Top 10 Technology Stocks to Buy in 2023 According to Ray Dalio

In this article, we discuss the top 10 technology stocks to buy in 2023, according to Ray Dalio.

Billionaire Ray Dalio argued in a recent interview on the Julia La Roche Show that global central banks are less willing to hold the US dollar for two reasons. First, the greenback has serious competition for the first time in many decades from the Chinese yuan. He noted that China’s share of global trade is ascendant while the US share is shrinking. Most importantly, China is promoting trading agreements centered on its currency rather than the dollar, which has been the norm for a long time. Secondly, Western sanctions against Russia and several other countries have exposed new risks for holding dollar-denominated assets. For instance, the US and its allies froze Russia’s assets, with the US Fed freezing currency reserves. To Dalio, the action was not only high-handed but spooky to global central banks that hold dollar-denominated currency reserves.

Last year, Dalio said during CNBC’s Squawk Box interview that investors are better off not keeping cash because inflation had reached dangerous levels. Instead, he argued that putting the money in a well-balanced portfolio was safe. He also spent time discussing his latest book, “The Changing World Order,” in which he shares valuable insights on the current geopolitical and economic cycles.

Dalio has made bullish comments on China’s tech sector, arguing that it is vibrant and poised to challenge the United States. At home, Dalio was among the loudest speakers regarding the possibility of a tech stock bubble pre-2021. He said in an interview in early 2022 that the Fed’s rate hikes would hit hard the ‘bubble-type’ tech stocks. His thoughts were prescient because several tech stocks lost significant value in 2022 after the Fed’s sustained campaign of rate hikes.

Ray Dalio of Bridgewater Associates

Our Methodology

We picked top 10 tech stocks from Bridgewater Associates’ 13F portfolio as of the end of the fourth quarter of 2022. Although the billionaire retired from Bridgewater, he remains a mentor, board member and investor at the firm.

Top Technology Stocks to Buy in 2023 According to Ray Dalio

10. Netflix, Inc. (NASDAQ:NFLX)

Value of Bridgewater Associates’ 13F Position: $24.89 million

Percentage of Bridgewater Associates’ 13F Portfolio: 0.13%

Number of Hedge Fund Shareholders: 117

Netflix, Inc. (NASDAQ:NFLX) provides streaming entertainment services, including TV series, movies, documentaries, and mobile games in multiple languages and genres, available on various internet-connected devices. The company has around 231 million paid subscribers across 190 countries.

On April 18, Credit Suisse analyst Douglas Mitchelson raised his price objective on Netflix, Inc. (NASDAQ:NFLX) to $331 from $291 and retained a ‘Neutral’ rating before Q1 earnings report. Credit Suisse predicted positive investor feedback on Netflix’s Q1 earnings with increased revenue and margin improvement but anticipated management’s caution on Q2 subscriber numbers due to potential password-sharing launches and seasonal effects.

Bridgewater Associates owns 84,422 shares in Netflix, Inc. (NASDAQ:NFLX), valued at more than $24.89 million, which accounts for 0.13% of the hedge fund’s portfolio. The hedge fund has boosted its stake in the firm by an impressive 101% in the fourth quarter of 2022.

Out of the hedge funds tracked by Insider Monkey, 117 hedge funds were long Netflix, Inc. (NASDAQ:NFLX) during the fourth quarter with aggregate stakes worth $8.15 billion. This compares to 115 hedge funds holding $6.66 billion in Netflix, Inc. (NASDAQ:NFLX) in the previous quarter.

Like Baidu, Inc. (NASDAQ:BIDU), Apple, Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB), Netflix, Inc. (NASDAQ:NFLX) is one of the tech stocks on the radar of Ray Dalio.

In its Q4 2022 investor letter, Broyhill Asset Management stated the following about Netflix, Inc. (NASDAQ:NFLX):

“Speaking of fresh names, we established a new position in Netflix, Inc. (NASDAQ:NFLX) during the second half. We began accumulating shares after the company reported two consecutive quarters of subscriber losses, which brought the stock down by about 75% from peak to trough. Our investment in Netflix is a good example of what we categorize as a “temporary dislocation” and a great example of the historical investments we’ve made in the tech sector. Unlike other “value” investors, we don’t arbitrarily put tech in the “too hard” pile. We are comfortable and more than happy to underwrite investments in the industry. We just demand a margin of safety when doing it (something often ignored by other investors in the industry). That margin of safety opened up when consensus quickly concluded that Netflix’s growth was over, on the heels of two quarters of subscriber losses, which happened to follow years of surging lock-down-induced demand. The popular narrative was that by pursuing advertising revenue, Netflix was all but admitting that streaming television was completely saturated. We thought otherwise. With ~ 75MM subscribers in the US, even converting a small portion of those 100MM moochers would move the needle3. And given the superiority of the company’s technology and first-party user data, we think the consensus is completely underestimating the long-term potential of a Netflix advertising model.”

