Tech stocks are some of the most appealing and popular in the stock market. But did you ever think about what makes investors so eager to find the best tech stocks to buy?
For me, finding the best tech stocks to buy is about the growth potential. Tech companies by nature are looking for innovative ways to do things or bring new technologies to market.
People get excited about advances in tech because they often have direct applications to their daily lives.
That nature can lead to revolutionary advances that change the world overnight. Companies have been working on artificial intelligence for a long time, but ChatGPT changed everything.
The AI program amazed the world late last year with its ability to hold conversations and respond to questions in an incredibly conversational and natural way, and now AI stocks are all the rage.
As an investor, choosing tech stocks to buy can be pretty exciting, particularly when companies can scale their products for the masses. That’s when the profits really roll in.
Tech stocks also face lots of competition, so you have to be prepared to take the good with the bad.
There are no guarantees with investing, but the Portfolio Grader can help you target the best tech stocks to buy.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) was one of the biggest winners from the AI craze, thanks to its $13 billion investment since 2019 in OpenAI, the company that created ChatGPT. Microsoft was quick to integrate ChatGPT and its generative AI into the company’s Bing search engine.
The stock price pulled back a little in recent weeks as Microsoft disclosed that it’s not expected to see considerable growth in AI revenue this year, a classic case of the market getting ahead of itself.
But that’s OK. I think Microsoft still has a long way to go. Earnings should grow from $10.98 in this fiscal year (ending June 2024) to nearly $15 per share just two years later.
I think that the current pullback is just an opportunity to buy some discounted MSFT shares. Microsoft stock is up 37% in 2023 and gets a “B” rating in the Portfolio Grader.
Palantir Technologies (PLTR)
If you’re looking for another way to play AI, then Palantir Technologies (NYSE:PLTR) is a good option.
I think investors who bailed out after the Q2 earnings report were being a little hasty.
Earnings were solid for the company, which sells custom data analytics software, helping companies analyze data to make decisions. Its largest customer remains the U.S. government.
Revenue of $533.3 million was up 12.7% from a year ago and was in line with analyst expectations. The company also posted net income of $28.1 million, up a whopping 113% from a year ago. Palantir also issued Q3 guidance in a range of $553 million to $557 million, which also was at the high end of analysts’ consensus estimate.
But the problem seems to be that some analysts believe Palantir isn’t growing fast enough to justify the increase in stock price. It’s up 136% this year.
PLTR stock gets a “B” rating in the Portfolio Grader.
Alphabet (GOOG, GOOGL)
If Microsoft can make money from AI by fusing its search engine with generative AI, then surely Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) can as well, right?
Alphabet’s Google search engine still has better than 80% market share, although Microsoft is making inroads.
Alphabet is using generative AI tools to help users summarize text, define terms and do other fun tricks. It’s also launching AI features that will help programmers with coding tasks.
Meanwhile, 78% of Alphabet’s revenue comes from advertising. Advertising weakness has been a problem as of late for Alphabet, with 3% year-over-year growth in the second quarter dragging down the rest of the company.
However, as the economy rebounds, advertising dollars will return both for Google search and for products such as YouTube.
GOOG stock is up 53% this year and gets a “B” rating in the Portfolio Grader.
Nvidia (NVDA)
No list of the best tech stocks to buy would be complete without Nvidia (NASDAQ:NVDA). You could make the argument that Nvidia is the most interesting and exciting tech stock of 2023. I wouldn’t be surprised if we’re saying the same thing next year.
Nvidia is the chip manufacturer that’s responsible for many of the chips used to power generative AI. Nivida has a market share of 80% to 95% in the AI computing market.
Earnings for the second quarter were just as impressive as Q1. Revenue was $13.51 million, which up from $6.7 billion a year and up 88% from Q1. Earnings of $2.70 per share beat expectations of $2.09.
NVDA stock is up 216% this year and that’s even after a pullback in the last two weeks, but this stock price is destined to hit $500 and more.
NVDA stock has an “A” rating in the Portfolio Grader.
Salesforce (CRM)
Salesforce (NYSE:CRM) is a San Francisco-based cloud software company. It provides management software for companies to manage sales, customer service, marketing automation, e-commerce, and analytics.
By helping businesses automate their sales and marketing processes, Salesforce can assist with capturing leads and email marketing.
AI is a major tool for Salesforce. Its Einstein product can create personalized marketing emails. It currently has more than 150,000 users for its customer relationship management platform.
Q2 revenue of $8.6 billion was up more than 11% from a year ago. The company also earned $2.12 per share, better than the $1.90 EPS that analysts expected.
CRM stock is up 67% this year and gets a “B” rating in the Portfolio Grader.
Meta Platforms (META)
After enduring a very difficult 2022, Facebook parent Meta Platforms (NASDAQ:META) is having a satisfyingly good year.
Second-quarter results were even better than analysts expected, with revenue of nearly $32 billion and EPS of $2.98. Profits were up over 16% on a year-over-year basis.
Meta raised a lot of eyebrows last year when it began investing billions into building the metaverse. And as Facebook’s growth stopped and advertisers fled the platform, Meta lost two-thirds of its value after peaking in 2021.
The metaverse hasn’t taken off like CEO Mark Zuckerberg may have hoped. But Meta’s strength this year is on the back of improvements in digital advertising, the continued strength of the Instagram platform and Meta’s Reels, which is a true competitor with TikTok.
Meta also launched Threads, a platform that’s very similar to X (the company formerly known as Twitter), which could become a solid revenue source.
META stock is up 148% this year, a solid bounce back from that awful 2022. It gets a “B” rating in the Portfolio Grader.
ePlus Incorporated (PLUS)
Virginia-based ePlus Incorporated (NASDAQ:PLUS) is an information technology services company.
It provides software solutions for cloud, data center, security, networking and AI.
It offers hardware, subscription software, professional and management services, desktop support and project management. The company also has a finance segment that handles underwriting, direct financing, accounting, risk management and asset management.
Results for the company’s fiscal Q1 2024 (ending June 30, 2023) included revenue of $574 million, an increase of 25% from a year ago. Operating income rose 40% to $46 million.
For the full 2024 fiscal year, ePlus issued guidance for sales between $2.23 billion and $2.33 billion, an increase from $2 billion in FY2023.
PLUS stock is up 47% in 2023 and gets a “B” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had a long position in NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article had a long position in PLTR. The staff member did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.