META, AMZN, MSFT: Which Stock Is Best after Their Magnificent Earnings?

The so-called Magnificent Seven have pulled the curtain on their earnings results. Though most Magnificent Seven members clocked in some magnificent quarters, there was one EV maker that delivered results that can only be described as less-than-magnificent. In any case, this piece will focus on a trio of Magnificent Seven members (META, AMZN, and MSFT) that stepped up to the plate and swung one out of the ballpark, sparking an impressive rally alongside a wave of analyst price target upgrades.

Therefore, let’s use TipRanks’ Comparison Tool to check in with the three aforementioned stocks that delivered and could continue to do so in the year ahead, thanks in part to a bit of help from their growing stake in artificial intelligence (AI).

Meta Platforms (NASDAQ:META)

Meta Platforms delivered the most impressive quarterly results this earnings season, sparking one of the biggest single-day rallies in the company’s history. Undoubtedly, Meta stock’s more than 20% surge represented the largest-ever single-day market cap gain of $204.5 billion. Put that one in the record books.

With a fresh dividend, AI tailwinds at its back, and the wildcard of its Reality Labs business, many analysts on Wall Street see the red-hot stock climbing even higher as it enters its dividend-paying era. All things considered, I find it hard to be any less bullish following the latest spike.

In fact, Morgan Stanley seems to think Meta is a stock to keep buying after its blowout earnings results. The company’s new AI tools are just one of the drivers that has the bank staying bullish. In a prior piece, I highlighted the potential of ad automation tool Advantage+ and its ability to give the ad business a real shot in the arm.

Just because Meta is maturing, with a dividend to pay (0.44% yield at writing), does not mean it’s steering off the growth track. If anything, Meta may be the most exciting Magnificent Seven member, given how effectively Mark Zuckerberg and his team have turned a corner following its “Year of Efficiency.”

As the company moves into a year (or should I say decade) of AI, the stock certainly seems too cheap at 23.7 times forward price-to-earnings, far below most Magnificent Seven members. The lowest-hanging fruit may have been picked amid last year’s efficiency push, but don’t expect management to settle into cruise mode as it looks to pull ahead in the so-called AI race while keeping up with peers in the virtual- and augmented-reality scene.

What Is the Price Target of META Stock?

Meta stock is a Strong Buy, according to analysts, with 38 Buys, two Holds, and one Sell assigned in the past three months. The average META stock price target of $522.00 implies 11.2% upside potential.

Amazon (NASDAQ:AMZN)

Amazon stock has also been riding higher following its own slate of quarterly earnings results. The numbers were exceptional, helping power shares more than 7% higher in a single trading session. With new all-time highs in sight (around 8% away), plenty of AI rally fuel, and a strong holiday season in the books, analysts seem right on the money to stay bullish on the stock post-earnings.

Like Meta, Amazon wants to equip advertisers with the right tools. With the firm launching new privacy tools in the European market while starting ads (and a paid option to eliminate them) on its streaming service Prime Video, it seems positioned to make a growing dent in the ad market.

Indeed, Amazon’s many Prime users will not be happy to have to view ads as they enjoy their paid Prime content. And though some may question the value proposition of being a Prime member (have the perks added up, or only the price hikes?), the consumer will speak with their money. For now, Prime looks sticky enough to not shed too many users due to the inclusion of ads on Prime Video.

Combine AI tools with ads, and it’s no mystery as to why RBC Capital views Amazon as one of its top tech picks (one of the others is Meta) to play the digital ad market in the new year. I think they’re right to praise the company as it looks to go above and beyond just being an e-commerce and cloud retailer.

What Is the Price Target of AMZN Stock?

Amazon stock is a Strong Buy, according to analysts, with unanimous 40 Buys assigned in the past three months. The average AMZN stock price target of $207.72 implies 21.8% upside potential.

Microsoft (NASDAQ:MSFT)

Microsoft also stood tall following its earnings report, with investors impressed by the company’s AI muscles. In many ways, Microsoft is still the AI stock to own for those who prefer to bet on software over hardware. While Microsoft is poised to gain some skin in the AI chip game, the company still remains a software titan that’s likely to continue having its way with rivals.

With a Super Bowl ad for its AI software CoPilot ready to go, it will be interesting to see where adoption of the Microsoft ecosystem goes from here as more are drawn in by its impressive AI capabilities. It’s hard not to be bullish, even with shares at fresh highs and a trailing price-to-earnings multiple now well above 35 times.

Apart from AI, Microsoft seems to be opening up its Xbox gaming ecosystem by sharing plans to bring its Xbox-exclusive games over to its rival console, PlayStation. Indeed, such a move could curb demand for its console while also dealing a heavy blow to the so-called “console wars.”

That said, by expanding the total addressable market for its games, I view the move as a net positive, even if it rubs some Xbox gamers the wrong way. If the friendly gesture is reciprocated by Sony (the firm behind PlayStation), the move could be a net positive for both console combatants as more emphasis is placed on growth in software.

What Is the Price Target of MSFT Stock?

Microsoft stock is a Strong Buy, according to analysts, with 32 Buys, one Hold, and one Sell assigned in the past three months. The average MSFT stock price target of $469.45 implies 13.4% upside potential.

The Takeaway

The Magnificent Seven stocks could continue higher if they continue smashing quarterly earnings this year. Undoubtedly, AI could be the magic that helps them keep pulling rabbits out of hats come future earnings seasons. Of the trio, analysts see the most upside (21.8%) in AMZN stock.

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