3 Oversold Large-Cap Tech Stocks with Terrific Upside Potential

Stocks to buy

2023 has been a volatile one for the equities markets, especially for the tech sector. The S&P 500 and the Nasdaq, two of the most widely followed indexes, have experienced significant swings in performance, as investors reacted to changing economic conditions, interest rates and earnings reports.

Uncertainty around where interest rates would land in the long term caused both the S&P 500 and the Nasdaq to approach correction territory towards the end of October 2023. A number of technology stocks were hit during this recent sell-off period, creating opportunities for investors willing to look long-term. Below are three oversold, large-cap tech stocks that have significant upside potential.

Salesforce (CRM)

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One of the oversold tech stocks is Salesforce (NYSE:CRM), the leading provider of cloud-based software solutions for customer relationship management (CRM). Salesforce’s shares are nearly 10% down from their $234.37 peak in late July. As a direct result, the CRM software company is trading at a reasonable multiple of 16.3 times forward EBITDA.

Prior to the recent macroeconomic slowdown, Salesforce had grown rapidly off of the tailwinds brought about by enterprises implementing cost-saving digital transformation efforts, including digitizing their CRM practices. Unfortunately, like many businesses, the software company has been hit with headwinds of the challenging macro environment, which has made it tougher for Salesforce to acquire new customers or upsell existing ones. However, recently employed cost cutting initiatives have helped Salesforce to maintain profitability.

As Salesforce’s share price continues to recover from the broader market sell-off, it may be an opportune time for investors to allocate to shares of a company that has become crucial for managing customer relationships.

IBM (IBM)

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IBM (NYSE:IBM) is another oversold large-cap technology stock. The iconic technology company that offers a wide range of products and services, such as cloud computing, artificial intelligence, quantum computing, cybersecurity and consulting. IBM has been undergoing a strategic transformation to focus on its high-growth and high-margin segments, while divesting from its legacy businesses. For example, the company was able to spin off its IT infrastructure services business into a new public company called Kyndryl (NYSE:KD).

The company has not only been investing in AI products and services but also in quantum computing. IBM offers a cloud-based quantum computing service called IBM Quantum Experience, which allows customers and researchers to access its quantum hardware and software. Given quantum computing will probably be the next step in computer revolution after language-based AI, IBM’s shares could be in for solid returns in the long run.

Alphabet (GOOGL)

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Alphabet (NASDAQ:GOOGL,NASDAQ:GOOG) needs little introduction at this point. The tech giant is not only the parent company of Google but also of several other businesses, such as YouTube and Google Cloud. Because the company has its hands in several technology verticals, the company has been able to weather the macroeconomic environment better than other technology companies. In their second quarter, for example, Alphabet beat both Wall Street’s revenue and earnings estimates. Similarly, in the third quarter, revenue growth returned to the double-digit growth territory. While cloud revenue disappointed, Google Cloud did swing to an operating profit when compared to last year’s figure during the same period.

As Alphabet continues to employ AI tools into Cloud platform, investors should expect this segment to not only grew in terms of revenue but also with respect to profitability. Shares in Alphabet sold off around 10% due to what investors saw as “disappointing” Google Cloud performance, but investors willing to take a long term bet on Google Cloud could benefit by allocating now before shares recover.

On the date of publication, Tyrik Torres did not have (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.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

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