These are the 3 Best Tech Stocks to Buy in May 2024, according to Wall Street analysts. Tech stocks offer considerable growth potential in times of economic expansion. With expectations of an interest rate cut later this year, tech stocks could witness a booming demand for their products and services. The technology sector encompasses a variety of companies such as hardware and equipment makers, Software-as-a-Service (SaaS) providers, artificial intelligence (AI)-based solution providers, and semiconductor makers.
We scanned the market for 3 large-cap tech stocks that are robust enough to grow their businesses irrespective of the macro environment. These three companies are dominant players in their fields and highly favored by analysts.
#1 Amazon.com (NASDAQ:AMZN)
Amazon.com is the undisputed leader in the e-commerce space, with this business accounting for more than 80% of the company’s revenues. Plus, the company’s cloud computing business, Amazon Web Service (AWS), has a massive potential to grow in the AI space. Amazon has enhanced its AWS platform with several AI tools, helping companies bolster their efficiency in generative AI.
Moreover, AMZN’s booming digital advertising business is at an expansion stage and is expected to boost the company’s top line in the years ahead. In Q1 FY24 results, Amazon exceeded both the sales and earnings per share (EPS) estimates while guiding for Q2 sales that were marginally below expectations. Importantly, AWS posted a 17% jump, while advertising business saw a 24% increase in revenues compared to the prior-year period.
What is the Future Price of Amazon Stock?
On TipRanks, the average Amazon.com price target of $219.50 implies 16.3% upside potential from current levels. Also, with 41 unanimous Buy ratings, AMZN stock has a Strong Buy consensus rating. In the past year, AMZN shares have gained 78.4%.
#2 Meta Platforms (NASDAQ:META)
Meta Platforms is a social networking behemoth, with its Family of Apps (FoA) comprising WhatsApp, Instagram, Facebook, Threads, and Messenger. In Q1 FY24, Meta beat the consensus estimates for both the top and bottom lines. Yet, its stock slipped owing to the revised capex guidance. Meta is betting big on its AI future with increased capex in the range of $35 billion to $40 billion in 2024 to accelerate AI infrastructure. However, META’s Reality Labs segment continues to make massive losses, dwindling investors’ confidence in Meta’s ability to scale new technology.
Even so, Meta noted that increased use of AI-driven recommendations helped boost its daily active people (DAP) to an average of 3.24 billion in the March quarter, up 7% compared to the prior year period. It is also worth noting that Meta’s advertising revenue (contributing over 97%) surged 26.8% year-over-year in Q1. Also, diluted EPS skyrocketed 114% compared to Q1 FY23, thanks to effective cost control measures.
Is Meta a Buy, Sell, or Hold?
With 39 Buys, three Holds, and one Sell rating, META stock has a Strong Buy consensus rating on TipRanks. The average Meta Platforms price target of $530.93 implies 13.4% upside potential from current levels. META shares have zoomed 100.7% in the past year.
#3 Alphabet Class A (NASDAQ:GOOGL)
Alphabet is a combination of leading information technology (IT) and advertising services, including Google, Gmail, YouTube, Android, Chrome, and Maps. Alphabet beat both the revenue and EPS estimates in Q1FY24 and announced its first-ever quarterly cash dividend of $0.20 per share. What’s more, the Board authorized a new $70 billion stock buyback program for both Class A and Class C shares.
In Q1, Google’s advertising revenue (more than 76% revenue contribution) grew 13% year-over-year, while Google Cloud revenue jumped 28.4%. Net income soared 57%, backed by the company’s stringent cost control measures.
Notably, Google is making notable progress with the application of its in-house generative AI model, Gemini. Google attributed its stellar Q1 results to AI-backed advertising solutions aiding both Google Search and YouTube. The company added that its AI solutions are only beginning to roll out and have a broader scope forward.
Is it a Good Time to Buy GOOGL Stock?
Analysts are highly bullish about GOOGL stock, awarding it a Strong Buy consensus rating on TipRanks. This is based on 31 Buys versus seven Hold ratings. The average Alphabet Class A price target of $189.79 implies 10.8% upside potential from current levels. GOOGL shares have gained 58.9% in the past year.
Ending Thoughts
The aforementioned three technology companies boast a wide moat and have leading positions in their respective fields. Based on Wall Street’s price targets, their share prices do not show massive upside potential as their market caps already run into trillions of dollars. Having said that, all three companies have sound businesses, drawing large profits, and are here to stay for generations, with huge advances in AI. Investors can consider exposure to these companies to bolster their portfolios.
