4 ‘Next Big Thing’ Investments That Will Struggle in 2024 (2024)

Certain stocks and sectors captivate the imagination (and money) of investors from time to time, providing a seemingly clear answer to the question, “What is the next big thing to invest in?” All too often, however, these investments fail to realize their assumed potential or just flat-out underperform.

Forecasting the market’s future is often difficult, and pinpointing the “next big thing” can be even harder. However, current market conditions and recent trends in certain promising sectors can give you a more informed view of the potential risks in former market darlings. Here’s a look at some sectors that might be in for some trouble this year.

Real Estate

This one might come as a shock to some people, but several significant challenges face atroubled and controversial housing market, including:

• High-interest lending rates: If borrowing costs stay high or continue to go up, demand for residential and commercial properties may decrease as consumers and businesses turn to things like group living and remote work. This could potentially slow price growth or even cause significant price drops in some areas.
• Potential economic downturn: If the economy slows down, reduced earning and spending power will contribute to a decline in demand, especially in urban areas. This could affect rental markets and popular investment tools such as real estate investment trusts.
• Overstocking: The problem may not be too few houses overall, but too few affordable options. Regardless, real estate developers have continued to build single- and multi-family housing in an effort to take advantage of high prices. If too many properties are built in specific areas, there could be an oversupply, which would likely drive prices down.

Artificial Intelligence

AI, though it’s progressing rapidly and enjoyingbroader consumer interest, still faces significant hurdles that make it an uncertain investment opportunity, including:

• The use of “black box” data: Many AI algorithms are black boxes in the way they make decisions — it is poorly understood or undisclosed. This lack of transparency can raise ethical issues and reputational risks for companies that are heavily dependent on AI.
• Regulation, legality and security: As AI’s capabilities grow, so do worries about misuse and possible security weaknesses. This could result in stricter regulations and slower uptake in some sectors, which could affect market performance.
• The skill gap: Building and deploying intricate AI systems will require professionals with high levels of expertise. The current lack of trained, expert-level professionals could hamper the scalability and effectiveness of AI solutions.

Electric Vehicles

Despite the booming EV market, many consumers are reporting problems with their vehicles, and various other factors mightput the brakes on EV market growth in 2024, including:

• Escalating raw material costs: The prices of vital battery component materials like lithium and cobalt are increasing production costs, which is likely to eat into EV manufacturers’ profit margins.
• Charging infrastructure shortcomings: Despite some progress, EV charging infrastructure still has significant gaps, especially in rural areas and developing countries. Tales of stranded drivers and long waits at charging stations can put off prospective buyers, limit EV uptake and cause EV stocks to stagnate or decline.
• Competition from traditional automakers: Traditional car manufacturers are stepping up their investments in EVs, which could ratchet up the competition in the EV consumer market in the near future.

Cryptocurrencies

The crypto market has growing appeal but continues to be extremely volatile, erratic and unpredictable. Here are some of thechallenges crypto investors might face this year:

• Regulatory ambiguity: Regulation for cryptocurrencies has yet to be fully established worldwide, resulting in widespread uncertainty and the risk of potential clampdowns on trading or even owning cryptocurrencies in certain areas. This could affect investors’ trust and disturb the market’s equilibrium.
• Scalability and sustainability issues: Some well-known blockchains face built-in challenges in scaling up, limiting their capacity to manage numerous transactions with wider adoption. A bigger issue may be the energy consumption of particular crypto mining methods, which have a massive carbon footprint and pose significant environmental threats.
• Security risks and fraud: The crypto market has been rocked with scams, deceptive practices and hacking attempts, all of which pose considerable financial risks for investors.

What Is the Next Big Thing To Invest In?

A foolproofguide to future investments would be a handy thing to have, but sadly, it’s impossible to predict with certainty which sectors will thrive in 2024. The market is perpetually fluid, and many factors can influence different industries’ performance. With that said, the following sectors may be primed to show growth this year:

• Healthcare: Aging populations, technological innovations in fields like biotech and genomics and increasing demand for personalized treatments make this sector one to watch.
• Cybersecurity: Escalating dependence on digital technology coupled with an exponential increase in cyber threats calls for more robust cybersecurity measures. Firms providing effective security solutions and technology are likely to benefit.
• Renewable energy: Regulatory boosts, the continued drive toward sustainability and the falling costs of renewable energy technologies, such as solar, wind and hydro power, suggest a strong potential for sustained growth in this sector.
• Automation and robotics: Extended automation across various sectors, from manufacturing to logistics, is a likely indicator of potential growth for firms designing and implementing automated solutions.

Final Take

Never put all of your eggs in one basket. Diversify your portfolio across multiple industries and asset classes to balance your risk. Before you commit to investing in a particular sector, do your homework, especially for short-term investments. That means doing comprehensive research on the sector’s prospective growth, the major players involved, the potential hazards and the various economic factors that could impact it.

The most important thing to remember is to match your investments to your risk tolerance. Certain sectors might offer higher returns, but they typically come with greater risks. When in doubt, turn to a professional — the value of professional financial or investment advice can’t be underestimated.