These 3 AI-Savvy FANGMA Stocks Are Still Strong Buys, Analysts Say – TipRanks.com

These 3 AI-Savvy FANGMA Stocks Are Still Strong Buys, Analysts Say - TipRanks.com

The rush for hot FANGMA stocks (META, AMZN, NFLX, GOOGL, MSFT, AAPL), which can be measured by the Evolve FANGMA Index ETF Trust Units CAD Hedged ETF (TSE: TECH), it was very impressive. It certainly didn’t take long for sentiment to take a 180-degree turn, driving some FANGMA stocks to new heights just months after hitting ominous depths.

Undoubtedly, it would have been nice to enter a few months ago. While it appears the surge is a missed opportunity, the uptick from analysts suggests the recent rush of big tech still has room to gain. I’m inclined to agree with the analyst community. FANGMA stock has more room to work, and it’s not just thanks to the AI ​​boom!

Therefore, we use TipRanks’ comparison tool to check in with three AI-savvy FANGMA names and see where the analysts stand.

Amazon is an e-commerce and public cloud behemoth that hasn’t been as hot as some of its big tech peers, some of which are sitting at or around new all-time highs. Going into the second half, I see Amazon stock as the FANGMA company with the most room to rise.

Undoubtedly, Amazon is the most expensive of the bunch. However, I still believe its disruptive capabilities will help it grow in its seemingly sky-high price-earnings multiple (it’s over 300 times trailing price-earnings and 71 times forward price-earnings). Of course, a lot of enthusiasm is already built into the share price. However, I view new highs as a realistic goal for the original innovator, especially when interest rates appear to be peaking. All in all, I remain bullish on AMZN stock.

The cloud and e-commerce segments aren’t flying in the clouds like they used to be, thanks in part to a hazy economic climate. Indeed, growth in both areas could rebound after a recession ends. If there is no recession, Amazon’s road to recovery could continue at its current breakneck pace.

While the upcoming forecasted recession is rocky and longer-lasting, the company has some growth drivers abuzz, and it’s these disruptive innovations that could help keep the good times (at least on a year-over-year basis) for Amazon stock investors.

Since the beginning of the year, the stock is up about 52%. With in-game AI skinning via its Amazon Bedrock AI service (which offers customizable AI models for easy integration into applications) and an intelligent Alexa (Amazon’s cloud-based voice service), I rate Amazon as one of the AI ​​companies that may not have so much hype integrated AI at current levels. We’ve heard a lot about OpenAI and ChatGPT this year. Later, I’ll look for Amazon to step forward with its AI innovations.

What is the price target for AMZN stock?

Amazon is a strong buy on Wall Street, with as many as 37 buys and just one hold. AMZN’s average stock price target of $137.62 implies 7% upside potential.

Microsoft shares recently hit a new high, just months after ChatGPT shed light on the potential of generative AI and large language models. As ChatGPT becomes stronger and more widely available in a number of productivity applications, it seems Microsoft is on the run, leaving many of its rivals in the dust.

Microsoft’s rivals have focused on AI innovation lately and may catch up. That said, it may prove difficult to dethrone Microsoft as it explores new possibilities with the power of AI. Even at today’s frothy valuations, I’m finding it hard to be anything but bullish on the stock.

Microsoft shares are the most expensive in some time. With a price-to-earnings ratio 36.7x lower, MSFT stock is at the high end of the historical valuation spectrum. Over the past five years, Microsoft has averaged 33.4 times the trailing price/earnings multiple. Undoubtedly, there are many AI expectations being considered. As Microsoft continues to roll out new AI features to its ecosystem, earnings could take a big hit. The magnitude of this quake, however, remains a question mark.

Executives see many ways Microsoft reaches $10 billion (or more) in annual AI ARR (annual recurring revenue). Microsoft could likely beat those estimates, perhaps sooner than expected, if the AI ​​plays well with the company’s existing offerings.

Following the hot run, several analysts raised their price targets, some by generous amounts. JPMorgan recently raised its price target from $315 to $350.

What is the price target for MSFT shares?

Microsoft is still a strong buy on Wall Street, with 30 buys, four hangs and one sale. However, MSFT’s average stock price target of $347.57 carries a small gain of 2.3% from here.

I consider Alphabet stock a must-have for new investors looking to bet on artificial intelligence. When it comes to AI innovation, it’s easier to bet on the products we’ve had the chance to interact with. While Google has its own Bard AI, the vast majority of the company’s AI innovations aren’t yet ready for consumers to play with. Arguably, Google’s AI innovations are too powerful (and risky) to release to the public right now. This could change once the regulations go into effect as guardrails improve.

For now, however, GOOGL stock certainly doesn’t seem like the “hottest” AI stock for investors to own. However, give it a few years and I’ll look for Google to flex its AI muscles. Arguably, Google may have bigger AI muscles than some of its more expensive peers. For this reason, I am bullish on GOOGL stock and view it as relative value in a hot space.

While GOOGL may be relatively cheap, given the AI ​​talent (consumer-facing and behind-the-scenes) you’re getting, the stock is still trading well above where it spent most of last year (had an average of 17.54 times the final price a -multiple of earnings in 2022). At 27.7 times P/E, there is some enthusiasm for AI.

What is the price target for GOOGL stock?

Alphabet is a Strong Buy based on 28 Buys and three Holds awarded in the last three months. GOOGL’s average stock price target of $131.48 implies 6.8% upside potential.

Conclusion

FANGMA stock has a lot to gain from AI, and of the three AI-savvy stocks in this piece, analysts are expecting the most upside from Amazon stock.

Disclosure

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