Should Vanguard Russell 1000 ETF (VONE) Be on Your Investing Radar?
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Sep 26 2024
0mins
Should l Buy MSFT?
Source: NASDAQ.COM
Vanguard Russell 1000 ETF Overview: The Vanguard Russell 1000 ETF (VONE) is a passively managed fund with over $5.11 billion in assets, focusing on large-cap blend stocks and offering low operating expenses of 0.08%. It has shown strong performance, up approximately 20.27% this year and 33.25% over the past year.
Investment Characteristics: VONE primarily invests in the Information Technology sector, with major holdings including Apple, Microsoft, and Nvidia. It aims to replicate the performance of the Russell 1000 Index and is considered a medium-risk investment option due to its diversified portfolio of around 1016 holdings.
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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: 404.370
Low
500.00
Averages
631.36
High
678.00
Current: 404.370
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.
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- Customer Concentration Risk: The company's remaining performance obligations reached $625 billion, up 110% year-over-year, with OpenAI contributing approximately $250 billion; management noted that even without OpenAI's commitments, the business outlook remains positive, though customer concentration risk is significant.
- Strong Software Performance: Despite market fears that AI may displace enterprise software, Microsoft's Productivity and Business Processes segment grew by 14% year-over-year on a constant-currency basis, demonstrating the resilience of its high-margin software business.
- Stable Free Cash Flow: Even with increased capital expenditures, Microsoft maintained a free cash flow of $5.9 billion, providing ample funding for its AI data center projects, supported by its high-margin software business and growing cloud billings.
See More
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- Surge in Capital Expenditures: Microsoft reported $37.5 billion in capital expenditures last quarter, exceeding analyst expectations, which, while pressuring profit margins, underscores the company's commitment to AI data center investments that are expected to drive future growth.
- Stable Cloud Growth: The Azure cloud computing segment achieved a 39% growth rate, and although investors anticipated higher revenue growth, management indicated that demand continues to outstrip supply, reflecting strong market demand and potential profitability.
- Significant Increase in Performance Obligations: Microsoft's remaining performance obligations rose to $625 billion, a 110% year-over-year increase, with approximately $250 billion stemming from a new deal with OpenAI, presenting substantial growth opportunities despite notable customer concentration risk.
- Strong Software Business Performance: Despite market concerns about AI displacing enterprise software, Microsoft's Productivity and Business Processes segment grew 14% year-over-year, and the combination of high-margin software and increasing cloud billings provides robust cash flow to fund AI data center projects.
See More
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- Intensifying Competition: With Google planning to invest up to $185 billion in capital expenditures this year, Anthropic faces fierce market competition and must continue to invest in infrastructure and R&D to maintain its market position and technological edge.
- Strong Customer Demand: Anthropic's CFO noted that demand for Claude is increasing, particularly in enterprise-grade products, and this funding will support infrastructure expansion and product development, further solidifying its leadership position in the AI sector.
See More
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- Strong Financial Performance: In its latest earnings report, Microsoft reported a 17% revenue growth and a 23% net income growth, and although the market reacted negatively, this presents an excellent opportunity for investors to buy at a low valuation, especially following the 2023 market sell-off.
- Nvidia's Industry Leadership: As a primary beneficiary of AI spending, Nvidia's GPUs have become the standard for most AI hyperscalers; despite a 0.08% stock price decline, analysts expect a 53% revenue growth over the next year, showcasing strong growth prospects.
- Significant Investment Value: Nvidia's forward P/E ratio is 24, slightly above the S&P 500's 21.8, but given its rapid growth and leadership in a technological revolution, this valuation is considered relatively cheap, making it a rare buying opportunity for investors.
See More
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- AI Threat to Software Sector: Fundstrat's Tom Lee warns that AI is wreaking havoc on the $450 billion software sector, predicting significant job losses as software companies face existential threats, potentially leading to deflationary pressures.
- Changing Inflation Expectations: The core CPI is projected to drop to 2.52% in Friday's report, aligning with the 2017-2019 average, indicating a return to pre-COVID inflation levels, which may prompt the Fed to adopt a more dovish monetary policy.
- Market Capital Flow: Lee notes that investors are rotating out of the Magnificent 7 into companies supplying AI infrastructure, such as energy providers and industrial manufacturers, which could trigger a 10-20% decline in the U.S. market.
- Crypto Market Bottom Signal: Despite challenges, Lee believes the crypto market shows signs of bottoming due to positive fundamentals, even as investors struggle with the decision to stay in crypto versus moving to stocks and gold.
See More
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- Tech Stock Pressure: The S&P 500 index fell by 0.52% and the Nasdaq 100 index dropped by 1.08% due to weakness in the Magnificent Seven tech stocks, indicating investor concerns that could dampen market confidence.
- Cisco Profit Warning: Cisco Systems forecasted that rising memory chip prices would erode profitability, leading to a more than 10% drop in its stock price, which may prompt investors to revise down their future performance expectations, negatively impacting overall market sentiment.
- Employment Data Impact: Initial US jobless claims fell by 5,000 to 227,000, reflecting a slightly weaker labor market, which could influence the Federal Reserve's monetary policy decisions and lower market expectations for future rate cuts.
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See More
