With the innovation space absorbing the brunt of the equity sector’s volatility, the concept of tech stock predictions for 2023 presents significant vagaries. Fundamentally, this market segment offers tremendous relevancies as it undergirds societal progress. At the same time, investors must respect the macroeconomic dynamics that affect valuations.
Primarily, all eyes focus on the Federal Reserve and its hawkish monetary policy. During the initial onset of the coronavirus pandemic, the central bank initiated accommodative programs to buttress the economy. Now, the Fed must unwind prior monetary excesses, which if performed too aggressively may lead to a recession. Naturally, such deflationary forces would put a negative slant on tech stock predictions.
Generally speaking, though, I’m optimistic about specific tech players that command significant demand structures. Again, society attempts to move forward, not backward. Nevertheless, I will provide two sets of tech stock predictions (one bullish, one bearish) for each of the companies below.
When it comes to tech stock predictions for 2023, I don’t expect too many folks to discuss IBM (NYSE:IBM). Though presenting many powerful applications, IBM represents a legacy tech firm. As a result, it carries a reputation for focusing too much on hardware, even though that’s no longer the case. It’s created an unusual situation where Big Blue has become a powerful investment stuck in the background.
No matter what, forward-thinking investors can use this dynamic to their advantage. For instance, IBM offers a forward yield of 5.4%, far above the technology sector’s average yield of 1.37%. While the company’s payout ratio is fairly lofty at 66.5%, it also commands 28 years of consecutive dividend increases. More than likely, management doesn’t want to abandon this status so the yield should be safe.
Combined with its innovations in artificial intelligence and the blockchain, IBM should steadily gain ground. A gradual return to the $140 level – about a 14% increase from the time-of-writing price – should be doable. And even under bearish market conditions, the stoutness of Big Blue’s business profile should spare it extreme volatility.
A powerhouse in innovations such as Software-as-a-Service (SaaS), Microsoft (NASDAQ:MSFT) commands attention as an all-around utilitarian tech platform. Fundamentally, Microsoft dominates the language of business. For instance, regarding the desktop operating system segment, Windows dominates with a 75% market share. Basically, if you’re unfamiliar with the Microsoft way, you’re going to struggle in a professional setting.
Financially, the company brings plenty of substance to the table. First, it enjoys a stable balance sheet, with a high Altman Z-Score of 7.27. This reflects a low probability of bankruptcy risk. On the income statement, Microsoft features sales expansion metrics that exceed the median ratings for the software industry. As well, its profitability metrics rank among the best in class.
At the moment, MSFT finds itself down over 29% on a year-to-date basis. Frankly, this doesn’t seem to align with wider implications, such as the burgeoning gig economy. Thus, regarding tech stock predictions, MSFT should move toward the $300 level. However, if economic conditions go awry, investors should watch the $200 support line. This demarcation also represents a psychologically significant price point.
Alphabet (GOOG, GOOGL)
Another tech giant that suffered massively during the year so far, Alphabet (NASDAQ: GOOG, NASDAQ: GOOGL) nevertheless offers an unignorable opportunity. Essentially, the company owns the internet. For example, the latest data for global search engine traffic indicates that Alphabet’s Google commands a market share of 92.4%. Everybody else (including the best that Russia and China have to offer) fights for the scraps.
Despite this extraordinary stat, GOOG and GOOGL have both found themselves down at least 30% since the beginning of this year. For contrarians, this discount may seem excessive. According to Gurufocus.com, Alphabet ranks as a modestly undervalued business. Backed by a stable balance sheet, Alphabet enjoys robust strengths in the top and bottom lines. Perhaps most notably, its 29% return on equity (which ranks above 88% of its peers) signifies a high-quality business.
With both fundamentals and financials aligned enticingly, GOOG/GOOGL should be able to march steadily toward the $130 level. Of course, if bearish pressures become the dominant force, a drop to $80 wouldn’t be shocking.
Cisco Systems (CSCO)
While not the most exciting market idea for discussions about tech stock predictions, Cisco Systems (NASDAQ:CSCO) warrants careful attention. A digital communications tech conglomerate, Cisco features many demand channels, perhaps most prominently the 5G rollout. So, call it boring but in this ecosystem, boring is good.
