Written by | U.S. Stock Research Institute
If you were to pick a few of the most iconic U.S. stock companies as the ones to summarize the U.S. stock market in 2021, FAAMG would be the obvious choice. However, after events such as Facebook's name change to Meta, Tesla's surging past the trillion-dollar market capitalization mark, and Nvidia's surge due to the meta-universe, the seven AAMMGTN companies may be even more capable of guiding the future market.
Apple, Amazon, Meta, Microsoft, Google, Tesla, Nvidia. There is no doubt that the seven giants of U.S. stocks are pointing out the future direction of technology in different ways. At the same time, some key questions need to be answered. Can Apple's $3 trillion market capitalization hurdle be crossed? What does Tesla's growth myth rest on? Will Meta, which changed its name and transformed itself, be able to sail through? Looking ahead to 2022, the giant may have many more surprises in store.
Apple: AR devices herald expansion
Since the beginning of the year, Apple's shares have risen about 36 percent. For comparison, the tech-dominated Nasdaq Composite Index is up 22 percent this year, and the Standard & Poor's 500 Index is up nearly 27 percent.
In absolute terms, Apple's gains aren't exactly eye-popping. But considering that Apple's stock is trading at $2.94 trillion as of this writing, and at 31 times PE it's not overvalued. As a super giant, Apple's steady growth is the most worthwhile point of concern for investors.
For Apple, both the iPhone as a representative of the hardware three, or software services and wearable devices, have shown a high base under the strong growth, so much so that Apple's biggest problem has turned out to be the production capacity can not meet the demand. December 28, Mizuho Securities analyst YasuoNakane will be the fourth quarter of the iPhone production is expected to be lowered from 95 million units to 90 million units, down 4 percent year-over-year.
However, Mizuho is more bullish on Apple's performance next year, predicting that Apple will produce 59 million iPhones in the first quarter, a 20 percent jump from a year earlier. Tianfeng International Securities analyst Ming Guo _ on the one hand, expressed a positive opinion of the iPhone14, and on the other hand, broke the news that Apple's AR device will be released next year, and its status may be similar to the AppleWatch. however, due to the base is still high, the analysts surveyed by FaceSet generally believe that tomorrow and after two years, Apple's growth will be slowed down significantly.
Cook argued that Apple isn't building a meta-universe, and that Apple will focus on artificial intelligence, augmented reality and automation. All indications are that 2022 could be the year Apple kicks off its next round of expansion. While that point is likely to come at least after WWDC in June, the $3 trillion market capitalization mark may be breached with sales.
Amazon: cloud-based support for earnings fix
2021 is not Amazon's year to shine, with AWS downtime, workers suing Amazon for crushing them, skyrocketing international logistics and labor costs, massive investments in logistics and networks, and antitrust Under all these factors, Amazon's shares are up a mere 3.9 percent so far this year.
Its performance is well documented, with the lowest revenue growth rate in three years in the third quarter, and it also gave the lowest Q4 estimate for the same increase. Still, AWS continues to carry the flag with a 32 percent market share in cloud computing, said Jere Ong, principal analyst and founder of JRResearch, adding that AWS is worth about 40 to 45 percent of Amazon's stock value.
Despite that, the downturn is already fading, with JPMorgan analyst Doug Anmuth ranking Amazon as one of the top Internet stocks for 2022.EvercoreISI analyst Mark Mahaney made the same call. After a tough 2021, Amazon shares will outperform the broader market next year, Goldman Sachs analyst Eric Sheridan said.
Besides the strength of AWS, Amazon's infrastructure buildout since 2020 is widely seen as starting to pay dividends next year, with a corresponding reduction in spending. So while its growth strategy for advertising is being optimized on the one hand, e-commerce could be a new surprise on the other.EricSheridan is bullish on Amazon's price target to $4,100, with about 20% upside in 2022.
Meta: the gateway to the meta-universe behind VR
Similar to Amazon, Meta, after six months of sustained gains, has been caught in a series of watery waters since September, including antitrust, Apple's new privacy policy, and information security issues. Zuckerberg was even called the biggest villain of 2021 by many foreign media and users.Meta's highest gain this year was originally more than 40%, and has now retraced to 25.55%.
In addition, the Facebook app family faces competition from TikTok. Cloudflare, a cloud infrastructure company that tracks Internet traffic, just released a report showing that in 2021, TikTok replaced even Google as the world's most visited Internet site during the year.
Nevertheless, the Facebook family of apps remains hard to replace. Zuckerberg is working on two of its biggest problems: the lack of an ESG policy and any uncertainty related to Apple's new privacy policy.
And from a meta-universe standpoint, Meta's certainty looks better. Just this past Christmas, the Oculus activation device app became No. 1 on the APPStore charts, Quest has sold more than 10 million units, and there is a high-end new product to be released next year. EvercoreISI analyst MarkMahaney said: a more moderate and cautious stance under which this will further demystify the meta-universe. MetaVR is expected to reign supreme until Apple enters the fray, according to CTS.
Microsoft: the business cloud to the next level
Wedbush analyst DanIves, who has long tracked the giant, believes there are at least two companies that will top $3 trillion in market capitalization next year. One is Apple, and the other is Microsoft. And Microsoft only broke the $2 trillion market capitalization mark this year. Year-to-date, Microsoft shares are up a total of 55.02 percent, and are nearly all the way up.
In Microsoft's case, cloud computing as the core of the enterprise services business is undoubtedly the power of its future growth -- before that, Microsoft's Microsoft Office and operating system business is clearly a nearly insurmountable moat. And in the era of cloud computing, the current performance growth shows that its transformation is successful. As of Q3 this year, the Azure cloud has grown at or above 50 percent for four consecutive quarters.
