In the past year, the U.S. dollar has strengthened considerably against major foreign currencies. This has hurt the revenues and profitability of companies with a high percentage of revenues coming from international businesses. Amazon.com, Inc. (NASDAQ:AMZN), Mastercard Incorporated (NYSE:MA), and Microsoft Corporation (NASDAQ:MSFT) are the three mega-cap companies that are highly exposed to the adverse impacts of the rising value of the U.S. dollar.
While the U.S. dollar gained 17% against Euro in the past year, it expanded 30.4% versus the Japanese Yen in the same period. As compared to the Canadian dollar, the British Pound, and the Indian Rupee, the U.S. currency has strengthened 2.7%, 18.3%, and 8.4%, respectively, in the trailing 12 months.
The surge in the U.S. dollar value could be the byproduct of various phenomena. The Federal Reserve’s tightening of monetary policy and the ongoing conflict between Ukraine and Russia have also made the U.S. market a lucrative destination for foreign investors to park their funds.
It is noteworthy that companies across various sectors and industries are at risk due to forex woes. Of the companies mentioned above, Amazon.com is from Consumer Goods, while Mastercard belongs to Services, and Microsoft comes under the ambit of the Technology sector.
A consolidated chart, designed using TipRanks’ Stock Comparison tool, is provided below.
Amazon.com, Inc. (NASDAQ:AMZN)
The $1.36-trillion company is an online retail behemoth. In the first half of 2022, the company sourced nearly 40% of its revenues from its International and AWS segments. While the International segment includes sales from retail for consumer goods and subscriptions, the AWS segment accounts for the global sales of storage and other services.
In the second quarter of 2022, forex woes lowered Amazon’s top line by $3.6 billion. For the third quarter of 2022, the company expects forex woes to hurt its top-line growth by 3.9 percentage points year-over-year. Over the past year, shares of AMZN have lost 22.9%.
Is Amazon Stock a Good Long-Term Investment?
Notwithstanding the near-term hurdles, the company’s solid prospects could look attractive to long-term investors. On TipRanks, the company has a Strong Buy consensus rating based on 37 Buys and one Hold. AMZN’s average price target is $177.05, representing upside potential of 32.85% from the current level.
Also, top retail investors tracked by TipRanks are Very Positive about the stock. They have increased their exposure to AMZN stock by 5.2% in the last 30 days. On the contrary, hedge funds have lowered their holdings in AMZN by selling 5.9 million shares in the last quarter.
Mastercard Incorporated (NYSE:MA)
The credit services company’s top-line results suffered a 6% impact from forex woes in the second quarter of 2022. The company expects an adverse impact of 5% to 6% from forex woes in 2022.
It is worth noting that the $324.56-billion company derived >60% of its revenues from international operations in the first half of 2022. Shares of MA have declined 3.4% in the past year.
Is MA Stock a Buy or Sell?
If stakeholders tracked by TipRanks are to be believed, the company could be a good investment opportunity for prospective investors.
Analysts are optimistic about the prospects of Mastercard, which warrants a Strong Buy consensus rating based on 19 Buys, one Hold, and one Sell. MA’s average price forecast is $412.24, mirroring upside of 22.75% from the current level.
In the last 30 days, top retail investors have increased their stake by 5.8% in MA stock. Also, hedge funds bought 7.2 million MA shares in the last quarter, as per TipRanks
Microsoft Corporation (NASDAQ:MSFT)
In the fourth quarter of Fiscal Year 2022 (ended June 30, 2022), forex woes lowered revenues of this $1.97-trillion technology company by $595 million. For Fiscal 2023 (ending June 2023), the company expects forex woes to hurt its sales by four percentage points.
In Fiscal 2022, the company derived nearly 49.5% of its revenues from international operations. In the past year, shares of MSFT have declined 11%.
Is Microsoft Stock a Buy or Sell?
Microsoft could be a good investment option for prospective investors seeking exposure in the technology space. The company has a Strong Buy consensus rating based on 28 Buys and two Holds. MSFT’s average price target of $327.41 suggests upside potential of 23.8% from the current level.
Moreover, top retail investors have increased their exposure to MSFT stock by 4% in the last 30 days. Also, hedge funds have purchased 12.7 million shares in the last quarter.
Concluding Remarks
Well-rooted companies like AMZN, MSFT, and MA could easily deal with near-term hurdles from forex woes. These companies could resort to hedging products or find ways of increasing their top line to compensate for their losses. A price chart for the three companies is provided below.
Read full Disclosure
