In this article, we will take a look at the 12 most promising tech stocks according to analysts.
Tech companies, small and large, enjoyed a euphoric growth in their valuations after the pandemic, helped by the world’s shift to everything digital and easy money that helped these firms burn cash and fund their growth projects. That era seems to have ended as rising inflation forced the Federal Reserve to embark on a rate-hike spree that crushed financial markets.
Technology companies are laying off employees by the thousands to cut costs and revive growth. In the short-term things won’t be easy for these companies that were used to easy credit markets and low competition, but in the long-term analysts believe the technology sector will rebound.
The Age of Cost Discipline
The Federal Reserve’s response to inflation isn’t the only problem tech stocks are facing. Major tech companies in the US are also scrutinized heavily by the regulators. A Deutsche Bank report said the following:
“Inflation and slower economic growth are, of course, key macro headwinds. On top of that, tech companies face the risk of increased influence from anti-trust and competition policies. That likely means lower valuation multiples. Shareholders are more demanding too – in this year of rising rates, payouts and cost discipline have been prioritised over last decade’s “growth at all costs” paradigm.”
But despite these challenges, many believe the current headwinds would help investors separate the wheat from the chaff and focus on those tech stocks that have strong fundamentals.
According to a Wall Street Journal report, Wedbush’s Dan Ives thinks tech companies will “ultimately” stage a rebound.
“Tech companies have spent like 1980s rock stars. Now they’re starting to spend like senior citizens on a fixed budget,” Ives reportedly said.
Photo by Adam Nowakowski on Unsplash
Our Methodology
For this article scoured the tech stock universe and picked 12 notable names which have one-year average price targets much higher than their current stock prices. We took one-year target prices for these stocks from their respective Yahoo Finance pages. We have also mentioned notable analyst ratings for these stocks. For each stock we have mentioned their one-year average price targets. The currency for that metric is US$.
Most Promising Tech Stocks According to Analysts
12. Lyft, Inc. (NASDAQ:LYFT)
One-Year Price Target: 18.36
Lyft, Inc. (NASDAQ:LYFT) stock is getting hammered after the company gave a weak Q1 guidance. Several analyst firms downgraded Lyft, Inc. (NASDAQ:LYFT). However, on average, Lyft, Inc. (NASDAQ:LYFT)’s 12-month price target still presents an attractive upside.
In the short term the stock is under pressure. Wedbush Securities analyst Dan Ives decreased his rating for Lyft, Inc. (NASDAQ:LYFT) and said that the company’s earnings call was one of the worst calls he’s heard in ages. The analyst said that Lyft, Inc. (NASDAQ:LYFT)’s EBITDA outlook was a “debacle for the ages.” The analyst also decreased his price target for Lyft, Inc. (NASDAQ:LYFT) to $13 from $17.
As of the end of the third quarter of 2022, 37 hedge funds reported owning stakes in Lyft, Inc. (NASDAQ:LYFT). The total value of these stakes was over $649 million.
11. SentinelOne, Inc. (NYSE:S)
One-Year Price Target: 21.50
Cybersecurity company SentinelOne, Inc. (NYSE:S) is one of the most promising tech stocks according to analysts. SentinelOne, Inc. (NYSE:S) has lost about 60% in value over the past 12 months through February 13.
SentinelOne, Inc. (NYSE:S) recently jumped after investment firm Guggenheim started covering the stock with a Buy rating. SentinelOne, Inc. (NYSE:S)’s analyst Raymond McDonough, who has an $18 price target on the stock, said that the company is “following a proven playbook” to take back its market share. The analyst added that he believes SentinelOne, Inc. (NYSE:S) can “grow into the number three player in the endpoint market.”
As of the end of the third quarter of 2022, 30 hedge funds reported owning stakes in SentinelOne, Inc. (NYSE:S). The total value of these stakes was $1.3 billion. The biggest stakeholder of SentinelOne, Inc. (NYSE:S) during this period was Dan Loeb’s Third Point which owns a $486 million stake in the company.
10. AppLovin Corporation (NYSE:APP)
One-Year Price Target: 23.43
AppLovin Corporation (NYSE:APP) ranks 10th in our list of the most promising tech stocks according to analysts. AppLovin Corporation (NYSE:APP) has gained a whopping 47% year to date as of February 13. Yet the average price target of $23.43 presents a significant upside from the current levels.
Most of AppLovin Corporation (NYSE:APP)’s latest stock gains came after the company gave an upbeat Q1 guidance and posted strong Q4 results. AppLovin Corporation (NYSE:APP)’s revenue in the fourth quarter of 2022 came in at $702 million, beating estimates. Adjusted EBITDA in the period was $260 million, near the high end of AppLovin Corporation (NYSE:APP)’s quarterly guidance.
