News: 3 'Wide Moat' Tech Stocks to Buy and Hold
We provide the latest news from the world of economics and finance. Investors’ enthusiasm for tech stocks has skyrocketed over the past year thanks to the tremendous buzz surrounding artificial intelligence (AI), pushing the broader market indexes to record highs in recent months. Joining investors’ enthusiasm, economic experts are also highly bullish on AI’s prospects, foreseeing it as potentially the most transformative development in economic history since the Industrial Revolution. With most companies rushing to capitalize on AI’s capabilities, identifying stocks with a sustainable competitive advantage, commonly known as a "moat," becomes essential.
Alphabet Inc. (GOOGL)
Morningstar analysts are bullish on Alphabet Inc. (GOOGL), Amazon.com, Inc. (AMZN), and Meta Platforms, Inc. (META). The investment research firm believes that these three tech giants have a “Wide Moat,” which means they have the potential to maintain their competitive edge for a solid two decades.
Alphabet Inc. (GOOGL), Google’s parent company, has evolved far beyond its roots as a search engine giant. Alphabet’s vast array of offerings, such as Gmail, Google Drive, Google Maps, Google Photos, and YouTube, play a pivotal role in our daily lives. Moreover, while the company holds a dominant position in the search engine market, it is also leveraging the immense capabilities of AI, integrating it across its product suite.
Shares of this mega-cap stock have rallied 37.7% over the past 52 weeks, outpacing the broader S&P 500 Index’s return of 24.4% over the same time frame.
In terms of valuation, the stock trades at 23.18 times forward earnings, which is lower than its own five-year average of 25.65x.
Amazon.com, Inc. (AMZN)
Commanding a market cap of $1.9 trillion, Washington-based Amazon.com, Inc. (AMZN) has spread its wings across various industries over the past few years. While best known for its unparalleled retail prowess, Amazon's foray into entertainment with Amazon Prime Video, Amazon Music, Prime Gaming, and Twitch highlights its versatility and impact. Furthermore, the company has made significant strides in the tech realm, particularly with its Amazon Web Services (AWS) segment, capitalizing on the burgeoning demand for cloud and AI services.
Over the past 52 weeks, shares of Amazon have surged nearly 46%, outperforming the broader SPX’s return during the same time.
Priced at 38.62 times forward earnings, the stock trades at a discount to its own five-year average of 183.17x.
Meta Platforms, Inc. (META)
With a market cap of $1.2 trillion, California-based Meta Platforms, Inc. (META) is the world's largest social media titan. Since Facebook's game-changing debut in 2004, Meta has revolutionized how we connect. Plus, through apps like Messenger, Instagram, and WhatsApp, Meta has further amplified its global reach. Having revolutionized the social media landscape, the company is now advancing into immersive experiences with augmented and virtual reality, leading the next evolution in social technology.
Shares of this social media giant have surged almost 77% over the past 52 weeks, easily dwarfing SPX’s gains during the same period.
In terms of valuation, the stock is trading at 23.78 times forward earnings, in line with its own five-year average.
On May 30, Meta declared its second-ever quarterly dividend of $0.50 per share, payable to its shareholders on June 26. The company’s annualized dividend of $2.00 translates to a 0.42% dividend yield.
Analysts tracking Meta project the company’s profit to increase 35.8% year over year to $20.19 per share in fiscal 2024 and grow another 14.7% to $23.15 per share in fiscal 2025.
