We’ve reached a point in which three U.S. stocks surpassed a market capitalization of over $1 trillion: Apple, Microsoft, and Alphabet. Still, Wall Street believes that only the latter will keep climbing in 2020.
According to a report from CNBC, quoting a report by FactSet, Apple could drop 8.2%, while Microsoft and Alphabet will both rise, with 3%, respectively 4.5% this year.
Usually, analysts have a bullish approach when it comes to the stocks they cover. Still, Wall Street’s tepid view comes after the stocks of each of these three companies registered impressive run-ups in the past year.
AAPL had an excellent 2019!
Apple was by far the top performer, going up 102%, Microsoft 57%, and Alphabet 33%. This dominance of strong giants means that they are now dominating the stock market. Also, combined with Amazon and Facebook, these five names make up 18% of the total market value of the S&P 500, Morgan Stanley claims. Even more, this is unprecedented, being the highest percentage in history, according to the same source.
“We see risk-reward on Apple as balanced,” said Toni Sacconaghi, Bernstein analyst, adding that the Cupertino-based manufacturer’s shares have doubled in value in 2019, taking the stock to its “highest relative multiple in a decade”.
However, some analysts maintain their bullish predictions regarding Apple’s prospects this year.
Katy Huberty, from Morgan Stanley, believes that the stock still has what it takes to climb further.
“Apple has proven less earnings dependency on iPhone with the success of Services and Wearables which now make up 27% of revenue and 37% of profits.”
Looking forward to a safe investment?
As for Microsoft and Alphabet, both of them received optimistic predictions from analysts, as well as recommendations to buy shares. Credit Suisse and UBS are two of the names recommending this, mostly because of the potential of the companies’ cloud businesses.
“Microsoft can reasonably achieve Commercial Cloud revenues of $100 Billion” by fiscal year 2024, Credit Suisse claims, while UBS believes that cloud computing is “an area where GOOG mgmt will continue heavy levels of investment to maintain/build upon recent end market success.”