The recent brief tech stock dip ended as second-quarter earnings reaffirmed tech’s market leadership. Indeed, the AI, cloud, and fintech sectors have been driving the tech sector in the past two years, driving more growth for the market. This makes tech stocks appear to be attractive investments at this point in the cycle.
Within the S&P 500 and Nasdaq indexes, tech stocks continue to be the superstars. That’s largely due to the scalability and high growth these companies provide.
Stocks that dip shouldn’t be that worrisome. In fact, investors looking to generate wealth over the very long-term may want to stay invested in such stocks, adding on future dips.
Watching these strong tech stocks can be beneficial during recession topics arise. That said, here are three tech stocks to consider adding if the recent bearish momentum we’ve seen picks up.
Advanced Micro Devices (AMD)
One of the strongest tech stocks to own is Nvidia’s rival, Advanced Micro Devices (NASDAQ:AMD). In its most recent quarter, the company saw its operating income soar to $1.1 billion.
Its data center segment drove this improvement, with revenue reaching a $2.3 billion record high. AMD’s strong financials and consistent demand for its chips also helps the company have a solid market position.
In the past years, AMD has been investing heavily in AI, acquiring two startups in 2023. Moreover, its chip products like the MI300 GPU has become the company’s fastest-selling semiconductor product.
Sales for this product surged $1 billion over the past two quarters, showing strong potential in its data center segment.
The company’s recent record data center growth and strong AI-driven guidance make this a stock that’s worth owning, for those looking to bet on the future of AI.
Fortinet (FTNT)
Next off the list of best tech stocks to own is Fortinet (NASDAQ:FTNT).
Although the company has faced some hurdles in the past year, its stock still shows great potential, making it a stock to own in every dip.
This thesis is even more true, following the recent global outages seen as the result of a failed update at rival CrowdStrike (NASDAQ:CRWD).
Indeed, there are plenty of investors out there who believe Fortinet and other players in this space could eat CrowdStrike’s lunch. We’ll have to see if such a thesis plays out, but it’s one worth considering.
The market expects the company’s 2024 numbers to be more positive, with revenues rising 9%. The stock currently trades 8.6-times forward sales and 38.9-ti es forward earnings.
It’s possible that Fortinet’s market cap could also improve to $60 billion if the company reaches $7.5 billion in sales in 2026, holding such multiples steady.
Impressively, in its Q1 2024 earnings, Fortinet’s reported its revenue reached $1.35 billion, driven by a 24% increase in service revenue. Product sales fell 18%, reflecting its shift to subscription models.
However, software and SaaS sales grew 29%, with 24% of billings from SASE and 9% from SecOps. The company is also integrating AI tools into its services, making this stock another way to play strong secular growth trends in this space.
Shopify (SHOP)
Shopify’s (NYSE:SHOP) has surged almost 2,000% since its IPO in 2015, making it not only a tech stock to own but also an e-commerce stock you can bet on.
Its revenue has increased 6,700% in the past 10 years, marking a success in all of its segments. Shopify has made it possible for merchants to have a comprehensive selling platform with user-friendly costs, making them unique among its rivals.
Customers choose e-commerce platforms based on functionality, favoring those enabling smarter, faster sales. Shopify excels by allowing outside developers to build and monetize features, attracting more developers and users.
With developers retaining 100% of their revenue up to $1 million, Shopify remains the top choice. This business model has fostered a cycle of innovation and user growth.
Additionally, these network effects, bolstered by AI, position Shopify to capture a significant share of the projected $8 trillion global e-commerce market by 2027.
Shopify leverages network effects by empowering over one million retailers with its e-commerce platform, dominating 28% of the U.S. market. Bank of America Securities recently upgraded Shopify to a “Buy” with an $82 target, citing improved margins, strong growth and effective cost management under new CFO Jeff Hoffmeister.
On the date of publication, Chris MacDonald 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
