Microsoft (MSFT) and Alphabet (GOOGL, GOOG) are among the eight elite companies with trillion-dollar market valuations, and their Wall Street price targets suggest no expected downside over the next year. Analysts forecast Microsoft’s share price could rise by 5% to $448, or 18% with a median estimate, given its current price of $425. Similarly, Alphabet's low target is $170 (5% upside from $162), with a median suggesting a 26% increase. Despite the optimistic outlook, market risks persist. Here's a closer look at each company: 1. **Microsoft**: As the largest enterprise software provider and second-largest public cloud company, Microsoft has integrated AI products, such as Copilots for productivity and Dynamics 365. Morgan Stanley predicts these innovations will sustain its market dominance. Within a year of its launch, 60% of Fortune 500 firms have adopted Microsoft 365 Copilot, with daily users doubling recently. Microsoft Azure is also growing, aided by strategic partnerships, notably with OpenAI for custom AI models.

In Q4 fiscal 2024, Microsoft reported a 15% revenue increase to $64. 7 billion, with GAAP earnings rising 10% to $2. 95 per share. Analysts expect earnings to rise 11% in the next year, suggesting the current valuation may seem high, leading some to advocate waiting for a better buying opportunity. 2. **Alphabet**: As the largest digital advertising firm and the third-largest public cloud service provider, Alphabet is leveraging its AI capabilities in various areas, including AI infrastructure and machine learning. The company's strength in advertising is backed by vast user engagement, with Google Search completing 5. 9 million searches every minute. Alphabet is integrating new AI features into its ad tech to enhance workflows and user engagement. In cloud services, it is slowly gaining market share, despite trailing behind Amazon and Microsoft, with a noted increase recently. In its second quarter, Alphabet’s revenue climbed 14% to $84. 7 billion, driven by cloud growth and a 31% increase in GAAP earnings to $1. 89 per share. Wall Street anticipates earnings growth of 15. 5% over the next year, indicating a reasonable valuation at 23. 5 times earnings, making now a suitable time for investors to enter the market.