Tech stocks have been on a roller-coaster ride this year. The first half of the year saw major sell-offs, with recovery seen only in the beginning of the second half. However, the stocks are again on a downward spiral due to concerns over another round of interest rate hikes by the Fed later this month. Given the current scenario, we will take a look at three tech stocks, Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), and Meta Platforms (NASDAQ:META), and understand Wall Street's take on them.
Now, with the help of the TipRanks Stock Comparison tool, let's determine which stock could be a better buy for your investment portfolio.
Microsoft Corp. (MSFT)Microsoft is a technology company, which offers a wide range of software, services, solutions, and devices like personal computers, tablets, and gaming consoles to its users. MSFT stock has lost over 20% so far this year.
According to UBS analyst Sundeep Gantori, “AI, big data and cybersecurity are at an inflection point that should see faster adoptions in the next few years.”
He believes that demand will remain robust on the back of strong momentum in the automation, analytics, and security space.
What Is the Future of MSFT Stock?Analysts are unanimously optimistic about Microsoft’s prospects. The stock commands a Strong Buy consensus rating based on 28 Buys and two Holds. Also, MSFT’s average price forecast of $327.41 suggests 23.2% upside potential.
Gantori highlights that Microsoft’s “valuation is still attractive compared to its large-cap peers on a free-cash-flow basis.”
Further, hedge funds seem to be very positive about the prospects of MSFT stock and have collectively increased their holdings in the company by 12.7 million shares in the last quarter.
Apple, Inc. (APPL)Apple designs, manufactures, and sells smartphones, personal computers, tablets, wearables, and accessories. It also offers a range of related services. Its products include iPhone, Mac, iPad, Apple TV, Apple Watch, Beats products, HomePod and AirPods.
Apple stock has been more resilient compared to its tech peers, gaining about 8% over the past six months. However, the stock is down more than 5% over the last 30 days.
Last week, Apple launched new versions of its iPhone, Apple Watch, and AirPods Pro. Despite inflation and an uncertain macro backdrop, demand for its products, especially the new iPhone 14, looks robust.
Are Apple Shares a Good Buy?Turning to Wall Street, the analyst consensus is also optimistic about Apple stock, with a Strong Buy rating based on 23 Buys, four Holds, and 1 Sell. Apple’s average price target of $183.56 indicates upside potential of 12.6%.
Wamsi Mohan from Bank of America Securities highlights that the preliminary iPhone pre-order data looks positive for Apple.
Further, Apple boasts a “Perfect 10” Smart Score on TipRanks, implying that the stock has a solid potential to outperform the market.
Meta Platforms (META)Formerly known as Facebook, Meta Platforms is an American multinational technology company headquartered in California. The company’s product portfolio includes Facebook, Instagram, WhatsApp, and other products and services.
Meta stock has lost half of its market capitalization over the past year. It is trading near its 52-week lows at $169.
Trading at 14x P/E, the valuations look very compelling compared to its own five-year historical average of 25x. Furthermore, it is relatively cheaper than its tech peers that are trading at P/E multiples of over 25x.
Is META Stock Expected to Go Up?Analysts on TipRanks are cautious but optimistic about the prospects of META, giving it a Moderate Buy consensus rating, which is based on 27 Buys, five Holds, and two Sells. Meta Platforms’s average price prediction of $223.70 implies 32.4% upside potential.
Markedly, making the most of the cheap valuation of Meta Platforms, hedge fund managers are buying its stock.
TipRanks’ Hedge Fund Trading Activity tool shows that the confidence in META is currently Very Positive, as some of the top hedge funds that were active in the last quarter increased their cumulative holdings by 4.5 million shares.
Bottom LineThe current sell-off in the tech space has led to an erosion in the market capitalization of many big tech players. As a result, the current price levels present a good investment opportunity for investors to take positions in big tech names like Microsoft, Apple, and Meta Platforms.
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In the past year, the U.S. dollar has strengthened considerably against major foreign currencies. This has hurt the revenues and profitability of companies with a high percentage of revenues coming from international businesses. Amazon.com, Inc. (NASDAQ:AMZN), Mastercard Incorporated (NYSE:MA), and Microsoft Corporation (NASDAQ:MSFT) are the three mega-cap companies that are highly exposed to the adverse impacts of the rising value of the U.S. dollar.
While the U.S. dollar gained 17% against Euro in the past year, it expanded 30.4% versus the Japanese Yen in the same period. As compared to the Canadian dollar, the British Pound, and the Indian Rupee, the U.S. currency has strengthened 2.7%, 18.3%, and 8.4%, respectively, in the trailing 12 months.
The surge in the U.S. dollar value could be the byproduct of various phenomena. The Federal Reserve’s tightening of monetary policy and the ongoing conflict between Ukraine and Russia have also made the U.S. market a lucrative destination for foreign investors to park their funds.
It is noteworthy that companies across various sectors and industries are at risk due to forex woes. Of the companies mentioned above, Amazon.com is from Consumer Goods, while Mastercard belongs to Services, and Microsoft comes under the ambit of the Technology sector.
A consolidated chart, designed using TipRanks’ Stock Comparison tool, is provided below.
