Top 10 Tech Stocks 2024

The technology sector has been the driving force behind the stock market's ascent to unprecedented heights in 2024. This trend is exemplified by the Technology Select Sector SPDR ETF (XLK), which has markedly outpaced the S&P 500's total return over the last five years.

Top 10 Tech Stocks to Invest in for 2024

Historically, the tech sector has shown resilience, with short-lived periods of underperformance often presenting lucrative long-term investment opportunities. This pattern is expected to persist in the coming years. However, investors should exercise caution as current economic conditions, particularly inflation and high interest rates, pose challenges to tech companies' earnings in the short term. Consequently, careful stock selection has become paramount in this environment.

To aid investors in navigating this landscape, CFRA analysts have compiled a list of 10 top tech stocks that they believe offer the best potential for returns. These carefully selected companies represent various facets of the tech industry and have been chosen based on their ability to withstand current economic pressures while positioning themselves for future growth.

Microsoft Corp. (MSFT)

Implied Upside: 11%

Company profile and status (100+ words): Microsoft is the world's largest software company, renowned for its Windows operating system, Office suite, and Azure cloud services. The company has successfully transitioned to a cloud-based business model, with cloud-based revenue now accounting for over two-thirds of its total revenue. Microsoft is well-positioned to capitalize on the growing artificial intelligence (AI) market, with plans to integrate AI features into its Azure cloud platform and other applications. Analyst Angelo Zino is bullish on Microsoft due to its ongoing cloud transition and AI opportunities. The company's diverse product portfolio, strong market position, and consistent innovation make it a compelling long-term investment in the tech sector. CFRA has assigned Microsoft a "strong buy" rating, indicating confidence in its future growth potential.

Nvidia Corp. (NVDA)

Implied Upside: -4.8%

Company profile and status (100+ words): Nvidia is a leading designer and manufacturer of high-end graphics and video processing chips used in desktop and gaming PCs, workstations, advanced computing servers, and AI engines. The company has been one of the top performers in the S&P 500 in 2024, with a year-to-date gain of over 140%. Despite its impressive growth, analyst Angelo Zino believes Nvidia still has upside potential due to its expanding total addressable market, increasing penetration in edge devices, and opportunities in software and system sales. Nvidia's strong position in the AI and gaming markets, coupled with its innovative product pipeline, continues to drive its growth. The company recently completed a 10-for-1 stock split, making its shares more accessible to a broader range of investors.

Apple Inc. (AAPL)

Implied Upside: 8.7%

Company profile and status (100+ words): Apple is a global technology giant known for its iconic products such as the iPhone, iPad, Apple Watch, and Mac computers. The company also has a thriving Services segment, which includes the App Store, Apple Music, iCloud, and licensing businesses. Analyst Angelo Zino views Apple as a compelling long-term investment due to its improving margin profile, impressive ecosystem, growing addressable market, and potential to integrate AI technology into its devices. Apple's combination of aggressive capital returns, stable free cash flow generation, and a history of sound execution justifies its premium valuation. The company's strong brand loyalty, innovative product lineup, and expanding services business continue to drive its growth and market leadership in the consumer technology sector.

Broadcom Inc. (AVGO)

Implied Upside: 11.1%

Company profile and status (100+ words): Broadcom is a diversified global analog semiconductor supplier with a strong presence in networking, switchers, and application-specific integrated circuits (ASICs). The company is well-positioned to benefit from the boom in global AI infrastructure investment. Analyst Angelo Zino highlights Broadcom's extended chip supply deal with Apple and its numerous AI opportunities as key factors contributing to its attractive financial outlook. The recent acquisition of VMware is expected to boost Broadcom's software revenue, improve recurring revenue, expand margins, and grow free cash flow. With projected revenue growth of 40% in fiscal 2024, Broadcom's diverse product portfolio and strategic acquisitions make it a strong player in the semiconductor industry.

Advanced Micro Devices Inc. (AMD)

Implied Upside: 24.7%

Company profile and status (100+ words): Advanced Micro Devices (AMD) is a leading manufacturer of microprocessors and graphics semiconductors. The company has experienced phenomenal growth over the past decade, with its stock price surging by 3,870%. Analyst Angelo Zino remains optimistic about AMD's future, citing the ramp-up of its next-generation EPYC processors and potential growth in graphics processing unit sales as key drivers. AMD's improved cash flow has allowed the company to strengthen its balance sheet, reducing risk for investors. The analyst anticipates continued margin expansion through at least 2025 as AMD rolls out new products. With its strong position in both the CPU and GPU markets, AMD is well-positioned to capitalize on the growing demand for high-performance computing solutions in various sectors, including gaming, data centers, and AI applications.

Qualcomm Inc. (QCOM)

Implied Upside: -4.5%

Company profile and status (100+ words): Qualcomm is a leading semiconductor company specializing in developing products based on advanced wireless broadband technology. The company has a growing addressable market, including smartphone content, AI personal computers, autonomous vehicles, and expanding industrial and Internet of Things (IoT) usage. Analyst Angelo Zino notes that only half of the global Android market has upgraded to 5G networks, providing potential upside for Qualcomm's sales. The company's automotive segment has shown impressive growth, with projected sales of at least $4 billion by fiscal 2026. Qualcomm's strong position in the 5G market, coupled with its diversification into new growth areas, positions it well for future success in the evolving telecommunications and technology landscape.

