Generation Z aims to bank on the stock market just like previous generations.
More than half of Gen Z hold investments and 41% invest primarily in individual stocks, according to a recent report from the CFA Institute.
Some of this interest, for better or worse, is driven by “fear of missing out” or “FOMO,” with 50% of Gen Z investors reporting having made “FOMO-driven investing.”
And you can say the same of previous generations.
A Bank of America survey of fund managers earlier this year showed investors were looking for gains in technology amid excitement over artificial intelligence. Remember, the strong performance in the first half of 2023 was mostly the result of gains from just half a dozen companies – mostly hot tech names like Meta.
So what are the main stock plays for the younger generation of market investors? We posed this question to some regulars on Yahoo Finance Live, and it turns out that some of the winners from the first half of the year are among the best buys.
AI Frenzy: Nvidia and Microsoft
AI-related stocks have skyrocketed this year, and two stocks among the biggest winners of the latest investor frenzy still have room for the pros to battle it out.
“All the rage this year and in the future is and will be AI,” Ken Mahoney of Mahoney Asset Management told Yahoo Finance Live, naming Nvidia (NVDA) and Microsoft (MSFT) as his top picks for investors. of Generation Z.
Nvidia’s growing dominance in the AI chip race and Microsoft’s $10 billion investment in OpenAI have helped propel both stocks year-to-date, with shares up 195% and 42% respectively.
This first-mover advantage is what will keep these stocks among the leaders of the AI boom, according to Mahoney. Finding leaders in particular areas with stocks trading at fair value is still key to investing, an important reminder for Gen Z investors studying the landscape.
“We see the market taking over Nvidia and Microsoft as they will be at the forefront of this AI revolution,” Mahoney added. “Although Nvidia’s P/E is high, there are no other cars that go so fast on the highway.”
Electric vehicle boom: Tesla
Unsurprisingly, Tesla (TSLA) should be the top stock pick for Gen Z investors, according to Freedom Capital Markets chief global strategist Jay Woods.
You must invest in a company that you believe in and “it [Gen Z] loves cars, technology and Elon Musk,” Woods told Yahoo Finance Live.
The stock has more than doubled this year, jumping around 125% since early January. This meteoric rally prompted a handful of analysts to sideline. But despite skepticism about its current valuation, many still see a long-term opportunity for the next generation of investors looking to own what they know and trust (in this example, Tesla).
Barclays analyst Dan Levy, who downgraded the stock last month, wrote in a client note that the team still sees “Tesla as the long-term winner among automakers in the race towards a world of electric vehicles,” while Morgan Stanley’s Adam Jonas said Tesla is still a “must have” in the automotive space.
Sounds ripe for the picking of Gen Zers.
Building America: Lennar, DR Horton
Homebuyers are turning to building new homes amid a shortage in the resale market, driving up homebuilder inventories, a trend that Portfolio Wealth Advisors CEO Lee Munson said. will remain intact for some time.
Munson named Lennar (LEN) and DR Horton (DHI) as top two picks for Gen Z investors.
“You add in the lagging demand from millennials, the drop in new housing due to the Great Financial Crisis, and the impossible zoning restrictions in the most populated cities, and now the demand far outstrips the supply,” he said. Munson told Yahoo Finance Live.
Munson added: “Bottom line, if you want to bet that millions of houses need to be built, DR Horton and Lennar are far and above the most important players.”
Once again, Gen Z would be wise to own the winners by taking advantage of significant demand trends.
Seana Smith is an anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Advice on transactions, mergers, militant situations or something else? Email seanasmith@yahooinc.com.
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