9. International Business Machines Corporation (NYSE:IBM)

Value of Bridgewater Associates’ 13F Position: $28.67 million

Percentage of Bridgewater Associates’ 13F Portfolio: 0.15%

Number of Hedge Fund Shareholders: 43

International Business Machines Corporation (NYSE:IBM) provides integrated solutions and services globally, operating through four business segments: Software, Consulting, Infrastructure, and Financing, offering hybrid cloud platform and software solutions, business transformation and technology consulting services, server and storage solutions, and financing services.

Securities filings reveal that Bridgewater Associates boosted its stake in International Business Machines Corporation (NYSE:IBM) by 8% during the fourth quarter of 2022. The fund presently owns 203,464 shares of the company worth over $28.67 million, representing 0.15% of the portfolio.

Credit Suisse analyst Shannon Cross lowered International Business Machines Corporation (NYSE:IBM)’s price target to $162 from $165 and maintained an ‘Outperform’ rating ahead of the Q1 earnings report on April 19, citing that IBM’s regular software revenue and AI assets made it more protected than other companies in the case of a possible economic downturn.

As of the fourth quarter of 2022, 43 hedge funds in Insider Monkey’s database held stakes in International Business Machines Corporation (NYSE:IBM). The most prominent shareholder in International Business Machines Corporation (NYSE:IBM) is Adage Capital Management, with 919,590 shares valued at $129.56 million.

In its Q4 2022 investor letter, Diamond Hill Capital stated the following about International Business Machines Corporation (NYSE:IBM):

“New positions initiated in Q4 included shorts International Business Machines Corporation (NYSE:IBM), Acushnet Holdings (GOLF) and elf Beauty (ELF). Since diversified information technology company IBM’s 2019 acquisition of Red Hat, the company has aggressively pursued a hybrid cloud strategy. Though IBM and its new management team have made solid progress on this pivot, we believe the company still meaningfully lags the cloud hyperscalers and other cloud-native companies. Management has also laid out aggressive long-term targets for revenue growth and free cash flow, both of which we believe the company will struggle to achieve as it faces intense competition in its hybrid cloud business and structural headwinds in the company’s legacy businesses.”

8. Kanzhun Limited (NASDAQ:BZ)

Value of Bridgewater Associates’ 13F Position: $28.97 million

Percentage of Bridgewater Associates’ 13F Portfolio: 0.15%

Number of Hedge Fund Shareholders: 23

Kanzhun Limited (NASDAQ:BZ) runs BOSS Zhipin, an online job search platform that connects job seekers with employers. The company generates revenue by providing recruitment services to both job seekers and enterprise clients through its mobile apps and websites.

Barclays analyst Jiong Shao raised his price objective on Kanzhun Limited (NASDAQ:BZ) to $21 from $16 and maintained an ‘Equal Weight’ rating, noting strong Q1 trends with 25% YoY billing growth despite subdued Q4 results.

Bridgewater Associates started building its position in Kanzhun Limited (NASDAQ:BZ) in the fourth quarter of 2021. As of the fourth quarter of 2022, the hedge fund held 1.42 million shares worth $28.97 million. The company represents 0.15% of the hedge fund’s 13F portfolio.

As of the end of the fourth quarter, there were 23 hedge funds in Insider Monkey’s database that held stakes in Kanzhun Limited (NASDAQ:BZ), compared to 19 funds in the third quarter. Tiger Global Management LLC, with 13.86 million shares, is the biggest stakeholder in the company.

7. KE Holdings Inc. (NYSE:BEKE)

Value of Bridgewater Associates’ 13F Position: $45.14 million

Percentage of Bridgewater Associates’ 13F Portfolio: 0.24%

Number of Hedge Fund Shareholders: 39

KE Holdings Inc. (NYSE:BEKE) is a Chinese company that provides an integrated online and offline platform for housing transactions and services, including existing and new home sales, home rentals, home renovation, furnishing, and related services. KE Holdings Inc. (NYSE:BEKE) operates in three segments and owns Lianjia, a real estate brokerage store, and a franchise model for connected brokerage stores called Deyou. KE Holdings is based in Beijing, China.

