Unwrapped

Big Tech Battles for the Crown

As if it’s not enough to be in the trillion-dollar market cap club, Nvidia ($NVDA), Microsoft ($MSFT) and Apple ($AAPL) also battled for the crown of ‘world’s most valuable company’. It changed hands several times in 2024.

To get ahead, these firms – along with Amazon ($AMZN), Meta ($META) and Alphabet ($GOOGL) – have upped their spend on AI infrastructure in a big way. Of course, Nvidia is still very much in the driver’s seat as the AI revolution charges ahead full steam. And Nvidia shares? They’re ending the year 180% higher.

Corporate Earnings: Stronger For Longer

It was generally a good year for corporate earnings. Even in Q4, where 67 S&P 500 companies issued negative guidance, the index’s estimated YoY earnings growth rate was the highest in three years.

Shares rallied hard on surprise earnings beats. A supercharged earnings report from Tesla ($TSLA) that finally came in Q3 helped put the stock back in favor with investors, after some had suggested it be axed from the illustrious Mag 7 group of stocks.

And while the S&P 500 might have broken records more than 50 times this year, let’s not forget the VIX’s big moment in August. The CBOE Volatility Index, aka Wall Street’s ‘fear gauge’, recorded a 180% jump to 65.73 – the largest single-day surge in history. 

Comebacks > Setbacks

Many of the year’s biggest gainers are firms that are staging a comeback. We talked about Carvana’s ($CVNA) share price resurrection earlier this year. It's pretty much doubled since then, gaining 400% YTD.

After losing 72% of its value in 2022, Palantir ($PLTR) is up 330% this year. It's expensive (trading at around 135x forward earnings, yikes) but still managed to defy its short sellers, who lost US$3.6b this year.

Space stocks are also having a bit of a resurgence. SpaceX planning a US$350b tender offer spurred even more excitement in firms like RocketLab ($RKLB), which is up 330% YTD after a few down years.

Finally, A Rate Cut

For the first time in a long time, the Federal Reserve found the U.S. economy in a ‘Goldilocks’ situation this year. They cut rates by a juicy 50 basis points in September, and then by another 25 basis points in November.

It was welcome news for everyone except maybe the big banks. But while they’re not looking forward to taking a hit on net interest margins, at least they can take solace in the great year they’ve had in terms of performance. JPMorgan ($JPM) and Wells Fargo ($WFC) shares are both up over 40% this year.

GameStop Won’t Stop

We saw the return of the memestock in 2024. Roaring Kitty’s surprise reappearance inspired retail traders to bet big on GameStop ($GME), sending the stock up 74% in May and squeezing short sellers for nearly US$1b. 

It’s all very reminiscent of 2021, but GME wasn't the only memestock gainer. Trump Media ($DJT) shares rallied 180% over six weeks in the lead up to the election. It's been widely traded by retail investors, but apparently institutional traders didn't shy away either. Charles Schwab added a US$9.5 million position in DJT in December.

Trump Trades Rally Post-Election

After a deadlocked election, markets geared up for a Trump 2.0 presidency. Steel companies rallied and clean energy stocks fell. Big banks had another nice boost, as did crypto-related companies, while shares in private prison firm GEO ($GEO) – which tracks and detains illegal immigrants – gained 100% post-election.

The entire market was tracking higher amid boosted sentiment around corporate America. But when Trump announced cabinet picks, the losers became more obvious. Shares in defense contractor General Dynamics ($GD) are down 15% – likely owing to fears that the Elon Musk-run government efficiency unit would cut spending. Also, vaccine skeptic Robert F. Kennedy Jr. running the Department of Health doesn't bode well for drugmakers like Pfizer ($PFE) and Moderna ($MRNA).

$100K BTC

Speaking of Trump trades, we’d be remiss not to mention Bitcoin’s rally past the mega milestone of US$100,000. Trump’s pro-crypto stance spurred a massive capital influx into spot U.S. bitcoin ETFs, that now cumulatively hold more Bitcoin than its pseudonymous creator Satoshi Nakamoto.

The iShares Bitcoin Trust ETF ($IBIT) and the Fidelity Wise Origin Bitcoin Fund ($FBTC) raked in the highest inflows YTD. Shares in the biggest U.S. crypto exchange Coinbase ($COIN) are up nearly 100%, but the big winner is MicroStrategy ($MSTR). With its 500% gain in 2024, the largest corporate holder of Bitcoin is up over four times as much as the cryptocurrency itself.

What’s next? 

A nice little Santa rally could set us up for more good fortune in the new year. Until then, The Wrap is taking a short break. We’ll be back on 2 January 2025 with a breakdown on the biggest themes for the year ahead.