In this article, we will take a look at the 10 best long-term tech stocks to buy. To skip our analysis of the tech industry and its recent trends, you can go directly to see the 5 Best Long-Term Tech Stocks To Buy.
The tech market is undergoing a significant transformation propelled by advancements in AI, data analytics, and cybersecurity. Among these, Artificial Intelligence (AI) stands out as a potentially groundbreaking technological advancement, with Wall Street analysts drawing parallels to pivotal innovations like the internet. While there is a widespread consensus that AI will ultimately reshape the economy and boost corporate profits, there is vigorous debate regarding the timing and magnitude of these transformative and lucrative changes. Skeptics argue that especially in the stock market domain, the excitement surrounding AI may have surpassed actual developments, potentially leaving some highly valued stocks exposed to a decline in the event of an economic slowdown.
Despite the initial decline in the NASDAQ during the early days of the year and the skepticism expressed by some circles regarding the Magnificent Seven’s ability to sustain the gains observed in 2023, long-term analysts remain optimistic, believing that technology stocks have further potential for growth in 2024. During a recent appearance on CNBC, Josh Brown, the CEO of Ritholtz Wealth Management, discussed the factors contributing to the decline in tech stocks in the first week of 2024. Brown attributed this decline to a significant amount of profit-taking activity currently underway, driven by the remarkable returns investors witnessed in the technology sector throughout 2023, particularly in the fourth quarter. The wealth manager also expressed an understanding of the rationale behind early-year profit-taking, given the spectacular rally in 2023. With that said, he emphasized that the downturn in tech stocks should not be misconstrued as these companies “stumbling”; rather, it is a result of strategic profit-taking.
Overall, the technology industry is poised for expansion as a growing number of companies show interest in joining the competition for AI and data analytics. Key industry players like Apple, Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA) are among the best technology stocks that are achieving notable progress in the field and could potentially take the lead in seizing the considerable opportunities arising from future advancements.
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Our Methodology
When assembling our portfolio of the best long-term tech stocks to buy, our initial step involved identifying some of the best technology stocks showing potential for share price growth by considering analyst average share price targets with a minimum Buy rating. Following this, we evaluated the extent of hedge fund investments in these stocks as of September 2023, utilizing Insider Monkey’s comprehensive database covering 910 hedge funds. Over the past decade, the top 10 consensus stock picks of hedge funds have outperformed the S&P 500 Index by more than 140 percentage points (see the details here). This is a significant outperformance, and it underscores the importance of closely monitoring this frequently overlooked indicator.
10. Cadence Design Systems, Inc. (NASDAQ:CDNS)
Number of Hedge Fund Holders: 58
Based in San Jose, California, Cadence Design Systems, Inc. (NASDAQ:CDNS) is a leading player in electronic systems design. Employing its Intelligent System Design™ strategy, the company offers a comprehensive suite of computational software, hardware, and IP solutions. Its portfolio includes software, hardware, services, and reusable IC design blocks, all tailored to cater to the diverse needs of its clientele.
On November 2, Cadence Design Systems, Inc. (NASDAQ:CDNS) introduced the groundbreaking Cadence® Voltus™ InsightAI, representing the industry’s first generative AI technology. This innovation is crafted to identify the root cause of EM-IR drop violations at the early stages of the design process. Additionally, it selects and implements the most efficient fixes to enhance power, performance, and area (PPA).
As of Q3 2023, shares of Cadence Design Systems, Inc. (NASDAQ:CDNS) were held by 58 prominent hedge funds, totaling a collective valuation of $2.94 billion. Andreas Halvorsen’s Viking Global emerged as the leading hedge fund shareholder for the quarter.
Much like Apple, Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA), Cadence Design Systems, Inc. (NASDAQ:CDNS) is one of the best technology stocks to invest in.
9. Mercadolibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 76
Established in 1999, Mercadolibre, Inc. (NASDAQ:MELI), headquartered in Buenos Aires, Argentina, stands as the foremost e-commerce technology company in Latin America. Operating through its key platforms, MercadoLibre.com and MercadoPago.com, the company offers solutions for individuals and businesses engaged in online buying, selling, advertising, and payment transactions.
On November 2, Wedbush analyst Scott Devitt reaffirmed an ‘Outperform’ rating for Mercadolibre, Inc. (NASDAQ:MELI) shares and maintained a price target of $1500.
As of Q3 2023, Mercadolibre, Inc. (NASDAQ:MELI) shares were held by 76 prominent hedge funds, amounting to over $3.38 billion in value, according to data from Insider Monkey on 910 hedge funds. Generation Investment Management emerged as the largest hedge fund shareholder, holding 480,480 shares valued at $609.19 million.
8. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 81
Based in Austin, Texas, Tesla, Inc. (NASDAQ:TSLA) is a multinational American company specializing in automotive and clean energy. The company is widely recognized for its expertise in designing and manufacturing electric vehicles, as well as providing stationary battery energy storage solutions for various scales, from households to grid-level applications. Additionally, Tesla, Inc. (NASDAQ:TSLA) manufactures solar panels, solar shingles, and related products and services.
In the third quarter of 2023, Tesla, Inc. (NASDAQ:TSLA) achieved the production of 430,488 vehicles and successfully delivered over 435,000 vehicles. The company operates six expansive manufacturing facilities globally, including its original plant in California and gigafactories located in Nevada, New York, Shanghai, Texas, and Berlin.
On December 18, investment advisory RBC Capital maintained an Outperform rating on Tesla, Inc. (NASDAQ:TSLA) stock and lowered the price target to $300 from $301.
According to Insider Monkey’s third-quarter database, 81 hedge funds expressed a bullish stance on Tesla (NASDAQ:TSLA), indicating an increase from the 79 funds in the previous quarter. Catherine D. Wood’s ARK Investment Management emerged as a prominent shareholder for the quarter, holding a stake valued at $1.02 billion.
7. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 107
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a leading Taiwanese semiconductor manufacturing firm that specializes in producing chips for major entities such as NVIDIA Corporation (NASDAQ:NVDA). In November, the company delivered positive news to investors by reporting its first monthly increase in sales since February, driven by heightened demand for smartphones and AI.
On November 13, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) revealed a significant 34.8% month-over-month surge in its October net revenue, reaching nearly NT$243.2 billion, accompanied by a year-over-year growth of 15.7%, marking it as one of the best technology stocks to consider.
During the third quarter of 2023, 107 hedge funds held positions in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). Fisher Asset Management emerged as the primary investor in the company, increasing its holdings to 30.637 million shares, valued at $2.66 billion.
In its third quarter 2023 investor letter, Bonsai Partners stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM):
“Robustness at the product level exists differently than in other layers of the value chain. Product diversification follows the same principle, but product control isn’t related to vertical integration. Product control exists in multiple forms, such as switching costs or happy customers who don’t want to buy elsewhere. However, one often overlooked dimension of product-level robustness is adaptability. Some businesses offer goods and services that behave like shapeshifters; they naturally adapt to the market’s needs regardless of how the world changes. Adaptability also serves as a hedge against the unknown.
Consider our investment in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), which enjoys a highly adaptive product portfolio. If we compare TSMC to a fabless chip maker like Qualcomm, investing in Qualcomm is a bet that its products will retain their technological advantage over time. Meanwhile, TSMC sells a service that naturally produces whatever the end customer wants. There is little need for brilliant product-level foresight; TSMC just needs to maintain its process and service level advantages, allowing it to manufacture whatever the market demands. TSMC’s product portfolio is robust compared to most other semiconductor companies because it naturally adapts to technological and market-driven shifts. Instead of product-level risk, TSMC’s core risks are geopolitical.”
6. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 110
Advanced Micro Devices, Inc. (NASDAQ:AMD), commonly known as AMD, is a global semiconductor company headquartered in Santa Clara, California. Specializing in the development of computer processors and associated technologies, AMD serves both business and consumer markets.
On October 10, Advanced Micro Devices, Inc. (NASDAQ:AMD) announced the finalization of a definitive agreement to acquire Nod.ai, a strategic move aimed at enhancing the company’s capabilities in open AI software. In August of the same year, AMD had also acquired Mipsology, an AI software company known for its expertise in providing AI solutions compatible with AMD adaptive computing silicon.
On November 13, investment advisory firm Roth MKM initiated coverage of Advanced Micro Devices, Inc. (NASDAQ:AMD) with a Buy rating and a price target of $125. The focus was on the company’s distinctive portfolio of high-performance compute and networking processors.
As of Q3 2023, 110 hedge funds tracked by Insider Monkey held shares of Advanced Micro Devices, Inc. (NASDAQ:AMD), valued at $9.2 billion. Fisher Asset Management, led by Ken Fisher, emerged as the largest hedge fund shareholder, owning 27.8 million shares with a total value of $2.9 billion.
In addition to Apple, Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD) ranks as one of the best technology stocks for investment.
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Disclosure. None. 10 Best Long-Term Tech Stocks To Buy was initially published on Insider Monkey.
