The broader batch of tech stocks has stumbled a bit in recent weeks, partly thanks to renewed worries about rising interest rates. As rates on the 10-year Treasury note climb again, even tech stocks that analysts are bullish on — like ACN, PDD, and INTU — could stand to get dinged. Indeed, rising rates are like gravity for stocks.
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Though it’s hard to tell what will happen in the next few weeks, I think it’s wise for investors to be ready to buy dips if the waters get choppier going into year’s end. The tech sector is coming off a hot run, and the August and September cooldown could set the stage for an even chillier October. Indeed, good news regarding the economy could be bad news for stocks, as higher interest rates now seem worse for markets than a sagging economy.
Nevertheless, in this piece, we’ll use TipRanks’ Comparison Tool to check out three tech titans that have Wall Street’s confidence to see if they’re worth considering.
Accenture (NASDAQ:ACN)
Accenture stock fell into a major rut last year, tumbling by around 40% from peak to trough. Since bottoming out this March, it’s been off to the races for the IT services firm. Despite reporting solid results for Q3 (earnings per share of $3.19, ahead of the $3.02 consensus estimate), Accenture’s management team set a pretty low bar for itself, with Fiscal 2023 revenue growth expected to fall to 8-9%, a slight dip from the initial 8-10% forecast.
Given the low bar, a modest valuation, and skin in the generative artificial intelligence (AI) game, I have to stay bullish on the stock.
It’s been tough sailing for Accenture over the past year, thanks in part to macro headwinds and the industry’s focus on trimming expenses. Still, the future looks bright as the firm looks to AI horizons. The company plans to invest $3 billion in AI over the next three years to help it grow and improve efficiencies.
To add even more AI sweetener to the Accenture story, the firm is also partnering with Nvidia (NASDAQ:NVDA) and ServiceNow (NASDAQ:NOW) — two AI plays that are Strong Buys, according to Wall Street — to work on AI Lighthouse, a program that aims to boost enterprise AI adoption.
All considered, Accenture seems like a magnificent buy at this juncture while it goes for 28.2 times trailing price-to-earnings, just shy of the IT services industry average of over 30 times.
What is the Price Target for ACN Stock?
Accenture is a Moderate Buy on TipRanks, with nine Buys and four Holds assigned by analysts in the past three months. The average ACN stock price target of $343.55 entails 8.67% upside potential.
Pinduoduo (NASDAQ:PDD)
Shares of Chinese e-tailer PDD (or Pinduoduo) have been extremely volatile in recent years. Its stock skyrocketed almost 500% from March 2020 to its February 2021 peak, only to crash over 83% to its March 2022 trough. More recently, the roller-coaster ride of a stock has been on the mend, with the stock up 59.8% in the past year.
Though Chinese Internet stocks are not for the faint of heart, many analysts believe the volatility is worth braving if you seek a shot at greater gains. I’m in agreement and am staying bullish.
A strong quarter helped power PDD stock’s latest gains. The company’s second quarter saw earnings per share of $1.43 per American Depository Shares (ADS), way ahead of the consensus estimate of $1.00 per ADS. Revenues also rocketed to RMB52.3 billion ($7.21 billion), up from the RMB37.6 billion posted in the prior quarter. Indeed, PDD seems to have finally turned a corner.
As the Chinese economy looks to get a jolt from some stimulus, PDD may have more fuel to extend its rally going into year’s end. Either way, PDD’s growth trajectory seems robust, especially as the company leverages the strength of its Temu overseas e-commerce platform in its ongoing global expansion.
Hedgeye (a market research firm) may view PDD stock as a great short. However, I think it’s dangerous to bet against the name with all the newfound momentum behind it.
What is the Price Target for PDD Stock?
PDD is a Strong Buy, according to analysts, with 12 Buys and one Hold rating given in the past three months. The average PDD stock price target of $121.62 implies 26.8% upside potential.
Intuit (NASDAQ:INTU)
Intuit is another tech titan that has recovered nicely this year, now up over 30% year to date but still off around 28% from its all-time high. The firm behind TurboTax and Quickbooks accounting software recently gave underwhelming guidance, calling for adjusted earnings per share to fall in the $1.94-2.00 range, down from the $2.02 consensus estimate. The weaker-than-expected guidance didn’t rattle investors for very long, who eventually pushed the stock higher.
Looking ahead, analysts expect more gains to come as the firm looks to place bets on data and even AI. Indeed, innovation is still alive and well at Intuit. And for that reason, I’m staying bullish.
Recently, Intuit launched an intriguing generative AI tool to be added across its broad range of solutions. The company’s CEO, Sasan Goodarzi, believes such tools are game changers. I think it’s hard to argue with that. Intuit’s already impressive suite of software stands to become that much better with AI in the mix. Whether Intuit can attract more AI-upside-hungry investors, though, remains to be seen.
In any case, INTU stock looks reasonably valued at 30.8 times forward price-to-earnings, well below its five-year average forward P/E of 38.7.
What is the Price Target for INTU Stock?
Intuit comes in as a Strong Buy on TipRanks, with 21 Buys and three Hold ratings. The average INTU stock price target of $576.86 implies 13.4% upside potential.
Conclusion
The following software companies look intriguing, even as volatility and rates remain high for the remainder of the year. Of the trio of names highlighted in this piece, analysts expect the most upside (26.8%) from PDD, which has seen solid growth lately.
