In this article, we will take a look at the 10 best long-term tech stocks to buy.
The tech market is undergoing a significant transformation propelled by advancements in AI, data analytics, and cybersecurity. Among these, Artificial Intelligence (AI) stands out as a potentially groundbreaking technological advancement, with Wall Street analysts drawing parallels to pivotal innovations like the internet. While there is a widespread consensus that AI will ultimately reshape the economy and boost corporate profits, there is vigorous debate regarding the timing and magnitude of these transformative and lucrative changes. Skeptics argue that especially in the stock market domain, the excitement surrounding AI may have surpassed actual developments, potentially leaving some highly valued stocks exposed to a decline in the event of an economic slowdown.
Despite the initial decline in the NASDAQ during the early days of the year and the skepticism expressed by some circles regarding the Magnificent Seven’s ability to sustain the gains observed in 2023, long-term analysts remain optimistic, believing that technology stocks have further potential for growth in 2024. During a recent appearance on CNBC, Josh Brown, the CEO of Ritholtz Wealth Management, discussed the factors contributing to the decline in tech stocks in the first week of 2024. Brown attributed this decline to a significant amount of profit-taking activity currently underway, driven by the remarkable returns investors witnessed in the technology sector throughout 2023, particularly in the fourth quarter. The wealth manager also expressed an understanding of the rationale behind early-year profit-taking, given the spectacular rally in 2023. With that said, he emphasized that the downturn in tech stocks should not be misconstrued as these companies “stumbling”; rather, it is a result of strategic profit-taking.
Overall, the technology industry is poised for expansion as a growing number of companies show interest in joining the competition for AI and data analytics. Key industry players like Apple, Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA) are among the best technology stocks that are achieving notable progress in the field and could potentially take the lead in seizing the considerable opportunities arising from future advancements.
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Our Methodology
When assembling our portfolio of the best long-term tech stocks to buy, our initial step involved identifying some of the best technology stocks showing potential for share price growth by considering analyst average share price targets with a minimum Buy rating. Following this, we evaluated the extent of hedge fund investments in these stocks as of September 2023, utilizing Insider Monkey’s comprehensive database covering 910 hedge funds. Over the past decade, the top 10 consensus stock picks of hedge funds have outperformed the S&P 500 Index by more than 140 percentage points (see the details here). This is a significant outperformance, and it underscores the importance of closely monitoring this frequently overlooked indicator.
10. Cadence Design Systems, Inc. (NASDAQ:CDNS)
Number of Hedge Fund Holders: 58
Based in San Jose, California, Cadence Design Systems, Inc. (NASDAQ:CDNS) is a leading player in electronic systems design. Employing its Intelligent System Design™ strategy, the company offers a comprehensive suite of computational software, hardware, and IP solutions. Its portfolio includes software, hardware, services, and reusable IC design blocks, all tailored to cater to the diverse needs of its clientele.
On November 2, Cadence Design Systems, Inc. introduced the groundbreaking Cadence® Voltus™ InsightAI, representing the industry’s first generative AI technology. This innovation is crafted to identify the root cause of EM-IR drop violations at the early stages of the design process. Additionally, it selects and implements the most efficient fixes to enhance power, performance, and area (PPA).
As of Q3 2023, shares of Cadence Design Systems, Inc. were held by 58 prominent hedge funds, totaling a collective valuation of $2.94 billion. Andreas Halvorsen’s Viking Global emerged as the leading hedge fund shareholder for the quarter.
Much like Apple, Inc., Microsoft Corporation, and NVIDIA Corporation, Cadence Design Systems, Inc. is one of the best technology stocks to invest in.
9. Mercadolibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 76
Established in 1999, Mercadolibre, Inc. (NASDAQ:MELI), headquartered in Buenos Aires, Argentina, stands as the foremost e-commerce technology company in Latin America. Operating through its key platforms, MercadoLibre.com and MercadoPago.com, the company offers solutions for individuals and businesses engaged in online buying, selling, advertising, and payment transactions.
On November 2, Wedbush analyst Scott Devitt reaffirmed an ‘Outperform’ rating for Mercadolibre, Inc. shares and maintained a price target of $1500.
As of Q3 2023, Mercadolibre, Inc. shares were held by 76 prominent hedge funds, amounting to over $3.38 billion in value, according to data from Insider Monkey on 910 hedge funds. Generation Investment Management emerged as the largest hedge fund shareholder, holding 480,480 shares valued at $609.19 million.
8. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 81
Based in Austin, Texas, Tesla, Inc. (NASDAQ:TSLA) is a multinational American company specializing in automotive and clean energy. The company is widely recognized for its expertise in designing and manufacturing electric vehicles, as well as providing stationary battery energy storage solutions for various scales, from households to grid-level applications. Additionally, Tesla, Inc. manufactures solar panels, solar shingles, and related products and services.
In the third quarter of 2023, Tesla, Inc. achieved the production of 430,488 vehicles and successfully delivered over 435,000 vehicles. The company operates six expansive manufacturing facilities globally, including its original plant in California and gigafactories located in Nevada, New York, Shanghai, Texas, and Berlin.
On December 18, investment advisory RBC Capital maintained an Outperform rating on Tesla, Inc. stock and lowered the price target to $300 from $301.
According to Insider Monkey’s third-quarter database, 81 hedge funds expressed a bullish stance on Tesla, indicating an increase from the 79 funds in the previous quarter. Catherine D. Wood’s ARK Investment Management emerged as a prominent shareholder for the quarter, holding a stake valued at $1.02 billion.
7. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 107
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a leading Taiwanese semiconductor manufacturing firm that specializes in producing chips for major entities such as NVIDIA Corporation. In November, the company delivered positive news to investors by reporting its first monthly increase in sales since February, driven by heightened demand for smartphones and AI.
On November 13, Taiwan Semiconductor Manufacturing Company Limited revealed a significant 34.8% month-over-month surge in its October net revenue, reaching nearly NT$243.2 billion, accompanied by a year-over-year growth of 15.7%, marking it as one of the best technology stocks to consider.
During the third quarter of 2023, 107 hedge funds held positions in Taiwan Semiconductor Manufacturing Company Limited. Fisher Asset Management emerged as the primary investor in the company, increasing its holdings to 30.637 million shares, valued at $2.66 billion.
In its third quarter 2023 investor letter, Bonsai Partners stated the following regarding Taiwan Semiconductor Manufacturing Company Limited:
“Robustness at the product level exists differently than in other layers of the value chain. Product diversification follows the same principle, but product control isn’t related to vertical integration. Product control exists in multiple forms, such as switching costs or happy customers who don’t want to buy elsewhere. However, one often overlooked dimension of product-level robustness is adaptability. Some businesses offer goods and services that behave like shapeshifters; they naturally adapt to the market’s needs regardless of how the world changes. Adaptability also serves as a hedge against the unknown.
Consider our investment in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), which enjoys a highly adaptive product portfolio. If we compare TSMC to a fabless chip maker like Qualcomm, investing in Qualcomm is a bet that its products will retain their technological advantage over time. Meanwhile, TSMC sells a service that naturally produces whatever the end customer wants. There is little need for brilliant product-level foresight; TSMC just needs to maintain its process and service level advantages, allowing it to manufacture whatever the market demands. TSMC’s product portfolio is robust compared to most other semiconductor companies because it naturally adapts to technological and market-driven shifts. Instead of product-level risk, TSMC’s core risks are geopolitical.”
6. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 110
Advanced Micro Devices, Inc. (NASDAQ:AMD), commonly known as AMD, is a global semiconductor company headquartered in Santa Clara, California. Specializing in the development of computer processors and associated technologies, AMD serves both business and consumer markets.
On October 10, Advanced Micro Devices, Inc. announced the finalization of a definitive agreement to acquire Nod.ai, a strategic move aimed at enhancing the company’s capabilities in open AI software. In August of the same year, AMD had also acquired Mipsology, an AI software company known for its expertise in providing AI solutions compatible with AMD adaptive computing silicon.
On November 13, investment advisory firm Roth MKM initiated coverage of Advanced Micro Devices, Inc. with a Buy rating and a price target of $125. The focus was on the company’s distinctive portfolio of high-performance compute and networking processors.
As of Q3 2023, 110 hedge funds tracked by Insider Monkey held shares of Advanced Micro Devices, Inc., valued at $9.2 billion. Fisher Asset Management, led by Ken Fisher, emerged as the largest hedge fund shareholder, owning 27.8 million shares with a total value of $2.9 billion.
