Latest news with #DavidKostin
Business Insider
26-05-2025
- Business
- Business Insider
Goldman Sachs Says These 2 ‘Magnificent Seven' Stocks Offer the Most Upside in the Group
The stock market seesaw is in full swing, with last week's downturn ending a streak of winning sessions. The rapid oscillations can be hard to track – but Goldman Sachs strategist David Kostin is on the case, searching for upside in a challenging macro environment. Confident Investing Starts Here: Specifically, Kostin is recommending the 'Magnificent 7' stocks as a place to find relative bargains. That may seem odd, since these mega-cap names aren't exactly cheap – but Kostin points out that the tech leaders have dropped to a relative low compared to the rest of the S&P 500 and are now trading at their most attractive levels in the past six years. At the same time, Kostin notes that the Mag 7 stocks have outpaced the S&P in earnings growth this year. In Q1, the group posted a collective 28% year-over-year increase in earnings, compared to just 9% for the broader index. Against this backdrop, the stock analysts at Goldman Sachs are highlighting two Mag 7 stocks in particular as offering the best upside potential in the group. To see whether this bullish stance is echoed more broadly, we turned to the TipRanks database to check how the rest of Wall Street views these names. Here are the details. Alphabet (GOOGL) The first Magnificent 7 stock we'll look at is Alphabet, the parent company of both Google and YouTube – and, through them, the undisputed leader in online search. Alphabet has long used this dominance to build and sustain its position in digital advertising, which remains its most lucrative business. By capturing vast amounts of data on user behavior, search patterns, and online preferences, Alphabet has developed an unmatched ability to deliver precisely targeted ads. In addition to its advertising business, Alphabet is also a key player in the fields of cloud computing and AI. The company's Google Cloud platform is one of the three largest subscription cloud services, alongside AWS and Microsoft's Azure. Alphabet is also staking out a strong position in AI. The company's database, already alluded to, is a tremendous resource for training AI models, and Alphabet uses the technology to enhance its Google search engine and its ad placement capabilities. In addition, Alphabet is moving into generative AI with Google's Gemini model. Combining these paths, Google's 'AI Mode,' a new option on the search engine, makes use of Gemini 2.5 to provide AI-generated enhancements to the search results. We should note that Alphabet, and particularly its Google subsidiary, is facing a serious headwind in the form of a Department of Justice antitrust lawsuit. In April of this year, the DOJ secured a favorable ruling in the U.S. District Court for the Eastern District of Virginia, which found that Google had illegally monopolized key segments of the digital advertising technology stack – including its ad exchange and publisher ad server. The court concluded that Google used its dominant position to stifle competition. Alphabet has announced plans to appeal the decision. Also in April, not long after the DOJ ruling, Alphabet released its 1Q25 financial results. At the top line, Alphabet's total revenue came to $90.23 billion, up 12% year-over-year and beating the forecast by $1.08 billion. The revenue total included $77.3 billion from Google Services (Google search and other; Google subscriptions, platforms, and devices; and YouTube ads), along with $12.3 billion from Google Cloud (Google Cloud; AI infrastructure; generative AI solutions). Google Cloud led the way in year-over-year gains, at 28%; Google Services was up 10%. Alphabet's bottom-line earnings came to $2.81 per share, up 92 cents per share year-over-year, or 49%, and 80 cents ahead of expectations. Goldman analyst Eric Sheridan believes that the increasing combination of digital advertising and AI will drive Alphabet's growth going forward. 'Digital advertising is, in our view, one of the few subsectors within our coverage where AI is seeing early adoption and monetization. Against this backdrop (and taking into account Google's incremental product announcements at Marketing Live), we continue to see Alphabet as well positioned to capitalize on the theme of AI longer-term given its leading AI capabilities, infrastructure advantage and benefits of scale with respect to both users and advertisers to deploy new AI tools & services over the medium term. While investor debates remain around medium-/long-term computing shifts, financial implications of the rise of AI/ML, competitive dynamics and regulatory developments, we remain constructive on the mix of Alphabet's businesses and their operating profile in the coming years,' Sheridan opined. To this end, Sheridan puts a Buy rating on GOOGL, and his $220 price target implies a one-year upside potential of ~31%. (To