In this article, we discuss the 12 tech stocks with the biggest upside.

Technology stocks are one of the hottest areas of the stock market and investors eagerly follow the latest developments in the space as it has a track record of providing quick returns and the potential for explosive growth in the future. The technology sector consists of businesses that sell goods and services in electronics, computers, software, artificial intelligence, and other industries relevant to information technology. The IT market includes services such as computer networking, broadcasting, systems design services, and information distribution technologies. 

The tech sector has always been a market leader for years, but there are growing concerns about the future. Prominent stocks like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB) have all had a below par year, falling 50%, 28%, and 66% year-to-date respectively. Todd Sohn, the director and technical strategist at Strategas, noted in a recent report that tech could take a backseat over value offerings for the next couple of years. 

Investors who are concerned about investing in big tech can look towards the upside potential that these firms offer, as well as analyst predictions about their deeper value, for 2023 analysis. Per experts, the tech field has expanded beyond the next great idea or application, and is now more concentrated towards service-oriented businesses that provide valuable products with recession-proof credentials. Tech investors should look for more boring investments in the space instead of flashy ones like crypto that are more about hype than substance.

Our Methodology

The companies that have upcoming growth catalysts and operate in the tech sector were selected for the list. Special importance was assigned to outlining the basic business fundamentals and analyst ratings for each firm to provide readers with some context so they can make more informed investment choices. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.

Tech Stocks With Biggest Upside

12. Photronics, Inc. (NASDAQ:PLAB)

Number of Hedge Fund Holders: 21 

Phototronics, Inc. (NASDAQ:PLAB) engages in the manufacture and sale of photomask products and services in the United States, Taiwan, Korea, Europe, China, and internationally. On December 8, Photronics SEMiC revealed that its undisclosed sales in November rose 43.97% to NT$286,387,000 from NT$198,919,000, according to a statement filed to the Taiwan Stock Exchange.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in Phototronics, Inc. (NASDAQ:PLAB) with 1.2 million shares worth more than $17.8 million. 

In its Q2 2022 investor letter, Meridian Funds, an asset management firm, highlighted a few stocks and Phototronics, Inc. (NASDAQ:PLAB) was one of them. Here is what the fund said:

“Photronics, Inc. (NASDAQ:PLAB) is a semiconductor capital equipment company and a leader in photomasks, a critical component in the manufacturing of semiconductors and flat panel displays. The company’s earnings declined from a peak in 2015 due in part to a long-term trend within the semiconductor industry away from ASICs to FPGAs, which, to put it simply, allowed more semiconductor functionality to be made with fewer photomasks. Earnings also were pressured by significant investments made by Photronics to build out capacity in China, which took time to ramp up to profitability. We invested in the company in the second quarter of 2021 due to our thesis that 1) increased semiconductor content in a wide variety of products would revitalize the ASIC market; 2) it’s China investments would pay off, partially helped by an emerging trend toward localization of semiconductor production; and 3) Photronics is a well-managed industry leader with a strong balance sheet and improving return on capital. Despite macroeconomic worries about the semiconductor industry, the company’s stock advanced on news that it had exceeded earnings forecasts for the fourth consecutive quarter, with projections for 2022 earnings per share rising to $1.90 per share, up from less than $1 at the time of our investment. We added to our position in Photronics during the quarter when the strong results were initially not recognized. We believe current secular trends should remain intact for several years, however, we are conscious of the potential for near-term macro-driven volatility.”

11. SoFi Technologies, Inc. (NASDAQ:SOFI)

Number of Hedge Fund Holders: 25     

SoFi Technologies, Inc. (NASDAQ:SOFI) provides digital financial services. It operates through three segments: Lending, Technology Platform, and Financial Services. On November 23, Mizuho analyst Dan Dolev maintained a Buy rating on SoFi Technologies, Inc. (NASDAQ:SOFI) stock and lowered the price target to $6 from $7, noting that the impact on 2023 sales and profits should be less dramatic for the firm than peers. 

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Silver Lake Partners is a leading shareholder in SoFi Technologies, Inc. (NASDAQ:SOFI) with 31.2 million shares worth more than $152 million.  

