As the market begins a new quarter, Bank of America refreshed its list of top picks for the coming months. The major averages had a winning first quarter as the rally propelled by artificial intelligence continued. The S & P 500 gained about 10.2% to notch its best first-quarter performance since 2019, and the Nasdaq Composite jumped 9.1%. Here are some of the firm’s top picks for the second quarter: Big Tech underperformer Alphabet is one of Bank of America’s top 10 picks for the new quarter. The stock added just 8% in the first quarter of 2024 as a series of AI-related blunders bruised investor sentiment. By comparison, Microsoft and Meta Platforms rose 12% and 37%, respectively, during the quarter. However, Bank of America thinks the Google Cloud Next conference this month, as well as the Google I/O event in May are near-term catalysts for the stock. A relaunch of controversial AI image generation program Gemini would likely provide a boost to shares, the firm added. “While not necessarily expected in 2Q, there is also opportunity for ‘self-help,'” analyst Justin Post wrote in a Monday note. His price target of $173 suggests upside of 14.6% from Thursday’s close. Another technology name featured on the list is Spotify . Shares have soared nearly 41% year to date. Analyst Jessica Reif Ehrlich highlighted the company’s restructuring and headcount reduction efforts in 2023 as a boost for gross margins. “The company appears to be at an inflection point which is driving share price performance over the last ~18 months. We expect this momentum to sustain,” she said, citing subscriber growth, scaling opportunities and continued operating leverage. The firm forecasts Spotify shares rising around 19% from Thursday’s close. SPOT YTD mountain Spotify shares in 2024 One of the financial stocks featured in Bank of America’s top picks list was Citigroup . Shares are up 23% in 2024, outperforming the broad market index, but analyst Ebrahim Poonawala says they still present a “compelling” risk-reward profile. “In our view the gap between perceived vs. real risk should narrow as the Street gains better visibility into the core earnings trajectory, thereby driving a re-rating higher in the stock,” wrote Poonawala. The analyst’s price target of $65 implies nearly 3% upside from Thursday’s close. Food and beverage manufacturer Kraft Heinz is another top buy-rated idea from Bank of America. While the company suffered some of the biggest impacts from a rollback in Supplemental Nutrition Assistance Program (SNAP) benefits in 2023 due to its exposure to kids’ food items. However, food volumes and demand are expected to pick up again over the next few months, the firm found. “A positive inflection in volumes should support low valuation and potentially drive rotation from other consumer staples sub-sectors (Beverages/Household Personal Care) as investors chase underperforming food names,” wrote analyst Bryan Spillane. His price target suggests about 8% upside. Intuitive Surgical and Tapestry were some of the other buy-rated picks on the list.
