What a difference a year makes. This time in 2022, investors were just getting a taste of what would become one of the longest and biggest interest rate hikes in market history. While the Federal Reserve took a breather in June, it is a good bet more rate hikes are coming. Fed Chair Powell said so in his congressional testimony, and they could start as early as July. The ongoing increase in rates could not hold back the groundswell of artificial intelligence (AI), which has emerged as the biggest technology trend since the internet.
The current rally, which has pushed the Nasdaq up over 30% this year and has the venerable S&P 500 up close to 15%, has many old-timers reliving the late 1990s and early 2000 dot-com tech explosion and meltdown, which was fueled by the nascent internet coming into our lives.
While the current rally is not fueled by “eyeballs” as the dot-com era was, and the companies involved in the recent melt-up make huge profits, the main question for many investors is when will the rest of the market catch up, as the seven tech-driven technology companies that now all have reached the $1 trillion market-cap club, have supplied almost 95% of the upside for the Nasdaq and the S&P 500.
Whether the market breadth catches up or continues to lag should not deter aggressive growth investors from adding these seven top stocks, all of which are Buy rated across Wall Street. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
There should be no surprise that the Google parent and search giant is all-in on the AI revolution. Alphabet Inc. (NASDAQ: GOOGL) provides various products and platforms in North America, Europe, the Middle East, Latin America and elsewhere.
Its Google Services segment offers products and services, including ads, Android, Chrome, hardware, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in the Google Play store, as well as Fitbit wearable devices, Google Nest home products, Pixel phones and other devices, and in the provision of YouTube non-advertising services.
The Google Cloud segment offers infrastructure, platform and other services; Google Workspace that includes cloud-based collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar and Meet; and other services for enterprise customers. The Other Bets segment sells health technology and internet services.
Alphabet is reported to be using AI applications in almost all the firm’s central business silos, from ad pricing to content to spam filters. Alphabet is the parent company for software subsidiary DeepMind and autonomous vehicle company Waymo.
Jefferies has a $150 price target for Alphabet stock. That compares with the $132.03 consensus target and Wednesday’s closing print of $123.10.
This company is very possibly the best value for investors, after taking a harsh beating this year. Amazon.com Inc. (NASDAQ: AMZN) engages in the retail sale of consumer products and subscriptions globally. It sells merchandise and content purchased for resale from third-party sellers through physical and online stores.
Amazon also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Rings and Echo and other devices. It provides Kindle Direct Publishing, an online service that allows independent authors and publishers to make their books available in the Kindle Store, and it develops and produces media content.
The company also offers programs that enable sellers to sell their products on its websites, as well as its stores, and its programs allow authors, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content. Further, the company provides computing, storage, database, analytics, machine learning and other services, as well as fulfillment, advertising, publishing, and digital content subscriptions.
Its Amazon Prime membership program provides free shipping of various items, access to streaming movies and series, and other services.
Given the incredible logistical needs for Amazon, the company has incorporated AI hybrid applications across much of its overall business for years. From e-commerce algorithms for search to the popular Alexa personal assistant and AWS advancements for customers that include advanced text analytics, automated code reviews and chatbots, AI has provided the company with a massive leg up.
Wells Fargo’s target price is $159, while Amazon.com stock has a $136.45 consensus target. The stock closed on Wednesday at $125.90.
It is almost hard to comprehend that this legacy technology giant makes up a stunning 40% of Warren Buffett’s Berkshire Hathaway portfolio. Apple Inc. (NASDAQ: AAPL) designs, manufactures and markets consumer electronics and computers, and it has developed its own proprietary iOS and Mac OS X operating systems and related software platform/ecosystem.
Revenues are principally derived from the iPhone line of smartphones, the Macintosh family of notebook and desktop computers, iPad tablets, iPod portable digital music players, and the Apple Watch. The company also realizes revenue from software, peripherals, digital media and services. The technology giant consistently has churned out new products, and the ongoing stream of new offerings continues to garner more consumer approval.
Apple stock investors receive a small dividend of 0.54%. Wells Fargo’s $210 price target is higher than the $186.40 consensus target. Shares closed at $185.01 on Wednesday.
Oil Could Explode Higher With Increasing Chinese Demand: 5 ‘Strong Buy’ Stocks With Huge Dividends
The Facebook and Instagram parent remains a social media destination for millions daily. Meta Platforms Inc. (NASDAQ: META) develops products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, wearables and in-home devices worldwide.
Its Family of Apps segment offers products such as Facebook, which enables people to share, discover and connect with interests; Instagram, a community for sharing photos, videos and private messages, as well as feed, stories, reels, video, live and shops; Messenger, a messaging application for people to connect with friends, family, groups and businesses across platforms and devices through chat, audio and video calls and rooms; and WhatsApp, a messaging application that is used by people and businesses to communicate and transact privately.
The Reality Labs segment provides augmented and virtual reality products, comprising virtual reality hardware, software and content that help people feel connected, anytime and anywhere. The company was formerly known as Facebook and changed its name in October 2021.
The $350 Oppenheimer price target towers over the $279.51 consensus target. Meta Platforms stock closed at $284.01 on Wednesday.
This is a more conservative way for investors to participate in the massive cloud growth. Microsoft Inc. (NASDAQ: MSFT) develops, licenses and supports software, services, devices and solutions worldwide. The company operates in the following three segments.
