Despite concerns about rising prices and the coronavirus epidemic impeding economic recovery, the stock market enjoyed another strong year. The S&P 500 has risen by 25% so far and continues to set new highs. With inflation at a 40-year high and the Fed going back on its free monetary policy while raising rates, 2022 might be a more difficult year for equity markets. The economic recovery has also been hampered by ongoing supply and demand mismatches, which have been worsened by the development of the new Omicron. While many Wall Street experts predict a positive 2022, investors should anticipate returns to be significantly lower than in prior years.
It's tough to identify issues with this enormously successful and diverse company, which has a credit rating higher than the US government and is the only tech behemoth not subject to significant governmental scrutiny. Microsoft will be able to maintain its position as a crucial utility in the digital economy for years to come because of its Windows operating system, Azure cloud, and cybersecurity solutions. Analysts predict that Azure will propel Microsoft to 15% profit growth next year, which is impressive given Microsoft's generous shareholder payouts. With a P/E of 37, the firm isn't cheap, but we feel it's worth paying a little more for quality.
Without Amazon, the current leader in both cloud and e-commerce, no cloud or e-commerce portfolio would be complete. We are concerned about Amazon's recent leadership transition, the absence of buybacks in the face of slowing growth, and increased competition across the company's product lines. However, given how swiftly the underlying industries are likely to develop, we believe experts' prediction of 29 percent profits growth in 2022 is a credible aim. And, as Amazon has done in the past, maintaining that kind of growth should continue to result in great returns.
Google Cloud, in keeping with the cloud computing concept, has risen to become one of the top three hyper-scale cloud providers. This is a shareholder-friendly firm, similar to Microsoft, which is still developing rapidly, with analysts forecasting a 17 percent sales increase next year. The majority of Google's revenue still comes from cyclical advertising. However, with high economic growth projected in 2022, this might be beneficial to investors the following year. With a P/E of 28 and a PEG of less than 1, Google appears to be well valued.
ASML, like TSMC, has a vast moat and is involved in semiconductors, putting it at the forefront of digitalization. ASML is the only business capable of creating the EUV equipment required for advanced semiconductor production, and this will remain true in 2022 and for many years to come. With a P/E of 53, ASML today appears to be a bit pricey, but it's also expected to boost earnings by 23% next year.
Despite having much of the same growth drivers as Crowdstrike, the firm hasn't delivered on the same degree of quality, earning just 12 on the Rule of 40 despite forecasting considerably lower revenue growth of 37 percent. Despite this, we believe Okta's concentration on identity management - an area with significant network effects and learning curves - provides it with greater long-term stability than other cybersecurity firms.