According to Bernstein, investors should look to some major tech stocks if they want to put new money to work amid rising market volatility. According to FactSet, the CBOE Volatility Index briefly spiked to 66 during the August 5 sell-off after a global stock sell-off accelerated as a weaker-than-expected July employment report and the unwinding of the yen carry trade fueled concerns that a recession was imminent. Over the past month, the Invesco QQQ Trust, which tracks the S&P 500 Information Technology Index and the Nasdaq 100 Index, has fallen more than 4%. This performance came after a big rally in tech stocks earlier this year and an even bigger rally in the “Magnificent Seven.” From January to June, information technology stocks rose nearly 28%, while CNBC’s Magnificent Seven Index soared more than 36%. Amid growing concerns about the state of the U.S. job market and consumer spending, as well as the potential hollowing out of artificial intelligence, Bernstein introduced the seven best stocks in the technology, media and communications sectors. Combined, these offer an average upside potential of 26% to Bernstein’s price target. Some of the stocks include: Bernstein sees Uber as a dominant player in the ride-sharing and delivery space, noting a “significant” turnaround in EBITDA with a 40% compound annual growth rate from 2023 to 2026 and a “wave of consumers seeking convenience” to drive the tech company. The stock has soared this year, up 17%, but Bernstein remains bullish. The firm has an outperform investment rating for Uber and a $95 price target, suggesting upside of about 31% from Friday’s closing price. Wall Street agrees, with more than 90% of analysts covering Uber rating the company the equivalent of a “buy.” The rest rate it a “hold,” and no analysts rate it a “sell.” Dell was also one of Bernstein’s top tech stocks. The company’s shares are priced for more than 45% upside through 2024, and its $155 price target suggests a 39% upside from Friday’s closing price. “We believe that A.I. [server] “Orders should remain very strong this fiscal year (revenues of more than $12 billion compared with $1.4 billion last year), and ISG profitability could improve due to cost savings and improved storage margins,” Bernstein wrote, referring to Dell’s Infrastructure Solutions Group. “We also see PCs benefiting from the economic recovery and AI products.” Another stock Bernstein recommended is Broadcom. Noting that the stock trades for just under 34 times this fiscal year’s adjusted earnings and just over 26 times 2025 adjusted EPS, Bernstein called the chipmaker “the cheapest way to get AI in semiconductors.”
Bernstein says you should buy these favorite tech stocks during times of volatility
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