In its Q4 2021 investor letter, Altron Capital Management, an asset management firm, highlighted a few stocks and SoFi Technologies, Inc. (NASDAQ:SOFI) was one of them. Here is what the fund said:

“We have been building our position in SoFi Technologies, Inc. (NASDAQ:SOFI) over the last two quarters but have not yet written about our thesis until now. SoFi is an online financial technology company that started off refinancing student loans. This segment remains a big part of the company’s business, but they have more recently expanded their products to offer an entire suite of financial services including personal banking, investing, and credit. While their collection of products is still evolving and not yet complete, we believe the company is in the early stages of its inflection. The company nearly doubled its member count over the past year and is growing 50%+ despite its loan refinancing business taking a hit due to the COVID-related loan moratorium. Furthermore, the company is close to obtaining a bank charter through its acquisition of Golden Pacific Bancorp, a community bank based in Sacramento. A bank charter would allow SoFi to take in its customer deposits, lowering its cost of capital and expanding the company’s breadth of financial offerings.

While SoFi is not the only online banking platform out there, we believe it could take a decent share of the financial services market. Banking is a notoriously sticky business, as the inconvenience and hassle of switching banks prevent consumers from jumping to competitors regardless of cost. This is one of the reasons that traditional banks are one of the few businesses to have truly been disrupted by technology. We think SoFi is well on its way to changing that and creating a new paradigm for the future of consumer banking and financial services. (read more)

10. Asana, Inc. (NYSE:ASAN)

Number of Hedge Fund Holders: 26

Asana, Inc. (NYSE:ASAN) operates a work management platform for individuals, team leads, and executives in the United States and internationally. In early December, Asana revealed that its time tracking feature in the work management products will track and report on estimated and actual time spent on tasks. Asana’s Updated portfolio view will help resize and reorder columns in the portfolio list, similar to the Project grid. The new feature is expected to further cement the place of the firm as a leading workforce software provider. 

On December 2, DA Davidson analyst Robert Simmons maintained a Neutral rating on Asana, Inc. (NYSE:ASAN) stock and lowered the price target to $18 from $20, noting that the company posted its smallest revenue beat in the past nine quarters and also provided commentary suggesting that Financial Year 2024 growth estimates may have been too high.

Among the hedge funds being tracked by Insider Monkey, Singapore-based firm Himension Capital is a leading shareholder in Asana, Inc. (NYSE:ASAN) with 7.5 million shares worth more than $167.5 million. 

In its Q3 2022 investor letter, Diamond Hill Capital, an asset management firm, highlighted a few stocks and Asana, Inc. (NYSE:ASAN) was one of them. Here is what the fund said:

“Work management software company Asana, Inc. (NYSE:ASAN) has, in our view, a relatively undifferentiated and discretionary software product within a software category that will likely be meaningfully smaller than anticipated. Additionally, Asana’s operating losses continue to widen as its revenues have begun decelerating.”

9. Avnet, Inc. (NASDAQ:AVT)

Number of Hedge Fund Holders: 27    

Avnet, Inc. (NASDAQ:AVT) is a technology solutions company that markets, sells, and distributes electronic components. Some of the major electronic products of Avnet are Amplifiers, Connectors, Batteries, Circuit protection, Displays, Embedded Boards and Systems and Cables & wires. The company has been paying a dividend to shareholders consistently for the past eight years. These payouts have also registered constant growth during this time. The stock offers investors a healthy mix of growth and value for a balanced portfolio. 

At the end of the third quarter of 2022, 27 hedge funds in the database of Insider Monkey held stakes worth $610 million in Avnet, Inc. (NASDAQ:AVT), compared to 27 in the previous quarter worth $765.6 million.

8. Pure Storage, Inc. (NYSE:PSTG)

Number of Hedge Fund Holders: 35  

Pure Storage, Inc. (NYSE:PSTG) provides data storage technologies, products, and services in the United States and internationally. On October 24, Pure Storage’s Chief Visionary Officer, John Colgrove, said that the firm’s backup as a service product and key part of its flash blade is being built out of Bengaluru. Parts of the firm’s file protocols, and object protocols are also running out of India. The company is also actively hiring in India and increasing its headcount. India is one of the biggest tech markets in the world and expansion in the country puts the firm in a pole position for fast growth. 

On December 1, Susquehanna analyst Mehdi Hosseini maintained a Positive rating on Pure Storage, Inc. (NYSE:PSTG) stock and raised the price target to $44 from $40, noting that the company reported strong third-quarter earnings and guidance which were driven by an increased emphasis on pursuing more profitable deals. 

At the end of the third quarter of 2022, 35 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Pure Storage, Inc. (NYSE:PSTG), compared to 33 in the preceding quarter worth $961.3 million. 

