3 Top Tech Stocks To Buy This Month

In spite of recent market weakness, the overall market has powered higher this year, and is up 11% still year-to-date.

The first quarter was strong, propelling the major indices higher, and overall profit growth drove positive results. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) has recently hit a bumpy patch, though, and is down 3.6% over the past month alone.

Wall Street’s prior enthusiasm about AI has dimmed somewhat, but that too has led to new opportunities. According to a Markets and Markets report, the global AI market is expected to grow at a CAGR of 35.7% to reach $1.34 trillion by 2030.

In light of future market size growth, among the top technology stocks to buy this month are Advanced Micro Devices, Inc. (NASDAQ:AMD), International Business Machines Corporation (NYSE:IBM), and Oracle Corporation (NYSE:ORCL).

AMD Is Coming After NVIDIA

One company riding high on the AI boom is AMD. The company’s chip offerings, like CPUs and GPUs have gained traction with customers and it remains one of the largest semiconductor companies in terms of market capitalization.

In spite of this, Advanced Micro Devices is not the industry leader. That’s because no matter what semiconductor companies do, NVIDIA Corporation (NASDAQ:NVDA) seems to eclipse them, so far. Still, there are reasons to be excited about what’s to come for AMD.

In the first quarter of fiscal 2024, AMD posted revenues of $5.47 billion, which reflects an increase of 2% from the prior year’s period. This figure was marginally better than analysts’ expectations.

The revenue figure also highlights the mixed state of the market. The company’s data center and client segments, which comprise the bulk of the semiconductor manufacturer’s top line, are expanding rapidly.

The same cannot be said for its gaming and embedded segments, which are seeing a broad-based slowdown. Meanwhile, AMD’s bottom line is growing in tandem with the revenues.

The data center segment, closely related to AI operations, is riding tailwinds that are seen in the numbers. In the first quarter, the company reported record GPU sales, with MI300 surpassing $1 billion in cumulative sales since its launch late last year.

Although NVIDIA is the clear favorite in chip stocks and AI, AMD might have prospects in advancing end-to-end AI infrastructure. 

Even following the most recent price action, analysts have a consensus price target on AMD of $189 per share, suggesting 35.2% upside opportunity.

Legacy Big Tech IBM Worth a Closer Look

IBM has an illustrious history that stretches all the way back to 1911 when it began as the Computing-Tabulating-Recording Company. Over the past century, it became one of the biggest technology titans in history but the recent past has not been kind to “Big Blue” as other tech giants have taken over.

Looking back to the turn of the decade, IBM has faced a rocky road when it comes to financials. Although annual revenues have increased at low- to mid-single digit year-over-year growth rates, net income has had large swings.

Last year may well have signaled a tectonic shift In that bumpy road when IBM’s profitability took a reassuring giant leap higher. The bottom line figure rose from $1.78 billion in 2022 to an astonishing $7.50 billion.

As IBM joins the AI wave, solutions like IBM WatsonX are just one example of keeping up with the Joneses so-to-speak. In the first quarter of fiscal 2024, IBM reported strong momentum for watsonx and generative AI, with its book of business surpassing $1 billion since watsonx’s launch in mid-2023.

In the same quarter, the company’s largest segment, software revenue, grew by 5.5% from the prior year’s period to reach $5.90 billion, driving a 1.5% year-over-year in overall revenue to $14.46 billion.

IBM also has a focus on cloud computing and acquired HashiCorp with a view to creating a comprehensive, end-to-end hybrid cloud platform for the AI era.

A 10-year discounted cash flow forecast paints a rosy picture for IBM with a $215 price target, though admittedly analysts are a bit more muted with a $186 fair value assessment.

IBM pays a 3.52% yield at this time and has a a growth streak of 28 years so income investors will find a lot to like too.

Oracle Is An Enterprise IT Behemoth

Since its beginnings in 1977, Oracle has had a focus on enterprise IT needs and provides a highly comprehensive suite of products and services delivered worldwide through various flexible, interoperable IT deployment models. But if it was boiled down simply, Oracle operates through three businesses that are cloud and license, hardware, and services.

It’s no surprise that Oracle’s cloud and license business is the primary revenue driver, accounting respectively for 84% and 83% of total revenues in fiscal 2024 and 2023 ending in May.

While other segments appear to be sledding uphill, this segment drove a 6% year-over-year increase in its total revenues to $52.96 billion in fiscal 2024.

Over the past five quarters, free cash flow as a percentage of its net income has eclipsed 100%, indicating that the company is generating substantial cash that’s surpassing its earnings.

It hasn’t all been plain sailing and storms may be brewing because Oracle acts as a data center for the popular short-form social media platform TikTok’s U.S. users. TikTok is currently facing a tough predicament, as the platform may be banned in the U.S. Market analysts speculate the ban could lead to financial headwinds for Oracle. That may prove to be a storm in a teacup, though.

For now, Oracle remains a highly attractive cash flow generator that produces about $52 billion in revenues and drops $10 billion to net income. While it’s trading at a relatively elevated price-to-earnings multiple now of 35x, a pullback is likely an attractive opportunity to snap up a premier technology brand with a bright future.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.