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3 Top Tech Stocks to Buy and Hold in 2023

These undervalued wide-moat stocks hold promise for long-term investors.

3 Top Tech Stocks to Buy and Hold in 2023
Securities In This Article
ServiceNow Inc
(NOW)
ASML Holding NV ADR
(ASML)
Salesforce Inc
(CRM)

Susan Dziubinski: Technology stocks endured a brutal 2022. The Morningstar US Technology Index finished the year down more than 31%. But the tables turned in the new year. In the first quarter of 2023, tech stocks rallied, rising 22%.

Can the tech stock rally continue? Maybe, or maybe not. We’re still seeing weak demand for PCs and Android-based smartphones, and software revenue growth has been slowing. Morningstar expects the economy overall to weaken in the second and third quarters this year. As a result, we think volatility will persist over the near term.

Longer term, however, we’re confident in secular tailwinds in the tech sector, such as cloud computing and rising semiconductor demand. For patient investors who can ride out volatility, here are three undervalued tech stocks that are among Morningstar analysts’ top picks for the second quarter of 2023.

3 Top Tech Stocks to Buy and Hold in 2023

  1. ASML Holding ASML
  2. Salesforce CRM
  3. ServiceNow NOW

First up is ASML Holding. ASML is one of our top picks in the semiconductor industry. The company is the predominant supplier of photolithography equipment for semiconductor manufacturers. We expect it to benefit from the proliferation of extreme ultraviolet lithography at leading-edge chipmakers. In fact, we expect ASML to outgrow the wafer fabrication equipment industry in the coming years, as process technology leaders buy its tools. We assign ASML a wide economic moat rating and think shares are worth $760.

Next is Salesforce. Our analysts think Salesforce represents one of the best long-term growth stories in large-cap software, thanks to the company’s expanding portfolio of complementary solutions that allows clients to completely embrace their customers and build relationships, strengthen retention, and drive revenue. We expect Salesforce to benefit even more from natural cross-selling among its clouds, upselling more robust features within product lines, pricing actions, international growth, and continued acquisitions such as the recent deals for Slack and Tableau. We assign Salesforce a wide economic moat rating and think shares are worth $245.

Lastly, there’s ServiceNow. ServiceNow has mastered what’s called the “land and expand” strategy by leveraging its strength in workflow automation to deepen its relationship with clients with additional IT, HR, customer service, and other back-office products. In fact, we think ServiceNow has become a key partner in digital transformation, given its elite retention statistics. We’re also impressed with ServiceNow’s excellent balance between strong and highly visible revenue growth and robust margins. We assign ServiceNow a wide economic moat rating, and we think shares are worth $600.

For more stock ideas, be sure to subscribe to Morningstar’s channel and visit Morningstar.com.

Morningstar sector director Brian Colello, strategist Abhinav Davuluri, and senior analyst Dan Romanoff provided the research behind this segment.

Watch4 Dividend Stocks Top Managers Are Buying” for more from Susan Dziubinski.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Susan Dziubinski

Investment Specialist
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Susan Dziubinski is an investment specialist with more than 30 years of experience at Morningstar covering stocks, funds, and portfolios. She previously managed the company's newsletter and books businesses and led the team that created content for Morningstar's Investing Classroom. She has also edited Morningstar FundInvestor and managed the launch of the Morningstar Rating for stocks. Since 2013, Dziubinski has been delivering Morningstar's long-term perspective and research to investors on Morningstar.com.

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