7. Cadence Design Systems, Inc. (NASDAQ:CDNS)

Number of Hedge Fund Holders: 46    

Cadence Design Systems, Inc. (NASDAQ:CDNS) provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide. On October 18, Cadence Design Systems revealed that it has expanded its partnership with Samsung Foundry to accelerate 3D-IC design. The Integrity y 3D-IC Platform is enabled for die-on-die 3D-IC stacking. This 3D platform supports the company’s Intelligent System Design strategy. The firm has also benefited from recent announcements by the US government to invest in chip infrastructure in the US. In earnings for the third quarter of 2022, the firm posted a more than 20% year-over-year increase in revenue. 

On October 25, Baird analyst Joe Vruwink maintained an Outperform rating on Cadence Design Systems, Inc. (NASDAQ:CDNS) stock and lowered the price target to $198 from $204, noting that 2022 is not materially impacted by recent export controls and raised outlook now factors in a better fourth quarter than implied last quarter.  

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Alkeon Capital Management is a leading shareholder in Cadence Design Systems, Inc. (NASDAQ:CDNS) with 3.2 million shares worth more than $523.4 million. 

6. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)

Number of Hedge Fund Holders: 85    

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) provides cloud-delivered protection across endpoints and cloud workloads, identity, and data. On November 29, CrowdStrike Holdings announced financial results for the third quarter of the fiscal year 2022, reporting that subscription gross margin was 75%, compared to 76% in the third quarter of fiscal 2021. CrowdStrike’s subscription customers that have adopted five or more, six or more and seven or more modules were 60%, 36% and 21%, respectively.

On November 30, Truist analyst Joel Fishbein maintained a Buy rating on CrowdStrike Holdings, Inc. (NASDAQ:CRWD) stock lowered the price target to 200 from $275, noting that the company’s third-quarter revenue and free cash flow topped estimates, but macro pressures weighed on its ARR and net new ARR metrics.

At the end of the third quarter of 2022, 85 hedge funds in the database of Insider Monkey held stakes worth $2.97 billion in CrowdStrike Holdings, Inc. (NASDAQ:CRWD), compared to 78 in the preceding quarter worth $4.1 billion.

In addition to Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB), CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is one of the tech stocks with the biggest upside. 

In its Q2 2022 investor letter, Carillon Towers Advisers, an asset management firm, highlighted a few stocks and CrowdStrike Holdings, Inc. (NASDAQ:CRWD) was one of them. Here is what the fund said:

“CrowdStrike Holdings, Inc. (NASDAQ:CRWD), a security software platform for protecting information technology assets and cloud workloads, delivered strong earnings results, with solid recurring revenue, customer growth, and profitability. Some investors, however, hoped for bigger numbers on the annual recurring revenue metric. Additionally, CrowdStrike has shown a desire to continue to hire to fuel growth, so the expected increase in future profitability will be held back somewhat in the near term. We remain positive on the company’s prospects, as current geopolitical tensions make cyber security mission-critical.”

5. Salesforce, Inc. (NYSE:CRM)

Number of Hedge Fund Holders: 117   

Salesforce, Inc. (NYSE:CRM) provides customer relationship management technology that brings companies and customers together worldwide. On November 29, Salesforce revealed that its customers drove more than 115 million orders in November. The digital sales of the company’s Commerce Cloud grew 7% year over year on Thanksgiving, 14% on Black Friday and 10% on Cyber Monday.

On December 5, Credit Suisse analyst Phil Winslow maintained an Outperform rating on Salesforce.com, inc. (NYSE:CRM) stock and lowered the price target to $225 from $250, noting that the company reported solid third-quarter results on the income statement. However, while cRPO growth of 12% year-over-year was consistent with guidance and consensus of 12%, it included 100 bps of incremental FX headwind.

At the end of the third quarter of 2022, 117 hedge funds in the database of Insider Monkey held stakes worth $8.2 billion in Salesforce, Inc. (NYSE:CRM), compared to 116 in the preceding quarter worth $7.9 billion. 

