Stocks to buy

The Only 7 Tech Stocks You Should Be Watching Now

Wagering on tech stocks involves investing in the vanguard of AI innovation, a sector poised to redefine our digital future. As businesses globally harness the power of AI to push the boundaries of what’s possible, tech stocks emerge as gateways to participate in the next revolution in tech. The fascination with these stocks continues to grow as AI unfolds its transformative power across multiple industries, signaling a new era of digital evolution.

The shift towards AI-driven technologies marks a major step-change reminiscent of the internet’s explosive growth in the mid-90s. Moreover, Wedbush Securities disagrees with the AI bubble argument, pointing to a foundational shift in the tech sphere, with AI at the forefront. Hence, it’s arguably the best time for investors eyeing tech stocks to back companies shaping an AI-driven future in our daily lives and work.

Tech Stocks to Buy: Microsoft (MSFT)

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Tech behemoth Microsoft (NASDAQ:MSFT) never ceases to amaze with its innovative prowess and evolving ability. Due to its pioneering advancements in generative artificial intelligence (AI) throughout 2023, MSFT stock saw an incredible 58% uptick in value. That wasn’t merely a fleeting success, as it looks to layer AI into its timeless software suite.

Moreover, Microsoft’s impressive financials are already benefitting from its AI investments. That shows in its recent quarterly showing, where it posted a stellar $890 million top-line beat and a 16 cents per-share earnings beat. The integration of ChatGPT-like functions into Bing and the Office365 suite, along with the launch of Microsoft 365 Copilot, points to a massive growth runway ahead for the firm. Additionally, the estimates of direct and indirect sales boosts from AI products, including a potential $10 billion incremental annual sales from Copilot, underscore Microsoft’s growth prospects. Given these dynamics, MSFT stock remains one of the top tech stock picks, offering immense upside potential ahead.

Oracle (ORCL)

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Oracle (NYSE:ORCL), a storied player in enterprise software and cloud services, is making significant inroads in the AI space. Its focus on AI cloud infrastructure is a game-changer, likely to increase cost efficiencies for its clients significantly. The company’s latest quarterly showing underscores this direction, with cloud revenues surging 25% year-over-year (YOY) to $4.8 billion, marked by a notable 52% jump in cloud infrastructure revenue.

Moreover, it is expanding its AI cloud positioning by expanding its global footprint with the construction of 100 new data centers for Microsoft while enhancing 66 existing ones. Its enriched AI portfolio, accessible through its cloud marketplace, is a testament to its forward-looking approach towards democratizing AI tools for businesses globally. With such dynamic growth and strategic positioning, Tipranks’ analysts point to an 11% upside in ORCL stock from its current price while assigning a Moderate Buy rating.

American Express (AXP)

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New York-based global payments giant American Express (NYSE:AXP) wrapped up another impressive year, thriving on the back of rising interest rates. Demonstrating robust financial health, it recently posted its fourth-quarter (Q4) results, with an 11% bump in sales from the prior year and a remarkable 23% surge in net income to $1.93 billion. That performance is a testament to the resilience of consumers, who remained unfazed amid non-essential cutbacks. Hence, for fiscal year 2023, American Express notched a record sales figure of $60.5 billion, achieving 14% growth in EPS to $11.21, buoyed by higher retail credit card rates and consumer spending.

Consequently, the firm announced a generous 17% increase in its quarterly cash dividend to 70 cents per share. Looking ahead, the management remains optimistic, projecting a revenue growth of 9% to 11% for fiscal 2024, with anticipated EPS ranging between $12.65 and $13.15. That outlook underscores American Express’ strategic positioning for sustained growth and long-term profitability.

Meta Platforms (META)

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Meta Platforms (NASDAQ:META) is a powerful AI, and it presents a compelling case for investors seeking exposure to cutting-edge technologies. Picking up from where it left off last year, Meta Platforms continued to shine in 2024, marked by four consecutive quarters of top-and-bottom-line beats. In its most recent quarter, it announced its first-ever dividend and $40.1 billion in sales, which surpassed estimates by $940.6 million.

Furthermore, Meta’s maverick CEO Mark Zuckerberg, is deeply invested in AI. His investment in the sphere is shown by Meta’s development of its in-house Artemis AI chip and board additions like Broadcom’s (NASDAQ:AVGO) Hock E. Tan and John Arnold. Also, his competitive stance is further illustrated in his challenge to Apple (NASDAQ:AAPL) in the lucrative metaverse-gear space, highlighting the Quest 3 VR headset’s affordability and superiority over Apple’s pricier Vision Pro VR headset. That move not only showcases Meta’s competitive positioning but also its ambition to lead in the adoption of AI and the metaverse.

Netflix (NFLX)

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Netflix (NASDAQ:NFLX) is a bellwether in the streaming sphere, which continues to outperform in a competitive sector. With an array of content that spans movies, TV shows and documentaries, the streaming giant has maintained its growth trajectory despite competitive pressures. Introducing new players during the pandemic did little to shake its stronghold. Instead, Netflix continues to expand its subscriber base at a healthy pace.

In its Q4 earnings report, Netflix posted a commendable 13% YOY increase in total revenue and subscriber numbers. Moreover, in the past four consecutive quarters, it has beaten earnings estimates in three of the past four quarters. However, in Q4, it fell short by 11 cents, on its bottom line.

Nevertheless, its growth trajectory mirrors its results during the pandemic’s peak, mainly due to the company’s successful crackdown on password sharing. NFLX stock is up over 40% in the past six months alone, and its exciting content lineup positions it for further gains.

Salesforce (CRM)

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Salesforce (NYSE:CRM), a customer relationship management (CRM) trailblazer, is another tech giant leveraging AI to enhance its cloud computing offerings. The company recently unveiled AI-driven products, such as its Einstein Copilot. The Einstein Copilot is the company’s new generative AI-powered conversational assistant, developed to enhance every Salesforce application.

Furthermore, the company’s financial performance speaks volumes, with its Q4 Non-GAAP EPS of $2.29, besting analyst estimates by two cents. Also, revenue saw a healthy 10.9% YOY increase to $9.29 billion, surpassing forecasts by $70 million. Notably, subscription and support revenues climbed to $8.75 billion, marking a 12% YOY growth.

Moreover, the company initiated a quarterly dividend of 40 cents per share and a significant increase in its share repurchase program by $10 billion. As we advance, the company sets its full-year fiscal 2025 sales guidance between $37.7 billion and $38.0 billion, indicating an 8% to 9% growth YOY.

Amazon (AMZN)

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ECommerce giant Amazon (NASDAQ:AMZN) is on a remarkable growth trajectory, with its latest quarterly results showing significant gains bolstered by holiday sales. Consequently, AMZN is up roughly 11% this month and 30% in the past six months.

Amazon’s success lies in its diversified business model, which covers multiple tech verticals, including advertising, cloud computing, subscription services and other areas. That diversification has yielded substantial sales from its eCommerce operations and its cloud computing juggernaut in Amazon Web Services (AWS).

Amazon is leveraging AI to solidify its leadership in the cloud sector. With its massive internal reserves, Amazon is looking to go full-steam ahead with its commitment to AI innovation through advanced computing chips, including Graviton4 and Trainium2. AWS continues to shine financially, with its sales up 13% YOY to $24.2 billion and advertising revenue growing 27% to $14.7 billion. Also, its eCommerce segment witnessed a 14% increase. Hence, Amazon’s dominance in the market is clear, offering tremendous upside to investors.

On the date of publication, Muslim Farooque did not hold (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.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

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