Many of the market’s bluest blue chip stocks have been shining bright in recent weeks, with some surging to new all-time highs while the rest of the market falls short. Notably, the S&P 500 is off more than 1% from its high, while the tech stock-heavy Nasdaq 100 is still down just shy of 7% from its peak. Undoubtedly, the market has come roaring back in what feels like record time since the market bottomed out earlier this month. Still, many notable tech and AI names are taking a breather. And it’s unclear what their trajectories will be as we approach the year’s final quarter.
With a much-anticipated Fed rate cut just weeks away, perhaps some of the more debt-laden, less-than-profitable technological innovators (think the disruptive innovators owned by a Cathie Wood Ark Invest fund) may regain traction again. Either way, I’m sticking with the blue chips, as the market waters can certainly get a whole lot rougher from here.
Key Points About This Article
- The large blue chip stocks can steadily ride higher, even as the tech trade falters.
- Some of the larger “value” firms valued at north of $1 trillion seem worth consideration.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
Berkshire Hathaway
Berkshire Hathaway (NYSE:BRK-B) earned its spot as the newest member of the $1 trillion market cap club this week as its stock blasted past $468 per share. It’s been a long time coming. What’s most respectable about Berkshire’s $1 trillion market cap is that it achieved it using the same strategy it always has. You see, Berkshire is all about investing for the long term and slowly but steadily building value for its most dedicated shareholder base.
Some of the names with valuations north of $1 trillion are on the cutting edge of technology, and many are considerably more exciting than Berkshire. However, as the AI trade begins to show signs it’s running out of steam and the market allows earnings a chance to catch up to recent appreciation, it could be the boring blue chips’ time to shine.
With a record cash pile of $276.9 billion following recent share-selling in Apple (NASDAQ:AAPL) and Bank of America (NYSE:BAC), Berkshire has more than enough dry powder to seize an opportunity that could accompany the next market-wide sell-off. Of course, Buffett is no market timer. Stocks could continue gaining for months and quarters to come without so much as a correction.
That said, whenever Berkshire adds to its cash stash, it may be a wise idea to ensure enough liquidity should a sudden plunge be on the horizon. Despite the high opportunity costs of holding cash, it can’t hurt to be prepared, especially if you’re overinvested in stocks that could feel the full force of the next market downswing, whenever that may be.
In any case, it’s hard to name any firm that’s better equipped to ride out a tough patch of terrain than Berkshire. It has the cash; it has the talent. Now, it just needs Mr. Market to serve up some better prices!
Microsoft
Microsoft (NASDAQ:MSFT) is another blue chip worthy of careful consideration right here while it’s still in correction territory, down more than 11% from its all-time high. Undoubtedly, if I were managing money for Berkshire, I’d give Microsoft a close look right here. The company’s arguably one of the best AI plays out there.
After all, it played a crucial role in backing OpenAI and Sam Altman as they unleashed ChatGPT on the world almost two years ago. Not to mention, Microsoft has a $13 billion stake in the company.
With Apple also reportedly looking to snag an investment in OpenAI as a part of its latest funding round, Sam Altman’s AI firm could find itself in a tug-of-war between two AI giants. Indeed, the two tech firms that battled throughout the 1980s and 90s are poised to keep throwing punches many decades later in this AI age. Ultimately, an Apple bet on OpenAI stands to take a bit of anti-trust scrutiny off Microsoft’s back. And that’s a good thing as the firm looks to remain at the forefront of disruptive AI innovation.
With Azure moving full speed ahead and Copilot hitting the spot for customers (Copilot users soared over 60% in the last quarter), Microsoft stock stands out as an investment that shows you can still be one of the market’s largest blue chips and still be one of the most disruptive innovators on Earth. At 31.1 times forward price-to-earnings (P/E), MSFT stock looks like a relative bargain while it’s still freshly corrected.
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