Strategist names his top five picks to buy in this pullback, including one popular technology stock

Investors may want to use the recent market pullback as an opportunity to snatch up shares of popular high quality stocks such as Amazon , according to Freedom Capital Markets' Jay Woods. "It just broke out, retraced, came back to support, and it's going to rally on the AI front and on the grocery and fundamental front," the chief global strategist said, referring to Amazon.

Stocks have fallen to start the new year, taking a breather after a blowout rally to end 2023 that pushed the Dow Jones Industrial Average to a new all time high and the S & P 500 to within striking distance of its own milestone. The latest downdraft wasn't a surprise to those on Wall Street who said stocks moved too high, too fast in the fourth quarter and became overbought, according to various yardsticks such as relative strength indexes.

Woods, a 14 year veteran of Goldman Sachs earlier in his career, views the decline as a healthy breather after a big run. Amazon is Woods' top pick in the new year, partly for technical reasons and the stock's recent price action. Shares held above an important support level at $145, rose above a key 50 day moving average momentum indicator, and now the price chart suggests more room to run.

AMZN 1Y mountain Amazon shares over the last year Further underpinning Amazon's prospects is the company's artificial intelligence initiatives and its expansion into the grocery business by offering a flat fee for unlimited delivery , pitting it against entrenched industry stalwarts Walmart and Uber, he said.

Still, even as Amazon shares rallied 81% in 2023, many on Wall Street viewed the e commerce giant as falling behind on AI initiatives. As if in reply, the Amazon Web Services cloud unit in November revealed a new chip known as Trainium2 for building language models. Earlier, CEO Andy Jassy pushed back against the idea that Amazon was lagging rivals in an interview with CNBC in July.

"The AI story is one that we're going to learn a lot more about over the next couple of quarters," Woods said. "Anyone that shops on Amazon knows that it knows your habits and keeps good track. I suspect that Amazon will be well ahead of that story when it comes to fruition." Woods is also finding Nike attractive following recent stock pressure.

The athletic apparel and sneaker maker plunged 30% in 2022, fell another 7% in 2023 and just before Christmas slashed its sales outlook and revealed plans to cut $2 billion in costs over the next three years, spurring a 12% selloff. Nike is positioning itself for a turnaround, Woods believes, albeit a "long, slow and steady" one that should start by pushing the stock back to where it traded before earnings were reported in December, or the $120 $122 area.

NKE 1M mountain Nike shares over the last month "[W]e'll start to see that stock slowly come back," Woods said of Nike. "It's one of those names from a long term perspective that's been beaten down for quite some time and to me, it looks like they are trying to right the ship." Payments companies fumbled during last week's selloff, with Mastercard falling about 1.7%, in line with the pullback in the major indexes.

Woods views Mastercard and Visa as long term winners poised to rally in 2024, with both stocks fresh off new highs. Strong consumer spending over the holidays bodes well for the companies, he added, recommending investors consider adding shares on any further pullback. Nvidia dominated 2023's AI focused investment boom.

And while that trade may continue in 2024, Woods recommends taking a look at Broadcom . The lesser known chipmaker dropped 6% last week, but when compared to how the stock performed in prior selloffs, that looks like a normal retracement, he said. Buy "Broadcom on weakness given the long term trajectory of the stock, given the space that it's in, given that it continues to beat quarter after quarter," Woods added..