Blue-chip stocks are probably the most attractive wagers in this mixed earnings season. The recent earnings announcements from the Magnificent Seven present a varied picture, sparking debates over market overreactions, overblown valuations and long-term outlook. Nevertheless, these stalwarts, buoyed by their investments in the burgeoning AI technology, are unlikely to be weighed down for long.
Furthermore, these blue-chip stocks offer stability and solid returns amidst periods of uncertainty in the market. Hence, for long-term investors searching for less volatility and promising growth avenues, these blue-chip picks from the Magnificent Seven offer a compelling proposition.
Blue-Chip Stocks: Microsoft (MSFT)
In the fiscal theater of tech juggernauts, Microsoft’s (NASDAQ:MSFT) powerful second-quarter earnings report is playing to a standing ovation. It posted a GAAP EPS of $2.93, cruising past estimates by 16 cents, while revenues shot up to $62.02 billion, a striking 17.7% year-over-year (YOY) increase. From these highly encouraging results, it is clear that Microsoft’s strategic pivot to AI is a virtuoso performance that’s just warming up. Moreover, its other key segments, from productivity and business processes to intelligent cloud, showcased double-digit growth.
Furthermore, according to analyst Dan Ives of Wedbush Securities, the spotlight is on AI, with more than 60% of Microsoft’s installed base poised to integrate AI across its operations. With him assigning an Outperform rating on MSFT stock, he envisions this uptake as the opening act of a promising saga, especially as Microsoft’s AI Copilot promises to orchestrate a surge in demand.
Moreover, Wall Street analysts echo a similar sentiment, assigning a Strong Buy rating to the stock and expecting a 16% bump in value. A resounding 52 Strong Buy/Buy recommendations out of 55 sing a bullish chorus.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) has investors clicking “like” on its stock after it spiked 20% in value post-earnings. That heartening result was on the back of a robust quarterly performance, which saw a 25% revenue bump YOY and an eye-popping 203% EPS increase. Moreover, its first-quarter guidance calls for revenue to fall between the $34.5 billion and $37 billion mark, significantly ahead of the $33.9 billion analyst consensus. Toss in the debut of a quarterly dividend, and you’ve got a business not just innovating but aiming to reward its stockholders handsomely.
Meta’s strategic bet on AI to revolutionize digital advertising and its overall business has injected new momentum into its operations. In 2024, digital ad spending is expected to grow significantly, with Meta’s progress in digital advertising credited to AI integration. Consequently, it attracts a Strong Buy rating from Wall Street analysts’ with 38 analysts signaling a Buy. The company is flirting with a forward-thinking AI-led future.
Amazon (AMZN)
Amazon (NASDAQ:AMZN), the colossus of eCommerce, effectively parlays its profits into an empire extending beyond the original marketplace. That strategic expansion into cloud computing with Amazon Web Services (AWS), physical storefronts, digital advertising and whatnot is a diversification like no other.
Its most recent results show an impressive 14% surge in eCommerce sales and a 13% climb in AWS growth YOY in the fourth quarter. The festive season witnessed the company’s prowess, with record-breaking sales and burgeoning growth in international territories. Moreover, its foray into generative AI with Bedrock is set to be a game-changer. By simplifying the scaling of AI applications, Bedrock is likely to amplify demand for AWS significantly, adding new layers to its growth story.
A full house of 40 Wall Street analysts assign a Buy rating to AMZN stock, pointing to a 25% upside potential.
On the date of publication, Muslim Farooque did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