Salesforce Inc. (CRM)

Implied Upside: 24%

Company profile and status (100+ words): Salesforce is the world's largest provider of cloud-based customer relationship management (CRM) software. While the company's impressive revenue growth has begun to slow, analyst Angelo Zino sees opportunities for Salesforce to expand its market share and improve profitability. The stock's valuation is considered extremely attractive, despite recent guidance for the lowest growth numbers in the company's history. Zino anticipates a potential rebound in growth in late 2025 as Salesforce's AI initiatives start to pay off. The company's strong position in the CRM market, coupled with its ongoing investments in AI and other emerging technologies, positions it well for long-term growth in the enterprise software sector.

Adobe Inc. (ADBE)

Implied Upside: 37%

Company profile and status (100+ words): Adobe is a leading producer of creative content software and applications used for marketing and e-commerce. Despite a recent 23% year-to-date decline in stock price, analyst Angelo Zino views this as a buying opportunity. Adobe has significant AI monetization opportunities, including the ramp-up of Firefly and Express, and the addition of AI Assistant features in Acrobat and Reader. While facing competitive pressures from companies like OpenAI and Sora, Adobe is investing heavily in developing its own competitive AI offerings. The company's strong market position in creative software, coupled with its expansion into digital marketing and e-commerce solutions, provides a solid foundation for future growth. Adobe's focus on integrating AI capabilities across its product suite is expected to drive innovation and maintain its leadership in the creative software market.

Applied Materials Inc. (AMAT)

Implied Upside: 5.2%

Company profile and status (100+ words): Applied Materials is the world's largest supplier of wafer fabrication equipment for the semiconductor industry. Despite recent softness in the semiconductor equipment market, analyst Brooks Idlet considers the stock an excellent long-term investment due to its market leadership across several key process categories. The growing interest in AI applications is expected to drive demand for high bandwidth memory (HBM) in the dynamic random-access memory (DRAM) space, benefiting Applied Materials' etch and deposition tools. Idlet projects a rebound in revenue growth to 10% in fiscal 2025. The company's strong position in the semiconductor equipment market, coupled with the increasing demand for advanced chips in various applications, positions Applied Materials well for future growth in the evolving semiconductor industry.

Accenture PLC (ACN)

Implied Upside: 33.3%

Company profile and status (100+ words): Accenture is a global information technology services firm specializing in consulting and outsourcing. Analyst Brooks Idlet believes Accenture deserves a premium valuation due to its attractive growth profile and strong business fundamentals. The company's strong balance sheet, diverse base of loyal customers, and long-term track record of industry-leading earnings growth make it a compelling investment. Accenture has demonstrated resilience even in mixed macroeconomic environments. Notably, it offers a 1.7% dividend yield, the highest among the stocks listed and a rarity in the tech sector. Accenture's diverse service offerings, global presence, and focus on emerging technologies position it well to capitalize on the ongoing digital transformation trends across various industries.

How to Buy Tech Stocks Step by Step

To buy tech stocks, follow these steps:

1. Open a Brokerage Account: Start by setting up an online brokerage account specifically for trading tech stocks. Compare different brokers based on their tech stock offerings, fees, and services. Once you’ve selected a broker that matches your tech investment goals, complete the application process and fund your account. This step establishes the foundation for your tech stock trading journey.

2. Research Tech Stocks: Use stock screeners to filter tech stocks based on criteria such as market capitalization, tech sector focus, and financial performance. Check analyst ratings for insights on tech stock potential. Consider your risk tolerance; established tech giants may offer stability, while emerging startups could provide higher growth potential. This research helps you identify tech stocks that align with your investment strategy.

3. Decide How Many Shares to Buy: Determine the number of tech stock shares you want to purchase based on your budget and the stock’s price. Diversify your tech investments across different subsectors like software, hardware, or fintech. If certain tech stocks are expensive, consider fractional shares to gain exposure without committing large amounts of capital. Align this decision with your tech investment goals and risk tolerance.

4. Choose an Order Type: Select the appropriate order type for your tech stock purchase. A market order buys tech stocks immediately at the current price, while a limit order allows you to set a specific purchase price for the tech stock. Understanding these options helps you make informed decisions when trading tech stocks.

5. Place Your Order: After deciding on the tech stock, number of shares, and order type, place your order through your brokerage platform. Double-check all details before confirming to ensure accuracy in your tech stock purchase. Monitor the order status to confirm the successful execution of your tech stock trade.

6. Manage Your Tech Stock Portfolio: Regularly review and adjust your tech stock investments. Stay informed about industry trends, monitor individual tech stock performance, and review updated analyst ratings. Learn when to sell tech stocks to optimize profits or minimize losses. Periodically rebalance your tech stock portfolio to maintain alignment with your financial goals and risk tolerance in the dynamic tech sector.

What to Look for When Choosing Stocks to Buy

When choosing which stocks to invest in, it is crucial to consider the following key factors:

• Financial Stability: Evaluate the company's balance sheet to gauge its financial health. Review its debt levels and overall fiscal status. Additionally, examine the company's profit margins over time; declining margins could signal financial trouble.

• Industry Standing: Assess the company's standing within its sector. Determine whether it is gaining or losing market share compared to its competitors. A solid competitive edge is often an indicator of future success.

• Revenue and Earnings Trends: Look at the company's history of sales and profit growth. Consistent growth in these areas is a positive sign, while decreasing revenues might hinder future opportunities and success.

• Stock Valuation: Examine the stock's price relative to its earnings and cash flow. Understanding its valuation is vital for assessing future growth potential. Seek stocks that offer good value in relation to their growth prospects.

• Quality of Leadership: Evaluate the company's management team and their alignment with shareholder interests. Determine if executives are self-serving or genuinely focused on growth. Transparency and integrity are essential for making well-informed investment decisions.

• Future Growth Potential: Investigate the company's potential for future expansion. Identify clear growth and development pathways that can improve its long-term outlook.