In addition to Apple, Inc., Microsoft Corporation, and NVIDIA Corporation, Advanced Micro Devices, Inc. ranks as one of the best technology stocks for investment.
5. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 112
Adobe Inc. (NASDAQ:ADBE) stands as a versatile software company providing a diverse array of products and solutions, enabling individuals, teams, and enterprises to create, publish, and promote content. Widely recognized as one of the most preferred choices for content creators, students, professionals, and consumers, Adobe Inc. also operates a Digital Experience segment, catering to brands and businesses in the creation, management, implementation, and monetization of customer experiences.
On November 14, investment advisory Evercore maintained an Outperform rating on Adobe Inc. stock and raised the price target to $700 from $605.
Among the 910 hedge funds featured in Insider Monkey’s third-quarter 2023 database, 112 had invested in the company. The most substantial hedge fund investment in Adobe Inc. for the September quarter came from Ken Fisher’s Fisher Asset Management, which held 4.5 million shares valued at $2.3 billion.
Here is what Polen Global Growth has to say about Adobe Inc. in its Q3 2023 investor letter:
“Both Alphabet and Adobe’s businesses continue to perform well. With respect to Adobe, the most recent quarter delivered more of the same with constant currency revenue growing 13%, margin expansion, and over 2% of shares outstanding repurchased for non-GAAP earnings growth of over 20%. We believe its approach to GenAI through Firefly, which guarantees safe content because it trains on Adobe Stock, will continue to be attractive to enterprises. The counter to GenAI, and something we are keeping an eye on with Alphabet and Adobe, is that it requires heavy investment. While both businesses can leverage their scale and manage costs in other areas, we expect the investment in future growth through GenAI will weigh on company-wide margins over the near term.”
4. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 122
Salesforce, Inc. (NYSE:CRM) is a prominent American cloud-based software company specializing in customer relationship management. The company provides tailored software and applications designed for sales, customer service, marketing automation, e-commerce, analytics, and application development.
Salesforce, Inc. surpassed analysts’ expectations with a rapid increase in third-quarter earnings, attributed to customer migration to the company’s cloud-based services in anticipation of upcoming AI offerings. The cloud software firm reported a net income of $1.22 billion, translating to diluted earnings per share of $1.25, reflecting a significant year-over-year increase. The 11.2% surge in revenue to $8.72 billion was driven by subscription and support services. In recent months, Salesforce, Inc. has expressed its commitment to embracing AI by consolidating various popular products into a single cloud-based platform.
In Insider Monkey’s Q3 2023 database, 122 out of 910 hedge funds had invested in the company, with Fisher Asset Management, led by Ken Fisher, emerging as the largest shareholder with a $2.87 billion investment during the specified period.
Harding Loevner talked about Salesforce, Inc. in its second-quarter 2023 investor letter. Here is what it said:
“Salesforce, Inc., a company we’ve owned since 2019, recently added ChatGPT-like capabilities onto its existing Al module, Einstein, to support its internal sales efforts and customer-facing software. For example, Einstein GPT can help generate marketing emails tailored to specific clients by using Salesforce’s customer database and past email correspondence to learn the most effective approach for each client. Einstein GPT is also different from off-the-shelf LLMS in three important ways: It keeps personal identifiable information private and secure, compared with external tools that retain anything a user enters. It employs the latest data in Salesforce’s system, as opposed to the sometimes-stale public data that train generic models. And generative Al capabilities can be integrated with other Salesforce offerings; the company has already introduced Slack GPT and Tableau GPT, Al-equipped versions of its workplace collaboration and analytics tools.”
3. Apple, Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 134
Apple Inc. is a leading technology company committed to the design, manufacturing, and promotion of smartphones, personal computers, tablets, wearables, and accessories. Additionally, the company provides a diverse range of related services. The latest iteration of its flagship smartphone, the iPhone 15, was globally launched on September 22 this year. Early sales for the models have exhibited strong performance, and analysts anticipate positive outcomes from the release.
In the third quarter of 2023, Apple Inc. was included in the portfolios of 134 out of the 910 hedge funds monitored by Insider Monkey. The combined value of Apple Inc. shares held by hedge funds reached an impressive $179 billion. Notably, Berkshire Hathaway, under the leadership of Warren Buffett, emerged as the largest shareholder, holding 915.6 million shares valued at $157 billion.
