Following forgettable showings in 2022, large-cap growth stocks perked up in the first quarter, but there’s good news for investors that may have missed out on that run: There’s some value and plenty of quality left in this corner of the market.
Better news: Market participants can efficiently access broad baskets of stocks checking those boxes thanks to exchange traded funds, including the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM) — both of which follow the Nasdaq-100 Index. Those ETFs are higher by nearly 16% since the start of 2023, and more upside could be on the way with potential contributions from some of the funds’ biggest names.
That group includes Microsoft (NASDAQ: MSFT). The tech giant is the largest holding in QQQ and QQQM, and at a weight of 12.63%, the stock is a vital driver of the ETFs’ performances. It’s also an attractively valued tech stock, according to Venu Krishna, Barclays’ head of U.S. equity strategy.
“More than 8 out of 10 analysts covering the stock rate it a buy, according to FactSet. The tech giant’s shares have been boosted by the recent boom in artificial intelligence,” reported Hakyung Kim for CNBC.
Some other Nasdaq-100 components made the Barclays list of tech stocks currently sporting compelling valuations. That group includes Dow component Cisco Systems (NASDAQ: CSCO) and semiconductor giant Texas Instruments (NASDAQ: TXN). That duo combines for nearly 3% of the QQQ and QQQM rosters.
Other analysts see opportunity with some other marquee names in the aforementioned Invesco ETFs, including Amazon (NASDAQ: AMZN). Despite concerns about consumer discretionary spending being pinched by high inflation and the possibility that some companies will scale back cloud computing expenditures, shares of Amazon are higher by 16.71% this year.
That’s an impressive showing, considering the trying macroeconomic environment. Morgan Stanley analyst Brian Nowak is forecasting big upside for Amazon. In a Sunday note to clients, he reiterated Amazon as a top idea, placing a $150 price target on the shares. That implies upside of more than 50% from the March 27 close.
“We believe a majority of reductions are from AWS/Advertising, which should help protect AWS EBIT through near-term deceleration and drive better long-term leverage,” observed Nowak.
His take is relevant for investors mulling QQQ and QQQM because Amazon is the largest consumer discretionary holding in the ETFs at a weight of 6.11%.
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