In its Q3 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Salesforce, Inc. (NYSE:CRM) was one of them. Here is what the fund said:

“Salesforce, Inc. (NYSE:CRM) has become a dominant global player in sales, customer service, commerce and marketing software over the past 20 years. The company earns 80% gross margins and grows 20% organically. Plus, virtually all of its revenue is recurring. We see Salesforce as a great business that we’ve admired from afar for a long time. More recently, the organization has made some changes at the top that prompted us to take a closer look at the stock. New CEO Bret Taylor and CFO Amy Weaver are bringing a culture of financial discipline. We believe this renewed focus on profitability and capital return, combined with Salesforce’s strong underlying business characteristics, will yield strong results. The current valuation of 3.9x next year’s revenues represents a significant discount compared to publicly traded peers and recent private market values in the software space that have similar growth profiles. We view this discount as an opportunity to invest in a great business at a good value.”

4. PayPal Holdings, Inc. (NASDAQ:PYPL)

Number of Hedge Fund Holders: 126 

PayPal Holdings, Inc. (NASDAQ:PYPL) operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. On November 16, PayPal launched Return Shopping for Shopify to provide a new revenue stream for merchants of Shopify. This feature will drive customers to the merchant’s e-commerce storefronts within the return process. On November 18, PayPal revealed that in the third quarter of 2022, its total payment volume grew by 8.7 percent compared to the same quarter one year before. This payment volume was generated through the over 5.5 billion transactions which PayPal processed during that period.

On December 12, Barclays analyst Ramsey El-Assal maintained an Overweight rating on PayPal Holdings, Inc. (NASDAQ:PYPL) stock and raised the price target to $108 from $100.

Among the hedge funds being tracked by Insider Monkey, Camas, Washington-based investment firm Fisher Asset Management is a leading shareholder in PayPal Holdings, Inc. (NASDAQ:PYPL) with 17.7 million shares worth more than $1.5 billion.

In its Q2 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and PayPal Holdings, Inc. (NASDAQ:PYPL) was one of them. Here is what the fund said:

“This quarter, we bought shares in PayPal (NASDAQ:PYPL), the payments platform. PayPal has been one of the more high-profile victims of the market’s brutal ruthlessness over the past few months, and the stock fell by over two-thirds between its peak in July to the beginning of March this year. As we progressed PayPal through the Mayar Checklist Process, we identified a business with a leadership position in a structurally growing market.

The company benefits from certain network effects and faces several competitive threats at the same time. As the business profited from the move to online retail during the pandemic, as well as from the stimulus cheques handed out in the US, the stock price soared to absurd levels. As so often happens, however, the market had overcorrected by February and this quarter was offering prospective shareholders prices that assumed essentially zero growth in the business. When life gives you irrational sellers, make lemonade!”

3. Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 140     

Apple Inc. (NASDAQ:AAPL) designs, manufactures and markets smartphones, personal computers, tablets, wearables, and accessories. On November 17, the firm revealed that almost 52 million iPhones were shipped during the third quarter of 2022, nearly an eight million unit increase compared to the previous quarter and around one million unit increase compared to the same quarter in the previous year 

On December 12, Oppenheimer analyst Marti Yang maintained an Outperform rating on Apple Inc. (NASDAQ:AAPL) stock and lowered the price target to $170 from $190, noting that no further COVID-related production capacity constraints are expected for Apple in 2023. 

At the end of the third quarter of 2022, 140 hedge funds in the database of Insider Monkey held stakes worth $144 billion in Apple Inc. (NASDAQ:AAPL), compared to 128 in the previous quarter worth $143 billion.

In its Q2 2022 investor letter, Alger Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:

“Apple Inc. (NASDAQ:AAPL) is a leading technology provider in telecommunications. computing and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives extremely tight engagement with consumers and enterprises. The engagement is fostering the growing purchase of high-margin services like music, apps, and apple pay. Apple’s shares detracted from performance as management lowered its guidance for the second quarter due to headwinds from the war in Ukraine, adverse foreign currency shifts, and dampened consumer demand associated with the coronavirus in China. Additionally, many investors were concerned that lockdowns implemented to curtail the spread of COVID-19 would impact the production of apple products, however, the manufacturing facilities have resumed activity.”

2. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 156     

Alphabet Inc. (NASDAQ:GOOG) provides various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. On October 7, Alphabet’s Google reported that it had sold nearly 30 million Pixel phones just ahead of Pixel 7 launch. The company managed to see a 2x times growth in a year and managed to sell over 7 million units in a single year.

On November 30, Generale analyst Christophe Cherblanc maintained a Buy rating on Alphabet Inc. (NASDAQ:GOOG) stock and lowered the price target to $132 from $147, noting that for Alphabet, the issue is less about short-term cyclical pressures than delivering the scale benefits expected from a company with revenues of $280 billion in a progressively maturing online ecosystem.

