In spite of rising costs and the coronavirus pandemic, the stock market had a very successful year. As of now, the S&P 500 index has increased by 25 percent and is continuing to break new records. Because of the Fed’s shift away from its loose monetary policy and the high level of inflation, 2022 could be a tough year for equities markets. Continuing supply and demand mismatches have also delayed economic recovery, which has been made worse by the emergence of Omicron. Many Wall Street analysts expect a positive year in 2022, but investors should expect lesser returns than in previous years.
According to the cloud computing model, Google Cloud has grown to be one of the top three hyper-scale cloud vendors. Unlike Microsoft, this is a company that values shareholders and is expected to see a 17 percent growth in revenue in 2015. It is still the primary source of Google’s revenue. While 2022 is expected to be a year of substantial economic growth, this could be good news for investors. Google appears to be well valued, with a P/E ratio of 28 and a PEG below 1.
To be at the forefront of digitalization, ASML shares a large moat with TSMC and is engaged in semiconductors. Only ASML can build the EUV equipment needed for advanced semiconductor production, and that will be the case until at least 2022. ASML has a P/E ratio of 53, which makes it appear expensive, but it is anticipated to increase earnings by 23% next year.
Because of similar growth factors, Crowdstrike hasn’t been able to provide the same quality results, scoring only a 12 on the Rule of 40 despite anticipating revenue growth of 37 percent. But we believe Okta’s focus on identity management, which has large network effects and learning curves, gives it greater long-term stability than other cybersecurity companies.
With a credit rating higher than the US government and the only tech juggernaut not subject to serious regulatory oversight, it’s difficult to discover problems with this hugely successful and diverse firm. Microsoft’s Windows operating system, Azure cloud, and cybersecurity solutions will allow it to maintain its position as a vital utility in the digital economy for years to come. Despite Microsoft’s large dividends, analysts expect that Azure will boost Microsoft’s profits by 15% next year. Although the company has a P/E of 37, we believe that paying a bit more for superior quality is worth it.
It would be impossible to build any cloud or e-commerce portfolio without Amazon, the current market leader. Beset by dwindling growth and growing competition across its product lines, we’re worried about Amazon’s recent leadership shift, lack of stock buybacks, and lack of buybacks in general. Experts’ forecast for 29 percent profit growth in 2022 is a reasonable goal, given how quickly the underlying industries are expected to grow. The current growth graph shows that Amazon should be able to continue to reap the benefits.