In its Baron Technology Fund Q3 2023 investor letter, Baron Funds made the following comments about Apple Inc.:
“Despite [the] quarterly fluctuations in product sales, we are encouraged by several long-term trends, including: (1) revenue from higher-margin services like the App Store, iCloud, and Apple Pay, which are growing faster than the overall business, driving better revenue visibility and higher free-cash-flow (FCF) margins; (2) continued gains in global market share in smartphones, wearables, and other hardware categories; and (3) consistent returns of capital to shareholders via share repurchases and dividends. On top of these trends in the core business, Apple is thoughtfully investing in new categories like augmented reality, search, financial services, and streaming media content. We took advantage of weakness in the quarter to add to our position in Apple.”
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 180
NVIDIA Corporation is an American multinational technology company incorporated in Delaware. Recognized for its expertise in integrated circuit development, NVIDIA’s capabilities span a diverse range of devices, from electronic game consoles to personal computers (PCs).
On November 21, NVIDIA Corporation disclosed its financial results for the third quarter, concluding on October 29, 2023. The company reported a revenue of $18.12 billion, signifying a significant increase of 206% compared to the corresponding period last year and a notable 34% rise from the previous quarter. The quarter recorded GAAP earnings per diluted share at $3.71, reflecting a more than 12-fold increase from a year ago and a 50% uptick from the previous quarter. Non-GAAP earnings per diluted share were $4.02, indicating an almost 6-fold rise from a year ago and a 49% increase from the previous quarter.
Insider Monkey’s analysis of hedge fund portfolios for Q3 2023 revealed that 180 hedge funds held a stake in NVIDIA Corporation. Citadel Investment Group emerged as its largest stakeholder, holding approximately 21.85 million shares valued at about $9.5 billion in NVIDIA Corporation.
Baron Opportunity Fund made the following comment about NVIDIA Corporation in its Q3 2023 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is a leading semiconductor company that sells chips and software for accelerated computing and gaming. Shares have nearly tripled year-to-date, as the company continues reporting unprecedented growth because of the acceleration in demand for its data center chips. After reporting revenue of $7 billion in the first quarter and providing guidance of $11 billion for the second quarter, NVIDIA reported second quarter revenue of $13.5 billion and guided for another step up in the third quarter to $16 billion, with its CFO declaring “[d]emand for our Data Center platform for AI is tremendous and broad-based across industries and customers.” We are at the tipping point of a new era of computing with NVIDIA at its epicenter. This is how CEO and founder Jensen Huang put it (during the company’s August 23 earnings call):
“[T]he easiest way to think about the demand is the world is transitioning from general purpose computing to accelerated computing…[W]hat you’re seeing companies do now is recognizing this…tipping point…recognizing the beginning of this transition, and diverting their capital investment to accelerated computing and generative AI…This isn’t a singular application that is driving the demand, but this is a new computing platform…a new computing transitioning that’s happening…A new computing era has begun. The simultaneously going through two platform transitions, accelerated computing and generative AI.””
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 306
Based in Redmond, Washington, Microsoft Corporation is a prominent technology company that offers a diverse array of products, including operating systems, cross-device productivity applications, server applications, business solution applications, desktop and server management tools, software development tools, and video games.
Microsoft Corporation has established itself as a leader in the AI field through its collaboration with OpenAI, the creator of Chat GPT—an AI-powered chatbot. Utilizing its AI capabilities, Microsoft Corporation is committed to enhancing its existing products and services, spanning Bing Search, Cloud, and its Office Suite.
In the third quarter of 2023, Microsoft Corporation emerges as the most favored stock among the 910 hedge funds monitored by Insider Monkey, holding the top position in hedge fund sentiment. A total of 306 hedge funds included shares of this software giant in their portfolios, reflecting a cumulative value of $72 billion.
In its Baron Technology Fund Q3 2023 investor letter, Baron Funds made the following comments about Microsoft Corporation:
“Looking at the big picture, Microsoft continues to execute at a high level, navigating a challenging macro backdrop while aggressively investing in long-term growth, and we remain confident that Microsoft is well positioned to leverage AI over the medium to long term as it infuses Open AI and other generative AI technologies across its entire product portfolio.”
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Disclosure. None. 10 Best Long-Term Tech Stocks To Buy was initially published on Insider Monkey.
