Jason Clark, a long term value investor and a contributing editor to The Prudent Speculator, looks to two leading technology stocks — Apple (AAPL) and Microsoft (MSFT) — that both continue to earn buy recommendations.

Apple’s fiscal Q4 revenue came in weaker than analysts were expecting. The California-based technology giant earned $1.24 per share (vs. $1.24 est.), while revenue was $83.4 billion (vs. $84.7 billion est.).

iPhone revenue trailed estimates at $38.9 billion (vs. $41.6 billion est.), as did Mac revenue of $9.2 billion (vs. $9.3 billion est.), although revenue from the Wearables-Home-Accessories, Service and iPad segments beat expectations. We note that the latest round of iPhones will show up in next quarter’s results.

With the latest batch of iPhones not yet reflected in financials and supply chain headwinds impacting Apple, we think the weaker-than-expected results were met with some consternation from investors due to Apple’s reputation for ruthless supply chain management.

As we now have found out, the company cannot simply innovate or work around every challenge, although we do expect Apple to bounce back fairly quickly. Apple continues to see success from its proprietary M1 chip, which powers the iPad Pro, iMac, MacBook and MacBook Pro, and we expect sales to remain strong.

We continue to be fans of Apple and our target price has been boosted to $170. It remains one of the largest holdings in our broadly diversified portfolios, which we are comfortable with at present despite its stretched valuation relative to its own history.

Computing giant Microsoft is once again the largest public company in the U.S. thanks in part to a strong fiscal Q1 2022. Microsoft earned $2.27 per share in the quarter (vs. $2.07 est.). MSFT had total revenue of $45.3 billion, versus the $43.9 billion estimate.

Microsoft’s results were strong in all areas, and revenue in the three main segments (Productivity and Business Processes, Intelligent Cloud and More Personal Computing) grew at least 12% or more year-over-year and the company spent $10.9 billion in share repurchases during the quarter.

Microsoft remains one of our largest holdings, a position we are comfortable with at present. We particularly like the rotation to a subscription software model and appreciate that the company has seen tremendous growth in Azure, complemented by growth in the Xbox gaming platform and business-social network LinkedIn.

We think the growth trends are unlikely to slow for the foreseeable future, a result in part of MSFT cementing its position in the tech world during the pandemic. Of course, technology changes quickly and Microsoft can’t rest on its laurels, but for now, the company’s position looks robust.

MSFT hiked its quarterly dividend from $0.56 to $0.62, resulting in a yield around 0.75%. Our MSFT Target Price has been increased to $357.

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