2022 has been tough for tech stocks. Most were grappling with higher interest rates, fears of aggressive rate hikes, geopolitical issues, economic concerns and weary consumers. It drove even the most sane investors out of the market. Although it is impossible to find a risk-free investment, some are safer than others, especially if they are leaders in their sector, with large economic moats.
In fact, one of the best ways to spot strong tech stocks is to follow Warren Buffett’s model of investing in simple, easy-to-understand companies. companies whose profits are predictable and proven; businesses that can be bought at a reasonable price; and companies with an “economic moat,” or a unique advantage over competitors. Considering that Warren Buffett is now worth around $108.2 billion, it’s a safe bet he knows a thing or two about safe investing.
With a diversified source of income and an ability to adapt to new consumer trends, Apple (NASDAQ:AAPL) will always be one of the strong technology stocks to bet on. Even Warren Buffett once said that he keep investing to Apple because of its brand, its ecosystem and its wide economic moat.
Moreover, we must consider that Apple is a world leader in innovation. Just look at the iPhone alone. First introduced to the public in 2007, it is now one of the most popular mobile phones in the world, with a growing market share. Best of all, earnings have been solid.
The company just exceeded revenue and profit expectations, and it showed that global demand for its products is still high. In the fourth quarter, the company’s revenue increased 8% to $90 billion. Mac sales rose 25% to $11.5 billion in the quarter. iPhone sales rose 10% to $42.6 billion. Operating profit increased 5% to $25 billion. EPS rose 4% to $1.29, putting it above expectations of $1.27.
In addition, analysts such as Sydney Ho of Deutsche Bank, say Apple is trading at a reasonable valuation and has a buy rating with a price target of $175. Apple also has a dividend yield of 0.66% and has been aggressive with share buybacks.
Tech Stocks: Advanced Microdevices (AMD)
Advanced micro-systems (NASDAQ:AMD) was slaughtered for most of the year. But that will happen when most of the tech stock sector drags just about everything down. However, after dropping from around $150 to a low of around $60, AMD stock is showing strong signs of life. With patience, I would like to see AMD stock rise from its current price of $75.25 to $120 in the near term.
Analysts also like AMD stock. UBS has raised AMD to a buy rating with a price target of $95 per share. Baird analyst Tristan Gerra also just updated the name of the tech beaten to outperform with a price target of $100. He thinks the company’s new Genoa chips could expand the company’s competitive moat. Credit Suisse analyst Chris Caso also launched AMD’s hedge with an outperform rating, with a price target of $90.
Piper Sandler analyst Harsh Kumar is also overweight the stock, with a price target of $90. He added that revenue appears to be bottoming out and PC inventory is expected to start emptying in early 2023. Additionally, he thinks AMD is a great way to trade the rising server trend and the strength of the cloud.
Tech stocks: Nvidia (NVDA)
Whereas Nvidia (NASDAQ:NVDA) has been halved this year, it is still a safe and quality name that investors can rely on. On the one hand, the company makes the chips used to power some of the world’s most advanced technologies, including gaming, supercomputing, cloud, artificial intelligence, machine learning, virtual reality, augmented reality, autonomous driving, etc. Again, NVDA was destroyed in 2022. But it’s still a high quality name to rely on.
Better is also to jump on the Industrial Omniverse, which is already used by large companies, such as Lowe’s (NYSE: DOWN), BMW (OTCMKTS:BMWYY), Siemens (OTCMKTS:HEAD OFFICE), and Lockheed Martin (NYSE:LMT).
analysts like Credit Suisse’s Chris Casso, say there has been enough bad news for semiconductors to reduce investment risk. The company also said Nvidia was one of its top picks thanks to its strength in artificial intelligence, computing, and data centers. Better, the company now has an outperform rating on the stock, with a price target of $210. Harsh Kumar, Piper Sandler analyst also sees a near-term turnaround for Nvidia and has an overweight rating on the stock. For me, from a current price of $160.38, I would like to see the stock back to $195 by the first half of the new year.
At the date of publication, Ian Cooper had (neither directly nor indirectly) any position in the securities mentioned. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.
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