Wall Street continues to love certain stocks, seeing them as great long-term investments. And at the top of the list of stocks with strong buy ratings are many of the mega-cap tech names.
Heading into the fourth-quarter 2023 earnings season, many of the best known technology stocks received ratings and price target upgrades across Wall Street. The upgrades helped to push the share prices of some of these stocks to all-time highs. So far the Q4 prints have been largely positive, but the stocks have pulled back on profit taking and amid lofty expectations.
However, investors shouldn’t worry about a post-earnings dip too much. Most analysts continue to see the leading technology companies as safe bets for future gains. Further, they maintain the highest ratings on the shares. Let’s examine the three Wall Street favorite long-term stocks with strong buy ratings.
ChatGPT logo seen on the smartphone, Microsoft (MSFT) logo seen on the laptop. Microsoft Copilot
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Microsoft’s (NASDAQ:MSFT) fourth-quarter financial results were very strong. They justify all the upgrades the stock received since the start of the year.
Also, the Q4 2023 print underscored the $3 trillion market capitalization Microsoft achieved heading into its latest earnings. The technology giant reported earnings per share (EPS) of $2.93 versus $2.78 that had been forecast among analysts. Revenue amounted to $62.02 billion compared to expected $61.12 billion. Sales grew 17.6% year over year (YOY).
The positive results were driven largely by the company’s cloud-computing segment, with revenue from Azure and other cloud services posting 30% growth from a year ago. Microsoft now has 53,000 Azure artificial intelligence (AI) customers. The number of commitments to spend more than $1 billion on Azure cloud services in the year ahead increased during the quarter, the company said. In terms of guidance, Microsoft said it expects revenue of $60 billion to $61 billion for the current first quarter of 2024.
Currently, MSFT has a strong buy rating and median price target of $443.20, implying 10% upside from current levels.
Alphabet (GOOG / GOOGL)
Alphabet Inc. (GOOG, GOOGL) and Google logos seen displayed on a smartphone
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Also maintaining a “strong buy” rating are shares of Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). The selloff in the stock that has come immediately after its latest earnings print should be viewed as an overreaction.
How else do you explain a 6% drop in the share price after the company beat Wall Street forecasts on both the top and bottom lines? Sure, online advertising revenue came in a little lighter than expected. Yet, it shouldn’t take away from what was otherwise a fantastic showing by Alphabet.
The internet search giant reported EPS of $1.64 versus $1.59 that had been expected among analysts. Revenue totaled $86.31 billion compared to $85.33 billion that was forecast on Wall Street. Total sales rose 13% YOY. Revenue in the Google Cloud segment grew 26% in Q4 2023 YOY. Now, the cloud business is profitable after years of losses. In Q4 2023, Alphabet earned $864 million from Google Cloud, up from a year-ago loss of $186 million.
In its earnings release, Alphabet said that it will continue to focus on investments in AI and embedding new AI tools into more Google products. The median price target on GOOGL stock is $164.12, implying 16% upside from the place of current trading.
Advanced Micro Devices (AMD)
Advanced Micro Devices, Inc. (AMD) logo in the building at CNE in Toronto. AMD is an American semiconductor company.
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Also holding a strong buy rating are shares of Advanced Micro Devices (NASDAQ:AMD).
The chipmaker’s stock is holding up fairly well following mixed Q4 2023 results. AMD is only down 2% after the company announced EPS of 77 cents, which matched the consensus expectation of analysts. Also, revenue of $6.17 billion was slightly ahead of the $6.12 billion forecast on Wall Street. The guidance was soft, with AMD saying it expects $5.40 billion in sales, plus or minus $300 million, for Q1 2024.
That outlook for the current first quarter fell short of the $5.73 billion of revenue that analysts had been anticipating from the company. However, analysts and investors chose to focus on the outlook given for AMD’s AI microchips, which was very bullish. Last fall, AMD said it expected $2 billion in AI chip sales in 2024. The company now expects $3.5 billion of AI chip sales this year as demand remains strong. AMD’s data center business, which includes AI chips, rose 38% on an annual basis in Q4 2023 to $2.28 billion.
The median price target on AMD stock is $187.21, which is 11% higher than where the share price is currently changing hands. The company’s share price has gained 125% in the last 12 months.
On the date of publication, Joel Baglole held long positions in MSFT and GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
