5 Quality Stocks That Wall Street Is Rating Strong Buy

5 of the highest-quality businesses in the US just  beat their earnings, and every single one of them   is rated a Strong Buy by Wall Street. And yet,  all of them are down from their all-time highs. In this video, I'll break down all 5 of these  companies, what's causing them to sell off,   and why I think the market is wrong. So let's  not waste any time and let's jump right in. First up is Meta. Meta's stock is down about  6% from its high. And the reason? There are   fears that Meta is spending so much on AI  that it could turn their cash flow negative. So when Meta first raised their 2026 capex  guidance to between USD 125 and USD 145 billion,   which was roughly double  what they spent last year,   the stock dropped by 6%. Then later on,  there were also reports that Meta might   sell tens of billions of dollars in stock  to help fund all that AI infrastructure,   which meant more stock dilution, and of  course, the stock dropped by another 6%. But when you look at the actual numbers,  Meta is actually doing quite well. In Q1,   Meta's revenue grew 33% year over year. That was  the fastest growth since 2021, plus it also beat   expectations. Operating profit grew about  30% alongside it. And on the bottom line,   if we exclude the one-time USD 8 billion tax  benefit, Meta's earnings also grew by about 14%. In fact, Nvidia's CEO Jensen Huang has also said  that nobody is using AI better than Meta. Not   Google, not OpenAI, not even his own company.  It's Meta. That's because AI has completely   changed the way Meta recommends ads, and  it's already showing up in the earnings. Meta's ad impressions were up 19%,  and the price per ad was up 12%. So   not only is Meta showing more ads,  it's also charging more for each   one. That tells us Meta isn't just  doing well. It's also speeding up. But despite all that, JPMorgan still downgraded  Meta to Neutral and projects that its free cash   flow is going to drop to negative USD 4 billion  in 2026 and then negative USD 24 billion in 2027,   with capex climbing to roughly USD 202 billion. Their argument is that with about 97% of  Meta's revenue still coming from advertising,   there's no clear proof that all that  AI spending is helping the ad business. And that's the problem. While companies like  Microsoft, Google, and Amazon all have a separate   cloud and AI business you can actually track,  Meta has no separate AI line like that. Instead,   it's all lumped under advertising, so you can't  really tell how much of that growth is the AI   paying off versus how much of that is just due  to a strong ad market. So investors are uncertain   whether all that investment can really pay back  enough to justify the hit to their cash flow. On the valuation front, if you give it  a conservative EPS growth rate of 15%,   which is below its 10-year average of 22%,  Meta is trading at above its fair value. Meanwhile, Meta's analyst consensus is  a Strong Buy, with not a single one of   them rating it as a sell. And it sits at an  average price target of around USD 822, which,   if it were to come true, would imply that Meta  has one of the biggest upsides on the whole list. In short, Meta is among the cheapest  of the Magnificent 7, while growing   the fastest out of the whole group. It  got sold off because people got scared   of all that future spending. But whether  that AI bill will ever pay for itself,   we'll just have to wait and see. Now if you want to start investing,   you want to keep your costs low.  That's why I use Interactive Brokers. With Interactive Brokers, you're paying just  US$0.35 per trade on the US stock market.   That's one of the lowest in the industry. They  also give you access to Ireland Domiciled ETFs,   which can save you a chunk on dividend withholding  taxes. And if you're not sure what to invest in,   they have free company research  tools built right into the platform,   so you can do your homework before  putting your hard earned money in. Check out my link in the description to get  started. Alright, now back to the video. Next up, we have Microsoft. Microsoft is probably  the company with the widest moat on the entire   list. And yet it's still down about 20% from its  high, on the same fears all over again. Basically,   investors are worried that Microsoft will never  earn back all the money that it's pouring into AI. On top of that, a big chunk of Microsoft's  cloud growth now leans on a single partner,   OpenAI. According to estimates, nearly  half of Microsoft's USD 625 billion   revenue backlog is tied to OpenAI  alone. So if OpenAI ever stumbles,   a huge slice of Microsoft's future  revenue will go down along with it. But despite all those fears, Microsoft's  financials are still strong. In the latest   earnings, Microsoft's revenue grew  18%, while beating expectations. Net   income grew 23%, and earnings per  share grew 23% right alongside it. Meanwhile, Azure, their cloud business, grew 40%,   which was even faster than they'd predicted. More  than 20 million people are now paying for Copilot,   their AI assistant. And the best part?  