Earnings season is right around the corner, which usually causes a lot of fluctuation in the stock market. As a result, many investors are probably wondering what stocks are safe bets and likely to rise after posting earnings.
Tech stocks fell out of favor amid last year’s economic downturn. However, a boom in artificial intelligence (AI) has made Wall Street optimistic about the industry again, with many companies enjoying double-digit stock growth in 2023. Meanwhile, easing inflation has allowed some businesses to recover from recent hurdles.
The great thing about tech is that it’s an ever-evolving market that is almost guaranteed to reward patient investors. So, no matter the outcome of this quarter’s earnings report, many of the market’s leaders will likely provide significant gains over the long term.
So, here are three no-brainer stocks I’d buy right now without hesitation.
Shares in Apple (AAPL -1.35%) tumbled almost 12% since the start of August after posting a 1% year-over-year decline in revenue for the third quarter of 2023. Economic headwinds caught up with the company as reductions in consumer spending across tech hurt product sales. Yet, despite the challenges, Apple’s stock has still gained 33% year to date.
The company has gained a reputation for its reliability over the long term. Since 2018, Apple’s annual revenue climbed 52%, with operating income up 87%. Meanwhile, its stock soared 209% in that time. The company’s nearly unrivaled dominance in consumer tech and loyalty from users enabled it to snap up leading market shares in most of its product categories.
Moreover, Apple is gradually expanding its business to lean less on product sales. Its services segment has become a particularly lucrative area, with revenue rising 8% year over year in Q3 2023. The digital business includes income from the App Store and subscription-based platforms like Apple TV+, which have proven less vulnerable to macro factors.
Apple could face another challenging quarter. However, its long-term prospects mean a recent dip has effectively put its shares on sale. With immense dominance in tech and a rapidly expanding services business, Apple’s stock is a no-brainer.
Microsoft (MSFT 3.07%) is easily one of my favorite stocks this year, with countless earning opportunities in AI.
The tech giant was an early investor in AI, sinking $1 billion in ChatGPT developer OpenAI in 2019. Microsoft has since increased that figure by $10 billion, bringing its stake in the start-up to 49%. The partnership gave Microsoft access to some of the most advanced AI technology, allowing it to get a head start in a highly competitive industry.
With the power of OpenAI’s technology, Microsoft arguably has the highest earning potential in AI thanks to its dominance in productivity and cloud services. Millions of businesses and consumers worldwide have come to rely on Microsoft’s Office productivity suite, which includes popular platforms such as Word, Excel, PowerPoint, Outlook, and more. The tech giant is steadily adding AI features to these programs and moving to monetize its efforts.
The company recently unveiled Copilot, an AI assistant that will debut as a $30 monthly add-on to a Microsoft 365 subscription. Meanwhile, Microsoft is using OpenAI’s models to expand its library of AI cloud services on Azure, striving to attract new customers to the platform and increase its 22% share of the cloud market.
The AI market is projected to expand at a compound annual growth rate of 37% through 2030, and Microsoft is well equipped to profit substantially as the industry develops. Its stock is a screaming buy right now and one I’d buy without hesitation.
Like the two companies above, Alphabet (GOOG -9.60%) (GOOGL -9.51%) has a potent position in tech and a long history of providing stockholders with reliable gains. Its success is mainly owed to its dominance in the digital advertising industry, where it holds a leading 25% market share.
Digital ad spending is expected to hit $680 billion in 2023, with the largest portion of that coming from search advertising. Meanwhile, Alphabet’s Google has an over 80% share of search engines. Along with YouTube, Android, Chrome, and the many other services under Google, Alphabet has almost endless advertising opportunities.
Alphabet serves billions of users daily and its annual revenue climbed 107% over the last five years, and operating income has increased 130%. Those figures are higher than any other company on this list in the same period.
In 2023, Alphabet has continued delivering strong financials as it recovers from last year’s economic downturn. In the second quarter, revenue rose 8% year over year after a solid rise in its Google advertising and Google Cloud segments. The company is on a promising trajectory, and you won’t want to miss out on its long-term future.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, and Microsoft. The Motley Fool has a disclosure policy.