After an uncharacteristically sluggish performance in 2022, tech stocks have come roaring back to life in 2023. In fact, the Technology Select Sector SPDR ETF (ticker: XLK) has more than tripled the S&P 500’s year-to-date return through June 2.
For more than a decade, brief periods of tech sector underperformance have consistently been long-term buying opportunities, and that trend seems to be playing out once again so far in 2023. However, inflation and interest rates remain headwinds for tech earnings in the near term, making stock selection critical.
Here are 10 of the best tech stocks to buy today, according to CFRA Research analysts:
|Stock||CFRA rating||Gap to price target (as of June 2)|
|Apple Inc. (AAPL)||Buy||5%|
|Microsoft Corp. (MSFT)||Strong Buy||-1.6%|
|Nvidia Corp. (NVDA)||Buy||6.2%|
|Broadcom Inc. (AVGO)||Buy||-8.3%|
|Salesforce Inc. (CRM)||Strong Buy||20.2%|
|Cisco Systems Inc. (CSCO)||Strong Buy||20%|
|Accenture PLC (ACN)||Strong Buy||6.9%|
|Advanced Micro Devices Inc. (AMD)||Buy||-19.4%|
|Adobe Inc. (ADBE)||Buy||-5.6%|
|Applied Materials Inc. (AMAT)||Buy||7.7%|
Apple produces the iPhone, iPad, Apple Watch, Mac computers and other personal computing devices. In addition, its services segment includes its App Store, Apple Music, iCloud and licensing businesses. Analyst Angelo Zino says Apple has an impressive customer ecosystem, which includes an expanding addressable market and high retention rates. Zino says Apple’s stable free cash flow generation, aggressive capital allocation strategy and its impressive track record of execution warrants a valuation premium for Apple shares. He says higher product prices will drive earnings upside in coming years. CFRA has a “buy” rating and $190 price target for AAPL stock, which closed at $180.95 on June 2.
Microsoft is the world’s largest software company and is best known for Windows, Office and Azure cloud services. Zino says Microsoft’s transition to cloud services has been extremely successful, and its cloud-based versions of Office, Dynamics and Teams are gaining significant traction. In fact, revenue from cloud-based sources now accounts for nearly two-thirds of Microsoft’s total sales. Zino says ChatGPT and other artificial intelligence technologies provide long-term revenue growth potential. He projects 10% revenue growth in fiscal 2024 and 12% growth in fiscal 2025. CFRA has a “strong buy” rating and $330 price target for MSFT stock, which closed at $335.40 on June 2.
Nvidia designs and sells high-end graphics and video processing chips used for desktop and gaming personal computers, workstations and other advanced computing servers and supercomputers. Not only is Nvidia one of the best-performing stocks in the entire market in the past 15 years, its year-to-date 169.1% gain through Jun 2 is the best performance of any stock on this list so far in 2023. Zino says Nvidia’s Hopper-based graphics processor units are driving impressive momentum in the company’s data center business. He projects 59% overall revenue growth in fiscal 2024. CFRA has a “buy” rating and $415 price target for NVDA stock, which closed at $390.87 on June 2.
Broadcom is a diversified global analog semiconductor supplier. Zino says investors are understandably concerned about Broadcom’s slowing wireless business and uncertainty surrounding the company’s pending acquisition of VMware Inc. (VMW). However, he says booming cloud demand will be the key long-term driver for Broadcom, and he projects generative AI technology will boost the company’s application-specific integrated circuit revenue to $3 billion in fiscal 2023. If regulators eventually approve the VMware buyout, Zino anticipates the company’s software exposure will diversify Broadcom’s business and potentially boost margins. CFRA has a “buy” rating and $750 price target for AVGO stock, which closed at $812 on June 2.
Salesforce is the world’s largest provider of cloud-based customer relationship management, or CRM, software. Analyst John Freeman says Salesforce shares have a historically low valuation and the company remains one of the most disruptive software innovators in the world. He says the stock is also one of the best pure-play investments in cloud computing. Freeman says Salesforce will expand its industry-leading 31% share of the CRM market to at least 36% by fiscal 2025, and he projects 13% compound annual revenue growth over the next three years. CFRA has a “strong buy” rating and $256 price target for CRM stock, which closed at $213.03 on June 2.
Cisco Systems Inc. (CSCO)
Cisco provides networking, cloud and cybersecurity hardware and software solutions. Cisco shares also pay a 3.1% dividend, the highest of any stock on this list. Analyst Keith Snyder says Cisco faces near-term headwinds, but 5G deployments and the Wi-Fi 6 upgrade cycle will be long-term demand drivers for the company. Snyder says component shortages will subside in early fiscal 2023 and says Cisco will benefit from a rapid rise in global bandwidth consumption in coming years. He projects 10.3% revenue growth in fiscal 2023. CFRA has a “strong buy” rating and $60 price target for CSCO stock, which closed at $50.02 on June 2.
Accenture is a global information technology services firm that specializes in consulting and outsourcing. Analyst David Holt says Accenture is a high-quality investment in an uncertain macroeconomic environment, and the stock is an excellent defensive play given the company’s diverse business, solid balance sheet and long-term track record of industry-leading earnings growth. Holt says disruptions in Russia and foreign exchange headwinds have weighed on Accenture’s growth in recent quarters, but the company continued to operate at a high level, anticipate its customers’ needs and outgrow its operating markets. CFRA has a “strong buy” rating and $333 price target for ACN stock, which closed at $311.39 on June 2.
Advanced Micro Devices Inc. (AMD)
Shares of microprocessor and graphics semiconductor stock Advanced Micro Devices are up a whopping 2,900% over the past decade, but Zino says there’s still more room for upside. He says the ramp up of its next-generation EPYC processor is a bullish catalyst, and AMD’s data center server central processing unit business has an attractive growth outlook. In addition, he anticipates an improving balance sheet and a more attractive mix of higher-margin product sales starting in the second half of 2023. He projects 20% revenue growth in 2024. CFRA has a “buy” rating and $95 price target for AMD stock, which closed at $117.86 on June 2.
Adobe produces creative content software and other applications used for marketing and e-commerce. Freeman says there are several reasons to like Adobe, including the company’s dominant share of popular content creation apps, its increasing mix of high-margin Document Cloud revenue and its impressive long-term track record of execution. In addition, Freeman says Adobe’s business has inherent operating leverage and the stock is undervalued relative to its three-year average. He projects three-year compound annual revenue growth of 15%, including at least 25% annual growth in Document Cloud revenue. CFRA has a “buy” rating and $412 price target for ADBE stock, which closed at $436.37 on June 2.
Applied Materials Inc. (AMAT)
Applied Materials is the world’s largest wafer fabrication equipment supplier for the semiconductor industry. Analyst Keven Young says investors are already looking beyond a bumpy fiscal 2023 for semiconductor stocks, and they are pricing in a demand rebound in fiscal 2024. Young says Applied Materials’ services segment will benefit from a growing installed user base and rising demand for trailing node geometries. He estimates foundry/logic capacity expansion could position Applied Materials to exceed earnings estimates and generate $7 billion in free cash flow in fiscal 2023. CFRA has a “buy” rating and $145 price target for AMAT stock, which closed at $134.63 on June 2.