Technology stocks

7 of the best tech stocks to buy after the big plunge

So far, 2022 has been a huge disappointment for tech stocks. But it won’t last forever.

Tech stocks are taking an oversized beating to start the year. While the Dow Jones Industrial Average is down 7.5% year-to-date (YTD), the heavier the tech Nasdaq Compound is down 14.3% since the start of the year.

Exchange-traded funds like the SPDR Fund for the Technology Sector (NYSEARC:XLK) also suffer. XLK is down more than 9% since January 1.

Tech stocks are the worst performing sector in the S&P500according to the wall street journal. Tech stocks in particular are under pressure as investors look instead to the higher yields offered by government-backed bonds. According to Deutsche Bank analyst Jim Reid, 2022 so far has been “a perfect negative storm for technology.”

But here’s the thing with storms – the clouds eventually part and the sun comes back. And for tech stocks, that means a return to growth and profits.

When that happens, you’ll want to hold these seven tech stocks:

  • Microsoft (NASDAQ:MSFT)
  • Nvidia (NASDAQ:NVDA)
  • Visa (NYSE:V)
  • Adobe (NASDAQ:ADBE)
  • Broadcom (NASDAQ:AVGO)
  • Selling power (NYSE:RCMP)
  • PayPal (NASDAQ:PYPL)

Best tech stocks to buy: Microsoft (MSFT)

Source: NYCStock / Shutterstock.com

Microsoft has been in the news lately with its announcement that it will buy the video game publisher ActivisionBlizzard (NASDAQ:ATVI) for $68.7 billion. It would be the biggest tech deal of all time.

But that’s normal for the course. Microsoft never does anything small. With its fingers in the cloud, gaming, and mainstream businesses, MSFT has a market capitalization of $2.16 trillion these days. The stock is up more than 50% in 2021. Revenue jumped 18% for the year and earnings per share rose 40%.

But 2022 has been tough so far. MSFT stock is down 15.8% since Jan. 1, and Wall Street will be eagerly watching the company’s earnings report on Jan. 25. Analysts are asking Microsoft to report revenue of $50.88 billion and earnings per share of $2.31.

It would be a great way for Microsoft to start the year. The average price estimate for MSFT shares is $373.24, which is more than 25% upside from current levels.

Nvidia (NVDA)

NVDA stock: an Nvidia sign outside an office building

Source: michelmond/Shutterstock.com

Nvidia was another high flyer in 2021 that came down to earth. At one point last year, NVDA stock was up more than 125% year-to-date. And even after starting to fall in November, Nvidia still managed a gain of over 70% in 2021.

Over the past five years, Nvidia has grown nearly 900%. You can’t ask for anything more from a stock.

But 2022 has been a different story so far. Nvidia has fallen 24% since the calendar turned in January.

With a market capitalization of $555.86 billion, Nvidia is too powerful and a growth engine to falter any longer. It remains a major player in the PC and gaming industries. Its semiconductor chips are used for machine learning, artificial intelligence (AI) and data centers.

Analysts have an average price target of $357.17 for NVDA stock. If it reaches this level, you would get a return of around 60%.

Best tech stocks to buy: Visa (V)

several Visa (V) brand credit cards

Source: Kikinunchi / Shutterstock.com

Unlike some of the other companies on this list, Visa really didn’t have a great 2021. It only grew 1.2% in 2021 and is now starting 2022 down 8%.

So what’s up with the stock V?

Visa is the largest credit card processing company in the world. With nearly $25 billion in annual revenue, Visa and other credit card companies do well when the economy is perceived to be doing well.

As my colleague Joel Baglole writes, Visa suffered last year from concerns over the delta variant of Covid-19 and threats of new lockdowns. So when omicron became an even bigger threat this winter, it’s no surprise that V stock was one of the names that dropped.

But there’s reason to be optimistic about V stock when it reports fourth-quarter results on January 27. The National Retail Federation expects holiday spending to hit a record $859 billion. And the Global Business Travel Association says business travel spending will grow 38% this year to more than $1 trillion. Both of these are powerful catalysts for V stock.

