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Zacks Investment Ideas feature highlights: Microsoft, Meta Platforms and Nvidia
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For Immediate Release
Chicago, IL – July 24, 2024 – Today, Zacks Investment Ideas feature highlights Microsoft (MSFT - Free Report) , Meta Platforms (META - Free Report) and Nvidia (NVDA - Free Report) .
Should You Buy Mag 7 Weakness?
Several Mag 7 stocks, namely Microsoft, Meta Platforms and Nvidia, have faced pressure over recent weeks, temporarily halting their remarkable runs.
Interestingly enough, the recent negative price action has coincided with a strong move from small-caps, perhaps reflecting a bit of rotation. Below is a chart illustrating the performance of each since July 11, which was the day small-caps began to roar thanks to a favorable CPI print.
It raises a valid question: Are these beloved stocks' runs over, or should investors stay exposed? Let's take a closer look.
Microsoft Cloud Reaccelerates
Recent cloud strength has analysts optimistic for Microsoft, with the company expected to benefit nicely from AI. Cloud revenue popped 23% year-over-year throughout its latest period, reflecting a reacceleration and positively shocking investors.
Many had feared a cloud slowdown, which did occur for a few periods, but the recent results paint a picture of positivity moving forward. The company's cloud results have remained positive overall, consistently exceeding our consensus estimates as of late.
In addition, earnings expectations for its current fiscal year have remained bullish, with the $11.77 per share expected suggesting 20% year-over-year growth. The favorable earnings picture will support near-term share performance, with the recent weakness likely reflecting profit-taking.
Meta Platforms Enjoys Profitability Boost
META shares have benefited nicely from improved operational efficiencies that have significantly boosted profitability. The company remains firmly in growth mode, with earnings and revenue climbing 80% and 30% throughout its latest period.
Like MSFT, the outlook for its current fiscal year remains bullish, with the $20.21 Zacks Consensus EPS estimate up 24% over the last year and suggesting a 36% year-over-year jump.
The company has been performing nicely, with its advertising revenue positively surprising in six consecutive quarters. It's worth noting that advertising represents the bulk of META's revenue.
In addition, META shares aren't expensive, with the current 23.6X forward 12-month earnings multiple in line with the five-year median and well beneath five-year highs of 37.0X. The current PEG ratio also works out to 1.2X, reflecting that investors are paying a fair price for the forecasted growth.
While shares have faced pressure, the company's outlook remains notably bright, and investors should block out the noise.
Nvidia Outlook Remains Robust
Beloved Nvidia has faced some pressure recently amid a broader cooldown in the semiconductor trade. Nonetheless, shares are still up a staggering 150% year-to-date, and its earnings outlook fully supports further near-term gains.
The stock maintains the highly-coveted Zacks Rank #1 (Strong Buy) thanks to its above-mentioned earnings outlook, which has shifted bullishly across the board. The $2.69 per share expected for its current year suggests a 100% year-over-year pop in earnings, with sales also expected to see a 90% increase.
The stock has been at the heart of the AI trade, with its Data Center results consistently blowing away expectations as of late.
Breakneck growth has kept valuation multiples at historically sound levels, with the current 39.1X forward 12-month earnings multiple below the 50.7X five-year median and five-year highs of 106.3X.
Keep in mind that shares traded well above current valuation levels in 2020 and 2021, a time when the AI theme had yet to emerge fully.
Putting Everything Together
While several Mag 7 stocks have faced pressure over recent weeks, their outlooks and fundamentals underneath the hood remain more than sound.
Their recent weakness has coincided with a strong move from small-cap stocks, perhaps a reflection of rotation and profit-taking after remarkable starts to 2024.
Nonetheless, these stocks' runs certainly aren't over, and they remain prime selections for portfolios.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: Microsoft, Meta Platforms and Nvidia
For Immediate Release
Chicago, IL – July 24, 2024 – Today, Zacks Investment Ideas feature highlights Microsoft (MSFT - Free Report) , Meta Platforms (META - Free Report) and Nvidia (NVDA - Free Report) .
Should You Buy Mag 7 Weakness?
Several Mag 7 stocks, namely Microsoft, Meta Platforms and Nvidia, have faced pressure over recent weeks, temporarily halting their remarkable runs.
Interestingly enough, the recent negative price action has coincided with a strong move from small-caps, perhaps reflecting a bit of rotation. Below is a chart illustrating the performance of each since July 11, which was the day small-caps began to roar thanks to a favorable CPI print.
It raises a valid question: Are these beloved stocks' runs over, or should investors stay exposed? Let's take a closer look.
Microsoft Cloud Reaccelerates
Recent cloud strength has analysts optimistic for Microsoft, with the company expected to benefit nicely from AI. Cloud revenue popped 23% year-over-year throughout its latest period, reflecting a reacceleration and positively shocking investors.
Many had feared a cloud slowdown, which did occur for a few periods, but the recent results paint a picture of positivity moving forward. The company's cloud results have remained positive overall, consistently exceeding our consensus estimates as of late.
In addition, earnings expectations for its current fiscal year have remained bullish, with the $11.77 per share expected suggesting 20% year-over-year growth. The favorable earnings picture will support near-term share performance, with the recent weakness likely reflecting profit-taking.
Meta Platforms Enjoys Profitability Boost
META shares have benefited nicely from improved operational efficiencies that have significantly boosted profitability. The company remains firmly in growth mode, with earnings and revenue climbing 80% and 30% throughout its latest period.
Like MSFT, the outlook for its current fiscal year remains bullish, with the $20.21 Zacks Consensus EPS estimate up 24% over the last year and suggesting a 36% year-over-year jump.
The company has been performing nicely, with its advertising revenue positively surprising in six consecutive quarters. It's worth noting that advertising represents the bulk of META's revenue.
In addition, META shares aren't expensive, with the current 23.6X forward 12-month earnings multiple in line with the five-year median and well beneath five-year highs of 37.0X. The current PEG ratio also works out to 1.2X, reflecting that investors are paying a fair price for the forecasted growth.
While shares have faced pressure, the company's outlook remains notably bright, and investors should block out the noise.
Nvidia Outlook Remains Robust
Beloved Nvidia has faced some pressure recently amid a broader cooldown in the semiconductor trade. Nonetheless, shares are still up a staggering 150% year-to-date, and its earnings outlook fully supports further near-term gains.
The stock maintains the highly-coveted Zacks Rank #1 (Strong Buy) thanks to its above-mentioned earnings outlook, which has shifted bullishly across the board. The $2.69 per share expected for its current year suggests a 100% year-over-year pop in earnings, with sales also expected to see a 90% increase.
The stock has been at the heart of the AI trade, with its Data Center results consistently blowing away expectations as of late.
Breakneck growth has kept valuation multiples at historically sound levels, with the current 39.1X forward 12-month earnings multiple below the 50.7X five-year median and five-year highs of 106.3X.
Keep in mind that shares traded well above current valuation levels in 2020 and 2021, a time when the AI theme had yet to emerge fully.
Putting Everything Together
While several Mag 7 stocks have faced pressure over recent weeks, their outlooks and fundamentals underneath the hood remain more than sound.
Their recent weakness has coincided with a strong move from small-cap stocks, perhaps a reflection of rotation and profit-taking after remarkable starts to 2024.
Nonetheless, these stocks' runs certainly aren't over, and they remain prime selections for portfolios.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.