The technology industry continues to grow to meet the increasing demands of an ever-changing world. Known for their steady upward trend, technology stocks thrive due to the continued high demand for technology solutions.Investors may want to consider tracking fundamentally sound tech stocks such as Microsoft.MSFT), Apple. (AAPL), and Alphabet Inc. (Google).
To adapt and compete in an ever-changing digital environment, businesses rely heavily on software solutions to optimize operations, improve customer experience, gain data-driven insights, and secure their systems. As a result, the U.S. software market is CAGR of approximately 7.2% by 2030.
Additionally, the rapid increase in enterprise data volumes and business process automation across end-use industries such as retail, manufacturing, healthcare and transportation are expected to drive demand for business software and services.
therefore, The global business software and services market is Average annual growth rate: 11.9% Until 2030.
With these favorable trends in mind, let’s look at the basis for picking three tech stocks.
Microsoft (MSFT)
MSFT develops and supports software, services, devices and solutions worldwide in the areas of productivity and business processes, intelligent cloud and other personal computing.
On May 1, MSFT and Brookfield Asset Management LimitedBam), Brookfield Renewable Partners LP (Beppu) has announced a global renewable energy framework agreement to help the company reach its goal of covering 100% of its electricity consumption with zero-carbon energy purchases by 2030.
The agreement builds on the two companies’ existing collaboration to decarbonize the global energy supply and will enable MSFT to access new renewable energy capacity to meet growing demand for its cloud services.
On April 29, MSFT and Axel Springer SE announced an expanded collaboration in the areas of advertising, AI, content and cloud computing. By combining strengths in digital publishing and technology, the strategic alliance aims to leverage cutting-edge innovation to support independent journalism around the world and accelerate its growth in the AI era.
MSFT’s total revenues for the third quarter ended March 31, 2024 increased 17% year over year to $61.86 billion. Operating income increased 23.4% year over year to $27.58 billion. The company’s net income and EPS were $21.94 billion and $2.94, respectively, up 19.9% and 20% year over year.
Additionally, the company’s total assets were $484.27 billion as of March 31, 2024, compared to $411.98 billion as of June 30, 2023.
The consensus revenue estimate for the second quarter (ending June 2024) is $64.37 billion, indicating a 14.6% increase year over year. The consensus EPS estimate for the current quarter is $2.93, indicating a 9% improvement year over year. The company has an impressive surprise track record of beating consensus revenue and EPS estimates over the past four quarters.
MSFT shares have risen 11.4% over the past month, closing the last trading session at $460.77.
MSFT POWR Rating This reflects its mixed outlook. The stock has an overall rating of C, which equates to Neutral in our proprietary rating system. POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
MSFT receives a B rating for Stability, Sentiment, and Quality. It is ranked 18th out of 41 stocks. Software – Business industry.
click here Access additional MSFT ratings (Momentum, Growth, Value).
Apple. (AAPL)
AAPL designs, manufactures and sells smartphones, computers, tablets, wearables and accessories worldwide. The company offers iPhone smartphones, Mac computers, iPad multi-purpose tablets, wearables, home and accessories (AirPods, Apple TV, Apple Watch, Beats products and HomePod).
On June 10, AAPL announced Apple Intelligence, a personal intelligence system for iPhone, iPad and Mac that combines the power of generative models with personal context to deliver highly useful and relevant intelligence, and is deeply integrated into iOS 18, iPadOS 18 and macOS Sequoia.
Apple Intelligence harnesses the power of Apple Silicon to understand and comprehend language and images, take actions across apps, and leverage personal context to simplify and speed up everyday tasks. With its unique approach, AAPL combines generative AI with user context to deliver helpful intelligence.
Also today, AAPL announced a suite of innovative new tools and resources to empower developers around the world to design more powerful and efficient apps across all Apple platforms. With Xcode 16 beta, developers can save time in the development process and access features such as Swift Assist and predictive code completion.
AAPL reported total Net Sales Revenues for the second quarter ended March 30, 2024 were $90.75 billion, with services segment net revenues increasing 14.2% year over year to $23.87 billion. The company’s quarterly net income and EPS were $23.64 billion and $1.53, respectively.
Additionally, the company’s cash and cash equivalents will be $32.69 billion as of March 31, 2024, compared to $29.96 billion as of September 30, 2023.
Analysts expect AAPL’s third-quarter (ending June 2024) revenue to grow 2.4% year-over-year to $83.74 billion and current-quarter EPS to increase 4.9% year-over-year to $1.32. Additionally, the company has beaten consensus EPS estimates for each of the past four quarters.
AAPL shares have risen 27.5% over the past nine months, closing the last trading session at $221.55.
AAPL’s fundamentals are reflected in its POWR Ratings, with an overall rating of C, which equates to Neutral in our proprietary rating system.
The stock has a rating of A for Quality and a rating of B for Sentiment. AAPL is ranked 22nd with a B rating. Technology – Hardware industry.
In addition to the above, we also evaluate AAPL for growth, value, stability, and momentum. See all AAPL ratings here.
Alphabet Inc.Google)
GOOGL is the driving force behind diverse technology innovations and platforms across the globe. Its segments across Google Services, Google Cloud and other businesses serve diverse digital needs and aspirations.
Like other big tech companies, GOOGL is investing in artificial intelligence, a strategy that is helping drive demand for its cloud services. The company also offers internet services, subscription-based products, apps and in-app purchases, licensing and research and development services.
On May 2, 2024, GOOGL and MongoDB, Inc.M.D.B.S.) have collaborated to optimize Gemini Code Assist and provide enhanced suggestions for application development and modernization on MDB, the industry-leading developer data platform used by millions of developers and tens of thousands of customers every day for their business-critical applications.
Through this collaboration, Gemini Code Assist will help developers get answers and information about MongoDB code, documentation and best practices, enabling them to prototype new features faster and accelerate application development.
For the first quarter ended March 31, 2024, GOOGL saw solid growth, with revenue increasing 15.4% year over year to $80.54 billion. Operating income increased 46.2% year over year to $25.47 billion, while net income soared 57.2% year over year to $23.66 billion. Earnings per share for Class A, B and C shares increased 61.5% year over year to $1.89.
For the fiscal year ending June 2024, GOOGL’s revenues are expected to increase 12.7% year over year to $84.07 billion, and EPS is expected to increase 27.6% year over year to $1.84. Additionally, the company has beaten consensus estimates for revenue and EPS for each of the past four quarters, which is great to see.
Shares have risen 55% over the past year, closing at $185.82 in the last trading session.
GOOGL’s POWR Ratings reflect a positive outlook: The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
GOOGL has received a B rating for sentiment and quality. It is ranked 12th in the B rating. internet industry.
In addition to the POWR Ratings above, you can access GOOGL’s Growth, Value, Momentum, and Stability ratings. here.
What next?
Check out these 10 widely held stocks that our proprietary model suggests could fall substantially.Death Trap” Stocks lurking in your portfolio:
10 stocks to sell now!
MSFT shares were trading at $460.77 on Wednesday afternoon, up $1.49 (+0.32%) per share. Year-to-date, MSFT is up 22.98%, while the benchmark S&P 500 index is up 16.76% over the same period.
About the Author: Nidhi Agarwal
Nidhi’s passion for capital markets and asset management led her to pursue a career as an investment analyst. She has a bachelor’s degree in finance and marketing and is working towards the CFA program. Her fundamental approach to stock analysis helps investors identify the best investment opportunities. Learn more…