With a market cap of $432.15 billion, Visa has an average price target of $265.80. This is expected to increase to 33.54% for stock V.

Adobe (ADBE)

Adobe (ADBE) logo on the wall of the corporate building.

Source: r.classen / Shutterstock.com

Cloud solutions provider Adobe has been one of the biggest losers in the S&P 500 over the past month. And it’s fallen 10.62% so far in 2022.

If you’ve ever used a PDF file on your computer, chances are you’ve used an Adobe product to read or edit it. Adobe makes products that help you create, edit, and sign PDF files and share them securely. The company claims that last year more than 300 billion PDF files were opened with its products.

In its fourth fiscal quarter, Adobe posted revenue of $4.11 billion. This is a 20% increase over the previous year. For the full year, ADBE achieved revenue of $15.79 billion, representing year-over-year growth of 23%.

And analysts expect better growth in 2022. They expect revenue growth to drop from 13.7% in 2021 to 15% in 2022. Earnings growth is expected to drop from 10% to 17.5%.

Analysts have an average price target of $667.40 for ADBE stock, which represents an upside of 31.38%.

Best tech stocks to buy: Broadcom (AVGO)

Broadcom (AVGO) logo outside office building

Source: Sasima / Shutterstock.com

Broadcom is another such semiconductor stock that has benefited greatly in 2021 from the global shortage of semiconductor chips. AVGO stock jumped more than 50% last year.

But this year Broadcom is starting slow, down 20% and wallowing in the mud with other tech stocks. And that’s even after releasing a strong earnings report last month and announcing a $10 billion share buyback program.

For the fiscal first quarter, Broadcom forecasts revenue of $7.6 billion, better than the previous forecast of $7.2 billion. Earnings before interest, taxes, depreciation and amortization (EBITDA) margin is expected to reach 61.5%.

You can expect the San Jose, Calif.-based company to benefit from the continued rollout of 5G in smartphones this year. With an average price target of $686, AVGO stock is up about 29%.

Salesforce (CRM)

A hand with pink fingernails holds a Salesforce (CRM) sticker.

Source: Bjorn Bakstad / Shutterstock.com

Salesforce makes its money in the cloud. It is a cloud-based software company that offers customer relationship management services. In short, its software helps clients track customer data including names, emails, phone calls, and meeting notes.

The company’s artificial intelligence service, Salesforce Einstein, provides deeper customer insights that help sales teams target customers and drive more sales.

It can also directly compete with Microsoft and Alphabet (NASDAQ:GOOGNASDAQ:GOOGL) in the office suite/enterprise communication space after buying Slack for $27.7 billion.

Third-quarter results released in December were also strong, with revenue of $6.86 billion beating analysts’ estimates of $6.8 billion. Earnings of $1.27 per share also beat expectations of 92 cents per share.

Even so, CRM stock is down about 13% so far in 2022.

But analysts still see plenty of upside for Salesforce, with an average share price target of $337.87. That’s 54% better than today’s prices.

Best tech stocks to buy: Paypal (PYPL)

PayPal is another such fintech stock that is beaten so far in 2022. Its YTD performance is -16.37%. And in the past six months, PayPal has fallen by more than 48%. Ouch!

Part of PayPal’s problem lately can be traced to an announcement from the Consumer Financial Protection Bureau. The agency says it is investigating PayPal and other buy now, pay later companies about how they harvest consumer data. It also investigates whether any of the companies are circumventing consumer protection laws.

But PayPal remains one of the best digital payment companies you can buy, with a market penetration of 75%. It had $20 billion in cash or cash equivalents at the end of the last quarter. And despite its weakness lately, PayPal still reported 13% year-over-year revenue growth in its latest earnings report.

Even better, PayPal’s recent weakness gives it an outsize advantage. The average price target for PYPL stock at the time of writing is $253.77, more than 61% higher than its current price.

At the date of publication, Patrick Sanders held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 he led the investment advice section at US News & World Report. Follow him on Twitter at@1patricksanders.