The US stock market heavyweights Amazon, Apple and Microsoft are on their way to become $2 trillion companies. While Apple is over $1.6 trillion in market capitalisation (m-cap), Amazon and Microsoft are more than $1.5 trillion in worth. According to analysts, the three American tech stocks can achieve the milestone by next year or two if they keep posting robust earnings.
The significance of these stocks for the American equity indices could be made out from the fact that these lifted NASDAQ to more than 10,000-level in June, even amid the rising coronavirus concerns.
Analysts upbeat on trio
Brokerages have so far shared upbeat views on these stocks. According to a study by Refinitiv, out of thirty nine analysts who cover Apple, 29 recommend a 'buy' on it. Similarly, 34 of 37 covering Microsoft have 'buy' recommendations for it. Forty eight of the 51 analysts covering Amazon gave a 'buy' call for the stock.
Apple can reap rich dividends from its iPhone trade-in program, Katy Huberty, Managing Director Research, Morgan Stanley, recently said in a note. "The proposition for consumers is compelling in our opinion as the trade-in program meaningfully lowers the net purchase price of an iPhone," Huberty wrote.
On Monday, Amazon, for the first time in over a year, saw its m-cap rising above Microsoft's after its shares rallied over 4 per cent. It was the fourth straight rise in as many trading sessions. The firm registered a m-cap of nearly $1.66 trillion, or nearly $30 billion more than Microsoft's. Amazon is expected to make most of the opportunity that the coronavirus pandemic has given. It has shifted to online retail at a brisk pace in the past few months. Even the demand for cloud-computing services has substantially risen of late.
Similarly, Apple is expected to keep doing well from iPhone sales. Also, there is a grown consensus that Office 365 subscription suite of software has generated robust revenues for Microsoft.
Running too fast
While Apple and Microsoft shares have risen over 30 per cent, Amazon has zoomed nearly 70 per cent so far this year. Even as the companies, with their strong performance so far, appear to be moving ahead to achieve the $2 trillion landmark, high valuations may be a concern.
"These are great companies, but price matters in the long run. The stocks that dominate the Nasdaq are expensive," Northern Trust Wealth Management chief investment officer Katie Nixon recently wrote in a report.Also read: Over 90 doctors on COVID-19 duty lost their lives so far, says IMA