META, PLTR or MSFT: Which tech stock is the best pick according to analysts?

Despite elevated interest rates and macro pressures, tech stocks received huge attention last year due to the generative artificial intelligence (AI) wave. Tech stocks are expected to benefit from a lower interest rate environment and improved spending in 2025. However, high valuations of some tech stocks after a strong rally in 2024 could affect their movement this year. With that background in mind, we used TipRanks’ Stock Comparison tool to pit Meta Platforms ( META ), Palantir Technologies ( PLTR ) and Microsoft ( MSFT ) against each other to pick the best tech stock, according to Wall Street analysts.

Meta Platforms (NASDAQ: META)

Shares of social media giant Meta Platforms have surged more than 66% over the past year, driven by the company’s solid results and optimism about the prospects in AI. The company is investing billions of dollars to capitalize on AI growth opportunities and improve its advertising tools. While announcing the results for the third quarter in October 2024, CEO Mark Zuckerberg stated that one million advertisers have already used Meta’s generative AI advertising tools.

The company raised its capex for 2024 to the range of $38 billion to $40 billion and expects its capex to continue to grow significantly this year due to the acceleration in AI infrastructure spending.

Is Meta Stock a good buy?

Recently, Goldman Sachs analyst Eric Sheridan raised the price target on Meta Platforms shares to $668 from $630 and reiterated a Buy rating. Ahead of Q4 2024 results on January 29, Sheridan continues to believe the company is well positioned to benefit from many long-term secular growth themes, including Reels, click-to-messaging ads and AI (including the adoption of Advantage+ offerings ).

Outside of Meta’s core advertising business, Sheridan also sees other potential long-term revenue growth opportunities such as Meta AI, AI Agents, Reality Labs and Llama AI models.

With 40 buys, three holds and a sell recommendation, Meta Platforms stock earns a strong buy consensus rating. The average META stock price target of $689.12 implies 12.5% ​​upside potential from current levels

See more META analyst ratings

Palantir Technologies (NASDAQ:PLTR)

Data analytics software provider Palantir Technologies was the best-performing stock on the S&P 500 index (SPX) in 2024 with a jump of 340%. The company’s strong fundamentals, inclusion in the Nasdaq 100 (NDX), and the traction of its Artificial Intelligence Platform (AIP) offering boosted investor sentiment.

Palantir is moving in the right direction, delivering strong growth rates in both its commercial and public businesses. The company’s offering is witnessing rapid adoption, with the number of customers increasing by 39% year-on-year to 629 in Q3 2024. Additionally, the company closed 104 deals worth over USD 1 million in the quarter.

While the company’s long-term AI prospects look attractive, there are major concerns over PLTR stock’s elevated valuation after last year’s stellar rise.

What is the prediction for PLTR stock?

In a research note to investors, Jefferies analyst Brent Thill said he sees further downside in Palantir stock after the recent selloff. Thill highlighted that PLTR shares still trade at 46x enterprise value to trailing 12-month revenue, or more than twice the next-highest software player.

He also noted the increase in insider sales through Rule 10b5-1 trading plans, with CEO Alex KARP selling over $2 billion in stock and other executives offloading more than $600 million in the past five months. The analyst believes that continued insider selling could weigh on PLTR stock. Thill reiterated a sell rating on the stock with a price target of $28, indicating a large downside risk of more than 60% from current levels.

Overall, Wall Street has a Hold consensus rating on PLTR stock based on two Buy, 10 Hold and seven Sell ratings. The average PLTR stock price target of $48.27 implies a downside risk of about 33%.

See more PLTR analyst ratings

Microsoft Corporation (NASDAQ:MSFT)

Microsoft is considered one of the biggest beneficiaries of the ongoing AI wave. The company’s investment in ChatGPT maker OpenAI and significant capital spending on AI infrastructure are expected to boost its future prospects. MSFT is on track to invest about $80 billion in building AI-enabled data centers to train AI models and deploy AI and cloud-based applications.

The company’s AI investments are also expected to drive continued growth in its Azure cloud service. Notably, revenue from Azure and other cloud services increased by 33% in Q1 FY25, with management highlighting that around 12 percentage points of Azure growth was attributable to AI.

Despite concerns about the short-term impact of significant AI spending on the bottom line, Microsoft’s long-term growth story looks attractive.

Is Microsoft a buy, sell or hold?

Ahead of MSFT’s upcoming Q2 Fiscal 2025 earnings, Evercore analyst Kirk Materne reaffirmed a Buy rating on Microsoft stock with a $500 price target. The analyst believes Azure’s reacceleration and some normalization of the company’s investment growth in the second half of Fiscal 2025 could help investors refocus on the long-term sustainability of MSFT’s revenue and EPS growth.

Specifically, Materne expects a stabilizing cloud services spending background, accelerating adoption of AI services by enterprise customers, and expanded AI-related capabilities to drive Azure growth to 33% to 34% over the next few quarters. He expects Q2 Fiscal 2025 Azure growth at or above the high end of the 31% to 32% guidance range. However, he warned investors about currency headwinds.

Overall, Materne expects Microsoft to benefit from several favorable factors in calendar year 2025, including “the ability to monetize Gen AI on both the app and infrastructure layers, its sustainable growth algorithm and a fortress-like balance sheet.”

With 26 Buys and two Holds, Wall Street has a Strong Buy consensus rating on Microsoft. The average MSFT stock target of $507 implies 18.2% upside potential.

See more MSFT analyst ratings

Conclusion

Wall Street is bullish on Meta Platforms and Microsoft shares, but bearish on Palantir shares due to valuation concerns. Currently, analysts see higher upside potential in Microsoft shares than the other two tech players. Specifically, Microsoft is expected to benefit from several growth catalysts, including AI capabilities and strength in its cloud business.

Disclosure