Signs continue to point to continued growth opportunities across a wide swath of tech stocks. Recently, the tech-heavy Nasdaq exchange has often been observed to outperform more balanced exchanges like the Dow on down days. That’s a sharp about-face from a few months ago, when the Nasdaq almost always underperformed relative to other exchanges. It suggests that downside risk is decreasing in the world of tech stocks.
This is certainly related to slowing interest rate hikes. Those higher rates resulted in massive trouble throughout 2022 across tech. That said, these changing tides again put tech stocks in the driver’s seat as it relates to growth opportunities.
Here are seven of the top opportunities I’m looking at right now in the world of tech.
Impinj (NASDAQ:PI) is one of the top tech stocks to keep a close eye on for growth opportunities moving forward. The firm provides radio frequency solutions that help connect everyday items to the internet. The result is increased data about items, that promises to lead to greater insights for consumers and companies. The notion that the internet of things (IoT) will lead to better products that better reflect consumer needs is a primary reason it is such a hot sector.
Just how high those growth rates are may surprise. It’s expected the IoT space will grow at a compounding annual rate of approximately 26% between 2023 and 2030. Impinj, in turn, is well-positioned to provide growth to its investors.
Impinj’s most recent earnings report shows even greater growth than those projections suggest. In Q1, Impinj’s sales increased by 57.9% on a year-over-year basis. The positive news for investors is that PI stock is not even close to being fully valued, and remains a unanimous buy rating from Wall Street.
Microsoft (NASDAQ:MSFT) is, in my opinion, the tech stock that best exhibits high growth potential as well as the ability to preserve investor capital. MSFT stock doesn’t necessarily have massive upside above its current price based on analysts’ consensus. But Microsoft is very evidently well-positioned to continue to grow over the long-term.
The most salient factor driving this growth is of course Microsoft’s huge $10 billion investment into OpenAI and ChatGPT. Investors’ early perception was an is that Microsoft struck first among big tech firms in securing a foot in the door in AI. Perception is important, but so too is the potential for ChatGPT’s integration into Bing to revitalize Microsoft’s search aspirations. Bing now promises the opportunity to claw back search market share from Google. That growth opportunity is massive.
On top of that, Microsoft is fundamentally rebounding as well. The company’s sales and net income increased by 7% and 9% respectively in Microsoft’s Q3 and full 2023 fiscal year. It’s likely that MSFT stock continues to grow via its exposure to AI, while remaining dominant in its other businesses, providing healthy returns for investors.
When AI burst onto the scene earlier this year, Alphabet (NASDAQ:GOOG) was perceived to be on its back foot. Microsoft clearly got the jump on the search leader and YouTube owner.
But those early perceptions may be shifting again following a recent I/O developers conference. The conference was a clear rebuttal to notions that Microsoft and ChatGPT are the firm to watch. Google announced generative AI tools and products aimed at countering ChatGPT. It is integrating those tools into Google search, clear to say that Bing will not take any ground away from the dominant force in search.
The news was well received, as GOOG stock shot up more than 5% in response.
It seems fairly clear that both Alphabet and Microsoft are in fortuitous positions currently. Both are likely to receive a continued influx of investor capital. The AI growth opportunity heavily favors big tech. Google’s flat earnings report doesn’t matter now. The company’s share price and valuation is once again untethered from fundamentals as interest rates flatten and Google’s AI aspirations take off.
ON Semiconductor (ON)
ON Semiconductor (NASDAQ:ON) has been among the steadiest chip stocks in this post-pandemic environment. Other semiconductor firms have faltered as the boom evaporates but ON Semiconductor isn’t among them.
Global chip sales are falling this year. Gartner expects an overall global sales decline of 11.2% in 2023. Thus, any firm that can avoid such steep declines should logically be considered something of a winner.
ON Semiconductor is one such firm. The firm grew by 1% in the first quarter, which not only exceeds those global growth rates, but also exceeded internal expectations.
A big factor in the firm’s success is its alignment with growth industries. ON Semiconductor is deeply aligned with the automotive sector. The company’s automotive sector revenues increased by 38% in the most recent quarter, accounting for a record 50% of revenues. ON Semiconductor should see similar performance throughout the remainder of 2023 with flat growth but, again, that’s very strong growth when taken in a relative sense.
Salesforce (NYSE:CRM) stock is down roughly 50% from the beginning of the tech rout that began in late-2021. Accordingly, it remains among the most overpriced software firms in existence based on its price-to-earnings ratio .
However, Salesforce remains well-regarded by analysts and is a straightforward choice for investors. The reason being Salesforce dominates the customer relationship management market. The firm controls more market share than the next nine biggest firms in the space, and roughly a third of the market overall.
And like other dominant tech firms, Salesforce has an AI opportunity that promises to further cement its position. The company is integrating Slack GPT into its Slack platform. The integration promises to increase productivity, saving 3.6 hours of work on an average week for users. That doesn’t mean workers will suddenly have 4 free hours at work. Instead, it means companies like Salesforce that integrate first will have employees with four more hours of productivity weekly to use on other projects. That will add up quickly, and could be monetized accordingly by the company.
Visa (NYSE:V) continues to grow quickly despite expectations of an impending recession. Consumer spending and consumer credit continue to increase despite those concerns. In turn, Visa stock continues to exhibit strong growth potential that is reflected in its second-quarter results.
Visa’s business is booming due to spiking payments volume that increased by 10% overall. Cross-border payments are especially strong, having increased 24% in Q2 on a year-over-year basis. As a result, revenues increased by 11%, with net income growing by 17%.
Analysts remain positive about Visa’s prospects due to the fact that credit card debt is only increasing. American consumers remain unwilling to take on less credit card debt overall. Inflation continues to hurt consumers, who in turn have upped their credit card usage.
In any case, the U.S. economy relies heavily on consumption often financed through credit cards. And that points to a continued opportunity for Visa investors, even as worries about the overall economy mount.
Rounding out this list of tech stocks to buy is Adobe (NASDAQ:ADBE), a diversified stock for the digital economy. The company hasn’t received much attention recently, as its earnings do not coincide with the normal earnings season. Adobe will release its earnings in mid-June, which by all indications, will likely be strong.
Adobe reported record Q1 revenues in mid-March, providing improved revenue guidance for Q2 of between $4.75 to $4.78 billion. Two months later, the average expectation is that Adobe will report $4.77 billion in sales next month.
The thesis around this stock is relatively simple. Because Adobe has sort of fallen by the wayside due to the timing of its earnings release, while continuing to project strong growth based on all the data, it remains a stock that could have the greatest potential to pop near-term. Additionally, over the longer-term, it appears that Adobe stands to benefit in a big way from the integration of AI into its creative cloud. AI is certain to make PhotoShop much more productive overall, and Adobe will create dozens of new apps that leverage AI moving forward. As a result, growth should continue for a very long time with this tech behemoth.
On the date of publication, Alex Sirois 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.