watch Sheridan's track record, click here) The broader Street is also firmly on board. Alphabet boasts a Strong Buy consensus, based on 37 analyst ratings that break down to 28 Buys and 9 Holds. Currently trading at $168.47, the stock has an average price target of $197.69, leaving room for a ~17% gain in the coming year. (See GOOGL stock forecast) Apple (AAPL) Next up is Apple, one of the world's most recognizable brand names. Over the decades, the company has evolved far beyond its origins in personal computing to offer a diverse lineup of iPhones, iPads, Macs, and wearable devices—supported by a robust and growing services segment. It's no surprise that Apple became the first publicly traded company on Wall Street to surpass a $1 trillion market capitalization. But even a giant like Apple isn't immune to geopolitical pressures. In recent months, the company has found itself caught in the crosshairs of President Trump's shifting tariff policies. With major exposure to Chinese markets and a global supply chain spanning multiple countries, Apple remains particularly vulnerable to disruptions in international trade. That vulnerability was underscored at the end of last week, when President Trump announced plans to impose a 25% tariff on iPhones not manufactured in the US. Keeping that in the background, we can look at the fiscal 2Q25 results that Apple released earlier this month. The company has arranged its fiscal calendar so that Q1, covering the holiday shopping season, shows the strongest results. Fiscal Q2 typically shows a drop-off in both revenues and earnings, and we saw that in this report. While down from Q1, Apple's $95.4 billion Q2 total revenue was up 6% year-over-year and beat expectations by $840 million. The company's bottom-line EPS in the quarter, $1.65, was up 12 cents per share from the year-ago period, and was 3 cents above the forecast. The drill-downs behind the revenue totals are instructive. Apple faced slowing sales in China during the March quarter, and the $16 billion in sales there was $830 million less than had been expected. We should note that the drop in Chinese sales came before Trump's tariff announcements, and is more reflective of increased competition from China's domestic smartphone market, especially Huawei, the country's leading tech company. Looking ahead, Apple is predicting a likely $900 million hit during Q3 from tariff impacts. On a more positive note, Apple's Services segment grew 12% year-over-year and reached an all-time high for quarterly revenue in fiscal 2Q25, of $26.6 billion. Under the company's Product sales, the iPad and Mac lines stood out, with year-over-year gains of 15% and 7% respectively. While iPhone sales grew only 2% year-over-year, Apple management reported that it did not see evidence of customers bringing product sales forward to avoid potential tariffs. That last factor marks the starting point for Michael Ng's review of Apple stock. The Goldman Sachs analyst goes on to outline why Apple remains a sound investment. 'AAPL reported that they did not see any obvious evidence of a pull forward in demand in the March quarter related to tariffs & that channel inventory at the beginning and the end of the quarter was at similar levels, implying that AAPL was not selling into the channel to get ahead of tariffs. We are encouraged that iPhone upgraders grew double digits % year over year – reflecting the all time high iPhone active installed base – with iPhone as the top selling model in the US, urban China, UK, Germany, Australia, and Japan… We reduce our F2025/26/27 EPS by 3% on average to $7.16/$7.80/$8.80 on lower gross margins, but are encouraged by continued strong demand signals across Apple products and services,' Ng noted. Ng backs his bullish outlook on AAPL shares with a Buy rating and a $253 price target, projecting a 30% upside over the next 12 months. (To watch Ng's track record, click here) Looking at the broader Street sentiment, Apple has attracted 29 recent analyst ratings, breaking down into 17 Buys, 8 Holds, and 4 Sells. This mix lands the stock a Moderate Buy consensus. With shares currently trading at $195.27 and the average price target sitting at $228.22, analysts are eyeing a potential ~17% upside over the next 12 months. (See AAPL stock forecast) To find good ideas for stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
Yahoo
21-05-2025
- Business
- Yahoo
Don't call it a comeback: Why Goldman sees the downtrodden Magnificent 7 roaring back to beat the market