The Productivity and Business Processes segment offers Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, Microsoft Viva, and Skype for Business; Skype, Outlook.com, OneDrive and LinkedIn; and Dynamics 365, a set of cloud-based and on-premises business solutions for organizations and enterprise divisions.
The Intelligent Cloud segment licenses SQL, Windows Servers, Visual Studio, System Center and related Client Access Licenses. GitHub provides a collaboration platform and code hosting service for developers, while Nuance provides health care and enterprise AI solutions, and Azure is a cloud platform. It also offers enterprise support, Microsoft consulting and nuance professional services to assist customers in developing, deploying and managing Microsoft server and desktop solutions, as well as training and certification on Microsoft products.
The More Personal Computing segment provides Windows original equipment manufacturer (OEM) licensing and other non-volume licensing of the Windows operating system; Windows Commercial, such as volume licensing of the Windows operating system, Windows cloud services and other Windows commercial offerings; patent licensing; and Windows Internet of Things.
This segment also offers Surface, PC accessories, PCs, tablets, gaming and entertainment consoles and other devices; Gaming, including Xbox hardware and Xbox content and services; video games and third-party video game royalties; and Search, including Bing and Microsoft advertising. The company sells its products through OEMs, distributors and resellers, as well as directly through digital marketplaces, online stores and retail stores.
The ChatGPT AI deal had been in the news in a big way after it was disclosed that Microsoft had invested an additional $10 billion in the AI module after starting off with a $1 billion investment in 2019. Many feel that the venture into AI could be a huge tailwind for the company’s surging cloud business. It has been reported that Microsoft will receive 75% of OpenAI’s profits until it claws back its investments, after which it will have a 49% stake in the firm.
Microsoft also has disclosed plans to launch an AI version of its Bing search engine powered by ChatGPT. It is a good bet it will be using AI in many of the company’s products and services.
Shareholders receive a 1.10% dividend. Microsoft stock has a $420 price target at Credit Suisse. The consensus target of $341.63 is closer to Wednesday’s final share price of $338.29.
This top company is making the chips that supply the incredible computing power required to run complex AI applications. Nvidia Corp. (NASDAQ: NVDA) provides graphics and computing and networking solutions in the United States, Taiwan, China, and elsewhere.
Its Graphics segment offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/Nvidia RTX GPUs for enterprise workstation graphics; vGPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse software for building 3D designs and virtual worlds.
Its Compute & Networking segment provides data center platforms and systems for AI, HPC and accelerated computing; Mellanox networking and interconnect solutions; automotive AI Cockpit, autonomous driving development agreements, and autonomous vehicle solutions; cryptocurrency mining processors; Jetson for robotics and other embedded platforms; and Nvidia AI Enterprise and other software.
The company’s products are used in gaming, professional visualization, data center and automotive markets. It sells its products to original equipment manufacturers, original device manufacturers, system builders, add-in board manufacturers, retailers/distributors, independent software vendors, internet and cloud service providers, automotive manufacturers and tier-1 automotive suppliers, mapping companies, start-ups and other ecosystem participants.
Morgan Stanley has set a $500 target price, and the consensus target is $467.95. Nvidia stock closed on Wednesday at $438.90.
The electric vehicle and space travel pioneer enjoys a prominent slot in the massive 2023 rally. Tesla Inc. (NASDAQ: TSLA) designs, develops, manufactures, leases and sells electric vehicles and energy generation and storage systems in the United States, China and elsewhere.
Tesla’s Automotive segment offers electric vehicles, as well as sells automotive regulatory credits. It offers non-warranty after-sales vehicles, used vehicles, retail merchandise and vehicle insurance services. This segment also provides sedans and sport utility vehicles through direct and used vehicle sales, a network of Tesla Superchargers, and in-app upgrades; purchase financing and leasing services; services for electric vehicles through its company-owned service locations and Tesla mobile service technicians; and vehicle limited warranties and extended service plans.
The Energy Generation and Storage segment engages in the design, manufacture, installation, sale and leasing of solar energy generation and energy storage products and related services to residential, commercial and industrial customers and utilities through its website, stores and galleries, as well as through a network of channel partners. It offers provision of service and repairs to its energy product customers, including under warranty, as well as various financing options to its solar customers.
Royal Bank of Canada’s $305 target price is a Wall Street high. The $194.84 consensus target for Tesla stock is well below Wednesday’s close at $274.45.
Artificial intelligence, while currently still in mania form, is here to stay. There will continue to be heated discussions of the pros and cons concerning the industry and the multitude of applications and solutions that can and will be provided. Elon Musk founded OpenAi in 2015 but left the board in 2018 and has cut ties with the company. He has had some harsh words from some of the so-called woke issues arising from the technology and is working on his own “anti-woke” AI to rival the company. That proves that we are still in the formative years and the big money will be made in the future.
Goldman Sachs Says Traders Should Use Options to Load Up on These 5 ‘Strong Buy’ Blue Chips
With second-quarter earnings right around the corner for these top companies, it may make sense to buy partial positions to see how the results come in. With the market on a strong roll in the second quarter, any company that misses expectations or has poor forward guidance could be immediately sent to the penalty box by institutional and hedge fund sellers.
Sponsored: Want to Retire Early? Here’s a Great First Step
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.