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Magnificent Seven stocks have dominated the stock market this year, driving the tech-heavy Nasdaq Composite Index up more than 43% since the beginning of the year.
Large-cap tech stocks were primarily banking on rapid growth in the artificial intelligence (AI) sector and the growing popularity of the metaverse. AI chip manufacturer Nvidia Inc. (NASDAQ:NVDA) is the best-performing Magnificent Seven stock this year, up more than 234% year-to-date. Meta Platforms Co., Ltd. (NASDAQ:META) follows suit, up more than 193% over the same period.
A huge rally over the past year has led many experts to speculate that the tech giant has reached its peak. With fears of a recession looming in 2024, diversifying beyond big tech could hedge investors’ portfolios in case of a market downturn.
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As of Dec. 4, the New York Federal Reserve’s recession probability model indicates a 51.8% chance that the U.S. will enter a recession within the next 12 months.
Despite the worrying market backdrop, analysts are bullish on these large-cap stocks in the short term.
spotify
Year-to-date, up more than 140%; Spotify Technology (NYSE:SPOT) is one of the world’s largest music streaming companies.
Spotify enjoys strong financial performance, with total monthly active users increasing 26% year-over-year to 574 million in the fiscal third quarter ended September 30. The company’s revenue rose 11% year over year to 3.36 billion euros ($3.7 billion). Operating profit was 32 million euros, compared to a loss of 228 million euros in the same period last year.
The company cut its workforce by 17% earlier this month, which is expected to reduce operating expenses by about 2% in fiscal 2024.
“Over the past two years, we have worked to build Spotify into a truly great and sustainable business, one that achieves our goal of becoming the world’s leading audio company and continues to drive profitability and growth into the future. ,” said Daniel Ek, CEO of Spotify. “We have made valuable progress, but as I have shared many times before, we still have work to do. Economic growth has slowed dramatically and capital has become more It’s gotten expensive, and Spotify is no exception to this reality.”
Analysts expect Spotify’s revenue to grow 17.3% year over year to $17.21 billion in fiscal 2024. Furthermore, Wall Street expects Spotify’s earnings per share (EPS) to be $2.05 next year.
Pivotal Research recently raised its rating on Spotify stock from “hold” to “buy,” with a price target of $265, indicating upside potential of more than 39%. Rosenblatt Securities also raised its outlook on Spotify to “buy” and set the price target to $300, reflecting an over 58% share price.
anheuser-busch
Anheuser-Busch InBev SA (NYSE:BUD) was embroiled in a major controversy earlier this year after transgender spokesperson Dylan Mulvaney promoted Bud Light beer through his Instagram account, angering conservative consumers. . Anheuser-Busch, the nation’s largest beer maker, reported a sharp drop in third-quarter sales as controversy raged amid a nationwide boycott by conservatives.
The company took steps to improve its consumer rankings by rebranding its packaging.
“Over the past two months, we have recognized that the debate surrounding our company and Bud Light has shifted away from beer, impacting our consumers, business partners and employees,” the company said in a statement. “We’re a beer company, and beer is for everyone.”
Anheuser-Busch stock has rebounded, rising more than 14% in the past three months. J.P. Morgan has an “overweight” rating on Anheuser-Busch’s stock with a price target of $79, and expects the momentum to continue, reflecting 22.5% upside potential. ing.
restaurant brand international
Restaurant Brands International Co., Ltd. (NYSE:QSR) is one of the world’s largest restaurant companies, with 2022 sales of approximately $39 billion from approximately 30,000 restaurants in more than 100 countries.
The company operates popular beverage and fast food chains such as Tim Hortons, Burger King, Firehouse Subs, and Popeyes Louisiana Kitchen. With the holiday season in full swing, restaurant brands’ revenue is expected to rise 7.1% year-on-year in the quarter ending December.
RBC Capital has an outperform rating on Restaurant Brands stock, with a price target of $87, implying an upside potential of nearly 12.4% from current price. BMO also rates Restaurant Brands an “outperform” with a price target of $85, indicating potential for an upside of more than 9% from current price.
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This article looks beyond the ‘Magnificent 7’ — analysts just upgraded these three large-cap stocks.
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