Big Shift Ahead? 3 Must-Watch Stocks Facing Pivotal Moments

Stock Market
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Some companies get too big or fail to change for a long time. However, these companies also often represent stocks to watch. Why is that?

Investors can benefit from looking at companies facing pivotal moments that stand to make or break their businesses. The ones that evolve with change in the macro environment represent stocks to consider buying. Meanwhile, those that completely lose their way may have further to fall.

Tighter credit conditions did not stop the credit card company on this list from raising its dividend and issuing promising guidance. Meanwhile, weaker demand will result in a bad next quarter for this list’s semiconductor name, but factors point to a stronger second half. Finally, in the software sector, artificial intelligence (AI) promises to accelerate long-term growth.

So, which names are the stocks to watch right now? Consider these three companies:

Stocks to Watch: American Express (AXP)

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American Express (NYSE:AXP) stock surged recently after the company posted diluted earnings per share of $2.07 for the fourth quarter, gave strong 2023 guidance and boosted its dividend by 15.4%.

For American Express, its Q4 consolidated provisions for credit losses of $1 billion — up from only $53 million last year — is a pivotal moment. The credit card firm’s revenue grew from strength in high consumer growth.

Of course, CEO Steve Squeri says that corporate spending has not come back yet. Fortunately, though, AXP will be able to depend on its premium customer base for continued momentum. To sustain earnings, American Express will increase the quality of the card members it acquires.

AXP stock is one to watch as the company adds better-quality customers in 2023.

Intel (INTC)

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When Intel (NASDAQ:INTC) posted Q4 results last week, INTC stock lost more than 10% in value before ending the day down by 6.4%. For the period, revenue fell 32% year-over-year (YOY) to $14 billion. Intel now expects a GAAP earnings per share loss of 80 cents in Q1 of this year.

Intel is a stock to watch as shares trade at deep value. Currently, the stock has a price-to-earnings (P/E) ratio of about 9 times. CFO David Zinsner says that most of Intel’s business units face declines in the double digits sequentially. The outlook for 2023 is so uncertain that the company will not guide for the rest of the year.

That said, CEO Pat Gelsinger believes the second half of the year could see improvements from cloud, enterprise and government. Intel must steer its data center business through “significant inventory adjustments.” Business in China should also recover as the country reopens its economy. As business picks up, many Chinese enterprises will need Intel’s semiconductors.

Stocks to Watch: Microsoft (MSFT)

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Microsoft (NASDAQ:MSFT) recently needed to adjust for over-hiring by cutting 10,000 employees. CEO Satya Nadella warned of a “challenging two years ahead for tech companies.” Tech firms, including Microsoft, need to run more efficiently as the industry faces global changes.

Why is MSFT stock a stock to watch in particular? For one, the company is building up its gaming empire. Last year, Microsoft proposed to buy Activision Blizzard (NASDAQ:ATVI) for $95 per share. While the gaming industry could slow amid a downturn, Microsoft may be able increase the value of its Xbox gaming platform with Activision. That said, the acquisition is still subject to regulatory approval.

On Jan. 16, Microsoft also made Azure OpenAI Service generally available. Known best for ChatGPT, the company’s artificial intelligence (AI) tech is sure to help it secure future growth as customers fight to stay ahead.

On the date of publication, Chris Lau did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get actionable insight to achieve strong investment returns.

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