The market's top tech stocks will outperform the rest of the S&P 500 again this year, Goldman says. That prediction comes even as the rest of the index has outperformed the mega-cap cohort this year. The top tech stocks are trading closer to attractive valuations again, the bank said. The stock market's tech titans stumbled in the first quarter, but 2025 will still be another winning year for the Magnificent Seven, Goldman Sachs said. In a recent note, chief equity strategist David Kostin projected that the mega-cap tech cohort will once again outperform the rest of the S&P 500 in 2025, extending a streak of stellar gains to a third straight year. "We continue to expect that superior earnings growth will drive the Magnificent 7 to outperform the S&P 493 in 2025, but by a smaller magnitude than in recent years," Kostin wrote. "The share price outperformance of the Magnificent 7 has been tied to their earnings growth outperformance." It's a take that might seem contradictory to what's transpired so far this year, as trade policy, AI disruptions, and antitrust moves have muddled the outlook for Big Tech. The group, which includes Nvidia, Tesla, Meta, Amazon, Microsoft, Alphabet, and Apple, is down 5% year-to-date, trailing the 4% gain achieved by the broader index. Some big banks, such as Morgan Stanley, have called on investors to reduce tech exposure. Ye, despite the slump so far, Kostin noted that mega-cap tech demonstrated earnings outperformance in the first quarter. In 2025, earnings-per-share growth has surged 28% for the Mag Seven, handily outpacing 9% for the S&P 493. "This magnitude of surprise was the largest since the 2Q 2021 reporting season when the Magnificent 7 beat earnings estimates by 27%," the bank wrote. "Partly as a result of strong 1Q results, consensus 2025 earnings estimates for the Magnificent 7 are roughly in line with where they began the year." What's more, the top tech stocks are now trading at a discounted valuation, resulting from narrowing earnings growth compared to previous years. "The relative valuation is the lowest it's been in the last two years," Kostin told Bloomberg TV. "From a starting point of entry, it's actually looking somewhat more attractive at these levels." Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
20-05-2025
- Business
- Business Insider
Don't call it a comeback: Why Goldman sees the downtrodden Magnificent 7 roaring back to beat the market
The market's top tech stocks will outperform the rest of the S&P 500 again this year, Goldman says. That prediction comes even as the rest of the index has outperformed the mega-cap cohort this year. The top tech stocks are trading closer to attractive valuations again, the bank said. The stock market's tech titans stumbled in the first quarter, but 2025 will still be another winning year for the Magnificent Seven, Goldman Sachs said. In a recent note, chief equity strategist David Kostin projected that the mega-cap tech cohort will once again outperform the rest of the S&P 500 in 2025, extending a streak of stellar gains to a third straight year. "We continue to expect that superior earnings growth will drive the Magnificent 7 to outperform the S&P 493 in 2025, but by a smaller magnitude than in recent years," Kostin wrote. "The share price outperformance of the Magnificent 7 has been tied to their earnings growth outperformance." It's a take that might seem contradictory to what's transpired so far this year, as trade policy, AI disruptions, and antitrust moves have muddled the outlook for Big Tech. The group, which includes Nvidia, Tesla, Meta, Amazon, Microsoft, Alphabet, and Apple, is down 5% year-to-date, trailing the 4% gain achieved by the broader index. Some big banks, such as Morgan Stanley, have called on investors to reduce tech exposure. Ye, despite the slump so far, Kostin noted that mega-cap tech demonstrated earnings outperformance in the first quarter. In 2025, earnings-per-share growth has surged 28% for the Mag Seven, handily outpacing 9% for the S&P 493. "This magnitude of surprise was the largest since the 2Q 2021 reporting season when the Magnificent 7 beat earnings estimates by 27%," the bank wrote. "Partly as a result of strong 1Q results, consensus 2025 earnings estimates for the Magnificent 7 are roughly in line with where they began the year." What's more, the top tech stocks are now trading at a discounted valuation, resulting from narrowing earnings growth compared to previous years. "The relative valuation is the lowest it's been in the last two years," Kostin told Bloomberg TV. "From a starting point of entry, it's actually looking somewhat more attractive at these levels."
Yahoo
20-05-2025
- Business
- Yahoo
Goldman's Kostin Sees US Big Tech Outperforming This Year
David Kostin, Goldman Sachs chief US equity strategist, explains why he predicts the Magnificent Seven group of technology stocks are likely to outperform the rest of the S&P 500 this year. (Video extended to include full interview.) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
20-05-2025
- Business
- Bloomberg
Goldman's Kostin Sees US Big Tech Outperforming This Year
David Kostin, Goldman Sachs chief US equity strategist, explains why he predicts the Magnificent Seven group of technology stocks are likely to outperform the rest of the S&P 500 this year. (Video extended to include full interview.) (Source: Bloomberg)
