The S&P 500 index hit a new all-time high of 5,321.41 on May 21, and despite a slight pullback, the momentum in artificial intelligence (AI) stocks could push the index even higher. Fundstrat Global Advisors Managing Partner Tom Lee predicts the S&P 500 could reach 5,500 by the end of June. While some may be cautious about investing at such high levels, historical trends suggest the index could continue its upward trend.
Investing in quality companies like Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN) can still be profitable in the long run. Microsoft has seen significant success with its AI-powered services, contributing to strong financial results in its recent fiscal quarter. The company’s Azure and cloud services revenue grew by 31% year over year, with AI playing a key role in this growth. Microsoft’s Copilot assistant is also gaining traction across various applications, with analysts projecting significant revenue potential by 2026.
Amazon, a dominant player in e-commerce, is also thriving. The global e-commerce market is expected to grow significantly, and Amazon has been implementing strategies to reduce costs and improve profitability. Its cloud computing business, Amazon Web Services, is experiencing growth as companies focus on cloud migrations and AI capabilities. Advertising revenue is also a key growth driver for Amazon.
Both Microsoft and Amazon present compelling investment opportunities for retail investors. While their valuations may not be cheap, the potential for growth in AI and other areas makes them attractive long-term investments. Considerations like these are important before making an investment decision.