High Growth Tech Stocks in the United States to Watch: Apple and Microsoft Lead the Pack
Wednesday, Jan 1, 2025 1:30 pm ET

In the ever-evolving tech landscape, two companies have consistently stood out as leaders in innovation, profitability, and growth: Apple Inc. (AAPL) and Microsoft Corporation (MSFT). Both tech giants have demonstrated an uncanny ability to adapt to regulatory changes, market fluctuations, and maintain their competitive edge. Let's delve into the key drivers of their growth, valuation, and potential risks.
Key Drivers of Growth
1. Apple Inc. (AAPL):
- AI-driven iPhone upgrade cycle: Wedbush analyst Daniel Ives raised the firm's price target on Apple Inc. to a Street-High of $325, citing a multi-year AI-driven iPhone upgrade cycle. This suggests that advancements in AI technology will drive demand for Apple's products, particularly the iPhone (Source: "Apple Inc. (AAPL): Wedbush Sets Street-High $325 Target, Citing AI-Driven iPhone Upgrade Cycle and New Revenue Streams").
- New revenue streams: The firm also predicts a major boost from new multi-billion-dollar yearly revenue streams from AI-powered apps, further contributing to Apple's growth (Source: "Apple Inc. (AAPL): Wedbush Sets Street-High $325 Target, Citing AI-Driven iPhone Upgrade Cycle and New Revenue Streams").
- Strong financial performance: Apple's intrinsic value as calculated by the Discounted Earnings model is $160.20, indicating that the company is modestly overvalued, with a margin of safety of -56.32% (Source: "Navigating Market Uncertainty: Intrinsic Value of Apple Inc").
2. Microsoft Corporation (MSFT):
- Cloud services and AI: Microsoft's Intelligent Cloud segment offers server products and cloud services, such as Azure and other cloud services, which are key drivers of growth. Additionally, Microsoft's AI capabilities, including Azure AI and other AI-related services, contribute to the company's growth (Source: "Microsoft Corporation").
- Gaming and devices: Microsoft's More Personal Computing segment offers Windows, devices like Surface and HoloLens, and gaming services, including Xbox hardware and content, Xbox Game Pass, and cloud gaming. These products and services contribute to Microsoft's growth and revenue (Source: "Microsoft Corporation").
- Strong financial performance: Microsoft's revenue growth rate is 0.16, and its operating income has increased from $27.8 billion in 2023 to $30.85 billion in 2024, indicating strong financial performance (Source: "Microsoft Corporation").
Valuation and Historical Averages
1. Apple Inc. (AAPL):
- Current P/E Ratio: 41.119865
- Forward P/E: 30.139963
- 52-Week Low: 164.08
- 52-Week High: 260.1
- 50-Day Average: 237.603
- 200-Day Average: 213.40855
Apple's current P/E ratio is higher than its historical average, which is around 15-20. Its forward P/E is also higher than the industry average of around 18-22. However, Apple's stock price has been volatile, with a 52-week low of 164.08 and a 52-week high of 260.1. The 50-day and 200-day averages are also higher than the 52-week low, indicating a bullish trend.
2. Microsoft Corporation (MSFT):
- Current P/E Ratio: 34.83471
- Forward P/E: 28.069965
- 52-Week Low: 366.5
- 52-Week High: 468.35
- 50-Day Average: 428.5496
- 200-Day Average: 425.16656
Microsoft's current P/E ratio is also higher than its historical average, which is around 15-20. Its forward P/E is higher than the industry average of around 18-22. Microsoft's stock price has been relatively stable, with a 52-week low of 366.5 and a 52-week high of 468.35. The 50-day and 200-day averages are close to the 52-week high, indicating a bullish trend.
Potential Risks and Challenges
1. Apple Inc. (AAPL):
- Market Saturation and Slowing Growth: Apple's market share in smartphones and tablets is high, which may lead to slower growth and increased competition. To mitigate this risk, Apple is diversifying its product offerings, such as wearables (AirPods, Apple Watch), services (Apple Music, Apple TV+, Apple Arcade), and new technologies like AR/VR (Apple Glass, AR headset).
- Supply Chain Disruptions and Geopolitical Risks: Apple's supply chain is complex and global, making it vulnerable to disruptions and geopolitical risks. To address this challenge, Apple is working on diversifying its supply chain, reducing its reliance on a single region (e.g., China), and investing in advanced manufacturing technologies to improve efficiency and resilience.
2. Microsoft Corporation (MSFT):
- Intense Competition in Cloud Services: Microsoft faces strong competition in the cloud services market from Amazon Web Services (AWS) and Google Cloud Platform (GCP). To maintain a competitive edge, Microsoft is investing heavily in its Azure cloud platform, innovating with new services, and expanding its global data center footprint. Additionally, Microsoft is leveraging its strong enterprise customer base and strategic partnerships to differentiate its offerings.
- Dependence on a Few Key Customers: Microsoft's revenue is concentrated among a small number of large customers, which could lead to revenue fluctuations if these customers reduce their spending. To mitigate this risk, Microsoft is diversifying its customer base by targeting small and medium-sized businesses, as well as expanding its presence in emerging markets. The company is also focusing on cross-selling and upselling its products and services to existing customers to drive growth.
In conclusion, Apple Inc. (AAPL) and Microsoft Corporation (MSFT) have demonstrated strong growth, driven by key drivers such as AI, cloud services, and gaming. Despite potential risks and challenges, both companies have taken proactive measures to mitigate these issues and maintain their competitive edge. With strong financial performance and high valuations, Apple and Microsoft remain top picks for investors seeking high-growth tech stocks in the United States.