Despite facing the largest cumulative increase in official interest rates in 40 years, the United States economy has demonstrated surprising resilience. Throughout the past year, gross domestic product grew by 2.9%, and employment remains strong. Unemployment is standing at 3.9%. This has spelled great things for tech stocks to buy.
The Fed funds rate has been raised by 525 basis points since March 2022, with a significant uptick of 100 points this year. This robust economic performance is positive for the stock market, and these are three perfect tech stocks to buy that you should invest in like renowned investor Cathie Wood.
Cisco Systems (CSCO)
Cisco Systems (NASDAQ:CSCO) provides end-to-end networking equipment, security, collaboration, data center and IoT.
The company had very strong Q4 earnings, with revenue of $15.2 billion growing 16% YoY. The EPS of $1.14 beat expectations by $0.08. Net income of $3.98 billion grew 40.6% YoY. The company has found success with its business model transformation. Total software revenue rose 17% YoY and software subscription revenue is up 20% YoY.
The stock is up 8.95% YTD. Yahoo! Finance reports 16 analysts with a mean one-year price target of $58.47, ranging from $45.00 to $76.00.
The network-as-a-service market has recently seen an increase in its projection with sources showing a 32%–35% CAGR. This increase in growth estimates is very attractive since it shows a higher industry potential.
Cisco’s largest growth catalyst this year is its recently announced acquisition of Splunk. At $28 billion, this is the company’s largest acquisition to date. This is key as Splunk will help move organizations from threat detection and response to prediction and prevention. The acquision illustrates a step forward in the cybersecurity space with AI technology. In addition, this acquisition will accelerate Cisco’s business transformation to more recurring revenue.
Cisco’s strong earnings and Splunk acquisition make it a stock that you do not want missing from your portfolio.
Broadcom Incorporated (AVGO)
Broadcom (NASDAQ:AVGO) has two main products: semiconductors and infrastructure software applications. The company has shown an excellent performance this year–the stock is up 71.09% YTD. Despite already growing so much this year, most notable firms are still saying Broadcom is undervalued.
In May, Apple announced a multibillion-dollar deal with Broadcom for the development of 5G radio frequency and wireless connectivity components. This huge agreement possesses countless benefits for Broadcom. 5G tech is a keystone of next-gen electronics, so receiving the funding to build FBAR filters in key American technology hubs will be a large catalyst for Broadcom. This partnership will also allow for investment further in critical automation projects and upskilling technicians and engineers.
Recently, Google reaffirmed its partnership with Broadcom. This lucrative chip partnership consists of Broadcom developing Google’s TPU chip series, which are specialized processors optimized to run AI models. This was critical, as Broadcom’s involvement in this AI chip-making partnership is essential to its growth in an AI economy. This partnership is only ramping up, with Google continuously accelerating chip orders. With the debut of the TPU v5e at the end of August and hints at a successor to the chip, Broadcom is in position to profit.
Yahoo! Finance reports 23 analysts with a mean 1-year price target of $977.61, ranging from $879.00 to $1,050.00.
With several long-term growth catalysts, including the in-progress acquisition of VMWare, Broadcom has never been in a better position to grow.
Microsoft Corporation (MSFT)
Microsoft Corporation (NASDAQ:MSFT) is a technology conglomerate, focused on developing market-ready software and hardware, with a recent shift of focus onto Artificial Intelligence with the acquisition of OpenAI. Currently, MSFT is valued at $366.68, with a year-to-date growth of 53.05%.
The global information technology sector continues its strong standing, thriving recently in 2022. 2027 is projected to grow to $12 trillion, marking a five-year CAGR of 7.9%. As known, Microsoft holds a strong standing in the industry, with a global market share of 21%.
Financially, MSFT had a great quarter in Q3 ’23, with every metric reporting year-over-year increases. Revenue was reported at $56.52 billion, or a YoY increase of 12.76%. Furthermore, both net income and diluted EPS grew nearly 27% a piece, with figures of $22.29 billion and 2.99 respectively. Finally, MSFT also outperformed consensus earnings estimates, with revenue beating projections by 3.6% and EPS by 12.82%.
Overall, the largest catalyst behind Microsoft’s future success has been the large announcements of OpenAI’s recent breakthroughs and product launches. Among these are GPT stores, allowing for users to upload and download versions of artificial intelligence chatbots to interact with. Further, OpenAI announced GPT-4 Turbo or further advances in the latest stage of their breakthrough product ChatGPT. Ultimately, the continuous development of AI will further push MSFT’s valuation and revenue through the roof. If you are looking for tech stocks to buy, start here.
On the date of publication, Michael Que did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
