is the substantial decline in lithium carbonate prices, which have decreased by 83% from their peak. This price reduction enables EV manufacturers to offer their vehicles at lower prices without significantly impacting their gross margins. Consequently, this could further accelerate the adoption of battery electric vehicles (BEVs).
Magnificent 7 – Looking Ahead
Shifting gears to the technology sector, the Big Tech stocks that dominated the market in 2023 have faced a challenging start to the year. These stocks played a significant role in driving about three-quarters of the S&P 500’s total gains in 2023. The key question now is whether this rally will continue throughout 2024.
Let’s take a closer look at some of the prominent tech companies and their prospects for 2024:
Alphabet is expected to report a 22% growth in earnings for 2023, and analysts project a further 17% growth in the current year. Amazon is poised for growth in 2024, with numerous opportunities anticipated, including increased revenue from advertising on Prime Video and the Amazon Web Services cloud business. Apple is expected to see a small sales increase in the quarter ending in December, which will be disclosed on February 1.
Despite having a relatively high forward price-to-earnings ratio of 29, we believe that Meta Platforms still has room for growth in 2024. This growth is expected to be fueled by the efficiencies of artificial intelligence (AI). Microsoft has recently garnered attention due to its ownership stake in OpenAI and its involvement in AI-related developments. We think the stock has yet to fully reflect the potential growth in cloud and AI.
Nvidia, the chipmaker, has experienced remarkable revenue growth rates exceeding triple digits in the past two quarters. For this year, Nvidia is expected to achieve a substantial 236% increase in earnings, amounting to $11.22 per share. Looking ahead to 2025, a growth rate of 67% in earnings is projected.