The biggest tech names in the market look almost unstoppable these days.
On Monday, Alphabet (GOOGL) - Get Report, Microsoft (MSFT) - Get Report, Apple (AAPL) - Get Report and Amazon (AMZN) - Get Report each floated above the $1 trillion valuation mark for the first time since the COVID-19 pandemic, with Alphabet re-entering the elite club of tech stocks as the broader tech-heavy Nasdaq index surged to a record high on Monday.
Of that group, Amazon stock has been a disproportionately strong performer, with shares up 61% year to date on booming demand for e-commerce in the COVID-19 pandemic. Shares traded above $3,000 for the first time on Monday, outpacing many analysts' 12-month targets: On average, Wall Street analysts have a target of $2,803.75 on Amazon shares currently.
Writing in a recent note, Deutsche Bank's Lloyd Walmsley raised the bank's target for Amazon shares to $3,333, a Street high, writing that Amazon is the "clear winner" from COVID-related disruptions and, given its high customer satisfaction ratings, will continue to reap benefits even as the lockdowns ease.
Across tech, the COVID-19 crisis has accelerated the adoption curve of digital products and services that might have otherwise taken years.
“We’ve had two decades of migration of products and services online. And we just accelerated that by one or two years -- compressed into the span of two months,” Mark Mahaney, an analyst who covers internet stocks for RBC, recently told TheStreet.
Everything from streaming and gaming to cloud productivity tools is up during COVID-19. And Big Tech firms have captured much of that growth.
Microsoft has reported growing demand for its collaboration and communication suites, Microsoft 365. And it's rapidly spinning up specialized cloud offerings for fast-growing, in-demand segment like virtual healthcare in a bid to corner new and potentially lucrative market segments. Microsoft closed at $210.70 per share on Monday at a $1.6 trillion market cap.
Bogged down by antitrust and regulatory concerns, Alphabet (GOOGL) - Get Report has lagged its mega-cap peers in terms of a percentage gain for much of this year. But recent days have brought speculation that Alphabet could benefit from a widespread advertiser boycott of Facebook's ad platforms this quarter. Some of that unspent money could flow to YouTube if the boycott continues, wrote Jefferies analyst Brent Thill recently, among other trends working in Alphabet's favor in the second quarter. Alphabet closed at $1,499.65 on Monday at a market cap of $1.02 trillion.
Apple has also proved remarkably durable, even in the face of lagging sales of the iPhone, still its main cash cow.
Apple shares have gained 26% year to date despite significant disruption from COVID-19 to its supply and demand, including factory shutdowns in China earlier this year and the closures of many retail stores worldwide.
Apple bulls anticipate an iPhone sales recovery later this year among consumers in an upgrade window, alongside the release of its iPhone 12 lineup.
In the meantime, some analysts see healthy upside in Apple's growing services business.
Writing in June, Morgan Stanley analyst Katy Huberty said the Apple is a beneficiary of the "stay-at-home" environment, with more consumers staying at home and downloading apps. Based partly on strong trends in the App Store, Huberty raised her 2021 services revenue forecast was to $63.7 billion, representing 17.8% growth. Apple closed at $373.85 on Monday with a $1.62 trillion valuation.
Alphabet, Microsoft, Amazon.com and Apple are holdings in Jim Cramer's Action Alerts PLUS member club.