5 Large-Cap ETFs at the Forefront of the Market Rally This Year
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 12 2024
0mins
Should l Buy MSFT?
Source: Business Insider
- Wall Street Rally: Wall Street has seen a strong rally this year, with large-cap stocks leading the way due to strong earnings growth and the AI craze.
- Reasons for Outperformance: Large-cap stocks are outperforming due to better-than-expected earnings, the dominance of key technology companies, and benefits from the AI boom.
- ETFs in Focus: Highlighted ETFs include VanEck Vectors Semiconductor, Invesco S&P 500 Momentum, Gabelli Growth Innovators, Fidelity Blue Chip Growth, and MicroSectors FANG+ ETN.
- ETF Performance: These ETFs have shown significant gains this year, ranging from 23.4% to 46.1%, with each focusing on different sectors and investment strategies.
- Investment Appeal: Large-cap stocks offer stability, resilience to higher rates, inflation hedge, and are considered less risky, making them attractive to investors seeking safety and growth potential.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy MSFT?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for MSFT is 631.36 USD with a low forecast of 500.00 USD and a high forecast of 678.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 393.670
Low
500.00
Averages
631.36
High
678.00
Current: 393.670
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Microsoft Faces Challenges and Opportunities in AI Business
- Performance Concerns: Microsoft's fiscal Q2 2026 results revealed strong overall performance; however, modest weaknesses in AI software and cloud services led to a more than 10% drop in stock price in one day, raising investor concerns about future growth.
- Copilot License Sales Growth: As of Q2 2026, Microsoft 365's Copilot licenses reached 15 million, doubling year-over-year but representing only a 3.7% market penetration, indicating limited market uptake that could hinder future revenue growth.
- Azure Revenue Growth Slowdown: Azure's revenue grew 39% year-over-year in Q2, surpassing Wall Street's 37.1% forecast, yet slower than the previous quarter's 40%, suggesting a potential loss of momentum that may affect investor confidence.
- Data Center Capacity Shortage: Microsoft's order backlog surged 110% year-over-year to $625 billion, with 45% from OpenAI, which may limit Azure's expansion and increase investment risks due to reliance on external funding and revenue growth.
See More
Microsoft Reports Strong Earnings Amid Stock Decline
- Strong Earnings but Stock Drop: Microsoft reported strong results for its fiscal 2026 second quarter, yet its stock fell over 10% due to modest weakness in AI software and cloud services, now down 22% from its record high, reflecting market concerns about future growth.
- Slow Copilot License Sales: As of the fiscal 2026 second quarter, only 15 million Copilot licenses for Microsoft 365 were sold, doubling year-over-year but representing a mere 3.7% market penetration, indicating insufficient market uptake that could hinder future revenue growth.
- Azure Growth Deceleration: Azure achieved a 39% year-over-year growth rate in the second quarter, exceeding Wall Street's expectations, yet slower than the previous quarter's 40%, with a staggering 110% year-over-year increase in order backlog to $625 billion due to data center capacity shortages, highlighting potential growth bottlenecks.
- Attractive Stock Valuation: With a current P/E ratio of 26.5, Microsoft is at its lowest valuation in three years, significantly lower than the Nasdaq-100's 32.8, and analysts project earnings to rise to $19.06 per share in fiscal 2027, resulting in a forward P/E of just 22.4, suggesting a buying opportunity for long-term investors.
See More
Amazon's Cloud Growth Lags Behind Rivals
- Market Share Decline: Amazon Web Services (AWS) reported a 20% growth in 2025, significantly trailing behind Google Cloud's 36% and Microsoft's Azure at 39%, indicating a weakening competitive position in the cloud infrastructure market that could impact future leadership.
- Revenue and Profit Comparison: AWS added over $21.2 billion in revenue in 2025, achieving an operating income of $45.6 billion, which is substantially higher than Google Cloud's $13.9 billion and Microsoft's Azure's $19 billion, highlighting AWS's profitability advantage, yet its growth rate lags behind competitors.
- Capital Expenditure Plans: Amazon is targeting $200 billion in capital expenditures for 2025, primarily for AWS and AI workloads, which may lead to negative free cash flow in 2026, but underscores the company's long-term commitment to its cloud business despite potential short-term financial strain.
- Stable Financial Performance: Amazon's quarterly revenue rose 14% to $213.4 billion in 2025, with operating income increasing 18% to $25 billion, indicating strong execution capabilities even as market reactions to its spending plans remain lukewarm, reflecting the company's resilience in financial performance.
See More
Amazon's AWS Growth Lags Behind Competitors
- Market Share Decline: Amazon's AWS reported a 20% growth in 2025, significantly trailing behind Google Cloud's 36% and Microsoft's Azure at 39%, indicating a potential erosion of Amazon's competitive edge in the cloud infrastructure market, which could impact its long-term leadership.
