Apple, Microsoft hit record highs amid tech stock rally – But are they a buy?

Key points

• Several blue-chip tech stocks saw record-breaking upticks on Friday.

• This further supports the markets' general directional of travel towards tech and AI.

• However, does this necessarily mean that these stocks are still a buy?

All-time highs for Apple, Microsoft, Alphabet, Amazon and Meta as investor confidence in AI and tech fuels stock market rally.

The share prices of Microsoft, Apple, Alphabet, Amazon and Meta – five of the six US-based companies valued at over $1 trillion – all rose by at least 1.2% on Friday, setting new valuation records for all five firms.

The rallies also helped the S&P 500 and Nasdaq Composite smash valuation records, with the indexes gaining 0.5% and 0.9%, respectively.

The rallies are thought to have been partly driven by fresh US jobs data, which revealed higher-than-expected unemployment figures. In theory, this trend will support the case for interest rate cuts, which tends to favor public companies.

However, ever-increasing confidence in tech and AI stocks is likely also a key driver. So, even though these tech stocks have already hit new highs, they likely still offer investors more upside potential this year.

Microsoft

Microsoft stock hit a new high of $467.56 on Friday. The stock is now up almost 24% YTD and over 40% in the past year. In late April, the software giant beat estimates with its fiscal third-quarter report card, thanks largely to its growing cloud computing business.

Several analysts are positive on the stock, including Citigroup, Truist Securities and Tigress Financial. The stock has an average price target of $556.67, an upside of about 19% from the current market price.

Going ahead, we believe Microsoft’s continued push into AI will drive its stock to new highs. Microsoft was an early investor in AI and has gradually introduced AI features to many of its products. The company also invested $1 billion in ChatGPT developer OpenAI back in 2019.

Apple

Apple stock surged to a new high of $226.34 on Friday, beating its previous high of $221.55. The stock has gained almost 17% YTD and over 30% in the past three months.

Apple beat Wall Street’s estimates with its fiscal second-quarter earnings, and also raised its quarterly dividend and stock buyback plan. But what now?

The iPhone maker still has a few factors that could push the stock to new highs this year, such as improving sales in China and its intelligent AI strategy.

Alphabet

Alphabet’s stock hit a new high of $190.60 Friday and is now up almost 35% YTD. In April, the company posted its first-quarter report card, with earnings and revenue easily beating analyst estimates. The search engine giant also announced its first-ever dividend.

Alphabet’s capital spending has jumped significantly in the last few quarters, but this is to be expected, as most of the investment is diverted toward AI. This year, the company has announced several upgrades for Google search, with most powered by artificial intelligence (AI), such as video search and travel planning

Additionally, despite a jump in capital spending, Bank of America estimates Google’s free cash flow to almost double to $118 billion in 2026, up from $69 billion in 2023.

Amazon

Amazon stock rallied 1.2% Friday to hit a new record valuation. The stock is up over 30% YTD and over 55% in the past year.

In April, the e-commerce giant exceeded expectations with its first-quarter earnings and sales, and going forward, the stock is expected to maintain this trend. Among the reasons for this are robust retail growth, impressive performance of the company’s digital advertising business and growing operating income.

Meta

Meta stock hit a new high on Friday of $539.91, surpassing its previous best of $531.49. The stock has gained over 52% YTD and over 80% in the past year.

In April, the social media giant beat analyst expectations for both sales and earnings, but the company gave a lighter-than-expected sales forecast for the current quarter.  

Despite this, the stock is expected to perform well owing to a number of factors, including the introduction of generative AI-based advertising features, impressive historical growth and optimistic analyst expectations.

Should you invest in these tech stocks?

All five of these tech stocks have demonstrated strong bullish trends and robust fundamentals that will drive their share prices up in the near future. Continued growth and innovation across the technology sector, especially within the AI space, also bode well for these tech stocks.  

However, while these stocks show positive momentum, the approach of earnings season means that a cautious approach from investors may be wise.