These top tech stock picks are great long-term plays.
Tech stocks have delivered an uncharacteristically sluggish performance in 2022. For example, tech-focused exchange-traded fund Technology Select Sector SPDR ETF (ticker: XLK) has actually lagged behind the S&P 500 by 6.6% this year through Dec. 14, as investors have rotated from growth stocks to value stocks. For more than a decade, brief periods of tech sector underperformance have consistently been long-term buying opportunities, and 2022 may be no exception. Economists expect interest rates to peak and inflation to continue to subside in 2023 — potentially alleviating pressure on tech stock valuations. Here are 10 of the best tech stocks to buy, according to CFRA Research analysts.
Apple Inc. (AAPL)
Apple produces a range of personal computing devices, along with services such as the App Store, Apple Music, iCloud and licensing businesses. Analyst Angelo Zino says Apple has high customer retention rates, a growing addressable market and stable free cash flows. In addition, he says Apple has been aggressive with its capital allocation, and the company’s management has a track record of successfully adapting and executing. He projects rising average selling prices for Apple devices will improve margins in the coming years. CFRA has a “buy” rating and $165 price target for AAPL stock, which closed at $143.21 on Dec. 14.
Microsoft Corp. (MSFT)
Microsoft is the world’s largest software company and is best known for Windows, Office and Azure cloud services. Even at a nearly $2 trillion market capitalization, analyst John Freeman says Microsoft’s successful transition to a cloud-centric business model creates significant long-term growth opportunities. Revenue from cloud-based businesses now makes up roughly two-thirds of Microsoft’s total revenue. Freeman projects Microsoft’s operating margin will expand to 50% in 2023, up from 42% in 2021. He also forecasts three-year compound annual revenue growth of 15% for Microsoft. CFRA has a “strong buy” rating and $330 price target for MSFT stock, which closed at $257.22 on Dec. 14.
Visa Inc. (V)
Visa is a global credit card leader and operates the world’s largest retail electronic payments network. Analyst David Holt says Visa’s business model is insulated from cyclical economic downturns, making the stock an excellent defensive investment in an uncertain macroeconomic environment. Holt says the company’s diversified exposure to a variety of payment categories will allow Visa to generate sustainable revenue and earnings growth. In addition, he says Visa’s size and scale will help the company increase operating leverage and generate high returns on capital for investors. CFRA has a “buy” rating and $255 price target for V stock, which closed at $213.32 on Dec. 14.
Nvidia Corp. (NVDA)
Nvidia designs and sells high-end graphics and video processing chips used for personal computers, workstations and other advanced computing servers and supercomputers. Zino says Nvidia’s momentum in data center sales is encouraging, including a strong start for its Hopper-based graphics processing units. In addition, Zino has high expectations for Nvidia’s 2023 expansion into the central processing unit market with its Grace products. He is also bullish on Nvidia’s automotive segment, which doubled its revenue run rate in the third quarter. CFRA has a “buy” rating and $200 price target for NVDA stock, which closed at $176.74 on Dec. 14.
Mastercard Inc. (MA)
Mastercard is another leading credit card and digital payments specialist that is the second-largest global payment processing company. Like Visa, Mastercard is insulated from economic volatility. MA shares are down just 0.5% through Dec. 14 this year, which is the best performance of any stock on this list. Holt says Mastercard’s volume-driven business protects the company from inflationary pressures and swings in consumer preferences. He says the company’s exposure to tech trends — such as consumer-to-merchant payments, remittance and accounts payable — will help it improve operating leverage and generate upside for investors. CFRA has a “buy” rating and $395 price target for MA stock, which closed at $357.51 on Dec. 14.
Broadcom Inc. (AVGO)
Broadcom is a diversified global semiconductor manufacturer. The company also announced plans for a massive $61 billion acquisition of enterprise software company VMware Inc. (VMW) in May 2022. Broadcom generated more than $3 billion in net income last quarter, and its stock trades at just 13 times forward earnings. In addition, Broadcom shares pay a 3.2% dividend, a rarity among tech stocks and the highest yield on this list. Zino says Broadcom has an attractive valuation and the VMware deal could help Broadcom boost margins and diversify its business. CFRA has a “buy” rating and $580 price target for AVGO stock, which closed at $574.44 on Dec. 14.
Cisco Systems Inc. (CSCO)
Cisco provides networking, cloud and cybersecurity hardware and software solutions. Analyst Keith Snyder says Cisco will continue to battle headwinds from component shortages in the near term. However, Snyder says the next-generation Wi-Fi 6 upgrade cycle and global 5G expansion will continue to drive long-term demand for Cisco. He says Cisco is well positioned to capitalize on several secular technology growth themes, including rising bandwidth consumption and data center solutions. He says Cisco’s strong balance sheet also provides opportunities for targeted acquisitions to supplement organic growth. CFRA has a “strong buy” rating and $60 price target for CSCO stock, which closed at $49.30 on Dec. 14.
Accenture PLC (ACN)
Accenture is a firm that specializes in consulting and outsourcing. Holt says Accenture’s business should hold up well even in a slowing macroeconomic climate. The company has a resilient client base, a strong balance sheet and a track record of above-average earnings growth. Russia’s invasion of Ukraine caused temporary disruptions for Accenture in 2022, but Holt says the company’s attractive talent pool, valuable relationships with software vendors and underlying business momentum will continue to generate upside for investors in the long term. CFRA has a “strong buy” rating and $333 price target for ACN stock, which closed at $291.45 on Dec. 14.
Adobe Inc. (ADBE)
Adobe produces creative content software and other applications used for marketing and e-commerce. Freeman says Adobe has a dominant position in select content creation markets, and it is highly exposed to booming global growth in creative professionals. In addition, Freeman says Adobe has opportunities to monetize its unauthorized users, and its cloud business has been a particularly strong growth source. He says Adobe has impressive operating leverage and the stock is attractively valued relative to its historical average. Freeman projects three-year compound revenue growth of 13%. CFRA has a “buy” rating and $456 price target for ADBE stock, which closed at $339.92 on Dec. 14.
Salesforce Inc. (CRM)
Salesforce is the world’s largest provider of cloud-based customer relationship management software. For investors looking to buy the dip in tech stocks in 2022, Salesforce is an excellent opportunity. The stock is down 47% this year through Dec. 14, the worst performance of any stock on this list. Freeman says the sell-off has dropped Salesforce’s valuation to historically low levels, but the company remains one of the market’s most disruptive innovators and one of the biggest long-term beneficiaries of cloud migration. He projects three-year annual revenue growth of 16%. CFRA has a “strong buy” rating and $190 price target for CRM stock, which closed at $134.75 on Dec. 14.
10 best tech stocks to buy for 2023:
— Apple Inc. (AAPL)
— Microsoft Corp. (MSFT)
— Visa Inc. (V)
— Nvidia Corp. (NVDA)
— Mastercard Inc. (MA)
— Broadcom Inc. (AVGO)
— Cisco Systems Inc. (CSCO)
— Accenture PLC (ACN)
— Adobe Inc. (ADBE)
— Salesforce Inc. (CRM)
More from U.S. News
Update 12/15/22: This story was previously published at an earlier date and has been updated with new information.