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Technology stocks have been surging higher in 2024 primarily on the back of AI driven growth potential. Research indicates that by 2030, AI will contribute $15.7 trillion to the global economy. However, technology stocks have witnessed a sharp rally and it’s a good idea to wait for some correction before considering fresh exposure.
As a matter of fact, some of the high-flying names have already corrected from highs along with the broad market correction. In my view, a 20% to 30% decline from all-time highs would be a good opportunity to buy for investors who missed the rally. At the same time, a deep correction would be an opportunity to average up on quality technology stocks.
This column focuses on three technology stocks to buy after correction. In my view, these stocks are worth holding until 2030 for multibagger returns.
Nvidia (NVDA)
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Nvidia (NASDAQ:NVDA) is already in the buying range after a correction of 29% from 52-week highs of $140.80. However, considering mixed sentiments for the broad markets, I would prefer gradual accumulation than a big plunge.
Talking about the growth potential, Fundstrat Global Advisors believes that Nvidia’s revenue can 10x by 2030 to hit $1 trillion. This would imply $400 to $500 billion in operating cash flows. Given this projection, I would not be surprised if Nvidia is among the first few companies to touch the $10 trillion valuation mark.
For that, Nvidia must stay ahead of the curve and the technology company is investing heavily towards research and development. The technological edge is evident from the fact that Nvidia company controls 80% of the high-end AI chip market. In the medium term, Nvidia’s next-generation Blackwell GPU chip is likely to be the growth driver.
Overall, Nvidia is a cash flow machine and is well positioned to stay as a market leader among AI companies. This will provide ample scope for shareholder value creation.
Microsoft (MSFT)
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Microsoft (NASDAQ:MSFT) stock has corrected by 15% from highs of $468. A forward P/E of 30.3x still looks stretched and I expect further correction before MSFT stock looks good for exposure. In my view, levels between $350 to $360 are an attractive buying zone.
The first point to note is that growth for Microsoft Azure has been somewhat disappointing for Q4 2024. Microsoft Chief Financial Officer Amy Hood believes that Azure growth should “accelerate” in the second half of 2025. With relatively soft earnings in the first half, I expect correction and consolidation for MSFT stock.
It’s however worth noting that Azure is likely to be a long-term value creator. According to Goldman Sachs, Azure AI has a revenue potential of $200 billion in the next five years. The investment phase will therefore be followed by growth acceleration. At the same time, Microsoft is expected to benefit from subscriber growth from the company’s Copilot Pro (AI assistant).
Meta Platforms (META)
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Meta Platforms (NASDAQ:META) is another long-term value creator that’s worth grabbing on declines. The stock had touched highs of $543 in the beginning of July. There has been a correction of 10% from those levels. I would wait for a deeper cut before fresh exposure.
An important point to note is that Meta expects capex of $35 to $40 billion for the year. With CEO Mark Zuckerberg guiding for a “multiyear investment cycle,” it’s likely that capex will remain high in the next few years. Only after this investment cycle, the company’s AI products to “scale into profitable services.” It makes sense to buy META stock during the investment cycle and reap benefit when growth accelerates in the next few years.
Of course, Meta has been delivering solid numbers. For Q2 2024, the social media company reported advertising revenue of $38 billion. While Reality Labs continued to bleed, I am focused on the long-term results. I must add that from a geographic perspective, there is ample scope for advertising revenue growth from emerging markets. This will support growth and cash flow upside.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