Morgan Stanley said in a research report, giving Microsoft an outperform rating and a target price of $364. It also listed Microsoft as a top software industry pick for 2022. Analyst KeithWeiss made a point of mentioning data platform solutions, which account for about 12 percent of total revenue, arguing that the potential for Microsoft's database side around platforms such as Azure, SQL and others is underestimated.Cowen analyst J. DerrickWood said that on a constant currency basis, Microsoft's Azure cloud platform will grow at least 45 percent, which would be the highest level of growth in recent years.
Google: can it dance again after its annual surge
Google, one of the giants with one of the biggest hauls in 2021. At press time, shares of its parent company, Alphabet, were up a whopping 67.35 percent for the year, the highest level of growth among trillion-dollar giants and the best performing year since 2009 - an elephant in the room. Its current market capitalization is about $1.95 trillion, having briefly surpassed $2 trillion in November, making it the third company after Apple and Microsoft to surpass $2 trillion in market value.
Google derives the vast majority of its revenue from advertising across its products, and its rebound has been remarkable. In the third quarter alone, it realized a 41 percent year-over-year rise in revenue and a 68 percent rise in net income. The 45% growth in cloud computing was also a highlight for the market, showing Google's resilience to grow in the face of Amazon and Microsoft's dominance. Innovative business losses are also narrowing.
Despite the negative impact of IOS14, Google remains our top choice for digital advertising over the long term, said the Citi analyst. However, he also believes Google will be challenged by regulation and store commission rates in the first half of 2022.
Analysts at Argus think: It's remarkable that Alphabet has recovered from its Q2 2020 advertising downturn. We see continued momentum in the quarters ahead, with e-commerce and digital advertising already booming with the economic recovery.
For Google in 2022, investors should probably pay more attention to how **developments** affect advertising and how much cloud computing expands.
Tesla: Deliveries, Capacity, and the Race Against Time
Musk has been on the Twitter hot seat 74 times in 2021, and Tesla is no less hot in the secondary market by comparison. After Musk kicked off two consecutive months of reductions, Tesla remains up 53.92 percent for the year as of this writing.
Before October, however, that number was less than 10 percent. It was also the wave of surges during that period that saw Tesla break the trillion-dollar market capitalization barrier.
But it is undoubtedly Tesla's position in the new-energy-vehicle space, as opposed to Musk's hype, that is the centerpiece. In the recent quarter, new forces such as Rivian and Lucid went public one after another, claiming to be able to threaten Tesla's position. But the end result proved that their listing only made the market confirm Tesla's dominant position once again. For Tesla, the main problem is delivery and production capacity, such as the Cybertruck's difficult production has made the market have high hopes for the Rivian.
2022 may reverse some of those perceptions. What has been revealed is that Tesla's Berlin factory will open next year, but the core remains in China. The Shanghai factory expansion will be Tesla's focus, and Musk will be there himself.
Wedbush analyst Daniel Ives estimates that the key to the overall bullish argument about Tesla remains China, which will account for 40 percent of Tesla deliveries by 2022. Over the next 12 months, Tesla's shares could rise nearly 30 percent, he said.
ArgusResearch Research is also bullish on Tesla and raised its price target for the stock to $1,313 from $1,010, reiterating its buy rating.ArgusResearch still sees Tesla as the undisputed leader in the electric-car industry.
NVIDIA: Gaming Market Shows Variables
No one can deny NVIDIA's potentially decisive role in the meta-universe in its role as a GPU leader with a range of complementary engines, development kits. It's in this vein of thinking that NVIDIA's stock has soared 130.01 percent so far this year, and that's after a round of pullbacks. For now, its market capitalization remains high at $750 billion and is seen as the next member of the trillion-dollar club.
The market is virtually devoid of analysts who are bearish on NVIDIA, but that doesn't mean NVIDIA isn't in trouble. In the case of the blocked ARM acquisition, WedbushSecurities analyst Matt Bryson said, We've been saying for some time now that the deal is unlikely to be approved. We also believe that the investment community largely feels the same way.
And for NVIDIA GPU fundamentals, Intel is emerging as an uptaker. Intel will enter the gaming GPU market in the first quarter -- obviously, it's unlikely to hit NVIDIA or AMD directly, however, Intel's entry will dramatically change supply and demand.
Both AMD and Intel have low market shares, so their growth will be a more bullish dynamic for the market. As a leader, even if it loses a very small share, investors will still see Nvidia as somewhat threatened, and market confidence will suffer, said Matt Maley, chief equity strategist at MillerTabak, on the CNBC program, adding that Nvidia is significantly overbought and overvalued relative to the broader market.
Despite this, purchasers from advanced sectors such as autonomous driving, data centers, and artificial intelligence still can't get around NVIDIA's dominance. NVIDIA's overvaluation is more from meta-universe hype and potential consumer resistance in the gaming market, where its fundamental growth momentum remains strong. Oppenheimer & Co. analyst Schaeffer raised his price target for the stock sharply to $350. Susquehanna's Christopher Rowland raised it to $360.
Summary
While several of the giants present different lights in the market, it's clear that the giants have both secured their fundamentals and have more leeway to explore future growth curves than so-called growth stocks with huge potential. By contrast, ZOOM, which surged five-fold in 2020, is down nearly 45 percent this year, and Peloton, whose stock soared 430 percent last year on a ** dividend, evaporated 75 percent of its market value at one point this year.
Since **, the seven giants with performance to prove the potential to traverse the cycle, occupying 27 percent of the S&P 500 index share of them, in the stormy market, may still be the most certainty of the core assets. While the Fed rate hike remains like a sword of Damocles hanging overhead, yet no one may want to leave the market early until the boots hit the ground.
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