As we delve into the outlook for stock investing in 2024, Goldman Sachs presents a compelling narrative for active investors. The chief U.S. equity strategist, David Kostin, highlights a remarkable phenomenon: the S&P 500 is projected to experience its highest levels of annual dispersion since 2007. This situation, termed ‘dispersion,’ refers to the varying performance among individual stocks within the market, a characteristic that suggests increased opportunities for stock pickers. For those eager to outperform the market benchmark, this environment holds promise.
This year’s stock landscape starkly diverges from the historically correlated movements seen in past markets. As Kostin emphasizes, the reduced correlation between individual equities opens the door for investors to discover those hidden gems capable of yielding superior returns. The foundation of this favorable scenario lies in declining macroeconomic uncertainties and a growing focus on thematic issues, such as artificial intelligence (AI) and the impending U.S. elections.
Kostin argues that the ongoing market dynamics have become increasingly micro-driven since 2023. Investors should prepare for this trend to persist, as high return dispersion continues to be forecasted through 2025. This suggests that stock performance will largely hinge on company-specific factors rather than broader market trends. As the economic landscape remains reasonably robust, the importance of individual business strategies, particularly in navigating the AI wave, will become paramount for discerning investors.
This nuanced understanding of market dispersion encourages investors to deploy a strategy focused on selecting equities with strong, company-specific drivers. By honing in on businesses poised for exceptional performance, investors can capitalize on the volatility that often accompanies such high dispersion.
Amid this expected backdrop, Kostin’s research team has identified ten stocks that stand out as potential winners. They assessed these companies using a dispersion score, which quantifies the potential for risk-adjusted returns – a crucial metric for discerning which stocks could yield the best outcomes in this complex environment.
Leading the list is Super Micro Computer, boasting an impressive dispersion score of nearly 32. This tech stock has experienced a dramatic surge, with a staggering 75% increase in 2025 alone, which places it on pace for its seventh consecutive year of gains. A notable driver for this stock’s momentum is the diminishing regulatory scrutiny the company faces. Caution remains, however, as analysts anticipate a possible pullback following such robust growth, suggesting that while the past year has been strong, some level of volatility lies ahead.
Following closely is Enphase, an energy stock that has not performed as well as its technology counterpart, scoring a dispersion value of 20.5. Unlike Super Micro, this company has struggled with a 5% decline in 2025, marking a potential third consecutive year of negative performance. While many analysts retain a hold rating on this stock, the consensus suggests a possible uptick, as they anticipate a rebound of over 21% within the coming year.
The volatility that accompanies stocks with high dispersion scores can be a double-edged sword. For instance, Super Micro showcased extraordinary resilience by soaring over 300% last year, only to later experience a dramatic collapse of over 85% from its peak. Such fluctuations underscore the inherent risks involved in stock picking, particularly when investing in sectors marked by rapid changes and uncertainty.
Given these factors, it is essential for investors to approach the stock market with a well-researched strategy, balancing the potential for high returns against the risks of volatility. As we navigate the layers of market performance through 2024 and into 2025, investors equipped with a keen understanding of individual stock dynamics will be better positioned to take advantage of the opportunities that lie ahead.
Goldman Sachs provides critical insights into what 2024 may hold for stock pickers, encouraging a vigilant, informed approach to investing in a landscape of high return dispersion and evolving trends. With a focus on company-specific fundamentals and vigilance against volatility, the potential for generating Alpha has never been more pronounced.