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The stock market has finally begun recovering from the worst bear market since 2008, with the S&P 500 index rising by nearly 12% year to date. The tech sector boasted a stellar recovery after a brutal rout last year, as evidenced by the Nasdaq Composite Index’s 26% gain so far this year.
But the market volatility is far from over. The Federal Reserve’s decision to raise interest rates at least once again this year and the growing geopolitical tensions globally have resulted in volatility levels spiking again.
Large-cap stocks typically deliver relatively stable returns during periods of heightened volatility and can be great for investors aiming to minimize risk. Nonetheless, as the economy enters the recovery stage, even large-cap stocks can deliver double-digit returns.
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Apple: Up To 20% Upside
Apple Inc. (NASDAQ:AAPL), the world’s largest company in terms of market cap, was assigned an Overweight rating by Morgan Stanley, with a price target of $210 on Oct. 16. Currently trading at just above $175, the tech stock is expected to witness a potential upside of 20.1%.
The company’s strong financials back the price target, as its quarterly revenue for the fiscal third quarter of 2023 came in at $81.8 billion, in line with analysts’ estimates.
“We are happy to report that we had an all-time revenue record in services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone,” Apple CEO Tim Cook said.
Moreover, Apple delivered earnings of $1.26 per share on a diluted basis, reflecting a 5% rise year over year.
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While declining iPhone sales in China, Apple’s largest market, amid growing tensions between the U.S. and China is a cause for concern, analysts still maintain an upbeat outlook, estimating quarterly revenue to amount to $84.8 billion for the fiscal fourth quarter, indicating a 3.7% from the last quarter.
The tech giant has also taken steps to strengthen its foothold in China. The company recently announced an iPad model with eSIM support specifically for the Chinese market in an effort to rejuvenate demand.
Microsoft: Up To 30% Upside
Microsoft Corp.’s (NASDAQ:MSFT) near-term prospects seem brighter than Apple’s, especially after its acquisition of gaming giant Activision Blizzard last week.
Citigroup assigned a Buy rating for Microsoft stock on Oct. 19, with a price target of $420, reflecting a 30.3% potential upside. Research firm Loop Capital expects Microsoft stock to rise by up to 28.7% in the near term, while D.A. Davidson Cos. estimates a 25.7% upside. U.S.-based investment banking firm Piper Sandler reiterated its Overweight rating on the stock, indicating a potential upside of 21.2%.
Microsoft, which is the second-largest company in the world in terms of market cap, also has an equity stake in OpenAI, which is arguably the hottest name in the artificial intelligence space right now. Microsoft is entitled to 75% of OpenAI’s annual profits until it recuperates its initial investment of $13 billion and 49% of its profits thereafter until it reaches $92 billion.
Microsoft has maintained its dominance in desktop operating systems globally, holding a 70% market share. The company also has been steadily growing its cloud computing business and is positioned to overtake Amazon Web Services (AWS) soon.
Nvidia: Up To 44% Upside
Chipmaker Nvidia Corp. (NASDAQ:NVDA) is the best-performing stock on the S&P 500 index so far in 2023, gaining more than 188% year to date. Nvidia made headlines earlier this year after its market cap crossed $1 trillion, making it the sixth-largest company in the U.S. Over the past year, Nividia stock rose by nearly 250%.
Nvidia’s revenue increased by 101% year over year for the second quarter ended July 30, making it one of the fastest-growing companies in the semiconductor space. Its generally accepted accounting principles (GAAP) earnings per share (EPS) amounted to $2.48, up 854% from a year ago.
While many predict Nividia to be grossly overvalued, analysts expect the stock to propel further, given its robust financials and stellar growth prospects. Morgan Stanley has an Overweight rating for the chipmaker, estimating a 44% upside on its stock. Citigroup has also assigned an equivalent Buy rating, with a price target of $630, which indicates a 38% potential upside.
Nvidia’s robust growth can be attributed to the AI boom, as its flagship graphics processing has immense applications in generative AI. The company manufactures approximately 80% of AI chips in the world.
“Long story short, they have the best of the best GPUs (graphics processing units),” Harsh Kumar, an analyst at Piper Sandler said. “And they have them today.”
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This article 3 Large-Cap Stocks That Could Surge By Over 20%, According To Analysts originally appeared on Benzinga.com
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