Some investors are looking at technology stocks with a skeptical eye right now. With inflation still at a nearly 40-year high and the Federal Reserve focused on bringing it down by hiking the federal funds rate, investors have been less keen to buy high-growth tech stocks.
But the recent sell-off in the market has opened up an opportunity for investors. Top tech companies including Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), and Doximity (NYSE: DOCS) still have lots of long-term potential for patient investors. Here’s why investors should consider snatching up some shares while they’re down right now.
Microsoft hasn’t been immune to the latest tech sell-off, but it certainly hasn’t suffered the same fate as most companies in its sector. Shares are down just 10.6% over the past 12 months, compared to the tech-heavy Nasdaq Composite‘s 24.2% plunge.
Why has Microsoft fared better than many of its tech peers? For one, it actually beat Wall Street’s consensus earnings estimate in its third quarter, reporting adjusted earnings of $2.22 per share compared to analysts’ average estimate of $2.19.
Investors are focused more than ever on tech companies’ bottom lines right now, and Microsoft delivered.
One of the biggest contributors to its profits is the company’s successful cloud computing business, Azure. In the most recent quarter, sales from the company’s Azure and other cloud services segment grew 46% year over year, and CEO Satya Nadella said that the number of Azure deals worth at least $100 million more than doubled in the quarter.
And the company will likely be able to keep that profit train running full steam. Azure holds 22% of the cloud infrastructure market, second only to Amazon‘s AWS, according to data from Canalys.
Azure’s strong position in the cloud computing market is a huge deal for the company and its investors because the cloud infrastructure market will grow to an estimated 30% between this year and next, reaching $156 billion by 2023, according to Gartner. As it grows, Microsoft should be able to continue tapping into this lucrative market.
Nvidia’s shares haven’t weathered the great tech sell-off as well as Microsoft’s have (down 25.7% from a year ago), but don’t let this chip company’s recent slide distract you from its long-term opportunities.
For one, Nvidia’s main revenue driver, chips for the gaming market, continues to make significant gains. Gaming revenue increased by 31% in the first quarter to a record $3.6 billion. That growth is impressive, especially considering that the company was…
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