Earnings season is upon us, which usually results in big swings in the stock market. As a result, many investors are probably wondering which stocks are safe bets and are likely to rise after the earnings release.
Tech stocks fell out of favor in the wake of last year’s economic downturn. However, a boom in artificial intelligence (AI) has renewed Wall Street’s optimism about the industry, with many companies posting double-digit stock growth in 2023. Meanwhile, easing inflation has allowed some companies to recover from recent hurdles.
The great thing about technology is that it is an ever-evolving market that will almost certainly reward patient investors. So, regardless of the outcome of the quarterly earnings report, many of the market leaders are likely to make significant gains in the long term.
So here are three stocks that I would buy immediately without hesitation.
shares Apple (AAPL -1.35% ) slumped nearly 12% since early August after the company posted a 1% year-over-year decline in third-quarter 2023 revenue. Economic headwinds hit the company as declining consumer spending across the technology sector hurt product sales. But despite the challenges, Apple shares are still up 33% year to date.
The company has long made a name for itself for its reliability. Since 2018, Apple’s annual revenue has increased by 52% and operating income has increased by 87%. Meanwhile, the stock is up 209% in that period. The company’s near-unmatched dominance in consumer technology and user loyalty allowed it to capture leading market share in most of its product categories.
Additionally, Apple is gradually expanding its business to rely less on product sales. Its services segment has emerged as a particularly lucrative area, with revenue up 8% year-over-year in the third quarter of 2023. Its digital business includes revenue from the App Store and subscription-based platforms such as Apple TV+, which have proven less vulnerable to macroeconomic factors have proven.
Apple could be in for another challenging quarter. However, the long-term outlook means the recent decline has effectively put the company’s shares on sale. Given its immense dominance in the technology space and a rapidly growing services business, Apple stock is a no-brainer.
Microsoft (MSFT 3.07%) is easily one of my favorite stocks this year, with tons of earning potential in the AI space.
The tech giant was an early investor in AI, investing $1 billion in ChatGPT developer OpenAI in 2019. Microsoft has since increased that number by $10 billion, increasing its stake in the startup to 49%. The partnership gave Microsoft access to some of the most advanced AI technologies, giving it an edge in a highly competitive industry.
With the power of OpenAI technology, Microsoft arguably has the highest earning potential in AI thanks to its dominance in productivity and cloud services. Millions of businesses and consumers around the world now rely on Microsoft’s Office productivity suite, which includes popular platforms such as Word, Excel, PowerPoint, Outlook and more. The tech giant is continually adding AI features to these programs and trying to monetize its efforts.
The company recently introduced Copilot, an AI assistant that will be available as a $30 monthly add-on to a Microsoft 365 subscription. Meanwhile, Microsoft is using OpenAI’s models to expand its library of AI cloud services on Azure, attracting new customers to the platform and increasing its 22% share of the cloud market.
The AI market is expected to grow at a compound annual growth rate of 37% through 2030, and Microsoft is well positioned to benefit significantly from the industry’s evolution. The stock is a screaming buy right now that I would buy without hesitation.
Like the two companies mentioned above alphabet (GOOG -9.60%) (GOOGL -9.51%) has a strong position in technology and a long history of delivering reliable profits to shareholders. Its success is largely due to its dominance in the digital advertising industry, where the company holds a leading 25% market share.
Digital advertising spending is expected to reach $680 billion in 2023, with search advertising accounting for most of that. Alphabet’s Google now has a share of over 80% of the search engines. In addition to YouTube, Android, Chrome and Google’s many other services, Alphabet offers almost unlimited advertising options.
Alphabet serves billions of users every day, and its annual revenue has increased 107% over the past five years, and operating income has increased 130%. These numbers are higher than any other company on this list during the same period.
In 2023, Alphabet has continued to deliver strong financials as it recovers from last year’s economic downturn. In the second quarter, revenue rose 8% year-over-year after the company reported solid increases in its Google Advertising and Google Cloud segments. The company is on a promising path and you shouldn’t miss out on its long-term future.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple and Microsoft. The Motley Fool has a disclosure policy.
Source : www.fool.com