AppLovin Corporation (NYSE:APP) said its mobile ads market is expected to remain relatively stable in the first quarter of 2023.
9. Uber Technologies, Inc. (NYSE:UBER)
One-Year Price Target: 47.59
Uber Technologies, Inc. (NYSE:UBER) shares are having a remarkable 2023 so far. Uber Technologies, Inc. (NYSE:UBER) has gained about 35% year to date through February 13. Much of these gains came on the back of Uber Technologies, Inc. (NYSE:UBER)’s strong Q4 report which surprised analysts. During the last quarter of 2022 Uber Technologies, Inc. (NYSE:UBER)’s earnings per share came in at $0.29, while revenue in the period totaled $8.6 billion. Both metrics beat estimates. Revenue from Uber Technologies, Inc. (NYSE:UBER)’s ride-hailing business jumped about 82% on a YoY basis.
It seems hedge funds foresaw Uber Technologies, Inc. (NYSE:UBER)’s strengths last year as Insider Monkey’s database of 920 hedge fund holdings shows that the smart money piled into the stock during the third quarter. At the end of the September quarter 142 hedge funds reported owning stakes in Uber Technologies, Inc. (NYSE:UBER), significantly up from 129 hedge funds in the previous quarter.
Artisan Partners made the following comment about Uber Technologies, Inc. (NYSE:UBER) in its Q3 2022 investor letter:
“During the quarter, we began new GardenSM campaigns in Uber Technologies, Inc. (NYSE:UBER) and Shopify. In July, we initiated our position in Uber, a leader in global ride-hailing and online food delivery. We believe the company is wellpositioned to benefit from strong secular tailwinds in both of its core businesses. Earlier this year, management outlined a plan at its investor day to achieve $4 billion of free cash flow by 2024, an encouraging commitment given investors have maligned the company for years of being unprofitable. We witnessed solid progress toward achieving this goal in the company’s most recent earnings results, where it beat expectations for the quarter on both fronts and delivered positive FCF for the first time. The company also indicated it isn’t seeing any evidence of slowing demand. We recognize the execution risk associated with Uber achieving its long-term targets, and the path likely won’t be linear, which is why we are keeping our position size modest until we see signs of continued operational momentum in the coming quarters.”
8. Open Text Corporation (NASDAQ:OTEX)
One-Year Price Target: 56.76
Open Text Corporation (NASDAQ:OTEX) is a Canadian software company. Open Text Corporation (NASDAQ:OTEX) ranks 8th in our list of the most promising tech stocks according to analysts. In February, Open Text Corporation (NASDAQ:OTEX) posted its fiscal second quarter results. Adjusted EPS in the quarter came in at $0.89, beating estimates by $0.11. Revenue in the quarter jumped 2.3% to total $897.4 million, beating estimates by $20.37 million. Open Text Corporation (NASDAQ:OTEX) recently closed its acquisition of Micro Focus.
As of the end of the third quarter of 2022, 22 hedge funds tracked by Insider Monkey reported owning stakes in Open Text Corporation (NASDAQ:OTEX). The net worth of these stakes was about $150 million. The biggest stakeholder of Open Text Corporation (NASDAQ:OTEX) during this period was Natixis Global Asset Management’s Harris Associates which owns a stake worth about $313 million.
7. Marvell Technology, Inc. (NASDAQ:MRVL)
One-Year Price Target: 62.01
Headwinds in the semiconductor industry might have dented Marvell Technology, Inc. (NASDAQ:MRVL) in the short term but analysts believe the company is positioned well for the long term. In December, Cowen analyst Matthew Ramsay in a note highlighted that Marvell Technology, Inc. (NASDAQ:MRVL)’s long-term growth catalysts such as cloud computing, 5G, custom silicon, and automotive are still intact. His comments came after Marvell Technology, Inc. (NASDAQ:MRVL) posted weak Q3 results.
The analyst also noted Marvell Technology, Inc. (NASDAQ:MRVL)’s strengths in the data center market.
As of the end of the third quarter of 2022, 58 hedge funds tracked by Insider Monkey reported owning shares of Marvell Technology, Inc. (NASDAQ:MRVL). The total value of these stakes at the end of the third quarter was about $1.9 billion.
Carillon Tower Advisors made the following comment about Marvell Technology, Inc. (NASDAQ:MRVL) in its Q4 2022 investor letter:
“Marvell Technology, Inc. (NASDAQ:MRVL) provides infrastructure semiconductor solutions. Investors are concerned about the semiconductor cycle and how demand for Marvell’s products will fare in a slowing economic environment. We remain confident that the company’s portfolio of products is highly important in parts of the datacenter server market and note that the company recently has secured strong wins with large technology companies to use its products. The company also benefits from 5G wireless infrastructure build-outs that remain on pace and are generally insulated from macroeconomic pressures. With supply chain issues easing, we believe Marvell remains in a strong position to post healthy growth in 2023.”