On April 7, JPMorgan’s Alex Yao raised his price target on KE Holdings Inc. (NYSE:BEKE)’s to $23.50 from $23 and maintained an ‘Overweight’ rating. According to JPMorgan, KE Holdings Inc. (NYSE:BEKE) surpassed the China internet sector in the past year, buoyed by upbeat earnings revisions and a re-rating from investors. The firm had expected this trend to persist with further earnings upgrades.

6. Cisco Systems, Inc. (NASDAQ:CSCO)

Value of Bridgewater Associates’ 13F Position: $48.54 million

Percentage of Bridgewater Associates’ 13F Portfolio: 0.26%

Number of Hedge Fund Shareholders: 70

Cisco Systems, Inc. (NASDAQ:CSCO) designs, manufactures, and sells networking and IT products globally, including switching, routing, wireless, and computing solutions. They also offer Internet for the future, collaboration, security, optimized application experiences products, and customer support services. Cisco Systems, Inc. (NASDAQ:CSCO) serves various organizations directly or through partners and has strategic alliances with other companies.

Goldman Sachs rated Cisco Systems, Inc. (NASDAQ:CSCO) ‘Neutral’ on March 6, stating a preference for networking equipment stocks that would benefit from cloud service provider data center investments and enterprise digital transformation spending. They also cited earnings visibility and attractive valuation compared to peers.

Bridgewater Associates loaded up on California-based tech company Cisco Systems, Inc. (NASDAQ:CSCO) in the fourth quarter, increasing its hold on the company by 4%. The hedge fund owns 1.02 million shares of the company, worth $48.54 million.

In the fourth quarter of 2022, 70 hedge funds had stakes worth $3.03 billion in Cisco Systems, Inc. (NASDAQ:CSCO), up from 68 in the preceding quarter worth $2.79 billion. The most prominent shareholder in Cisco Systems, Inc. (NASDAQ:CSCO) is Two Sigma Advisors.

Along with Baidu, Inc. (NASDAQ:BIDU), Apple, Inc. (NASDAQ:AAPL), and Meta Platforms, Inc. (NASDAQ:FB), Cisco Systems, Inc. (NASDAQ:CSCO) is one of the tech stocks that Bridgewater Associates is monitoring.

In its Q4 2022 investor letter, Artisan Partners stated the following about Cisco Systems, Inc. (NASDAQ:CSCO):

“We had one sale this quarter, exiting network equipment company Cisco Systems, Inc. (NASDAQ:CSCO). We chose to use the proceeds on more attractive value opportunities as Cisco’s growth has come in below what we had hoped for, and the company is increasingly looking at M&A to augment its growth rate.”

5. Block, Inc. (NYSE:SQ)

Value of Bridgewater Associates’ 13F Position: $54.74 million
Percentage of Bridgewater Associates’ 13F Portfolio: 0.29%
Number of Hedge Fund Shareholders: 70

Block, Inc. (NYSE:SQ) provides credit card payment processing solutions. Its commerce ecosystem includes software and hardware for point-of-sale operations, assisting merchants with payment and point-of-sale solutions.

Bridgewater Associates elevated its position in Block, Inc. (NYSE:SQ) by 80% in Q4 2022, holding 871,118 shares worth over $54.74 million. The stock accounts for 0.29% of the fund’s total 13F portfolio. Block, Inc. (NYSE:SQ) has featured on Bridgewater Associates’ portfolio since the first quarter of 2022.

Baird expected Block, Inc. (NYSE:SQ) to have a slow Q1 but improve later in the year. They predicted slightly higher earnings per share in Q1, but March and April results would be more important to investors. Baird was positive about CashApp’s growth but concerned about a possible decline in the Seller business. On April 13, Baird maintained an ‘Outperform’ rating and a price target of $92 for Square shares.

As of the fourth quarter of 2022, 70 hedge funds in Insider Monkey’s database held stakes in Block, Inc. (NYSE:SQ). Catherine D. Wood’s ARK Investment Management is the most notable shareholder in Block, Inc. (NYSE:SQ), with 9 million shares valued at $565.77 million.

