TLDR
- HSBC analyst Nicole Inui has named 10 Buy-rated stocks to watch as Q2 earnings season kicks off next week
- The picks span technology, financials, consumer, and industrials sectors
- Microsoft’s Azure AI is seeing 40% year-over-year revenue growth, with further acceleration expected
- Meta saw 33% advertising growth in Q1, driven by AI-powered recommendation tools
- Wells Fargo trades at just 10.8x 2027 estimated earnings, supported by strong buybacks and loan growth
HSBC has released its top 10 stock picks ahead of second-quarter earnings season, which begins next week. Analyst Nicole Inui and her team selected Buy-rated names they believe are set to outperform across a range of sectors.
Expectations going into earnings are high, and HSBC’s list reflects that. The picks cover technology, financials, consumer, and industrial stocks.
Tech Giants Lead the List
Microsoft tops the list with Azure AI showing 40% year-over-year revenue growth. HSBC says cross-selling within its ecosystem deepens customer lock-in and supports margin growth, despite high capital spending. Microsoft recently signed a 20-year power deal with Chevron to supply electricity to a new data center in West Texas.
Alphabet is expected to hold its ground in core Search while Google Cloud accelerates. Its eighth-generation TPU chips are now rolling out to external customers. Google also announced plans to invest over €1 billion to expand its data center in Austria.
Amazon continues to grow AWS on the largest cloud revenue base in the industry. Its in-house silicon is now a $20 billion annual recurring revenue business. Amazon recently launched Loom for AWS, a platform for secure AI agent deployment.
Meta drove 33% advertising growth in Q1, including a 12% rise in ad prices, powered by AI tools. The company broke ground on a $13 billion AI-optimized data center in Canada.
Industrials, Health, and Finance Round Out the Picks
Caterpillar benefits from AI data center power demand and a capacity ramp targeting 65GW by 2030. It recently acquired spatial data firm Skycatch and raised its quarterly dividend by 8%.
Vertiv has roughly 80% of its revenue tied to data centers, the highest exposure among U.S. capital goods stocks. It completed the acquisition of thermal technology provider ThermoKey and opened a new manufacturing facility in Malaysia.
Nextpower holds a backlog exceeding $5.25 billion in solar trackers, with a new Middle East joint venture adding international reach.
Marriott runs an asset-light model with 283 million Bonvoy loyalty members. It recently launched a beta version of Ask Bonvoy, an AI search tool for hotel bookings.
AbbVie’s drugs Skyrizi and Rinvoq are expected to drive growth into the early 2030s. The Apogee acquisition adds a new pipeline in atopic dermatitis. Guggenheim recently raised its price target on the stock to $261.
Wells Fargo rounds out the list, trading at 10.8x 2027 estimated earnings. HSBC points to improving net interest income, healthy loan growth, and elevated share buybacks as key drivers.
HSBC says the selections offer exposure to multiple growth themes as companies prepare to report results against rising market expectations. Q2 earnings season begins next week.
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