May 5, 2024

Tech Stock Momentum Slowing a Bit in Late Second Quarter

By Natalie McGuiggan
@redlineproject

Editor’s note: Besides covering the Illinois primary, UIC students in Advanced Data Journalism also scraped Google Finance data and wrote a series of analysis reports on publicly-traded companies in various industries (automotive, airlines, insurance, tech) with Chicago ties. They pored over SEC filings, used information trackers to dig up lawsuits and court documents, and tracked stock prices over several months for each company. Here is Natalie McGuiggan’s final report on tech stocks.

Summary
The technology sector’s strength continues to be reflected through its highly-valued stocks. However there have been signs of its momentum slowing down since early March as the Federal Reserve continues its fight against inflation and impending recession fears rising.

The Fed’s decision in the future will heavily impact technology stocks as investors will most likely be cautious with their investment decisions and will be less likely to continue buying technology stocks at its high prices. Many technology companies also report their first quarter earnings and so its results may also provide a clearer picture of where the market is headed. | Stock Analysis Spreadsheet

Meta | $META
Meta is currently priced at $511.90, which is roughly 20 points below its all time high of $531.49. Since its stock shot up from earnings in February, Meta stock has been strong ever since. Recently, Meta unveiled the next-generation of the Meta Training and Inference Accelerator (MTIA), its custom-made chips that are designed for Meta’s AI workloads. With the first version debuting last year, this version will offer the best experience for users as AI becomes integrated in its products and services. From a long-term perspective, Meta’s investment in AI technologies positions the company at the top of AI innovation. Investors should continue to be optimistic about the company’s stock if they continue to capitalize on growing demand for AI solutions. Meta does not currently have any new violations, however, have faced many wrongful death lawsuits in recent years. They are currently testing new features that will limit situations of financial sextortion and create a safer environment for teens to limit these issues in the future.

Google | $GOOGL
Google’s stock has created a new all-time high of $160.22, after breaking above its previous high of $153.78 from January earlier this year, and is now currently priced at $157.73. On April 9th to the 11th Google Cloud Next 2024 was held, where Google showcased its dedication to advancing AI technology. One notable announcement was the unveiling of its new custom AI chip using Arm Holding’s (ARM) technology called the Google Axion. This advancement will allow Google to lower its costs by reducing its need for outside chip vendors, and are now able to directly compete with Nvidia. Overall, its recent event displayed its dominant competitive position through its innovative solutions and has encouraged investors to keep notice of its stock. Google’s first quarter earnings results are scheduled on April 23, 2024. As for violations, Google was fined $270 million by French regulators for using news content without consent in order to train its AI chatbot and did not dispute the facts. 

Microsoft | $MSFT
Microsoft is another stock that has been extremely strong and is currently priced at $421.90, just slightly below its all-time high of $430.82 from late last month. Morgan Stanley raised its price target to $520 from $465. They believe that its earnings per share could double to $24 by 2029 mainly due to its strong growth drivers in its technology and GenAI resulting in higher potential revenue and long-term success. BMO Capital Markets analyst Keith Bachman says that Microsoft holds a strong position in the gaming market due its portfolio of leading titles and effective development and distribution scale. Bachman’s positive outlook for revenue growth in this sector suggests that Microsoft will hold its competitive advantage, given it can maintain its current trajectory. There are no new violations for Microsoft. 

Apple | $AAPL
Apple, whose stock has been extremely weak relative to its peers, showed some signs of life after two strong trading days as of April 12, 2024 which sent the stock almost 5% higher. Its stock price is currently priced at $176.55, which is about 24 points shy of its all-time high of $199.62. Its sudden praise from investors came after Apple announced its plans to overhaul its new Mac laptops and desktops with its next-generation M4 chips that have a deep emphasis on AI. Investors had previously been hesitant about Apple’s stock for reasons such as poor iPhone sales in China and canceling its efforts to create an electric vehicle, however, pushing for AI in Apple’s products appears to be causing more optimism in its stock. Apple must take advantage of its momentum by reiterating its AI efforts to the public and announcing new products that are implementing new AI-driven technologies. Apple reports its second fiscal quarter results on May 2, 2024 which will heavily impact its stock depending on its results. The Justice Department recently filed an antitrust lawsuit against Apple for attempted monopolization over smartphones by imposing restrictions on developers and withholding critical access points.

Amazon | $AMZN
After a strong year in 2023 and its continuous strength in 2024, Amazon’s stock has finally created a new all-time high of $189.77 after breaking above its previous all time high of $188.65 that was set in July 2021. This change of sentiment after a rough year in 2022, is mainly attributed to its success in its AI efforts. Recently, Amazon CEO Andy Jassy published his annual shareholder letter, where he committed to cutting costs while doubling down on high-growth areas such as artificial intelligence. With his efforts, he hopes that AI, specifically generative artificial intelligence, will play a crucial role in Amazon’s future growth and long term success. In the past year, Amazon has put a lot of money into the AI space, which has caused many technology companies to follow the trend to stay competitive. Overall, it appears that investor sentiment on Amazon continues to be positive, however, its next earnings date on April 25, 2024 has the opportunity to change the trajectory of the stock’s price if they do not meet analyst’s expectations. There are no recent violations from Amazon.

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