Amazon.com, Inc. (NASDAQ:AMZN)The $1.36-trillion company is an online retail behemoth. In the first half of 2022, the company sourced nearly 40% of its revenues from its International and AWS segments. While the International segment includes sales from retail for consumer goods and subscriptions, the AWS segment accounts for the global sales of storage and other services.
In the second quarter of 2022, forex woes lowered Amazon’s top line by $3.6 billion. For the third quarter of 2022, the company expects forex woes to hurt its top-line growth by 3.9 percentage points year-over-year. Over the past year, shares of AMZN have lost 22.9%.
Is Amazon Stock a Good Long-Term Investment?Notwithstanding the near-term hurdles, the company’s solid prospects could look attractive to long-term investors. On TipRanks, the company has a Strong Buy consensus rating based on 37 Buys and one Hold. AMZN’s average price target is $177.05, representing upside potential of 32.85% from the current level.
Also, top retail investors tracked by TipRanks are Very Positive about the stock. They have increased their exposure to AMZN stock by 5.2% in the last 30 days. On the contrary, hedge funds have lowered their holdings in AMZN by selling 5.9 million shares in the last quarter.
Mastercard Incorporated (NYSE:MA)The credit services company’s top-line results suffered a 6% impact from forex woes in the second quarter of 2022. The company expects an adverse impact of 5% to 6% from forex woes in 2022.
It is worth noting that the $324.56-billion company derived >60% of its revenues from international operations in the first half of 2022. Shares of MA have declined 3.4% in the past year.
Is MA Stock a Buy or Sell?If stakeholders tracked by TipRanks are to be believed, the company could be a good investment opportunity for prospective investors.
Analysts are optimistic about the prospects of Mastercard, which warrants a Strong Buy consensus rating based on 19 Buys, one Hold, and one Sell. MA’s average price forecast is $412.24, mirroring upside of 22.75% from the current level.
In the last 30 days, top retail investors have increased their stake by 5.8% in MA stock. Also, hedge funds bought 7.2 million MA shares in the last quarter, as per TipRanks
Microsoft Corporation (NASDAQ:MSFT)In the fourth quarter of Fiscal Year 2022 (ended June 30, 2022), forex woes lowered revenues of this $1.97-trillion technology company by $595 million. For Fiscal 2023 (ending June 2023), the company expects forex woes to hurt its sales by four percentage points.
In Fiscal 2022, the company derived nearly 49.5% of its revenues from international operations. In the past year, shares of MSFT have declined 11%.
Is Microsoft Stock a Buy or Sell?Microsoft could be a good investment option for prospective investors seeking exposure in the technology space. The company has a Strong Buy consensus rating based on 28 Buys and two Holds. MSFT’s average price target of $327.41 suggests upside potential of 23.8% from the current level.
Moreover, top retail investors have increased their exposure to MSFT stock by 4% in the last 30 days. Also, hedge funds have purchased 12.7 million shares in the last quarter.
Concluding RemarksWell-rooted companies like AMZN, MSFT, and MA could easily deal with near-term hurdles from forex woes. These companies could resort to hedging products or find ways of increasing their top line to compensate for their losses. A price chart for the three companies is provided below.
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A weak macro environment, COVID-led production challenges in China, currency headwinds, and reduction of operations in Russia is why Microsoft (NASDAQ:MSFT) stock has lost a notable portion of its value so far this year. However, Tigress Financial analyst Ivan Feinseth expects MSFT to overcome these headwinds. Feinseth is bullish about MSFT’s prospects, and his price target of $411 implies 55.4% upside potential.
Here’s Why Feinseth Is Bullish on MSFT StockFeinseth sees strength across MSFT’s multiple platforms to support its growth. The analyst stated, “MSFT continues to experience extremely strong Azure and Cloud adoption, gains in its Microsoft 365 application suite, and growth in Teams, Dynamics, and Power Platform.”
It’s worth mentioning that despite macro headwinds, Microsoft’s cloud business continued to grow rapidly and expanded its market share. Microsoft’s cloud revenue increased 28% year-over-year in Q4, and for the first time, quarterly cloud revenues exceeded $25 billion.
As enterprises continue to focus on the digital-first strategy, MSFT’s cloud business is poised to benefit from this shift. Thanks to the strong demand for its cloud offerings, MSFT won a record number of large deals ($100 million-plus and $1 billion-plus deals) in Q4.
Feinseth also highlighted MSFT’s ability to deliver solid shareholder returns through dividends and share repurchases. During Q4, MSFT returned $12.4 billion to its shareholders (up 19% year-over-year) in the form of share buybacks and dividends. Further, in FY22, MSFT returned total cash of about $46 billion.
Is Microsoft Buy or Sell?Per Wall Street analysts, MSFT stock is a Buy. On TipRanks, it has received 28 Buys and two Holds for a Strong Buy consensus rating. Meanwhile, MSFT’s average price forecast of $327.41 implies upside potential of 23.8%.
Along with analysts, hedge funds are also optimistic about MSFT’s prospects. They have bought 12.7M MSFT stock in the last three months. Overall, MSFT stock scores a nine out of 10 on TipRanks, indicating it has strong potential to outperform the market.
Bottom LineThe ongoing macro headwinds and a slowdown in the PC and gaming market could continue to impact MSFT’s near-term financials. However, the global digital transformation and strong demand for its cloud platform and Microsoft 365 application suite provide a solid foundation for long-term growth.
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