Amidst the constant buzz around artificial intelligence (AI), the rally in tech stocks shows no signs of slowing down.
In Friday's session, Up 40% in the past 12 months, the tech heavy is now within striking distance of its all-time closing price of 16,057, set in November 2021.
Source: Investing.com
However, despite the index's strong rise, smart investors should note that indiscriminate investing in fast-growing stocks does not necessarily guarantee success, especially given the high volatility in the tech industry. I know very well.
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Now, as the AI frenzy continues on Wall Street and the Nasdaq looks set to extend its rally toward a new record, here are three strong options worth considering.
1. Salesforce
Salesforce (NYSE:), a leader in cloud-based customer relationship management (CRM) solutions, has been at the forefront of digital transformation in recent years.
Salesforce enables organizations to better connect with customers, streamline operations, and accelerate growth through a suite of innovative products and services.
As companies increasingly prioritize digital engagement and data-driven decision-making, Salesforce's AI-driven CRM platform, Einstein, positions the company for continued success in a rapidly evolving market.
Taking this into account, Salesforce is expected to increase its profits and revenue over the coming year due to strong demand for its CRM tools and the positive impact of continued cost-cutting measures.
Source: InvestingPro
As we've seen above, InvestingPro paints a mostly positive picture of Salesforce's financial health, highlighting a solid outlook for earnings, revenue, net income, and cash flow growth.
CRM stock closed Thursday's trading at $293.54, its highest closing price since November 29, 2021.
At current levels, Salesforce has a market capitalization of $284.2 billion, earning it the position as the world's most valuable cloud-based software company.
The stock has risen about 79% over the past 12 months, in line with most of the tech sector.
Despite the strong performance, Salesforce stock remains undervalued according to InvestingPro's quantitative model, with a potential upside of 11.7% from current levels.
Source: InvestingPro
That would move CRM closer to its “fair value” target price of about $328.
2. Adobe
Adobe (NASDAQ:) is known for its creative software products and digital experience solutions, establishing itself as a cornerstone of the digital economy.
From Photoshop and Illustrator to Adobe Experience Cloud, the company's suite of products enables creators and marketers to deliver engaging digital content.
With Adobe Teacher's integration of AI and machine learning technology, Adobe is poised to take advantage of the growing demand for personalized, data-driven marketing solutions in an increasingly digital world.
As such, Adobe's innovative software solutions and strong foothold in creative and digital marketing tools will continue to drive market share as demand for digital content creation and marketing solutions increases.
InvestingPro notes that Adobe is in good financial shape thanks to strong revenue and revenue growth prospects, along with its impressive gross margins, demonstrating the strength of Adobe's business.
Source: InvestingPro
Adobe appears poised for further gains, as the current operating environment is stimulating demand for the company's wide range of subscription-based digital media and marketing software tools.
It's worth mentioning that InvestingPro's quantitative model suggests ADBE stock will appreciate 11.4% over the next 12 months, making it a Strong Buy.
Source: InvestingPro
As seen above, such a move would cause the stock to rise from last night's closing price of $537.57 to $599.10.
3. Dell Technologies
Dell Technologies (NYSE:) is well positioned for future growth with a diverse portfolio spanning hardware, software and services. Our ability to adapt to changing technology trends and provide comprehensive solutions allows us to meet the wide range of needs of businesses.
As the cybersecurity landscape rapidly evolves, Dell is leveraging AI and machine learning across its product portfolio to optimize performance and deliver innovative technology solutions for businesses of all sizes.
As the transition to hybrid cloud environments accelerates, Dell will benefit from strong demand for end-to-end hardware infrastructure services and cybersecurity solutions.
Source: InvestingPro
InvestingPro notes that Dell's strong financial position and diversified product portfolio are two factors that will likely continue to drive the company's stock to greater heights.
Additionally, Dell offers investors an annualized dividend of $1.48 per share at a yield of 1.69%. This is one of the highest standards in the information technology sector.
DELL stock closed at a high of $87.79 on Thursday, valuing the IT hardware and infrastructure technology maker at $62 billion.
The stock has more than doubled in the past year, surging 114% amid a ferocious rally in the tech sector.
Despite the recent boom, Dell offers an affordable opportunity for investors looking for exposure to the technology as excitement grows over the prospects of the AI business.
Source: InvestingPro
Currently trading at a discount according to several InvestingPro valuation models, DELL's “fair value” target price is nearly $94, implying a potential upside of 6.9% from the current market price.
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To stay on top of market trends and what they mean for your trading, be sure to check out InvestingPro. As with any investment, it is important to do extensive research before making a decision.
InvestingPro helps investors make informed decisions by providing comprehensive analysis of undervalued stocks with significant upside potential in the market.
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Disclosure: As of this writing, I am long the S&P 500, but via SPDR. S&P 500 ETF (SPY), and Invesco QQQ Trust ETF (QQQ). I am also long Technology Select Sector SPDR ETF (NYSE:).
I regularly rebalance my portfolio of individual stocks and ETFs based on an ongoing risk assessment of both the macroeconomic environment and corporate finances.
The views expressed in this article are solely those of the author and should not be taken as investment advice.
