- The S&P 500 shows no signs of slowing down as it continues its rally, driven by top holdings projected to surge by 10% or more this year.
- Analysts are upping their targets, indicating a sustained upward trajectory.
- While technology and AI play a pivotal role in the index’s progress, not all stocks are in the race.
The S&P 500 is set to soar even if certain stocks lag behind. The driving force lies in the six dominant holdings at the helm. A market cap-weighted index, the S&P 500 is steered by companies with the highest market cap – propelling the index skyward as they surge.
The leading lights are Microsoft, NVIDIA, Apple, Amazon, Meta Platforms, and Alphabet, often regarded as the six horsemen of the AI apocalypse, collectively accounting for 31% of the index. Bolstered by stellar performance and analyst backing, the question looms – how high can they ascend before reaching their peak? As for the S&P 500 as a whole, technical signals point to substantial gains by year-end; a forecast that dovetails with the future projection for these top performers.
Microsoft Secures the Top Spot
The coveted #1 position in market cap among the top three stocks is a closely contested title, with Microsoft claiming the throne at the start of the quarter. Rated top in this quarter’s fact sheet by S&P Global, Microsoft’s upward trajectory is fueled by positive analyst sentiment, poised to surge by an additional $110 or approximately 25% from current levels. With analysts bullish post-FQ3 earnings report, foreseeing a climb to $600, the demand for Microsoft’s Azure cloud and AI offerings, coupled with lucrative partnerships with tech giants like Oracle and Alphabet, underpin its upward spiral.
NVIDIA Leaps to $3 Trillion Valuation
Achieving a $3 trillion valuation, NVIDIA joins the elite club of tech titans reshaping the AI landscape. While consensus estimates allude to a downward trend, recent data paints a brighter picture, with projections hinting at a climb towards $150 post-split adjustment, around 7% higher. Backed by a pioneering full-stack strategy and fortified by recent outperformance and robust guidance, NVIDIA rides the AI wave with no signs of ebbing.
Apple’s AI Renaissance
After grappling in 2022 and 2023, Apple emerges reinvigorated, punctuating its resurgence with a newfound focus on AI at the recent developers’ conference. Fostering upgraded AI features like ChatGPT in its Mac OS lit a fire under Apple’s stock, triggering a slew of reiterated buy ratings and optimistic price targets. With a consensus suggesting a 13% to 26% upside potential, Apple’s climb to new heights seems imminent.
Amazon Ascends on Cloud and Consumer Success
Amazon stands tall on the pillars of thriving consumer and cloud businesses, bolstering its market value. Bolstered by analyst upgrades and revised price targets, Amazon eyes a zenith with a 17% surge anticipated. Riding high with Buy ratings and a pathway to an additional 1500 basis points upside, Amazon’s trajectory points skyward.
Meta Platforms: Mastering AI Monetization
Rebounding from a recent low, Meta Platforms thrives on AI prowess, witnessing a resurgence in user engagement and margin expansion. The initiation of dividends and aggressive share buybacks, catalyzed by robust earnings, underscores a bullish sentiment. Analysts backing propel the consensus to a 17% upside from recent highs, projecting a future brimming with optimism.
Google’s Dual Dominance
Ranking 6th in market cap but 7th due to dual share classes, Alphabet’s Google garners 4% of the S&P 500’s portfolio. Trending higher with a 50% YOY consensus upswing and a projected 10% elevation from current levels, Google is poised for a record high, with sustained revenue and earnings growth on the horizon.