6. GitLab Inc. (NASDAQ:GTLB)
One-Year Price Target: 65.54
DevOps platform company GitLab Inc. (NASDAQ:GTLB) ranks 6th in our list of the most promising tech stocks according to analysts. GitLab Inc. (NASDAQ:GTLB) is on investors’ radar these days after the company reportedly announced layoffs. Some reports also suggest GitLab Inc. (NASDAQ:GTLB) plans to go fully remote. The layoffs alarmed Needham analyst Mike Cikos who lowered GitLab Inc. (NASDAQ:GTLB)’s rating. The analyst thinks that the layoffs show deeper problems GitLab Inc. (NASDAQ:GTLB) might be facing in terms of demand.
However, some believe the layoffs would help GitLab Inc. (NASDAQ:GTLB) tighten its belt and continue on the path of revenue growth. In December, GitLab Inc. (NASDAQ:GTLB) posted its third quarter results. Adjusted EPS in the period came in at -$0.10, beating estimates by $0.05. Revenue in the quarter jumped about 69% to come in at $112.98 million, easily beating estimates by $6.9 million.
5. Zoom Video Communications, Inc. (NASDAQ:ZM)
One-Year Price Target: 85.74
Zoom Video Communications, Inc. (NASDAQ:ZM) has rebounded in 2023 thanks to the broader rally in tech stocks as well as the company’s plans to cut costs and improve its revenue. Zoom Video Communications, Inc. (NASDAQ:ZM) reportedly announced plans to cut 15% of its workforce. Last month, Barclays noted that Zoom Video Communications, Inc. (NASDAQ:ZM) was preparing to increase the price of its Zoom One Pro Plan.
As of the end of the third quarter of 2022, 50 hedge funds had stakes in Zoom Video Communications, Inc. (NASDAQ:ZM), up from 37 hedge funds in the previous quarter.
4. Sony Group Corporation (NYSE:SONY)
One-Year Price Target: 133.55
Sony Group Corporation (NYSE:SONY) is one of the biggest tech conglomerates that are poised to thrive because of their diversified income streams. Sony Group Corporation (NYSE:SONY)’s gaming business has been under pressure amid a broader slowness in the industry. However, analysts believe Sony Group Corporation (NYSE:SONY) has long-term growth catalysts because of Sony’s expansion in EVs, its strengths in digital entertainment, movies and music industry.
Recently, investment firm Cowen’s analyst Doug Creutz increased his price target for Sony Group Corporation (NYSE:SONY) shares to $118 from $102 and kept an Outperform rating.
Of the 920 hedge funds tracked by Insider Monkey, 27 hedge funds had stakes in Sony Group Corporation (NYSE:SONY). The total value of these hedge funds’ stakes was over $706 million.
Aristotle Capital made the following comment about Sony Group Corporation (NYSE:SONY) in its Q3 2022 investor letter:
“Sony Group Corporation (NYSE:SONY), the global provider of video games and consoles, image sensors, and music, as well as movies, was a major detractor for the period. The share price of the company has struggled this year following its strong performance in 2021. Signs of a slowdown in the gaming industry (as people seem inclined to take on outdoor activities as pandemic fears have subsided), combined with sales of its PlayStation 5 that have been held up by a global parts shortage, have led to gaming‐related software sales falling more than 20% year‐over‐year. Rather than focusing on short‐term demand dislocations, we focus on the company’s ability to continue migrating videogame users toward the firm’s subscription offerings, as well as its capacity to leverage content across its video, music and gaming platforms. We are also impressed with the expansion of Sony’s Music segment, which has been supported by the pervasiveness of streaming services. Management’s ongoing work to improve the company’s TV and film studios is bearing fruit as well, with sales growing 67% year‐over‐year for its Pictures segment as its regional strategy has taken hold, including recent progress made toward solidifying a merger plan with India‐based Zee Entertainment. All of this is to say we remain excited by the oligopolistic nature of the businesses Sony operates in, and the future prospects for the company given its leadership in image sensors, music publishing and gaming consoles.”
3. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
One-Year Price Target: 167.51
Cybersecurity company CrowdStrike Holdings, Inc. (NASDAQ:CRWD) shares have gained about 8% year to date in 2023 through February 13. However, CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s average price target of $167.51 shows strong upside potential from the current levels. Last month, CrowdStrike Holdings, Inc. (NASDAQ:CRWD) gained after BMO Capital Markets analyst Keith Bachman started covering the stock with an Outperform rating. The analyst mentioned CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s endpoint security products and its expanding platform of services and said that the company has the potential to compete against Microsoft Corporation (NASDAQ:MSFT) and other rivals.