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

Value of Bridgewater Associates’ 13F Position: $64.52 million
Percentage of Bridgewater Associates’ 13F Portfolio: 0.35%
Number of Hedge Fund Shareholders: 194

Meta Platforms, Inc. (NASDAQ:META) is a social networking company that creates apps for people to connect via mobile devices, personal computers, and other devices. Its products include Facebook, Instagram, Messenger, WhatsApp, and Oculus. Meta Platforms, Inc. (NASDAQ:META)’s primary source of revenue is advertising.

According to the 13F filings for the fourth quarter of 2022, Bridgewater Associates held 536,148 shares of Meta Platforms, Inc. (NASDAQ:META), amounting to more than $64.52 million in worth and representing 0.35% of the fund’s portfolio value.

BofA analyst Justin Post increased his price target on Meta Platforms to $250 from $230 on April 18 while maintaining a ‘Buy’ rating ahead of the company’s Q1 results. Mixed ad checks suggest Q1 spending slowdown vs. Q4, but February was better than January. Sensor Tower data showed steady daily active use trends and healthy time spent trends for Instagram. Analyst reported these findings to investors.

In the fourth quarter of 2022, 194 hedge funds had stakes worth $15.58 billion in Meta Platforms, Inc. (NASDAQ:META). In addition, Boykin Curry’s Eagle Capital Management held 9.12 million shares of Meta Platforms, Inc. (NASDAQ:META) shares, valued at $1.10 billion, making it the company’s most significant stakeholder.

In its Q4 2022 investor letter, Renaissance Investment Management stated the following about Meta Platforms, Inc. (NASDAQ:META):

“Lastly, Meta Platforms, Inc. (NASDAQ:META) declined for the quarter after reporting disappointing earnings and guidance. The company’s plan to accelerate operating expenses and capital investments despite a slowdown in the digital advertising market was not well received by investors. However, the stock pared losses in the second half of the quarter after management reversed course and announced a reduction in operating expenses for 2023 along with substantial headcount reductions.”

3. Alphabet Inc. (NASDAQ:GOOG)

Value of Bridgewater Associates’ 13F Position: $65.62 million
Percentage of Bridgewater Associates’ 13F Portfolio: 0.35%
Number of Hedge Fund Shareholders: 152

Alphabet Inc. (NASDAQ:GOOG) is a global technology company that owns Google and provides products like Google Maps, Search, YouTube, and Gmail, as well as hardware like Pixel phones and smartwatches. In addition, advertising services are offered through Google Network properties like AdSense, Google Ad Manager, and AdMob. Alphabet invests in infrastructure, data, machine learning, analytics, and AI.

On April 6, UBS analyst Lloyd Walmsley reiterated a ‘Buy’ rating on Alphabet Inc. (NASDAQ:GOOG) shares and raised the price target from $120 to $123. Walmsley expected the company to beat 1Q23 estimates, with Google Website revenues surpassing Street expectations and improved gross margins in Q1.

In the fourth quarter, Ray Dalio cut his stake in Alphabet Inc. (NASDAQ:GOOG) by 721,956 shares, reducing his total stake size by 50%. He first invested in Alphabet Inc. (NASDAQ:GOOG) in the third quarter of 2015. The stock has struggled in the past twelve months, dropping more than 19%. However, Dalio still holds 743,738 shares of the company, worth more than $65.62 million.

Hedge funds are loading up on Alphabet Inc. (NASDAQ:GOOG), as Insider Monkey’s data shows that 152 hedge funds held a stake in the company as of the end of the fourth quarter of 2022, compared to 156 funds at the end of the previous quarter. Chris Hohn’s TCI Fund Management is the leading shareholder of Alphabet Inc. (NASDAQ:GOOG) with 54.54 million shares.

Diamond Hill Capital made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q4 2022 investor letter:

“Other bottom contributors included media and technology giant Alphabet Inc. (NASDAQ:GOOG), apparel and footwear company V.F. Corporation and utility operator Dominion Energy. We believe Alphabet’s shares underperformed on concerns of a weakening macroeconomic environment. The company also reported weaker-than-expected earnings and revenue for Q3 2022. Longer-term, we expect Alphabet’s search engine advertising, YouTube advertising and other initiatives to continue driving revenue growth. As such, we used the share price weakness this quarter to add to our position.”

