According to an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith, all five of the largest-cap tech and tech-related stocks in the S&P 500, including Apple (AAPL), Amazon.com (AMZN), and Meta Platforms (META), stand to gain roughly 10% or more over the course of the next 12 months.
The S&P 500 Megacap Tech Rally Tech stocks, which served as the foundation for much of the most recent bull market, are beginning to recover.
It’s also crucial to recognise that tech has an impact on the S&P 500 that goes beyond the industry it belongs to. Many people mistakenly classify Amazon.com as a technology stock, although it actually makes up close to 25% of the consumer discretionary market. In a month, Amazon stock has increased by close to 29 percent.
Just over the past month, the Technology Select Sector SPDR ETF (XLK) has increased by 12 percent. It is just slightly inferior to the Consumer Discretionary Select Sector (XLY) ETF at that time. And the increase in tech stocks is even more significant. More than any other sector, technology stocks make up 28% of the S&P 500. Only 11% of the index is made up of consumer discretionary.
The S&P 500 has big-cap tech stocks once again. Analysts contend that there is still time for you to significantly outperform them.
And investors are happy to see that. Why? In total, these five stocks make up almost 20% of the S&P 500. Even so, according to David Trainer, CEO of the research firm New Constructs, “Investors should be selective when buying equities inside the tech sector.”
Gains in megacap tech and companies with a technological focus are impressive. The market value of Apple (AAPL) and Microsoft (MSFT) shares has increased by 19.5 percent and 9.1 percent, respectively, in July. Alphabet (GOOGL) is up 5.6 percent in a month in the communication services sector. The only megacap tech-related stock to decline in July was Meta Platforms (META). only by 3%, to be precise.
Analysts Pick Their Favorite Megacap Techs
A decisive second-quarter earnings season largely separated the winners from the losers. But analysts still like all their options.
Amazon is the tech-related stock analysts think has the second-highest upside. Meta is the one they think has the highest upside potential. Shares of Amazon, up nearly 29% in just a month, gained more than any other stock in the group. Interestingly, the company’s loss of 20 cents a share, reported July 28, missed views calling for an adjusted profit of 12 cents a share. Revenue topped views, though. Analysts still think the stock should be worth 172.83 a share in 12 months, implying a nearly 26% upside. Also on the plus side, Apple on July 28 reported a quarterly profit that was 3% more than analysts’ expectations. And that was despite revenue of nearly $83 billion, roughly in line with views. Such strength is prompting analysts to think Apple’s stock should still be worth 179.55 in 12 months. That would mark nearly 10% upside.
It’s time for investors to analyze all these megacap techs not as a group, but individually, Trainer says. For instance, analysts are most bullish on Meta, despite it being the only megacap tech-related stock to fall in July. “(Many of these stocks are) trading in the same direction, (which) reflects the inefficiency of the stock market over the last several years,” he said.