At the end of the third quarter of 2022, 156 hedge funds in the database of Insider Monkey held stakes worth $19.3 billion in Alphabet Inc. (NASDAQ:GOOG), compared to 153 in the preceding quarter worth $22.3 billion.

In its Q3 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:

“In early January this year – which admittedly feels like eons ago – US President Joe Biden was pushing Americans to take up the government’s offer of free COVID tests to help tackle the surging omicron variant. How did Biden respond when citizens asked about the availability of these tests?

“Google it!”

This advice, undoubtedly well-meant, was roundly scoffed at by the press, however. It seemed too obvious to be very helpful.

Anyway, the anecdote serves to introduce you to one of our largest holdings, Alphabet; the parent company of Google. Note that first, Alphabet’s original and core product – its search engine – has entered our common vocabulary as a verb. ‘Googling’ something has the same meaning as ‘researching’ or ‘finding an answer to something. Second, the reason Biden’s advice was met with such opprobrium was that Googling something has become almost second nature to us now.

These two observations reveal a lot about Google’s strength in the search engine market, in which it has a share of over 90 percent. Because internet search is almost the prototypical network, Google has benefitted from – and we think is also protected by – the huge competitive advantage its scale brings – both to those asking the questions and those providing the answers. The Google search platform becomes increasingly useful to anyone seeking information as a greater volume of stuff becomes available. This starts a virtuous cycle that results in a colossal market share for Google itself. In the language of business strategists, Google benefits from vast network effects.

Because Google’s search results are viewed by billions of eyeballs every day, its search page ‘real estate is understandably very valuable to those with goods and services to sell. Advertising revenues from this ‘real estate as well as that from its other properties such as Mail, Maps, and so on, totalled almost USD 150b in 2021; amounting to almost 58% of the company’s revenues. Ad sales on YouTube, also owned by Alphabet, brought in another USD 28b. With the secular shift of the advertising spend to digital channels – over which Alphabet has a tight grip – we estimate the company has a share of around 40% of the digital advertising market and is probably the most valuable advertising property in the world…read more

1. Meta Platforms, Inc. (NASDAQ:META)

Number of Hedge Fund Holders: 177    

Meta Platforms Inc. (NASDAQ:META) develops products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, wearables, and in-home devices worldwide. On November 8, Meta Platforms announced Grand Teton, its next-generation hardware platform for AI training. Grand Teton features several improvements over the previous generation, including 2x the network bandwidth and 4x the host-to-GPU bandwidth.

On November 11, Morgan Stanley analyst Brian Nowak maintained an Equal Weight rating on Meta Platforms, Inc. (NASDAQ:META) stock and lowered the price target to $100 from $105, noting that signs of a weakening ad market continued to grow through the third quarter earnings season as most of the companies in the space either missed third quarter ad revenue expectations and/or guided to slower than expected forward growth.

 On November 19, Meta AI unveiled a demo of Galactica, a large language model designed to “store, combine and reason about scientific knowledge.” While intended to accelerate writing scientific literature, adversarial users running tests found it could also generate realistic nonsense. After several days of ethical criticism, Meta took the demo offline.

On November 15, Morgan Stanley analyst Brian Nowak maintained an Equal Weight rating on Meta Platforms, Inc. (NASDAQ:META) stock and lowered the price target to $100 from $105, noting that signs of a weakening ad market continued to grow through third Quarter earnings season as the majority of companies being tracked in the space either missed third-quarter ad revenue expectations and/or guided to slower than expected forward growth.   

At the end of the third quarter of 2022, 177 hedge funds in the database of Insider Monkey held stakes worth $14.2 billion in Meta Platforms, Inc. (NASDAQ:META), compared to 185 in the preceding quarter worth $18.2 billion.

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:META) was one of them. Here is what the fund said:

“Shares of Meta Platforms, Inc., the owner of Facebook, the world’s largest social network, fell 28.4% during the second quarter due to quarterly results that missed consensus estimates, driven by the impact of Apple’s new privacy changes in its iOS operating system. These changes have made it harder for Facebook to measure the effectiveness of its advertising across its mobile apps.

In the longer term, we expect Facebook to continue utilizing its leadership in mobile to provide global advertisers targeted marketing capabilities at scale, with substantial monetization optionality ahead in newer areas such as Reels (Meta’s competing solution to TikTok) and e-commerce.”

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Disclosure. None. 12 Tech Stocks With Biggest Upside is originally published on Insider Monkey.