Investors may want to use the recent market pullback as an opportunity to snap up stakes in popular blue-chip stocks like Amazon, said Jay Woods of Freedom Capital Markets. “Stocks just broke out, fell back, came back into support, but I think they'll rise in the AI space, in the grocery space, in the fundamentals space,” the chief global strategist said, referring to Amazon. After an explosive rally toward the end of 2023 that pushed the Dow Jones Industrial Average to a new all-time high and pushed the S&P 500 within striking distance of that milestone, stocks took a breather and fell as the new year began. The selloff came as no surprise to Wall Street observers, who say stocks moved too high, moved too fast and were overbought in the fourth quarter, according to a variety of measures, including the Relative Strength Index. Ta. Woods, a 14-year veteran of Goldman Sachs earlier in his career, sees the downturn as a healthy reprieve after his breakthrough. Woods' top stock pick for the new year is Amazon, in part due to technical reasons and the stock's recent price movement. The stock is holding above the key support level of $145 and rising above the key 50-day moving average momentum indicator, with the price chart currently suggesting further upside potential. AMZN 1Y Last Year's Amazon Stock Pile Further supporting Amazon's outlook is the company's efforts in artificial intelligence and its expansion into the grocery business by offering a flat fee for unlimited deliveries, making it one of the best in the industry. He said it competes with well-established companies like Walmart and Uber. Still, even though Amazon's stock rose 81% in 2023, many on Wall Street saw the e-commerce giant as lagging behind in its AI efforts. As if in response, Amazon Web Services' cloud division announced in November his new chip for building language models, known as Trainium2. Earlier, CEO Andy Jassy pushed back against the idea that Amazon was lagging behind rivals in an interview with CNBC in July. “We're going to learn more about the AI story in the coming quarters,” Woods said. “Anyone who shops on Amazon knows that Amazon knows your habits and is constantly tracking them. By the time this story comes to fruition, Amazon won't be far ahead of the curve.” I think so.'' Woods is also attracted to Nike due to the recent pressure on its stock price. The sports apparel and sneaker maker plunged 30% in 2022, fell another 7% in 2023, cut its revenue outlook just before Christmas and announced plans to cut costs by $2 billion over the next three years. The disclosure spurred a 12% decline. Woods said Nike is poised for a turnaround, but it's been a “long, slow and steady” turnaround, with the stock still at the level it was trading before December's earnings release, between $120 and $122. I think we should start by returning it to the realm. NKE Last month's Nike stock price 1 million mountain”[W]”I think the stock price will start to gradually recover,” Woods said of Nike. “From a long-term perspective, Nike is one of those stocks that has been beaten down for quite some time, and it looks to me like they're trying to recover.”Last week's selloff left payments companies stymied. In line with the decline in major indexes, Mastercard fell by about 1.7%. Woods sees Mastercard and Visa as long-term winners that will rise in 2024, and both stocks have just risen in value. He added that “strong consumer spending during the holiday period bodes well for companies,” and advised investors to consider adding to the stock in case of further pullbacks. And while that trade could continue into 2024, Woods said, look at Broadcom, the little-known chipmaker that fell 6% last week. But compared to the stock's performance during previous selloffs, he said, it looks like a normal retracement. Given Broadcom's long-term trajectory, we buy Broadcom's weakness. “Given that space, the stock price is high given that it continues to rise every quarter,” Woods added.
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