Stock Picks to Buy, Best Tech and Software Investments for 2023: RBC

Stock Picks to Buy, Best Tech and Software Investments for 2023: RBC
  • In a rough year for markets, tech stocks have been notably poor performers.
  • Rising interest rates and recession fears have both hit the sector hard.
  • RBC’s analysts recently revealed the stocks they expect to deliver better returns in 2023.

It’s been a brutal year for tech stocks, as investors grow increasingly worried that businesses will cut back on advertising and consumers will slash their spending ahead of a possible recession.

Also in the mix are rising interest rates, which have dimmed the cluster of companies that were being valued in long-term growth. On top of that, many tech trends that sped up at the peak of the pandemic have returned to normal, such as the work-from-home boom. That’s affected growth rates for many companies — and that, too, worked out unfavorably for tech.

But even with such a troubling backdrop, some companies will outperform others, and RBC’s tech and software analysts are updating their views on which companies are best positioned for success in 2023. They named a group of top picks in the sector after a recent annual tech , internet, media, and telecom conference.

The event featured conversations with more than 100 executives from industries, including software, internet, advertising technology, media, and payments processing. They’re each facing some significant headwinds, ranging from reduced business spending to slower subscriber growth to concerns about demand trends.

One comment in particular about what investors want to see from software companies summed up the general tone for most of tech.

“We believe investors want to find a point where estimates feel like they’ve bottomed and can work higher as our focus is on quality growth names with some company-specific catalysts including a path for margin expansion,” wrote the RBC team including Matthew Hedberg , Rishi Laneia, and others.

The following stocks are the top picks of RBC analysts covering tech stocks. Most are rated “Outperform,” and the firm considers them the cream of the crop among their various industries. Upside figures were calculated based on Tuesday’s closing prices.