In addition, Cisco provides a generally reliable source of passive income for those seeking inflation-related mitigation. Per Dividend.com, the company offers a forward yield of 3.63% with a payout ratio of 43.15%. As well, Cisco features 11 years of consecutive dividend increases, a tally that management would probably like to expand upon.
Further, Gurufocus.com rates CSCO as modestly undervalued. Financially, the underlying firm features strengths across the board, though it’s notable for its excellent profitability metrics. Additionally, Cisco features a return on equity of 29%, ranked better than 94% of its peers.
In terms of tech stock predictions, I anticipate CSCO to march toward and eventually break the upside technical ceiling of $50. From there, it could drive up to $60. However, if bearishness becomes the order of the day, the next logical support line would be around the $35 level.
Meta Platforms (META)
Long a winner in the tech space, Meta Platforms (NASDAQ: META) finds itself staring at an unusual color for the company: red, as in garish bloody red. Since the start of 2022, META hemorrhaged nearly 61% of its equity value. Moreover, the hits just keep on coming. In the trailing month, for instance, META slipped 9%.
Nevertheless, Meta brings too many relevancies to the table to ignore. While Alphabet may own the internet, Meta owns social media via Facebook. In terms of monthly active users, Facebook now has 2.93 billion people logging on. And unlike other competing platforms, Facebook – while predominantly skewing young – appeals to multiple age cohorts. That’s going to be significant for long-term growth.
Therefore, in terms of tech stock predictions, I anticipate a recovery in META – or at least the beginning of one. First things first though: investors will need to see META climb back to $200 before we can discuss higher price objectives.
Of course, tech stock predictions don’t always point up. Should macro headwinds continue to weigh on the digital advertising space, META could be in serious trouble. We’re talking possibly to $100 based on present market dynamics.
Rover Group (ROVR)
One of the intriguing market ideas tied to the gig economy, Rover Group (NASDAQ:ROVR) connects service providers with service seekers. Unlike other pure-play gig economy stocks, however, Rover’s specialty focuses on pet-related services. We’re talking about dog walking, grooming, boarding, and other important needs.
Fundamentally, Rover benefits from America’s love of its furry friends. According to the American Pet Products Association, the pet industry generated total revenue of $123.6 billion. Since at least 2018, total revenue increased consecutively, symbolizing substantial demand. Thus, ROVR could be a great deal for those who aren’t put off by its 62% YTD loss.
To be fair, data from Gurufocus.com reveals that Rover could use some shoring up in its financials. Undoubtedly, it presently features a growth-centric profile. Still, it does have notable strengths in its balance sheet, highlighted by a cash-to-debt ratio in the double digits.
In terms of tech stock predictions, ROVR could return to $5, especially if the return-to-the-office narrative intensifies. That would imply Fido being suddenly alone, thus requiring outside help. However, if economic forces don’t cooperate, ROVR could lose half its present valuation based on consumer budget cuts.
Regarding tech stock predictions, it’s quite possible that interest in Coinbase (NASDAQ:COIN) ranks among the most queried. Of course, in 2021, seemingly everybody was clamoring for cryptocurrencies and anything related to the blockchain. Now, in 2022, few want to touch the sector with a 10-foot pole. The extremes in sentiment leave COIN in a precarious position.
Per Gurufocus.com, Coinbase’s financials leave much to be desired. True, the company expanded significantly in 2021 relative to prior years. However, that’s also the problem. If cryptos aren’t rocking and rolling, COIN suffers dramatically from a lack of activity. Therefore, it’s a very cyclical, feast-or-famine business.
For tech stock predictions against a multi-year backdrop, I’m generally bullish on COIN. However, if we’re talking specifically about 2023, I’m afraid I’m not that optimistic. At best, I believe it will meander between the $60 and $70 range. However, if the economy slips into recession, it’s difficult to place a floor on COIN. If pressed for an answer, an erosion to $40 wouldn’t be unbelievable.
On the date of publication, Josh Enomoto 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.