After accounting for most of the market’s gains in 2023, the so-called “Magnificent 7” mega-cap technology stocks cooled off in recent months. While some matched the 12% year-to-date gain in the benchmark S&P 500 index, they are no longer outperforming the way they did last year.
But despite the slowdown, most analysts remain bullish on big tech and maintain their highest ratings on the stocks.
As the recent spate of first-quarter financial results demonstrated, the Magnificent 7 remain extraordinary companies, generating revenue and profits at an astounding rate and spewing cash in the process. They continue to be some of the best growth stocks that investors can own. And the share prices never seem to be down for long.
These Wall Street favorites all have strong buy ratings this month.
Alphabet (GOOGL)
Analysts remain bullish on tech giant Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and the opportunity the company has in artificial intelligence (AI). Currently, 36 Wall Street analysts rate GOOGL stock a strong buy with a median price target that indicates a 14% upside from current levels. Analysts have also been ratcheting up their ratings and price targets on Alphabet after the company’s recent developer conference.
Analysts at Citigroup, for example, just reiterated their buy rating on GOOGL stock and lifted their price target on the shares to $190, saying they liked what the company had to say at the developer event. Alphabet used the conference to announce a host of new AI innovations, including Project Astra, a universal AI assistant that the company hopes will become indispensable to users.
GOOGL stock has risen 25% year to date.
Microsoft (MSFT)
Another company that analysts see benefitting from the AI craze is Microsoft (NASDAQ:MSFT). A total of 33 analysts give MSFT stock a strong buy rating and a price target that implies a 16% upside. Analysts continue to see Microsoft as a chief beneficiary of the AI market.
The company recently announced plans to introduce new AI tools for use with its Windows operating system and its cloud-computing infrastructure, and plans to announce more AI products at its Build conference later in May.
Microsoft also scored points with analysts for its ongoing growth in its cloud computing segment. In its recent first-quarter earnings report, Microsoft said that sales in its Intelligent Cloud segment, which includes the Azure public cloud, totaled $26.71 billion. That was up 21% from the previous year and ahead of the $26.26 billion expected among analysts. Cloud computing continues to be a major driver of growth at Microsoft.
MSFT stock is up 14% so far in 2024.
Amazon (AMZN)
One of the Magnificent 7 stocks that analysts are most bullish on is e-commerce giant Amazon (NASDAQ:AMZN). Continued cost controls and growth in areas ranging from online advertising to streaming subscribers led 40 analysts to rate AMZN stock a strong buy with a median price target nearly 20% above current levels. Amazon’s stock has risen 24% on the year, but analysts expect more gains ahead.
Amazon’s Q1 earnings print was strong, driven by growth in advertising and cloud computing. Amazon Web Services (AWS), the company’s cloud computing unit, recorded $25 billion of revenue, accounting for 62% of total operating profit.
At the same time, advertising sales surged 24% during the quarter from a year earlier. Management noted that the advertising business is now growing faster than the company’s e-commerce sales.
On the date of publication, Joel Baglole held long positions in GOOGL and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
