The S&P500, which tracks the stock market performance of the 500 largest U.S. companies, hit a new all-time high this week. This marks the 21st time this year that the benchmark has soared to new highs (at the time of writing).
While some investors may find this worrying, helps justify.” UBS Analyst Mark Haefele agrees, saying in a note to investors: “All-time highs often lead investors to believe that markets have peaked. Such concerns are not supported by history.”
According to select Wall Street analysts, some high-profile stocks in the S&P 500 still have a lot of upside potential and could rise as much as 91%.
Super Micro Computer: implicit advantage of 91%
The first S&P 500 stock that could continue to rise is Super microcomputer (NASDAQ:SMCI), also known as Supermicro. The company partners with some of the top chipmakers to integrate state-of-the-art processors into a range of high-performance servers specifically designed to handle the computational rigors of artificial intelligence (AI).
Unlike some of its competitors, Supermicro uses a building block architecture, which allows buyers to customize a system that best suits their needs. The company provides a wide range of server solutions focused on energy efficiency, helping to cover the costs of AI processing.
In the third quarter of fiscal 2024 (ended March 31), Supermicro’s revenue rose 201% year over year to $3.85 billion, while adjusted earnings per share (EPS) rose 329% to $6.56 . To meet rising demand, Supermicro is building new production facilities and expanding existing ones, bringing its production capacity to $25 billion per year.
Wall Street remains remarkably bullish, despite shares rising as much as 232% over the past year. Loop Capital analyst Ananda Baruah raised his price target on Supermicro to $1,500, while maintaining a buy rating on the stock. That represents a potential upside of 91% compared to Friday’s closing price.
Baruah cited Supermicro’s leading position in the AI ​​server market and its ability to navigate complexity and scale as reasons for his growing confidence. He also believes the company will increase its revenue to $40 billion by the end of fiscal 2026 – a far cry from management’s current forecast of around $15 billion for fiscal 2024.
The analyst is not the only one who is positive about Supermicro. Of the sixteen analysts who gave their opinion on the stock in April, twelve rated the stock as buy or strong buy. no recommended sale.
Plus, at just twice next year’s revenue, the stock is cheap compared to many AI stocks.
Microsoft: implicit advantage of 45%
Another S&P 500 stock with a lot 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 provider of software-as-a-service (SaaS). There are also the company’s legacy businesses, including the Windows operating system and the Office suite of productivity software.
One of Microsoft’s biggest opportunities is generative AI, which the company has integrated into its product portfolio and offerings to its cloud customers. The standard-bearer of its efforts is Copilot, Microsoft’s generative AI-powered suite of digital assistants.
Most prominent is Microsoft Copilot 365, but the company also has versions aimed at developers, finance, sales and more. The company charges $30 per user per month, and numerous analysts have weighed in, suggesting it could be worth as much as $100 billion in additional revenue annually.
During the third quarter of fiscal 2024 (ended March 31), Microsoft’s revenue of $61.9 billion rose 17% year over year, while earnings per share of $2.94 rose 20%.
One Wall Street analyst believes much more will happen. Truist analyst Joel Fishbein has a buy rating on Microsoft stock and a three-year price target of $600. This represents a potential upside of 45% compared to Friday’s closing price.
Fishbein cited generative AI, cloud computing and Copilot as drivers, “which could fuel stocks to strong gains,” resulting in tens of billions of dollars in additional revenue. The analyst is part of a growing Wall Street chorus 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. no recommended sale.
At 35 times future earnings, Microsoft may seem a bit pricey, but AI adoption is still growing by leaps and bounds, creating a strong secular tailwind. That, combined with his long track record of performance, shows he deserves a premium.
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Danny Vena holds positions at Microsoft and Super Micro Computer. The Motley Fool holds positions in and recommends Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
2 S&P 500 Stocks We Need to Buy Before They Surge as Much as 91%, According to Select Wall Street Analysts, originally published by The Motley Fool
