12 Most Promising Tech Stocks to Buy in 2023
From sleek and foldable mobile phones to surgical robots and from 3D Metaverse simulators to space crafts reaching Mars, technology is evolving at lightning speed across domains. This is why tech stocks are also known as growth stocks and garner huge investor interest and promises of exciting returns for shareholders. As a result, the US tech industry is projected to grow by 5.4% in 2023.
Looking to invest in tech? Here are 12 tech stock with the most promising return potential, in no specific order.
1. Microsoft Corp. (MSFT)
The leading operating systems producer has been in the green since it was established in 1975 and is the second-largest tech company by market cap today. Its share price did decline during the 2022 slump, which affected the entire tech sector. Yet, the company has registered 218.28% growth in the 5 years from 2018 to 2023 and has maintained a consistent dividend history for the last 18 years. As of April 4, 2023, the TTM dividend pay-out for Microsoft stood at $2.72 with a dividend yield of 0.94%. Analysts project consistent growth for the stock and expect it to reach 2.87x its current price at $870 by 2030.
2. Medtronic plc. (MDT)
The American medical device company has paid dividends for over 30 years. It is also considered a defensive stock since healthcare is one of the basic necessities and the sector performs stably even during economic slumps. The company's annual dividend is $2.72, with a dividend yield of 3.37%. At present, analysts consider it undervalued, signalling growth potential. Moreover, the neuroscience specialist firm recently partnered with Qure.ai and aims to provide innovative stroke management solutions to aid the identification and triage management of stroke patients.
3. Apple Inc. (AAPL)
Apple is the largest company by market cap and a global leader in mobile phones. It has established an ecosystem of computing devices that includes the iPad, Apple Watch and Mac computers, along with services, such as Apple Music and iCloud. The company holds a strong record of exceptional strategy execution to maintain stable free cash flow.
4. International Business Machines (IBM)
The tech giant is currently considered undervalued by stock analysts. The reason is its overall below-par performance in the last five years. Despite that, the company has maintained its status as a Dividend Aristocrat and raised dividends for the last 27 straight years, ended 2022, with massive free cash of $8.8 billion, which was more than 6.7 times the 2021 level. Its dividend yield as of April 2023 is 5.3%. IBM is also working to empower its customers by leveraging distributed ledger technology to enhance logistics operations.
The integrated chip maker has led the graphics market for the past 30 years. Its chips have evolved at pace with computers. The year-to-date gain for Nvidia, as of April 6, 2023, was 87.78%, the best in the segment so far in 2023. Nvidia was also among the top companies driving the rally of the Nasdaq 100 in the first quarter of 2023, with growth of over 70%, registering its highest quarterly gains in the last 20 years. Its cards are powering devices for the uber-relevant digital currency space for crypto mining and the Metaverse.
6. Alphabet Inc. (GOOGL)
Google’s parent is the second largest company by market capitalisation. It boasts a 5-year trailing return of 10.3% and a 10-year average annualised return of 11.4%. The company has a breadth of subsidiaries across domains, such as smart homes, self-driven cars, cloud storage and gaming systems.
7. Cisco Systems Inc. (CSCO)
Another defensive stock, the network devices and services company has amazed analysts with its top and bottom line performances, which outperformed the guidance in Q4 2022. Analysts expect the stock to continue on an upward trajectory, reaching a 25-year high with 12.5% upside. The company initiated dividends in 2011 and has increased them at least once a year since then. Cisco’s cybersecurity unit grew 14% in Q1 2023.
8. Meta Platforms Inc. (Meta)
Built on the foundation of Facebook, now Meta encompasses WhatsApp and Instagram as well. Despite some poor performance in 2022, the company is on a rebound since the beginning of 2023, with a 10-year trailing return of 20.4%. Mark Zuckerberg's pivot into the Metaverse, with gloves and 3D-vision devices, provides tailwinds to the company. Zuckerberg aims to help people “exist” in the Metaverse by bringing cutting-edge technology to every household. And when he pledged to improve efficiency, the company's share price surged 20% in January 2023.
9. Hewlett-Packard (HPQ)
The global personal computer manufacturer also builds enterprise products, such as servers, network devices, storage drives and imaging solutions. The company has had 13 consecutive years of dividend hikes, pushing the annual dividend above $1.00. It has a 3.7% forward yield. Additionally, Hewlett-Packard reported a 12.18% increase in revenue for the quarter ending January 31, 2023, and even registered year-on-year growth of 5.13%, despite most tech companies remaining in the red.
10. Adobe Inc. (ADBE)
Although the stock has grown less than 14% since the beginning of 2023, as of April 6, 2023, analysts predict the low valuation to be an opportunity for those with a long-term vision. Known for the ubiquitous proprietary pdf file format, the company's Document Cloud sales grew 14% in 2022, boosting revenues, which grew 11.5% yoy for the 12 months ending February 28, 2023.
11. Seagate Technology Holdings Plc. (STX)
Seagate dominates the storage supply space, along with Western Digital, and both have remained stable in the long term. Despite slowing share price growth, the company’s dividend has grown from 2020 through 2023, with a current annual pay-out of 4.6%.
12. Amazon.com (AMZN)
The stock price of the e-commerce giant and leading cloud services provider is poorly valued since the 2022 decline. The company announced its entry into generative artificial intelligence by launching an AI accelerator to help startups working in the domain. The kick-off event scheduled in the last week of May has all eyes as speculators assume it to be Amazon's reply to ChatGPT. The company's revenue has been growing over the past few years, reaching a 9.4% year-on-year increase at the end of 2022.
To Sum Up
Strong fundamentals and growth potential are the key drivers of the tech industry. Due to recessionary fears in 2022, many companies' earnings reports were disappointing. But the industry seems to be rapidly catching up, and this may be a good time to invest. However, careful due diligence and alignment with your trading style and portfolio strategy remain essential prerequisites.
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