3 tech stocks to target

The market has become more volatile due to fears of a possible recession.

Recessions, or periods of economic contraction, are not pleasant. Unemployment rises and stock or real estate prices fall, sometimes precipitously. It can be scary. Buying stocks during a recession probably goes against all your basic emotions.

However, history has shown time and time again that recessions are great long-term buying opportunities. Warren Buffett said: “Be greedy when others are fearful.”

Here are three top AI stocks that have started to liquidate their massive gains and could be fantastic targets if market volatility continues.

1. Broadcom

Nvidia makes headlines among semiconductor companies, but Broadcom (NASDAQ: AVGO) is a rock star that long-term investors would do well to focus on. The company sells a mix of semiconductors and software used in end markets related to networking, cloud, and wireless technologies. Revenue is split roughly 60/40 between chips and software, which helps diversify the company. The stock is a market beater that has outperformed the S&P 500 by a landslide this decade.

Financially, Broadcom is a behemoth. The company generates over $42 billion in annual revenue, with over 40% of that being free cash flow. Broadcom’s management returns money to shareholders in the form of dividends. The dividend has increased for 15 consecutive years, growing at an annualized rate of 36% over the past decade. Investors should still see double-digit dividend growth in the future. The company continues to grow, and the dividend only costs 50% of its cash flow.

Artificial intelligence (AI) is only expected to bolster Broadcom’s current growth. About 35% of Broadcom’s expected 2024 chip revenue will be dedicated to AI, and the company recently discussed creating a custom chip for ChatGPT developer OpenAI. Analysts estimate that Broadcom will grow earnings by an average of 18% per year over the long term. Recent volatility has pushed the stock price from a forward P/E of 38 to 30, making Broadcom an increasingly attractive stock idea given its growth prospects.

2. Microsoft

Technology giant Microsoft (NASDAQ: MSFT) could be a case of the rich getting richer. Microsoft is integrating AI into its tech empire, adding AI capabilities to its consumer and enterprise software products and making Azure a leading platform to power AI applications. It’s remarkable that a company with nearly a quarter-billion dollars in annual revenue continues to grow at a double-digit pace, with analysts expecting long-term annualized earnings growth of more than 13%. Decades of growth have made Microsoft one of the best stocks of all time; shares have returned nearly 680,000% since its initial public offering (IPO).

Microsoft generated $74 billion in cash flow over the past four quarters, more than most publicly traded companies are worth. That’s more than enough to invest in growth, buy back shares to fuel earnings growth, and pay a dividend that has increased for 22 consecutive years. Microsoft is one of two publicly traded companies with a perfect AAA credit rating,…