- Revenue vs. Expenditure: AWS added over $21.2 billion in revenue in 2025, achieving an operating income of $45.6 billion, yet this pales in comparison to Google Cloud's $13.9 billion and Microsoft's Azure's $19 billion, suggesting that Amazon's profitability advantage may not offset its market share losses.
- Capital Expenditure Plans: Amazon is targeting $200 billion in capital expenditures for 2025, primarily for AWS and AI workloads, which, while likely leading to negative free cash flow in 2026, demonstrates Amazon's long-term commitment to its cloud business despite short-term financial strain.
- Stock Price Reaction: Following its earnings report, Amazon's stock price fell despite meeting expectations, as investors reacted negatively to the $200 billion capex forecast, reflecting market concerns about the company's future growth potential amidst rising expenditures.
See More
Arista Networks: A Hidden Gem in AI Networking
- Market Opportunity: According to BNP Paribas, the total addressable data center networking market is projected to reach approximately $120 billion by 2028, positioning Arista Networks favorably with its ultra-fast Ethernet switches to meet the demands of cloud giants like Microsoft and Meta, thereby driving future growth.
- Technological Advantage: Arista's 400G and 800G high-speed Ethernet switching platforms are being widely deployed in next-generation AI cluster networks by 2025, with expectations for even faster 1.6T platforms by 2026, which will directly enhance the company's market share amid ongoing AI spending growth.
- Financial Performance: With over 20% annual revenue growth and gross margins exceeding 60%, Arista's revenues are expected to rise from $8.9 billion in 2025 to nearly $21 billion by 2030, reflecting a robust financial health and strong growth potential.
- Market Capitalization Outlook: Assuming the company's price-to-sales ratio reverts to its five-year historical average of 15.4x by 2030, Arista's market capitalization is projected to reach around $323 billion, representing an approximately 84% increase from its current market cap, indicating its investment value as a high-quality AI company.
See More
Software Stocks Face Unprecedented Selloff Amid AI Concerns
- Software Stock Selloff: Wedbush analyst Dan Ives highlighted that Wall Street's selloff of software stocks like Salesforce, ServiceNow, and Microsoft is unprecedented, indicating severe investor skepticism about their relevance in the AI era, which could lead to declining performance over the next few years.
- Historic Decline: Ives noted that in his 25 years of experience, he has never witnessed such a structural selloff, with software companies being perceived as lacking space in the AI age, reflecting a significant drop in market confidence that could result in a loss of about 5% of customers.
- AI Impact Analysis: While Ives acknowledged that AI disrupts the software industry, he argued that considering software as obsolete is an extreme view, citing Palantir as an example of how software can still thrive in the AI era, demonstrating that there is still room for software to succeed.
- Market Reaction: The stock prices of Microsoft, Salesforce, and ServiceNow have dropped 16.75%, 25.87%, and 30.47% respectively over the past month, indicating a pessimistic outlook from investors regarding the future prospects of these companies and reflecting a waning confidence in the software sector.
See More
Microsoft Faces Challenges and Opportunities in AI Business
- Performance Concerns: Microsoft's fiscal Q2 2026 results revealed strong overall performance; however, modest weaknesses in AI software and cloud services led to a more than 10% drop in stock price in one day, raising investor concerns about future growth.
- Copilot License Sales Growth: As of Q2 2026, Microsoft 365's Copilot licenses reached 15 million, doubling year-over-year but representing only a 3.7% market penetration, indicating limited market uptake that could hinder future revenue growth.
- Azure Revenue Growth Slowdown: Azure's revenue grew 39% year-over-year in Q2, surpassing Wall Street's 37.1% forecast, yet slower than the previous quarter's 40%, suggesting a potential loss of momentum that may affect investor confidence.
- Data Center Capacity Shortage: Microsoft's order backlog surged 110% year-over-year to $625 billion, with 45% from OpenAI, which may limit Azure's expansion and increase investment risks due to reliance on external funding and revenue growth.
See More
Microsoft Reports Strong Earnings Amid Stock Decline
- Strong Earnings but Stock Drop: Microsoft reported strong results for its fiscal 2026 second quarter, yet its stock fell over 10% due to modest weakness in AI software and cloud services, now down 22% from its record high, reflecting market concerns about future growth.
- Slow Copilot License Sales: As of the fiscal 2026 second quarter, only 15 million Copilot licenses for Microsoft 365 were sold, doubling year-over-year but representing a mere 3.7% market penetration, indicating insufficient market uptake that could hinder future revenue growth.
- Azure Growth Deceleration: Azure achieved a 39% year-over-year growth rate in the second quarter, exceeding Wall Street's expectations, yet slower than the previous quarter's 40%, with a staggering 110% year-over-year increase in order backlog to $625 billion due to data center capacity shortages, highlighting potential growth bottlenecks.
