Is the tech trade really over? Much is being written about investors rotating capital out of high-flying technology names and into value and small-cap stocks. While the rotation is seen as healthy and likely to prolong the current market rally that began in late 2022, it seems doubtful that technology stocks will trail for long.
First of all, tech firms tend to be the engines of innovation and growth in the economy. That fact has only accelerated with the advent of artificial intelligence (AI). Second, the quarterly financial results of technology companies justify their stock’s performance and lofty valuations. With the economy and consumer spending remaining resilient, there’s no reason to assume that there will be an earnings downturn.
Lastly, technology companies, particularly the mega-cap variety, have a dominant position in the markets in which they compete. Some, it can be argued, have near-monopoly positions. That also looks unlikely to change or be seriously challenged in the near future. Here are seven longevity tech stocks extending investment horizons.
Super Micro Computer (SMCI)
The good news keeps on coming for Super Micro Computer (NASDAQ:SMCI). The latest tailwind for the stock is that it’s being added to the Nasdaq 100 index, replacing
pharmacy chain Walgreens Boots Alliance (NASDAQ:WBA). SMCI stock will officially start trading on the Nasdaq 100 July 22. The Nasdaq 100 is comprised of the 100 largest non-financial companies in the broader Nasdaq Composite index.
Super Micro Computer’s inclusion in the Nasdaq 100 should give its stock a boost as mutual funds and exchange-traded funds (ETFs) that track the index will now be required to buy its shares. Super Micro Computer makes servers that run AI microchips and processors and its products are in high demand worldwide. SMCI stock has more than tripled so far in 2024. Earlier this year, the company’s stock was added to the benchmark S&P 500 index where it remains the top performing security.
MicroStrategy (MSTR)
Speaking of winning tech stocks, how about software firm turned Bitcoin (BTC-USD) powerhouse MicroStrategy (NASDAQ:MSTR)? The company’s stock has performed nearly as well this year as Super Micro Computer. Since January, MSTR stock has gained 141%, driving its share price up to $1,654.18 and leading the company to announce a 10-for-1 stock split that goes into effect on August 8.
While technically a provider of enterprise software, MicroStrategy has switched its focus in recent years and adopted an aggressive Bitcoin-buying strategy. Michael Saylor, the company’s executive chairman, has said that MicroStrategy is now primarily focused on Bitcoin development and blockchain technologies. At the end of June this year, MicroStrategy owned 226,331 Bitcoin worth $14.59 billion based on the current price of the largest cryptocurrency.
Analysts at Wall Street firm Bernstein recently said that MicroStrategy is “building the world’s largest Bitcoin company” and that the stock has a further 80% upside.
Alphabet (GOOG,GOOGL)
Google parent company Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is well-known as a leader in AI. However, Alphabet is still a diversified technology company that has its tentacles in many other areas of technology, from smartphones to cybersecurity. The company’s role in cybersecurity looks likely to expand with the expected acquisition of Wiz, a privately held firm that specializes in cybersecurity for cloud computing.
Multiple media reports say Alphabet is planning to spend $23 billion to purchase Wiz, in what would be its biggest acquisition ever. Wiz was founded in 2020 and had been planning an initial public offering (IPO) later this year. However, it now looks as though Wiz will be content to sell itself to Alphabet instead. The purchase comes as Alphabet makes growing its cybersecurity offerings a key priority.
In 2022, Alphabet acquired cybersecurity firm Mandiant for $5.4 billion. Alphabet’s stock has risen 33% so far this year and the consensus rating among 38 analysts who cover the company is that the shares are a “strong buy.”
Dell Technologies (DELL)
Speaking of “strong buy” ratings, Dell Technologies (NYSE:DELL) also holds one, along with a median price target that is 17% above where the stock currently trades. Investment bank Morgan Stanley (NYSE:MS) recently named Dell a “top pick” and said the company’s share price could rise as much as 40% over the next 12 months. At the start of July, Dell stock was added to Bank of America’s (NYSE:BAC) coveted “U.S. 1 List” of top investment ideas.
The bullish sentiment is due to the opportunity Dell has in front of it with AI, notably the servers that run AI applications and models. That business is expected to accelerate and become more profitable in coming quarters. At the same time, Dell’s core personal computer (PC) business is expected to outperform in coming quarters as a global refresh leads to accelerating PC sales this year and throughout 2025.
DELL stock has increased 80% so far this year, with more gains likely, according to analysts.
Apple (AAPL)
As far as bullish sentiment goes, few stocks have experienced as big a turnaround in recent weeks as Apple (NASDAQ:AAPL). At the start of the year, Apple couldn’t do anything right. The media was awash with headlines about slumping iPhone sales, rising competition in China, and a new augmented reality headset that, at more than $3,000, was too expensive for most consumers. But ever since Apple unveiled its AI strategy in June, its been blue skies for the company’s stock.
AAPL stock has risen 40% from a 52-week low reached in April. The shares are now up 25% on the year and trading near an all-time high on a split adjusted basis. The rebound comes after Apple announced plans to add advanced AI technology to future versions of the iPhone. Analysts say the addition of AI should spur global sales of the smartphone in coming years.
Additionally, Apple has just expanded sales of its Vision Pro augmented reality headset, rolling it out in Australia, Canada, France, Germany and U.K. Suddenly, Apple stock looks unstoppable once again.
CrowdStrike (CRWD)
As mentioned with Alphabet, cybersecurity remains a hot corner of technology right now. And among cybersecurity stocks, CrowdStrike Holdings (NASDAQ:CRWD) is the king. Over the past 12 months, CRWD stock has increased 143%, including a 50% gain so far this year. Analysts and investors stood up and cheered after the company’s last financial results, which beat Wall Street estimates across the board.
CrowdStrike reported EPS of 93 cents, which was above the 89 cents expected among analysts. Revenue for the year’s first three months totaled $921 million, up 34% from a year earlier and ahead of estimates calling for $905 million in sales. CrowdStrike’s free cash flow stood at $322.5 million at quarter’s end, up 42% from a year ago. If there’s a knock on CRWD stock it is the valuation.
Shares currently trade at nearly 700x future earnings estimates. While pricey, many analysts continue to see CrowdStrike as the de facto leader among cybersecurity stocks.
Adobe (ADBE)
We’ll end with a dark horse candidate: design software company Adobe (NASDAQ:ADBE). The company behind products such as Photoshop, Illustrator and the PDF has seen its share price driven 3% lower this year over concerns that AI is going to effectively put it out of business. However, reports of Adobe’s demise appear to have been greatly exaggerated based on the company’s most recent quarterly print.
ADBE stock rose 17% after the company reported financial results that beat Wall Street forecasts and raised its full-year guidance. Adobe announced Q1 EPS of $4.48 compared to $4.39 that was expected among analysts. Revenue came in at $5.31 billion versus $5.29 billion that had been estimated. Sales rose 10% from a year earlier. Rather than be replaced by AI, management said on an earnings call that they are using the technology to their advantage.
Specifically, Adobe is adding AI across its suite of creative products, including Firefly and Illustrator, and charging a premium for it.
On the date of publication, Joel Baglole held a long position in GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
