Technology stocks or tech stocks are shares of corporations that produce and sell tech-integrated products and services. They can range from small startups to well-established firms and can be operating across diverse tech-related industries, including software, hardware, and telecommunications.
Tech Stocks
2022 witnessed tech stocks of the biggest tech companies, including Apple, Microsoft, and Meta, drop significantly in market cap. However, many analysts are optimistic about the future of tech stocks due to the rising demand for cloud-based services, along with the possibility of consumer spending returning to normal.
Why Invest in Tech Stocks?
Today the harsh reality is that investors, analysts, as well as policymakers are all paying close watch to inflation data and other reports. This data enables them to identify the current state of the economy. While the goal of the Fed’s aggressive rate hikes was to hinder/ slow down the economy enough to get prices back down for consumers, during this process, there were many casualties as consumers were less inclined to spend money on discretionary purchases. This, in turn, led to tech companies having to report lower earnings.
Many are guessing that the stock market and the tech industry in 2023 are expected to show optimistic growth. However, analysts are also predicting that despite a bleak 2022, in the new year, investors and businesses can expect a different situation. 2023 would be deemed a much better year as many tech giants will be targeting to generate profit from the growing cloud-based industry.
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While tech stocks have been considered one of the most volatile and high-risk investments, they have held the potential for high returns and growth. Regardless of their inherent risks, tech stocks remain a popular choice for investors looking for long-term growth. And with the technology sector consistently outperforming others, the investment market has been broadening over the past few decades. Many experts believe that emerging trend in technology is likely to advance and becomes increasingly integrated into all aspects.
Top Tech Stocks to Buy in 2024
While many tech companies have dropped in value over the last year, they could still be considered a good investment if the economy turns around. Considering this, here are some top tech stocks to keep an eye on in 2024.
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Adobe Inc. (ADBE)
93% of the revenue of Adobe Inc. is generated from the subscriptions segment. Adobe had an annual revenue of approximately $15.785 billion in 2021. Whereas in the third quarter of 2022, the corporation announced a record-setting revenue amount of $4.43 billion. This, in total, represented a 3% year-over-year growth for the organization. Due to their long-term enterprise contracts and design tools, as well as cloud-based services, Adobe is likely to continue growing in 2023 as well. In the first half of January 2023, Adobe shares closed at $344.38, and the stock is expected to have a one-year target price of $386.17.
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Microsoft (MSFT)
Microsoft has been expanding its services and moving across diverse businesses. While the corporation is renowned for its Office products, its Azure cloud services have also been entering the limelight. Microsoft's cloud-based business accounts for almost two-thirds of its total revenue. The company brought in $20.3 billion in the last quarter, specifically from cloud services. And this segment is expected to grow as industries integrate digital transformation. The operating margin for Microsoft is expected to shoot up to 50% in 2023, with a compounded revenue growth of 15%.
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Apple (AAPL)
The tech giant witnessed its shares drop significantly in 2022 due to macroeconomic factors and other production crises. Apple not only had to deal with the factory crisis in China, but it also had to face significant losses due to the slow delivery of the newest iPhone. While share prices are falling, and the market cap has dropped below $2 trillion, investors are now voicing their concerns about the iPhone supply chain disruptions and the reduced demand for their new product.
But the company is still maintaining its strong financial position. And rumors of a major new lineup launch, such as their AR/VR headset, could come out in 2023. The company reported record revenue for the most recent quarter of $90.1 billion when other businesses were struggling with earnings. Their robust iPhone and Mac computer sales aided them in setting this revenue record.
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NVIDIA Corp (NVDA)
Renowned for selling and designing high-end graphics cards as well as video process chips for the gaming industry, Nvidia is also known for creating incredible visual effects for games. They offer the most advanced options currently available, making their chips popular among developers and gaming enthusiasts.
Despite its popularity, the company witnessed its shares sliced by half in 2022. Consumer fears over a recession were considered one of the significant reasons for the drop. While the company lost revenue due to the issues with the cryptocurrency space, many feel that Nvidia stocks are likely to rebound in 2023 due to the booming cloud-based data center business.
However, it is worth reporting that the data center business of Nvidia brought in almost $10 billion in revenue for 2022. With businesses continuing to incorporate digital transformations into their operations, investors are optimistic that this will represent a higher demand for Nvidia’s chips.
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PayPal (PYPL)
A leader in digital payment processing, PayPal service is used globally. What makes PayPal's tech stock a buy for investors is that its shares dropped almost 60%. However, the company has remained a highly profitable business. Though the present-day issues with inflation and looming fears of a recession are likely to hurt volume, the company can capitalize when the economy rebounds. With the growing popularity of the buy-now-pay-later program and the addition of cryptocurrency, PayPal, which has a customer base of 432 million worldwide, should be a stock to watch in 2023.
Other Notable Tech Stocks to Pay Attention:
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Meta Platforms
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Mastercard
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Accenture
Key Highlights - Tech Stocks
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With all eyes are artificial intelligence space and other upcoming innovations, investors will explore new investment opportunities in 2023.
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Major tech companies experienced a rough year in the stock market in 2022. And they are now expecting plenty of opportunities to invest in AI and other tech stocks in 2023.
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The beaten-down tech sector ended 2022 with consecutive declines. However, 2023 is set to offer an upside as the market starts to recover.
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Even with the uncertainties, many stocks performed well during the 2022 downturn. They even had excellent fundamentals and bullish momentum, indicating their potential to perform well.
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Major companies are racing to invest in technological advancements, with new innovations emerging on a scale.
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In Conclusion - Best Tech Stocks to Buy Now
The pandemic highlighted the significance of having a proper IT (Information Technology) infrastructure to ensure the efficient continuation of businesses. It also accelerated the push towards digitalization for all companies ranging from small local enterprises to large conglomerates. Companies are now focusing more on developing and upgrading their infrastructure for operations-related services. Along with this, many IT-enabled businesses are emerging as the top investment options for investors. This is providing the IT sector with great investment opportunities over the long term, thereby driving growth.
While it is no secret that 2022 was a volatile year for the economy, some of the biggest companies witnessed a drop in value significantly due to soaring inflation and rate hikes. This led to a series of investor sell-offs among the rising fears of a possible recession. With many top tech stocks at surprisingly low prices, this market dip could be considered a perfect opportunity to invest in these giant companies. Many analysts are now optimistic about the future of tech stocks due to emerging trends and demands.
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