- Attractive Stock Valuation: With a current P/E ratio of 26.5, Microsoft is at its lowest valuation in three years, significantly lower than the Nasdaq-100's 32.8, and analysts project earnings to rise to $19.06 per share in fiscal 2027, resulting in a forward P/E of just 22.4, suggesting a buying opportunity for long-term investors.
See More
Amazon's Cloud Growth Lags Behind Rivals
- Market Share Decline: Amazon Web Services (AWS) reported a 20% growth in 2025, significantly trailing behind Google Cloud's 36% and Microsoft's Azure at 39%, indicating a weakening competitive position in the cloud infrastructure market that could impact future leadership.
- Revenue and Profit Comparison: AWS added over $21.2 billion in revenue in 2025, achieving an operating income of $45.6 billion, which is substantially higher than Google Cloud's $13.9 billion and Microsoft's Azure's $19 billion, highlighting AWS's profitability advantage, yet its growth rate lags behind competitors.
- Capital Expenditure Plans: Amazon is targeting $200 billion in capital expenditures for 2025, primarily for AWS and AI workloads, which may lead to negative free cash flow in 2026, but underscores the company's long-term commitment to its cloud business despite potential short-term financial strain.
- Stable Financial Performance: Amazon's quarterly revenue rose 14% to $213.4 billion in 2025, with operating income increasing 18% to $25 billion, indicating strong execution capabilities even as market reactions to its spending plans remain lukewarm, reflecting the company's resilience in financial performance.
See More
Amazon's AWS Growth Lags Behind Competitors
- Market Share Decline: Amazon's AWS reported a 20% growth in 2025, significantly trailing behind Google Cloud's 36% and Microsoft's Azure at 39%, indicating a potential erosion of Amazon's competitive edge in the cloud infrastructure market, which could impact its long-term leadership.
- Revenue vs. Expenditure: AWS added over $21.2 billion in revenue in 2025, achieving an operating income of $45.6 billion, yet this pales in comparison to Google Cloud's $13.9 billion and Microsoft's Azure's $19 billion, suggesting that Amazon's profitability advantage may not offset its market share losses.
- Capital Expenditure Plans: Amazon is targeting $200 billion in capital expenditures for 2025, primarily for AWS and AI workloads, which, while likely leading to negative free cash flow in 2026, demonstrates Amazon's long-term commitment to its cloud business despite short-term financial strain.
- Stock Price Reaction: Following its earnings report, Amazon's stock price fell despite meeting expectations, as investors reacted negatively to the $200 billion capex forecast, reflecting market concerns about the company's future growth potential amidst rising expenditures.
See More
Arista Networks: A Hidden Gem in AI Networking
- Market Opportunity: According to BNP Paribas, the total addressable data center networking market is projected to reach approximately $120 billion by 2028, positioning Arista Networks favorably with its ultra-fast Ethernet switches to meet the demands of cloud giants like Microsoft and Meta, thereby driving future growth.
- Technological Advantage: Arista's 400G and 800G high-speed Ethernet switching platforms are being widely deployed in next-generation AI cluster networks by 2025, with expectations for even faster 1.6T platforms by 2026, which will directly enhance the company's market share amid ongoing AI spending growth.
- Financial Performance: With over 20% annual revenue growth and gross margins exceeding 60%, Arista's revenues are expected to rise from $8.9 billion in 2025 to nearly $21 billion by 2030, reflecting a robust financial health and strong growth potential.
- Market Capitalization Outlook: Assuming the company's price-to-sales ratio reverts to its five-year historical average of 15.4x by 2030, Arista's market capitalization is projected to reach around $323 billion, representing an approximately 84% increase from its current market cap, indicating its investment value as a high-quality AI company.
See More
Software Stocks Face Unprecedented Selloff Amid AI Concerns
- Software Stock Selloff: Wedbush analyst Dan Ives highlighted that Wall Street's selloff of software stocks like Salesforce, ServiceNow, and Microsoft is unprecedented, indicating severe investor skepticism about their relevance in the AI era, which could lead to declining performance over the next few years.
- Historic Decline: Ives noted that in his 25 years of experience, he has never witnessed such a structural selloff, with software companies being perceived as lacking space in the AI age, reflecting a significant drop in market confidence that could result in a loss of about 5% of customers.
- AI Impact Analysis: While Ives acknowledged that AI disrupts the software industry, he argued that considering software as obsolete is an extreme view, citing Palantir as an example of how software can still thrive in the AI era, demonstrating that there is still room for software to succeed.
- Market Reaction: The stock prices of Microsoft, Salesforce, and ServiceNow have dropped 16.75%, 25.87%, and 30.47% respectively over the past month, indicating a pessimistic outlook from investors regarding the future prospects of these companies and reflecting a waning confidence in the software sector.
See More
