Nvidia
Nvidia earned its title as an AI darling after demand for its chips fueled booming revenue growth. The stock’s more than 230% rally this year to a record has made it the top performer in both the S&P 500 and the Nasdaq 100.
The market has high hopes for the chipmaker. In the last year, Wall Street’s estimates for 2025 revenue have surged more than 150%, data compiled by Bloomberg show. Analysts are overwhelmingly bullish on the stock — more than 90% of those covering it say it’s a buy, and the average price target of $652 implies a roughly 30% upside.
“Execution is key,” said Hendi Susanto, an analyst at Gabelli Funds. “There’s a lot of demand right now and the execution has to be solid in order to meet those high expectations.”
Alphabet
Alphabet, which is up more than 60% this year, is perhaps Microsoft’s biggest competition in AI and cloud products at the moment.
Now investors want to see a clear path to higher revenue from its AI offering, Gemini.
Trading at about 20 times forward earnings, the Google parent is one of the more reasonably priced stocks in the Magnificent Seven on a valuation basis, and is below its record high. Meta has a similar valuation, while Tesla, at about 70 times forward earnings, is the priciest. The average for the seven firms is roughly 32.
“Google and Meta are relatively cheaper compared to the rest” of the group, said Williams at Spouting Rock.
Meta Platforms
In the era of social media, it’s no surprise that Meta is a high flyer. The company’s shares have nearly tripled in 2023 and it boasts the most bullish skew of Wall Street ratings in its history. Meta’s shares are also below their 2021 high.
“Meta remains our top pick overall” among Internet stocks, Citigroup Inc. analysts led by Ron Josey said in a Dec. 20 note. “Engagement continues to ramp as Meta benefits from a multi-year product roadmap across social, GenAI, and ad tools as margins expand.”
Tesla
Tesla has had a choppier year than most in the group but has still more than doubled. Though the company looks like the winner in the electric-vehicle race, analysts have soured on it lately, reducing expectations for deliveries and profits as demand cools across the industry.
Still, bulls see Tesla’s leading position and ability to tap trends like AI as a long-term tailwind. This stock, too, is well under its 2021 peak.
“There’s so many different avenues for growth and so many different things they’re working on,” said Meyers at Laffer Tengler Investments. “We just don’t see it slowing down.”
This article was provided by Bloomberg News.