The 'BATMMAAN' Stocks Swooped to the Market's Rescue in December. Will They Keep Climbing in 2025?

Despite the broad-based post-election rally in the U.S. stock market in November, December saw a significant narrowing of market breadth. However, the 'BATMMAAN' stocks, a group of tech giants, came to the rescue, continuing their upward trajectory and driving the market's gains. As we look ahead to 2025, the question remains: will these stocks continue their impressive run?

The 'BATMMAAN' stocks, which include Broadcom (AVGO), Apple (AAPL), Tesla (TSLA), Microsoft (MSFT), Meta Platforms (META), Amazon.com (AMZN), Alphabet (GOOGL), and Nvidia (NVDA), have been the driving force behind the market's gains in recent months. Despite the broader market experiencing some turbulence, these eight companies continued to march higher, building on the gains that followed President-elect Donald Trump's electoral victory on November 5.

According to Dow Jones Market Data, the combined market capitalization of these stocks increased by more than $1.9 trillion since the election, which is equivalent to more than 85% of the total increase in the S&P 500's market capitalization during that time. This impressive performance has led many investors to wonder if these stocks will continue their upward trajectory in 2025.



AI-related developments have played a significant role in the surge of the 'BATMMAAN' stocks, particularly for Broadcom and Nvidia. Here's how:

1. Broadcom's AI chip earnings and outlook: Broadcom reported earnings last week, forecasting booming AI sales. This outlook helped spark the biggest ever one-day percentage gain for the stock, with a 24% increase in the following session. Many have been calling that Broadcom's "Nvidia moment," referring to 2023 when Nvidia's blowout results sent investors scrambling into the stock. Since then, Nvidia shares have climbed 243%.
2. Nvidia's AI chip dominance: Nvidia remains the biggest driver of BATMMAAN gains, up 163% year-to-date. Nvidia's AI chips are widely used in data centers and for AI applications, making it a key player in the AI space. The company's strong earnings and sales growth over the past two years have contributed to its impressive performance.
3. AI-related developments in other BATMMAAN stocks: While not as directly tied to AI chips, other BATMMAAN stocks have also benefited from AI-related developments:
* Tesla: Tesla's AI efforts in autonomous driving and AI-powered vehicles have contributed to its 93% year-to-date gain.
* Meta Platforms (formerly Facebook): Meta's investment in the metaverse and AI-driven technologies has helped it achieve a 75% year-to-date gain.
* Amazon.com: Amazon's AI and machine learning capabilities in areas like recommendation systems and voice assistants have contributed to its 52% year-to-date gain.
* Alphabet: Alphabet's AI advancements in search, Google Assistant, and other services have helped it achieve a 39% year-to-date gain.
* Apple: Apple's AI and machine learning capabilities in products like Siri and Face ID have contributed to its 31% year-to-date gain.
* Microsoft: Microsoft's AI and cloud services, such as Azure AI and Microsoft 365, have helped it achieve a 20% year-to-date gain.

Hedge funds have significantly contributed to the rally of the 'BATMMAAN' stocks, as evidenced by their increased holdings in these companies. According to an analysis of monthly holdings from Your Weekend Reading, Broadcom, a member of the 'BATMMAAN' group, has become a top holding among hedge funds, ranking at No. 8 among top equity positions at 338 hedge funds as of Dec. 16. This is a notable change from earlier this year when Broadcom was not even listed among the top holdings.

The increased interest from hedge funds in Broadcom and other 'BATMMAAN' stocks can be attributed to their strong performance and growth prospects. For instance, Nvidia, another member of the group, has seen its shares climb 243% since its blowout results in 2023, despite experiencing bouts of selling. This trend is likely to continue in 2025, as Bank of America's December global fund managers survey reported that being long Magnificent Seven stocks continues to be the most crowded trade, with this trend lasting for 21 months and counting.

Moreover, the strategists at Bank of America believe that not owning enough U.S. stocks, large-cap stocks, or tech stocks has been a painful stance for many years and will continue to be a major risk in 2025. This suggests that hedge funds and other investors are likely to maintain their focus on the 'BATMMAAN' stocks, contributing to their continued rally in the new year.

In conclusion, the 'BATMMAAN' stocks swooped to the market's rescue in December, driving the market's gains despite the narrowing of market breadth. AI-related developments, particularly in AI chips and AI-driven technologies, have played a significant role in the surge of these stocks. Hedge funds have also contributed to the rally, with increased holdings in these companies. As we look ahead to 2025, the continued investment of hedge funds and the strong performance of these stocks suggest that they will likely keep climbing, although investors should be aware of potential risks and market conditions.