2 S&P 500 Stocks to Buy Before They Soar Up to 91%, According to Some Wall Street Analysts
THE S&P500, which tracks the stock market performance of the 500 largest U.S. companies, hit a new record this week. This is the 21st time this year that the benchmark index has reached new highs (as of this writing).
While some investors might find this worrying, XM Investment analyst Marios Hadjikyriacos remains optimistic: “Stock markets are enjoying the best of all worlds, supported by a resilient U.S. economy and speculation that Fed rate cuts are approaching making strides, which helps justify tight valuations. “. UBS Analyst Mark Haefele agrees, saying in a note to investors: “All-time highs often cause investors to worry that markets have peaked. Such concerns are not supported by history. »
In fact, according to some Wall Street analysts, a number of top S&P 500 stocks still have plenty of upside potential and could soar as much as 91%.
Super Micro Computer: implied increase of 91%
The first S&P 500 stock that could continue to soar is Super microcomputer (NASDAQ:SMCI), also known as Supermicro. The company partners with some of the largest chipmakers to integrate cutting-edge processors into a suite of high-end servers specifically designed to handle the computing rigors of artificial intelligence (AI).
Unlike some of its competitors, Supermicro uses a modular architecture, which allows buyers to customize a system to suit their needs. The company provides a wide variety of server solutions focused on energy efficiency, helping to cover the cost of AI processing.
During the company’s third quarter of fiscal 2024 (ended March 31), Supermicro’s revenue jumped 201% year over year to $3.85 billion, while its earnings per share (Adjusted EPS) jumped 329% to $6.56. To meet growing demand, Supermicro is building new production facilities and expanding existing ones, increasing its production capacity to $25 billion per year.
Wall Street remains remarkably optimistic despite an incredible 232% rise over the past year. Loop Capital analyst Ananda Baruah increased his price target on Supermicro to $1,500 while maintaining a buy rating on the shares. This represents a potential upside of 91% from Friday’s closing price.
Baruah cited Supermicro’s leading position in the AI server market and its ability to handle complexity and scalability as reasons for its growing confidence. He also estimates that by the end of fiscal 2026, the company will increase its revenue to $40 billion, a far cry from management’s current forecast of around $15 billion for fiscal 2024 .
The analyst is not the only one to be optimistic about Supermicro. Of the 16 analysts who gave their opinion on the stock in April, 12 rated the stock as a Buy or Strong Buy, and none recommended sale.
Plus, with just 2x next year’s sales, the stock is cheap compared to many AI stocks.
Microsoft: implied increase of 45%
Another S&P 500 stock with plenty of upside potential is Microsoft (NASDAQ:MSFT), despite being the largest company in the world by market capitalization. Microsoft is one of the big three cloud infrastructure platforms and a leading software-as-a-service (SaaS) provider. There’s also the company’s legacy business, which includes its Windows operating system and the Office suite of productivity software.
Among Microsoft’s biggest opportunities is generative AI, which the company has integrated into its product portfolio and offers to its cloud customers. The flagship of its efforts is Copilot, Microsoft’s suite of generative digital assistants powered by AI.
The largest is Microsoft Copilot 365, but the company also offers versions focused on developers, finance, sales, and more. The company charges $30 per user per month, and many analysts have weighed in, suggesting that could amount to as much as $100 billion in additional revenue each year.
During the company’s third quarter of fiscal 2024 (ended March 31), Microsoft’s revenue of $61.9 billion increased 17% year over year, while EPS of $2.94 jumped 20%.
One Wall Street analyst believes much more is to come. Truist analyst Joel Fishbein has a Buy rating on Microsoft shares and a three-year price target of $600. This represents a 45% upside potential from Friday’s closing price.
Fishbein cited generative AI, cloud computing and Copilot as drivers, “which could propel stocks toward significant gains,” leading to tens of billions of dollars in additional revenue. The analyst is part of a growing chorus on Wall Street singing Microsoft’s praises. Of the 58 analysts who gave their opinion on the stock in April, 55 rated the stock as a Buy or Strong Buy, and none recommended sale.
At 35 times forward earnings, Microsoft may seem a little expensive, but AI adoption continues to grow by leaps and bounds, providing a strong secular tailwind. That, combined with his long performance history, shows he deserves a premium.
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Danny Vena holds positions at Microsoft and Super Micro Computer. The Motley Fool holds positions at and recommends Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
2 S&P 500 Stocks to Buy Before They Skyrocket 91%, Some Wall Street Analysts Say, originally published by The Motley Fool
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