Many of these are big companies that   are locked into 3 to 5 year contracts, so  that revenue will keep coming in for years. Microsoft's bull case is simple. Azure  is the second-biggest cloud in the world.   And because every single company that's  chasing AI needs somewhere to run it,   a lot of that demand is going to land on Azure.  So the bigger AI gets, the more Azure grows. If we assume that Microsoft can keep growing  its EPS at 15% a year over the next decade,   which is roughly in line with the past 3 years,  then it's trading above its fair value. Though,   the analysts are far more bullish. Right now,  they are rating Microsoft as a Strong Buy,   with an average price target of around USD 560. In short, Microsoft is a great business. However,  its AI-spending question is genuinely unresolved.   With the stock trading at right around fair  value, you're not buying a steal here. Instead,   you're simply buying a wide moat company  while waiting for that bet to settle. The third company on the list is S&P Global.  After hitting its all-time high earlier this year,   S&P Global has dropped by about 10%. So what  caused the drop? It all started in February,   when S&P Global put out a 2026 earnings  forecast that came in weaker than expected.   Then there's the worry about where  its future growth could come from. That's because about a third of S&P Global's  revenue comes from rating company debt for   a fee. And what's happening is that a wave of  corporate debt was going to be due in 2025 and   2026. Because of that, over the past 2 years,  companies were rushing to refinance it early,   while borrowing costs were still low. As  a result, a lot of their future borrowing   was pulled forward. And all that could lead  to slower borrowing in the near future. So   if there are fewer new bonds for S&P Global to  rate, there would be fewer fees for it to earn. However, the bigger worry is the whole AI  thing again. Around 35% of S&P's revenue   comes from selling financial data and  analytics, basically S&P Global's own   version of the Bloomberg terminal. But  with AI tools, customers can now get   those same answers for cheaper, which  could eat into S&P Global's business. So those are the 2 fears hanging  over S&P Global. However when you   look at the actual numbers, both of those  segments are still holding up just fine. In Q1, revenue grew 10%, and the bottom line  grew even faster, with earnings per share up   32%. Then on the ratings side, which had the whole  debt-slowdown fear, the business actually grew   13%, driven significantly by the AI-infrastructure  debt that's getting raised right now. As for the data side, which was supposed  to be getting eaten alive by AI,   it still grew 8%, with its  core data products up 11%.  Not only that, S&P Global is confident to  keep their full year guidance unchanged.  So neither scary story is showing  up in the results just yet. And it all comes down to the strong moat that it  has in each of its business segments. Its ratings   arm is a duopoly with Moody's, where together  they cover around 80% of the world's rated debt,   and because of the way the industry is  regulated, no new player can really break in. Then there's the data business, which the whole  industry runs on and rarely switches away from.   And it even owns the S&P 500 together with many  other indexes. So when you put it all together,   you get a company that sits right at  the center of the financial system,   while taking a small cut of almost  everything that flows through it. If we assume that it is going to continue to  grow its EPS at its 10-year rate of 13.5%,   S&P Global is still trading at above its fair  value. So it's not really a bargain right now. That said, the analysts are a lot more  upbeat. The consensus is still a Strong Buy,   with not a single one of them rating it a  sell. And with their average price target   sitting around USD 510, it would imply that  there's upside from where it trades today. In short, this is one of the  cleanest compounders on the   list. And despite all the market  fears, it's still growing well. Next up, ServiceNow. Since its all-time  high, ServiceNow has crashed nearly 30%,   making it the biggest drop on the whole list. And all this was caused by 2  things. The first is again,   AI. The idea is that AI agents can  now do the work people used to do,   so companies won't need to buy as many  software seats for their staff. And since   ServiceNow charges per seat, fewer seats  would mean a direct hit to its revenue. And second, US government agencies  are big customers of ServiceNow. So   when DOGE started slashing federal  software contracts in early 2026,   ServiceNow's government business slowed sharply,  after growing around 30% the year before. However, the good news is that the  federal weakness looks short-lived.   