- Each of these tech stocks to buy are approaching critical bounce levels.
- Advanced Micro Devices (AMD) stock is hot and cheap.
- Nvidia (NVDA) is the new trend-setter.
- Intel (INTC) is s dirt cheap tech behemoth.
- Microsoft (MSFT) represents the most improved old dog on the Street.
- Tesla (TSLA) continues to lead the electric vehicle space.
- Shopify (SHOP) is reinventing the world Amazon created.
- Amazon (AMZN) is a titan that continues to make great moves.
Wall Street is a total mess this week, but the list of tech stocks to buy remains quite large. Equities and other asset classes are in free fall. Even Bitcoin (BTC-USD) is now below $30,000. The tech stocks I’ve identified today are all likely to experience sharp recoveries soon enough.
We should recognize that there are short-term risks, like yesterday the indices fell 2.5%. More proof of the chaos is that the CBOE volatility index (INDEXCBOE:VIX) also closed red. Since bond yields also fell, we should not blame the inflation report. Regardless, most companies are still reporting strong P&L’s. Even Upstart (NASDAQ:UPST) collapsed despite growing sales 150%. Risk appetite is very particular these days, and investors favor less frothy tickers.
I limited my list of tech stocks to include nothing but outstanding companies. The uneasiness in the stock market will abate after a while, as the hawkish Federal Reserve rhetoric becomes stale. Meanwhile, the indices have room to fall another 12% to 20% from here. Therefore, tech stocks may not have hit an absolute bottom. So it would be a wise to throttle deployment of new trades.
Long term, the overwhelming bullish thesis is that the world is absolutely going digital. This is a one-way trend and we will need smart machines to make that happen. Overall, demand for these products and services will linger for a decade.
|AMD||Advanced Micro Devices||$93.73|
Advanced Micro Devices (AMD)
I will start with a successful company that provides brains to the operations. The world needs computers and Advanced Micro Devices (NASDAQ:AMD) provides strong processing power to make that happen. The company’s fundamentals are excellent, and it’s relatively cheap. Its reputation has grown to the point that it has staunch fans. I, for one, have recently purchased two computers with AMD internals.
The stock chart is approaching a support zone above $75 per share. There are likely to be bulls lurking there waiting to buy it. This has served as a base since summer of 2020. However, investors should look out for small technical hiccups to close a few gaps below that. Below these levels, AMD would make for an excellent value proposition. The rally back should be violent, because Wall Street habitually overdoes things. The bears cannot help but overstay their welcome into winning trades.
Nvidia (NASDAQ:NVDA) stock is suffering a similar fate to AMD. It is its chief headline rival also providing excellent brains to our highly technical world. Nvidia has earned the reputation of the lead innovator in the field. Their financial results support these claims with absolute certainty. Nvidia management grew its revenues more than five times since 2015. They even boast a $10 billion net income. Last year they generated $9 billion in cash from their operations.
However, the stock is not cheap, especially relative to its competition. With a price-to-sales ratio of 17x, it could lose a bit of froth to bring that more in line. Nevertheless, the stock is also falling into a sharp pivotal zone. The support extends from current price through $138 per share. Those levels have been in contention also since 2020, so they will provide support.
This stock is also in a bearish pattern that may have a few more bucks to go. All it needs is for the indices to stabilize and it will too. There’s no doubt of Nvidia’s excellence, and the buyers will come back to it with force. The rally back should be more violent than the sellers may yet realize.
While Nvidia and AMD hog the headlines, Intel is still the behemoth they are both chasing. Most investors don’t realize that Intel (NASDAQ:INTC) is larger than the other two twice over. It is still a beast, but not as exciting. Eventually they recapture the investor imagination and earn back the respect they lost. Fundamentally this is the cheapest of them all by a mile.
From a charts perspective, INTC stock has had strong support around $40 per share since 2018. Investors who hold the stock have strong hands. They are not likely to capitulate easily. There is technical risk just like the other two, but it’s likely to find support soon. The rally back in this one may not be as ferocious as the other two. This makes it carry a bit less risk over all.
Microsoft (NASDAQ:MSFT) is an old dog that lived through the dot com bubble. MSFT stock has lost 25% of its value since the high it set last fall. Since it lost the support from early March, it could even overshoot a bit lower from here. But if the indices stabilize, Microsoft has technical reasons to rally back 15% and quickly.
This company proved itself worthy of trust. Microsoft was able to shift a giant ship and steer it straight into winning trends. Under the leadership of Satya Nadella, the company made it look easy too. Wall Street rewarded MSFT for its efforts, as the stock still is miles away from its pandemic lows. While it is not cheap, there isn’t obvious bloat either. Revenues for the trailing 12 months doubled from five years ago. With a net income of $70 billion, investors can sit through a few bumps along the way. If I were long the stock I can confidently wait out these jitters.
While you might not see electric vehicle maker Tesla (NASDAQ:TSLA) as a tech stock, it’s full of technology, so I’m keeping it on this list. Currently its financials are impeccable and twice as efficient with its gross margin compared to Ford (NYSE:F) or General Motors (NYSE:GM).
Tesla stock is a bigger beast than the company itself. Over time it has slayed many shorts. Not yesterday though, as it fell 8% and for no specific reason. However it is still doing relatively better than the indices. At least it has not yet lost its support from Feb. 24. But therein lies some technical risk. If TSLA falls below $697 per share, it could accelerate lower.
I am confident that once it stabilizes Tesla will slay more bears. The rally back will be ferocious, so investors should avoid shorting it. Smart money would look for entries near support spots below. It too will need help from the overall markets.
The line between tech and retail companies is paper thin. Therefore, I’m including Shopify (NYSE:SHOP) in my list of tech stocks to buy. If there is a stock that can rally fast, SHOP stock is it. Unfortunately it does so in both directions. Case in point, the company just lost 80% of its value since last November. Luckily it had just rallied over 200% out of the pandemic.
SHOP stock took a long round trip road to $1,760 and closed under $320 on Wednesday. Investors drove it straight into the pandemic base. Once it comes back into style, the buyers will overdo it one more time. It is hard to quantify the size of the rebound, as it is hard to pinpoint the absolute bottom. Therefore, taking small bites is best.
Management grew revenues seven-fold in five years. And they did that without creating excessive valuation. Its humble price-to-sales suggests that owners now have realistic expectations. Moderation is an extremely important virtue when dealing with Shopify stock.
If we include SHOP, then Amazon (NASDAQ:AMZN) also belongs on this list. After all, Amazon essentially owns the cloud, so most tech-related things pass through their servers.
It too has had a bad time on Wall Street of late. Amazon stock is 44% below its all-time highs. It is also approaching a very sharp consolidation zone. Unfortunately it is also wide, so the floor is more of a band of support. Going all-in to catch this falling machete would be reckless.
Its fundamentals are beyond reproach and its financial metrics are strong. Amazon generates $470 billion in revenues and $20 billion in net income. It has 1the means to do whatever it wants to grow the business further. The team is rarely short on imagination and it has earned every benefit of the doubt. This is a tech stock I could own for a lifetime.
On the date of publication, Nicolas Chahine 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.