The tech sector has had a tough year in 2022 as the Nasdaq 100 tech index fell more than 35%. Once a hot favorite, tech stocks have provided meaningful growth during bull market runs, such as the one seen through the end of 2021. However, with so many tech stocks falling so dramatically of late, bargains could be had in many corners of the market.
That said, rising inflation worries continue to plague most tech stocks. The recent selloff we’ve seen is due in part to weakening profit and margin outlooks for 2023 and beyond. That said, this environment also provides for rock-bottom multiples, compared to recent years. With so many tech stocks trading at a discount today, this could be a great opportunity for long-term investors to buy the dip.
Quality stocks always bounce back, no matter the market sentiment for a given sector. Buy these stocks now while their valuations are low, since they will surely become hot property in the near future.
| MSFT | Microsoft | $240.22 |
| NVDA | Nvidia | $178.39 |
| GOOG | Alphabet | $99.28 |
Microsoft (MSFT)
At the top of my list is Microsoft (NASDAQ:MSFT). It is undoubtedly one of the top tech stocks to have in your portfolio. One of the world’s largest software companies, Microsoft has become a household name today. With a market capitalization of $2 trillion, the company has made a swift transition towards a cloud business model, paving its growth outlook for the next decade.
I view MSFT stock as a solid stock to own for retirement, as it offers consistency and growth alongside a dividend. A solid reason to invest in the stock is the company’s focus on diversification.
That said, MSFT stock has dropped more than 20% over the past year, becoming much more affordable at the $240 level today. The company reported revenue of $198.3 billion in 2022, and has shown consistent top-line increases over the past six years. Now, when comparing the company’s growth to its previous impressive levels, it’s true that growth is slowing. However, on a division by division basis, there is hope, with Microsoft’s Cloud business continuing to surge.
The company’s cloud revenue last quarter came in at $25.7 billion. This represents an increase of 24% over the same period the previous year. This is for the first time that the company reported 50% of its revenue from the Cloud segment, and I think it is only the beginning. Despite the company’s overall dip in net income, Microsoft boosted its quarterly dividend by 10% this year, announcing a dividend of $0.68 a share. This is the 20th consecutive year of dividend increases, which is no small feat.
Nvidia (NVDA)
Known for its high-end semiconductors (chips) used in the gaming industry, Nvidia (NASDAQ:NVDA) is a familiar name among many investors. Once one of the hottest tech stocks in the market, NVDA stock has not seen positive momentum prevail in 2022. Like most high-growth companies on the Nasdaq, NVDA stock dipped more than 30% over the past year.
That said, this dip creates a buying opportunity for long-term investors. The company’s focus on creating the most advanced chips for video game enthusiasts means Nvidia sets the gold standard when it comes to semiconductors. Additionally, many analysts think that the stock could bounce back this year due to Nvidia’s booming cloud and data center business. Its data center business raked in more than $10 billion in revenue for 2022. I think this is only just the beginning of what could be an incredible opportunity, given the secular shift toward digital transformation and burgeoning overall demand for chips in general.
Additionally, there is a lot to be bullish about when it comes to Nvidia’s automotive segment. I think this segment could be a multi-billion dollar opportunity over the next decade (it’s already a billion dollar opportunity for the company today). Thus, NVDA stock is one to buy and hold for the long-term.
Alphabet (GOOG)
My list of top tech stocks to buy can’t end without a mention of Alphabet (NASDAQ:GOOG). This is one stock I think investors should buy without any hesitation.
The company did see a decline in the stock price last year, but Alphabet has all the resources it needs to bounce back. On a year-over-year basis, GOOG stock is down roughly 30%, trading around $100 per share at the time of writing. Its advertising business has had a huge impact on the stock, with inflation leading to a cut in advertising budgets for several business clients. That said, over the long-term, I still view Alphabet as one of the stocks to buy to make you rich over the next decade.
Indeed, I think most of the rhetoric surrounding Alphabet will be short-lived. The company is already a leader in its key high-growth industries, and its diversified business model makes it a relatively safe investment compared to its peers. Over the long-term, I think investors would do well to focus on Alphabet’s growth engine, Google Cloud. This segment reported strong revenue growth, bringing in $6.8 billion in its most recent report.
Overall market dynamics have impacted GOOG stock, much like its peers. However, I think these current dynamics don’t fully reflect Alphabet’s financial stability and potential.
On the date of publication, Vandita Jadeja 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.