The technology industry continues to grow to meet the increasing demand in an ever-changing world. Technology stocks, known for their steady upward trend, are thriving due to the continued high demand for technological solutions.Investors might consider keeping an eye on fundamentally sound technology stocks such as Microsoft Corporation (MSFT), Apple Inc. (AAPL) and Alphabet Inc. (GOOGLE).
Businesses rely heavily on software solutions to optimize their operations, improve customer experience, gain data-driven insights, and protect their systems as they strive to adapt and compete in an ever-changing digital landscape. As a result, the U.S. software market is expected to grow at a rapid pace. CAGR of around 7.2% by 2030.
Additionally, demand for enterprise software and services is expected to be driven by the rapid increase in the volume of enterprise data and automation of business processes in end-use sectors such as retail, manufacturing, healthcare, and transportation.
SO, Global Enterprise Software and Services Market Expected to Grow Rapidly CAGR of 11.9% until 2030.
Given these favorable trends, let’s look at the fundamentals of the three tech stock picks.
Microsoft Corporation (MSFT)
MSFT develops and supports software, services, devices and solutions worldwide. The company operates in the segments Business Processes & Productivity, Intelligent Cloud and More Personal Computing.
On May 1, MSFT, Brookfield Asset Management Ltd. (BAM) and Brookfield Renewable Partners LP (BEP) announced a global renewable energy framework agreement to help the company meet its goal of matching 100% of its electricity consumption with zero-carbon energy purchases by 2030.
This agreement builds on existing collaboration and aims to decarbonize the global energy supply. It provides MSFT with access to new renewable energy capacity to meet growing demand for cloud services.
On April 29, MSFT and Axel Springer SE announced an expanded partnership across advertising, artificial intelligence, content and cloud computing. This strategic collaboration aims to leverage cutting-edge innovation to support independent journalism worldwide and accelerate growth in the age of artificial intelligence by combining their strengths in digital publishing and technology.
MSFT’s total revenue increased 17% year over year to $61.86 billion in the third quarter ended March 31, 2024. Its 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 billion, reflecting increases of 19.9% and 20%, respectively, compared to the prior-year quarter.
Additionally, the company’s total assets stood at $484.27 billion as of March 31, 2024, compared to $411.98 billion as of June 30, 2023.
The consensus estimate for revenue of $64.37 billion for the fiscal second quarter (ending June 2024) represents an increase of 14.6% from the prior year. The consensus estimate for EPS of $2.93 for the current quarter indicates an improvement of 9% from the prior year. The company has a strong track record of surprising, beating consensus estimates for revenue and EPS in each of the last four quarters.
MSFT shares have gained 11.4% over the past month to close the latest trading session at $460.77.
MSFT POWR Ratings reflect its mixed outlook. The stock has an overall rating of C, which translates to Neutral in our proprietary rating system. POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
MSFT received a B grade for Stability, Sentiment, and Quality. It is ranked #18 out of 41 stocks in the Software – Businesses industry.
Click here to access additional MSFT ratings (Momentum, Growth and Value).
Apple Inc. (AAPL)
AAPL designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories worldwide. It offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of versatile tablets; and wearables, home products and accessories including AirPods, Apple TV, Apple Watch, Beats and HomePod.
On June 10, AAPL unveiled Apple Intelligence, the personal intelligence system for iPhone, iPad, and Mac. It combines the power of generative models with personal context to deliver incredibly useful and relevant insights. It’s deeply integrated into iOS 18, iPadOS 18, and macOS Sequoia.
Apple Intelligence harnesses the power of the Apple chip to understand and create language and images, act across apps, and leverage personal context to simplify and accelerate everyday tasks. With its unique approach, AAPL combines generative AI with user context to deliver actionable insights.
On the same day, AAPL launched a suite of innovative new tools and resources to help developers around the world build more powerful and efficient apps across all Apple platforms. With the beta of Xcode 16, developers can save time in their development process and gain access to features like Swift Assist and predictive code completion.
AAPL reported the total net sales For the second quarter ended March 30, 2024, the company posted revenue of $90.75 billion, of which service net sales increased 14.2% year over year to $23.87 billion. The company’s net income and EPS were $23.64 billion and $1.53 billion, respectively, for the quarter.
Additionally, the company’s cash and cash equivalents were $32.69 billion as of March 31, 2024, compared to $29.96 billion as of September 30, 2023.
Analysts expect AAPL’s revenue for the third quarter (ending June 2024) to increase 2.4% year over year to $83.74 billion, and its EPS for the current quarter to increase 4.9% year over year to $1.32. Additionally, the company has surpassed consensus EPS estimates in each of the last four quarters.
AAPL shares have gained 27.5% over the past nine months to close the last trading session at $221.55.
AAPL’s fundamentals are reflected in its POWR Ratings. Its overall rating is C, which equates to a Neutral grade in our proprietary rating system.
The stock has an A grade for Quality and a B grade for Sentiment. AAPL is ranked 22nd in the B category Technology – Hardware industry.
Beyond what’s stated above, we also rated AAPL for Growth, Value, Stability, and Momentum. Get all AAPL ratings here.
Alphabet Inc. (GOOGLE)
GOOGL is the driving force behind a broad range of technology innovations and platforms around the world. Its segments, which span Google Services, Google Cloud and Other Bets, address diverse digital needs and aspirations.
Like other major tech companies, GOOGL has invested in artificial intelligence, a strategy that has helped drive demand for its cloud services. The company also offers internet services, subscription products, apps and in-app purchases, and licensing and research and development services.
On May 2, 2024, GOOGL and MongoDB, Inc. (BMD) have collaborated to optimize Gemini Code Assist and provide enhanced suggestions for developing and modernizing applications on MDB. MDB is the industry-leading developer data platform that millions of developers and tens of thousands of customers rely on every day for mission-critical applications.
Through this collaboration, Gemini Code Assist can help developers get answers and insights about MongoDB code, documentation, and best practices so they can prototype new features faster and accelerate application development.
During the first quarter, which ended March 31, 2024, GOOGL experienced robust growth, with revenue up 15.4% year over year to $80.54 billion. Operating income jumped 46.2% year over year to $25.47 billion, while net income climbed to $23.66 billion, an increase of 57.2% year over year. Earnings per share for Class A, B and C shares reached $1.89, up 61.5% year over year.
For the quarter ending June 2024, GOOGL’s revenue is expected to increase 12.7% year over year to $84.07 billion, and its EPS is expected to increase 27.6% year over year to $1.84. Additionally, the company has surpassed consensus estimates for revenue and EPS in each of the trailing four quarters, which is impressive.
Over the past year, the stock has gained 55%, closing the last trading session at $185.82.
GOOGL’s POWR Ratings reflect a strong outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
GOOGL got a B grade for sentiment and quality. It is ranked #12 in the B category the Internet industry.
In addition to the POWR Ratings highlighted above, one can access GOOGL’s ratings for Growth, Value, Momentum, and Stability here.
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MSFT stock was trading at $460.77 per share Wednesday afternoon, up $1.49 or 0.32%. Year-to-date, MSFT has gained 22.98%, compared to a 16.76% gain for the benchmark S&P 500 index over the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about financial markets and wealth management, which led her to pursue a career as an investment analyst. She holds a Bachelor’s degree in Finance and Marketing and is pursuing the CFA program. Her fundamental approach to stock analysis helps investors identify the best investment opportunities. More…
