US stocks have been roiled in recent weeks amid fears that Trump tariffs may lead to a depression before the end 2025.
An HSBC senior analysts says that such concerns may be exaggerated as we continue through the rest of this year.
Stephen Bersey expects some pressure on the macroeconomy by the second half of 2025. However, a recession is still a bit far-fetched, he said in a note to investors.
He added that if the US does not experience a recession in this year, two of the “Magnificent Seven” stocks, Microsoft, and Amazon, could rise as much as 40% above their current levels.
Microsoft Corp. (NASDAQ: MSFT).
Microsoft stock has fallen about 15% since January due to the uncertainty surrounding Trump’s policies, and their possible impact on global trade.
HSBC still recommends buying MSFT shares at a discount, as the potential growth from Azure has not yet been fully incorporated into the tech stock.
Analyst Stephen Bersey has raised his revenue estimate for Microsoft (FY27), which is currently 16% higher than the consensus. His EPS forecast also exceeds the consensus by around 20%.
In a recent report, he said: “We believe that the consensus underestimates the company’s return on investment from Azure.”
Bersey’s $598 price target for Microsoft shares indicates a potential upside of more than 55% from current levels as long as the US economic situation does not turn into a recession.
Note that MSFT also pays a dividend yield (0.88%) that makes it more attractive at the time this article was written.
Amazon.com Inc. (NASDAQ: AMZN).
HSBC believes that Amazon shares are well-positioned to navigate through the new tariff environment and the macroeconomic uncertainty it brings.
The ecommerce and tech giant has a current drop of well over 20%. Stephen Bersey, in his research note, called this a great opportunity for long-term investors who want to purchase a quality brand at a deep discount.
The firm’s analyst believes that despite the headwinds mentioned, “fundamentally not much has changed.”
He is still bullish about AMZN, as it is “well-positioned” to capitalize on the returns from its previous strategic investments.
HSBC expects Amazon Web Services will materially benefit when the macroeconomic climate returns to normal.
The $280 price target for Amazon shares suggests that there is potential for a 30% increase from here.
Bersey believes AMZN is a good investment because its high-margin ad business is growing rapidly.
This segment, which brought in $17.3 billion during the last reported quarter, helped the titan to surpass both expectations on the top and bottom lines.
Amazon does not pay a dividend at the moment, unlike MSFT. This makes it unattractive to income investors.
This post Top two magnificent seven’ poised to gain 40% if US recession avoided may be modified based on updates.
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