The cruise industry is a better investment than AI or self-driving vehicles.

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• Royal Caribbean and Carnival have been among the top five performers in the S&P 500 for this year.
• Other tech titans include Nvidia Tesla and Meta Platforms
• After the pandemic, both cruise lines have seen a strong rebound in their business.

The S&P 500's two best performers this year had nothing to do either with self-driving vehicles, artificial intelligence or other revolutionary technologies. Cruise ships transport people all over the world.

Royal Caribbean Cruises' stock price has soared 97% in this year. It is only behind Nvidia (187%), Meta Platforms (139%) and Nvidia (187%). Carnival Corporation is another cruise line that has seen a rise of 81%. Elon Musk’s Tesla is the last of this year's S&P 500 winners, having gained 96%.

Royal Caribbean and Carnival are reaping massive gains for 2023. There are a number of reasons. The pair has a lot to recover from; they were the worst-hit stocks in the COVID-19 epidemic, when global travel restrictions were implemented.

Royal Caribbean shares have fallen by about 25%, while Carnival shares have gained around 70% this year.

Recent earnings reports reveal that the release of pent up demand for travel has also revived their operations.

Royal Caribbean, for example, saw its revenue almost triple year-on-year in the first quarter to $2.9 billion as both ticket sales and onboard sales increased. The operator went from an operating loss of nearly $900,000,000 to a profit of almost $300,000,000, more than doubling its growth expectations for the full year to 7.75%.

Carnival Cruise Lines' revenue increased by 230% in the first half of the year to $9 billion, generating a $120,000,000 operating profit. This is a stark contrast to the $1.5 billion operating losses in 2022. The company reported record revenue in the second quarter, and bookings for future travel soared to an all-time-high.

Royal Caribbean and Carnival have been riding a wave of demand and their stock price is still below the pre-pandemic level.

They could lose out if consumers pull back from spending due to stubborn inflation, high interest rates and an upcoming recession. But for now, their fortunes are holding up against some of most popular stocks in the market.

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By: tmohamed@insider.com (Theron Mohamed)
Title: Forget AI and self-driving cars – 2 of the S&P 500’s 5 best-performing stocks this year are cruise lines
Sourced From: markets.businessinsider.com/news/stocks/cruise-lines-royal-caribbean-carnival-spx-tech-stocks-ai-travel-2023-6
Published Date: Wed, 28 Jun 2023 11:12:26 +0000

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