The S&P 500 has delivered strong returns in the first half of 2023, with a year-to-date increase of over 15%. While positive economic factors such as lower inflation and a resilient labor market support continued growth, challenges remain, including elevated inflation and the possibility of a recession.
Despite the market’s performance, analysts still identify compelling investment opportunities in fundamentally strong stocks that offer value, financial stability, and growth potential. Investing in such stocks can help mitigate risks in an uncertain economic climate.
Keeping that in mind, examine these three stocks that are worth buying now. I currently own one of these stocks and anticipate buying the other two on any weakness moving forward.
Alphabet (GOOG)
Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) has delivered a solid performance, with its stock surging over 34% this year.
While it may have trailed its peers, Alphabet’s dominance in search and advancements in AI make it well-positioned for growth. Integrating AI features, YouTube’s strong presence, and the expansion of Google Cloud contribute to its revenue growth and future success in the competitive market. The projected $3 trillion EBITDA opportunity in the cloud by 2030 further highlights Alphabet’s potential.
Alphabet’s leadership in machine learning was evident with the launch of ChatGPT, showcasing its capabilities in generative AI. The introduction of Bard, a viable competitor to ChatGPT, further solidifies the company’s position. After a slump in 2022, Alphabet rebounded in 2023, with GOOGL stock up 35% this year, indicating further growth potential.
Moreover, Alphabet has emerged as an AI pioneer, delivering impressive returns of 39% year to date. The company’s latest earnings report exceeded expectations, showcasing its resilience and growth. Beyond financial success, Alphabet is reshaping the AI landscape applying generative AI to consulting services and making significant strides in healthcare innovation.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) stands out in the AI sector, boasting a remarkable year-to-date return of 42%. The company’s strong financial performance in the third quarter of FY 2023, with significant revenue and net income growth, adds to its appeal for investors.
Microsoft is actively pursuing advancements in quantum computing, aiming to develop its own quantum supercomputer within a decade. With its strong presence in multiple tech sectors, Microsoft attracts investors with its impressive stock performance, including a 41% increase this year and a remarkable 234% gain over the past five years. The company’s strategic partnerships, such as integrating ChatGPT from OpenAI, and advancements in Azure and quantum computing, position Microsoft for continued future growth and success.
Microsoft’s dominance extends beyond the tech industry as it holds a strong presence in the corporate and business sectors. Its Windows PCs and Excel software are integral tools for daily operations, while its cloud services play a crucial role in online businesses. Additionally, MSFT-owned LinkedIn platform has become prominent for job searching and recruitment. With its diverse range of offerings, Microsoft is deeply integrated into various industries.
Baidu (BIDU)
Despite facing early setbacks, Baidu (NASDAQ:BIDU) is emerging as a major player in the Chinese AI industry. With its robust generative AI Bot, ERNIE, and advancements in language models, Baidu is attracting a multitude of companies eager to experiment with its technology.
The company’s commitment to autonomy and ethics in AI deployment, coupled with its strategic initiatives such as an AI venture fund and integration of ERNIE into startup content creation, showcase its innovative approach. Furthermore, Baidu’s approval for a fully driverless ride-hailing service in Shenzhen demonstrates its forward-thinking mindset.
Baidu’s efforts to boost its AI reputation following the disappointing launch of Ernie Bot have yet to be independently verified. The lackluster launch has led to doubts about Baidu’s capabilities in comparison to the US tech sector. Consequently, investors, including hedge funds, have been selling BIDU stock, resulting in a significant decline in share price.
Even still, this underperformance may be a buying opportunity for those thinking long-term. Given the size of the Chinese market, and Baidu’s impressive position in this market, it’s a buy in my books.
On the date of publication, Chris MacDonald has a LONG position in BIDU. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
