Advisors seeking stock ideas should consider these 3 themes

Advisors searching for investing themes in 2024 may want to try AI, health care innovation and new supply chains, a BlackRock strategist says.

Jay Jacobs, U.S. head of thematic and active equity ETFs at BlackRock, said the big investing idea in 2023 was cash as a result of rising yields and recession worries. Now that the all-clear alarm has more or less been sounded on those two fronts, investors can once again seek out relatively comfortable places to put that cash to work for the long term.  

The first and foremost theme for 2024 in Jacobs’ view just happens to be last year’s big winner, AI. However, instead of doubling down on the so-called "Magnificent Seven" stocks, which more than doubled last year, Jacobs suggests looking beyond those few names into areas of the AI ecosystem that have yet to truly take off.

“You have to look at the tech stack, so you can look at areas like semiconductors that are doing a lot of the power behind AI,” he said. “You can look at data owners that have really useful proprietary data that can feed into AI systems. You can look at digital infrastructure, which is really physically where AI calculations are happening as well.”

Similarly, Jacobs is looking for a big year in the health care sector, but not solely in the weight-loss arena, which fared so well last year due to a gain of nearly 60% in shares of Eli Lilly.

In Jacobs' opinion, demographics will determine the winners in years ahead. He points out that 2024 will be the first year where there are more people over the age of 65 in the United States than under the age of 15.

“We're looking specifically within health care and people developing drugs that really serve those senior citizens,” he said. “This could be drug developers for Alzheimer's, for Parkinson's, heart disease. Yes, weight loss as well. But it's really looking at a lot of different health care innovation powered by genomics research that will treat senior citizens in the United States and globally.” 

Finally, Jacobs said that recent changes in America’s industrial and trade policies are creating investing opportunities as more manufacturing returns to the U.S. or skips across the globe to a new trading partner.

“You can look at the Infrastructure Investments and Jobs Act from a couple of years ago, the Chips in Science Act, the Inflation Reduction Act, channeling billions of dollars to critical industries in the United States like electric vehicles and semiconductors and so on,” he said. “The challenge is we don't actually have enough manufacturing capacity to do all those things.”

As a result, Jacobs recommends advisors check out ETFs that focus on countries that may alleviate such bottlenecks.  

“We have to start looking outwardly at who are going to be the partners that help us, partners like Mexico, which has now become the biggest trade partner of the United States; countries like India, which are really benefiting from new supply chains as well, and reduced tariffs with the United States,” he said.