Buy these 5 tech stocks with upside, including these AI beneficiaries, analysts say
There’s a slate of top tech stocks that are poised for upside in the second quarter, according to Wall Street analysts Several investment firms said this week that many of these companies have more room to run as the artificial intelligence boom continues. CNBC Pro combed through Wall Street research to find tech stocks to buy as the second quarter gets underway. They include Microsoft, Amazon, Pinterest, Alphabet and Nvidia. Microsoft “We believe MSFT, due to its partnership with OpenAI, has positioned itself as a key beneficiary of Gen AI, ” Jefferies analyst Brent Thill said earlier this week. The firm raised its price target on Microsoft to a Street high price target of $550 per share from $465. Thill said the tech giant is well positioned for share gains as it ventures deeper into AI. “Further, we believe AI products, due to their strong pricing power, will be accretive to margins overtime,” he wrote. Further, its cloud computing division, Azure, has plenty for room for growth, he added. Azure should benefit from OpenAI as well, the analyst noted. The stock is up 13% this year, but Thill said now is the time to begin accumulating shares. “While material revenues are unlikely until late ’24 into ’25 and with semis outperforming software, investors should start positioning now,” he said. Alphabet Alphabet is lagging a number of its Big Tech peers, but the search giant is worth buying, according to Bank of America. The firm named the stock a top idea for the second quarter. “In 1Q ’24, Alphabet stock has underperformed broader markets and peers,” analyst Justin Post wrote. Nevertheless, the firm said there’s no shortage of positive catalysts ahead, he said. They include AI and search growth upside, as well as future moves to further cut costs, the analyst noted. “We also see potential for 2Q commentary (earnings calls and industry events) that AI integration into Search is aiding usage and monetization,” he said. Alphabet is expected to report earnings later this month. Shares are up 9.2% this year, but Post said the stock’s valuation is “reasonable vs. history” and that investors should quickly scoop up shares of the company. Pinterest “A ‘T-Sized’ [trillion] advertising market opportunity with powerful secular tailwinds,” Evercore ISI said of the social media company. Analyst Mark Mahaney said the share gain opportunity is so large for Pinterest that the company hasn’t even scratched the surface. “Pinterest offers advertisers a differentiated channel for reaching users with a rare combination of both scale and high purchase intent,” he wrote. The firm also said Pinterest has plenty of other revenue levers to pull, including its alliance with Amazon. Last year, the social media service announced a partnership with Amazon for third-party ads. “[The] Amazon partnership has the potential to bring material incremental advertiser demand to the Pinterest platform,” he added. Mahaney said he sees evidence that “ad spending [is] at least stabilizing, and likely improving,” which is another positive for Pinterest shares. The stock is down more than 7% in 2024. Amazon – Wells Fargo, overweight rating “We reiterate our Overweight rating and Signature pick, while also adding AMZN to the Q2’24 Tactical Ideas List. Increase PT to $217, from $211, based on 30x updated 2026E EPS. … Amazon (OW) is at a positive inflection in North America retail OI [operating income] margins and AWS revenue growth unlocking the earnings power of the company.” Alphabet – Bank of America, buy rating “In 1Q’24, Alphabet stock has underperformed broader markets and peers. … We also see potential for 2Q commentary that AI integration into Search is aiding usage and monetization … GOOGL has traded at an avg. multiple of 22x GAAP P/E over the last ten years & we think our multiple is reasonable vs history given expectations for double-digit revenue growth, Cloud margin expansion and the opportunity to capitalize on AI assets.” Microsoft – Jefferies, buy rating “While material revs are unlikely until late ’24 into ’25 and with Semis outperforming Software, investors should start positioning now. … We believe MSFT, due to its partnership with OpenAI, has positioned itself as a key beneficiary of Gen AI. … Further, we believe AI products, due to their strong pricing power, will be accretive to margins overtime…” Pinterest – Evercore ISI, outperform rating “A ‘T-Sized’ [trillion] advertising market opportunity with powerful secular tailwinds. … PINS offers advertisers a differentiated channel for reaching users with rare combination of both scale & high purchase intent. … [The] AMZN partnership has the potential to bring material incremental advertiser demand to the PINS platform … Evidence of Digital ad spending at least stabilizing, & likely improving, despite the early Oct brand ad pullback.” Nvidia – Mizuho, buy rating “We rate NVDA with a Buy rating and a 1,000 PT, ~31x F26E EPS, within its historical 15-67x range, which we see as appropriate given as NVDA continues to dominate the AI landscape with a holistic hardware and software offering and increasing AI server content from GPU, DPU, CPU, among others, despite near-term investor concerns over lost sales in China and the AI trade losing some steam.”
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