The analyst thinks CrowdStrike Holdings, Inc. (NASDAQ:CRWD) should use its endpoint services to become one of the leading network security providers.
Hedge fund sentiment is strong for CrowdStrike Holdings, Inc. (NASDAQ:CRWD). At the end of the third quarter of 2022, 85 hedge funds tracked by Insider Monkey reported owning stakes in CrowdStrike Holdings, Inc. (NASDAQ:CRWD), up from 78 funds in the previous quarter. The biggest stakeholder of CrowdStrike Holdings, Inc. (NASDAQ:CRWD) during this period was David Goel and Paul Ferri’s Matrix Capital Management which owns a $494 million stake in the company.
Carillon Tower Advisors made the following comment about CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q4 2022 investor letter:
“CrowdStrike Holdings, Inc. (NASDAQ:CRWD), a provider of cyber security software solutions, delivered quarterly results that exceeded expectations, but provided guidance that disappointed, as the macro economy is causing longer sales cycles and some larger orders are being sold in smaller pieces. However, these deals are not being lost to competitors; they are just being delayed, and management expects enterprise security spending to remain relatively resilient in 2023.”
2. Meta Platforms, Inc. (NASDAQ:META)
One-Year Price Target: 212.44
Meta Platforms, Inc. (NASDAQ:META) is back in action as the company’s latest quarterly results showed growth might be returning to Facebook. Meta Platforms, Inc. (NASDAQ:META) also has investments in the AI space which could benefit it in the short and long term as AI wars begin. Recently, Tigress Financial Partners analyst Ivan Feinseth gave bullish comments about Meta Platforms, Inc. (NASDAQ:META)’s user growth and AI investments in a note. The analyst said that Meta Platforms, Inc. (NASDAQ:META)’s “most valuable asset” is its “massive and ever-growing” user base. The analyst thinks Meta Platforms, Inc. (NASDAQ:META) can monetize its family of apps and new product features.
Vulcan Value Partners made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q4 2022 investor letter:
“During the quarter we sold Meta Platforms, Inc. (NASDAQ:META) after owning the business for over four years. The fundamentals of our investment case were based on the tremendous number of users that spent time on its various properties and the advertising dollars that flowed to the company as a result. We believed its competitive advantage was that the platform was, more or less, a monopoly on people’s time and attention. The rise of TikTok and other emerging platforms has given us pause on the company’s ability to maximize that advantage. From our perspective, the idea of “one platform to rule them all” may now be a thing of the past as social offerings have become more fragmented.
In addition, though our research has indicated that much of the initial damage done from Apple’s iOS 14.5 privacy changes has been repaired, we remain concerned with Apple’s influence over the digital advertising ecosystem. Apple is one of the largest gatekeepers to Meta’s mobile services, and it has become more difficult for us to gauge the pace of change emerging from Apple relating to privacy, as well as evaluating Apple’s ambitions in advertising…” (Click here to read the full text)
1. Microsoft Corporation (NASDAQ:MSFT)
One-Year Price Target: 284.73
Microsoft Corporation (NASDAQ:MSFT) is one of the most popular stocks among the Wall Street analysts and hedge funds. Microsoft Corporation (NASDAQ:MSFT) is making waves in 2023 amid the company’s huge investments in AI and Satya Nadella’s ambitious plans to revamp Bing search. Microsoft Corporation (NASDAQ:MSFT) recently started rolling out ChatGPT-powered Bing search features for desktop users. As of 16:09 PM ET, February 13, MSFT shares were trading at around $271. The Wall Street analysts’ average price target of $284 shows significant upside potential.
Polen Global Growth Strategy made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2022 investor letter:
“In the case of Microsoft Corporation (NASDAQ:MSFT), the company is performing very well. Azure now represents nearly 25% of the total business and continues to compound at a higher rate. Although growth is moderating a bit recently (as it is for AWS and Google Cloud Platform as well), these three platforms collectively generated more than $140 billion in revenue during the last 12 months and are still growing at a healthy rate. Further, Microsoft Cloud, or commercial cloud (which includes Azure and other cloud services, Office 365 Commercial, the commercial portion of LinkedIn, Dynamics 365, and other cloud properties) continues to grow roughly 30% and is now about half the business. Mathematically, commercial cloud could decelerate to 20% growth with all other segments decelerating to zero growth and total company revenue growth would still be at least double digits. We believe Microsoft is positioned to compound underlying earnings per share at a midteens rate over the next five years. At 22x earnings, we felt the valuation was attractive and that it should be a large position.”
You can also take a peek at 10 Hot Tech Stocks To Buy Now and 10 Hot Healthcare Stocks To Buy Now.
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Disclosure: None. 10 Most Promising Tech Stocks According to Analysts is originally published on Insider Monkey.
