Tech investors have certainly had quite the run over the past 15 years. The market has been on a mostly extended bull market run (with periods of volatility in 2018 and via the recession interspersed). However, with valuations having increased (partly due to earnings growth, but also due to multiple expansion), investors are increasingly looking for relative value in a sector that’s become increasingly difficult to value.

It’s not 2021 quite yet. But with interest rate cuts on the horizon, some investors are ramping up expectations that (barring a recession), valuations could start expanding like they once did. That would be a great thing for growth investors looking at some of the highest-growth names in this space.

But if a recession does take hold, and valuations do plunge, there are a few stocks I think are worth putting on the wish list right now. These are companies that may have valuations that are too rich for many investors. But at the right price, they’re also the kind of stocks that make for great long-term holdings, for those with the patience and time to hold them.

Key Points About This Article:

• Various tech stocks have seen increased volatility of late, with increased recession risks posing a problem for investors considering when to allocate capital in this sector.
• For those waiting for a tech stock plunge, here are three stocks I think are worth putting on the wish list right now.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Shopify (SHOP)

As a leading global e-commerce platform, Shopify (NYSE:SHOP) has certainly gone through a serious of boom-bust cycles of its own. Driven to all-time highs following the pandemic, and the fact that millions of businesses were forced to set up online shops just to survive, Shopify’s business model garnered a lot of attention in the investment community. That’s been a good thing, as it’s highlighted the company’s core business model and status as a top platform provider for small and medium sized businesses to sell their wares online. 

However, the company’s platform has seen rather consistent growth (which has obviously slowed from its insane post-pandemic comps), highlighting the quality of the secular growth catalysts underpinning the stock. Seeing more than 20% revenue growth this past quarter, Shopify has maintained gross margins above 50% and net margins around 12%. If those margins can expand, and the company can continue to gain share in this fast-moving space, there’s a lot to like about its future prospects.

Shopify has allocated $5 billion in capital expenditures to fund market growth and innovation, so more is likely to come on this front. And it’s worth noting that a good chunk of the company’s recent growth has been driven by its high-margin subscriptions solutions business. As the company continues to grow its ecosystem and create network effects, this is a stock I think that could be worth buying, particularly at lower levels.

Amazon (AMZN)

Another company well-known for its core e-commerce business, Amazon (NASDAQ:AMZN) is an absolute tech giant to behold. The company has capitalized on the AI boom while bolstering its core e-commerce operations, posting modest 10% revenue growth for Q2. That said, the company’s EPS nearly doubled from the previous year, exceeding expectations and highlighting the company’s focus on efficiency. While Amazon remains dominant in online retail and cloud infrastructure, the company is clearly positioning itself to benefit from the rise of generative AI. Additionally, its advertising segment is experiencing rapid growth, further enhancing its investment appeal.

Despite near-term dips, Amazon is expected to perform well over the long-term, as its highly-profitable and dominant Amazon Web Services (AWS) cloud business continues to provide increasing value. Assuming the cloud market continues to grow, and the company can integrate AI tools such as Rufus and Maestro across its services, there’s a lot to like about the company’s future revenue and earnings growth prospects moving forward. 

I think Wall Street analysts are catching on to the company’s upside potential relative to AI. But this is such a diversified story, I think it’s worth considering AMZN stock as a sum of the parts story. Overall, the stock remains a buy for most analysts, and I think could be worth buying at current levels, and would be a screaming buy at a discount of 10% to 20% from here.

Nvidia (NVDA)

Nvidia (NASDAQ:NVDA) reported earnings recently, and much to the chagrin of some investors, beat expectations, but not to the exact whisper number the market had implied. Shares dropped following its earnings report, and dropped further after reports began circulating that the DOJ had put a probe into Nvidia for its recent AI acquisitions, beginning to ask questions. When regulators start asking questions, investors get nervous.

Accordingly, one could argue that Nvidia is among the mega-cap tech stocks that’s already seen a significant decline from its previous highs. However, this is a stock that’s rocketed more than 100% this year alone, and its long-term stock chart is dizzying. This is a company with an incredible valuation that could certainly fall much further in a recessionary environment. Thus, those looking to finally be able to buy Nvidia at what they think are reasonable prices may in fact get their wish – depending on how things turn out.

the thing is, the company’s projected $28 billion in revenue for its upcoming report suggests plenty of growth is a head, with the company expected to pump out as much as $270 billion in free cash flow over the next three years. That would imply a decent free cash flow yield of around 3% for the hyper-growth giant, which isn’t bad all things considered. And on a forward multiple, this stock doesn’t look necessarily expensive at current levels.

So, if Nvidia drops materially from here, it’s a buy for me. The secular AI catalysts are real, and Nvidia will continue to ride them higher.

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