ServiceNow has just signed a  deal with the US government's   own procurement agency to roll its  AI out across federal departments. In the meantime, its latest quarter looked  strong. ServiceNow still grew its revenue   by 22%, with subscriptions up 22%, and their  committed future revenue up around 22% as well. Their adjusted earnings came  in well ahead of expectations,   with an operating margin of around 32%. Not only that, they also raised their  full-year subscription guidance. So   even with that federal hit dragging on one  side, the commercial side of the business   was strong enough to more than make up for it.  With 85% of the Fortune 500 as their customers,   and a renewal rate around 97%, this is  clearly not a business that's falling apart. Not just that, the company is also  actively fighting the seat-death   story. Rather than charging per seat, they  are now shifting towards usage-based pricing.   This means a growing share of their new  business isn't tied to seat counts at all. The insider signal is loud too. ServiceNow's  CEO Bill McDermott just bought about USD 3   million of stock at around USD 104.60 back  in February, and he called the stock a   once-in-a-generation opportunity, while executives  were cancelling their scheduled selling plans. However with that being said, there are some  genuine signs of growth slowing. ServiceNow's   committed-revenue guidance has eased from  about 21% to 19.5%, and the full-year raise   was credited almost entirely to an acquisition,  with the organic guidance holding flat. So even   if the company is nowhere near dying,  its growth does seem to be normalizing. If you used a very conservative 20%  EPS growth rate, which is far below   its historical growth rate, the stock is  still trading 10% below its fair value. And when it comes to analyst consensus,  this stock is rated as a Strong Buy,   with an average price target of around USD 141. In short, ServiceNow is one of the  best software companies out there,   and it got cut in half due to fears of AI  and shrinking government budgets. However,   it just beat and raised its guidance,  the CEO is putting his own money in,   and the AI shift that's supposed to  kill it ends up actually helping it. Last but not least, we have Mastercard. It's  basically a toll booth on global spending. So what happened here is that Visa, Mastercard,  and American Express all got caught in the same   selloff. The fear is that in the future, AI  shopping agents could start routing payments   through stablecoin rails that cost a fraction of  a cent, and skip the 2 to 3% card fee entirely. However, here's why I think the fear might  be overblown. According to Chainalysis,   the credible timeline for stablecoins to actually   overtake card volume is somewhere  around 2031 to 2039, and not 2026. That's because stablecoins still don't  have fraud protection, chargebacks,   or rewards. Plus they're not accepted  almost everywhere the way cards are. At the same time, Mastercard isn't sitting still  either. They just bought a stablecoin company   called BVNK for around USD 1.8 billion back in  March, and just recently they have also expanded   their network to settle card payments directly in  stablecoins like USDC and Ripple's RLUSD. So in   reality, they're already buying their way onto the  exact rail that people think will replace them. Meanwhile, Mastercard's business is accelerating  too. In Q1, Mastercard's revenue grew nearly 16%,   with net income up 18%. Earnings per  share grew faster than profit there   because Mastercard is constantly buying back  its own stock. Plus, its cross-border volume,   which is the high-margin travel-and-spending part,  was up 13%, while value-added services grew 22%. So is the stock cheap now? If we were to  use its 10-year EPS growth rate of 17.2%,   Mastercard would still appear to  be trading above its fair value. As for analyst consensus, this  stock is rated as a Strong Buy,   zero sells, and has an average  price target of around USD 645. In short, Mastercard is a business  that prints money on every swipe,   and has sold off over a disruption  fear that's almost a decade out. Anyway, that's all for this video.  Hope you found it useful. Like,   share, and subscribe as I'll be  posting new videos every week.