2. Veeva Systems Inc. (NYSE:VEEV)

Value of Bridgewater Associates’ 13F Position: $77.69 million
Percentage of Bridgewater Associates’ 13F Portfolio: 0.42%
Number of Hedge Fund Shareholders: 43

Veeva Systems Inc. (NYSE:VEEV) offers cloud-based software solutions to the healthcare industry, including customer relationship management, data management, and content management. They also provide consulting, training, and support services with 650 commercial and 860 R&D customers in FY2022. Serving various sectors, they are based in Pleasanton, California.

Truist analyst initiated coverage of Veeva Systems Inc. (NYSE:VEEV) on March 17 and downgraded it from ‘Buy’ to ‘Hold’ with a $195 price target (previously $205). Despite projecting mid-teens revenue growth and EBITDA margins of 34%-36%, Truist believed the shares were fairly valued.

In the fourth quarter, Bridgewater Associates sold 89,915 shares of Veeva Systems Inc. (NYSE:VEEV) stock, reducing its remaining stake by about 16%. At of the end of the quarter, the hedge fund still held 481,385 shares of Veeva, worth about $77.69 million.

At the end of Q4 2022, 43 hedge funds owned a stake in Veeva Systems Inc. (NYSE:VEEV), up from 42 in the preceding quarter. Greg Poole’s Echo Street Capital Management held a significant stake in Veeva Systems Inc. (NYSE:VEEV) at the end of the fourth quarter of 2022.

In its Q3 2022 investor letter, TimesSquare Capital Management made the following observation regarding Veeva Systems Inc. (NYSE:VEEV):

“Veeva Systems Inc. (NYSE:VEEV) supplies cloud solutions to the global life sciences industry. The company reported an inline fiscal second quarter but lowered fiscal year guidance. We decided to liquidate the position, which had a -17% return for the time it was held in the quarter. Veeva’s reduced outlook came from a combination of foreign currency translations, with the remaining tied to anticipated macroeconomic headwinds.”

1. Baidu, Inc. (NASDAQ:BIDU)

Value of Bridgewater Associates’ 13F Position: $80.35 million
Percentage of Bridgewater Associates’ 13F Portfolio: 0.43%
Number of Hedge Fund Shareholders: 40

Baidu, Inc. (NASDAQ:BIDU) is a Chinese multinational tech company that offers internet search services through Baidu Core and iQIYI segments. In addition, Baidu provides various mobile apps, including Baidu App, Baidu Search, Baidu Feed, Baidu Health, Haokan, and more. Baidu, Inc. (NASDAQ:BIDU) also offers online marketing, cloud services, self-driving services, and iQIYI online entertainment. Baidu has a strategic partnership with Zhejiang Geely Holding Group.

Bridgewater Associates holds 702,473 shares in Baidu, Inc. (NASDAQ:BIDU), worth over $80.35 million. This represents 0.43% of their portfolio. The hedge fund’s stake in Baidu, Inc. (NASDAQ:BIDU) stock decreased by 24% in the fourth quarter of 2022. Baidu, Inc. (NASDAQ:BIDU) has featured on Bridgewater Associates’ portfolio since the second quarter of 2018.

On April 17, Citi’s Alicia Yap lowered Baidu, Inc. (NASDAQ:BIDU)’s price target to $186 but maintained a ‘Buy’ rating. She expected Q1 results to meet expectations but lowered Q2 and fiscal 2023 assumptions due to slower macro improvements affecting advertising spend and cloud projects rollout.

At the end of the fourth quarter of 2022, 40 hedge funds in the database of Insider Monkey held stakes worth $1.74 billion in Baidu, Inc. (NASDAQ:BIDU), down from 43 the preceding quarter worth $1.46 billion. Ariel Investments is the company’s largest shareholder, with shares worth $326.31 million.

Horos Asset Management stated in its Q4 2022 investor letter about Baidu, Inc. (NASDAQ:BIDU):

“As I mentioned at the beginning of this quarterly letter, we took advantage of the meltdown in technology platforms to initiate new positions in companies in which we had already been shareholders in the past and whose valuation did not, until now, provide a sufficiently high margin of safety. Such is the case of PayPal and Baidu, Inc. (NASDAQ:BIDU).…” (Click here to read the full text)

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Disclosure: None. Top 10 Technology Stocks to Buy in 2023 According to Ray Dalio is originally published on Insider Monkey.