While the stock market has done much better in 2023, only 10 companies have made up 95% of the gains in the S&P 500, and nine of the heaviest-weighted stocks in the Nasdaq 100 have accounted for almost all of its gains. What do these stocks have in common, you may be wondering? They are almost all technology stocks, and it is likely that the technology sector continues to drive upside for the rest of the year.
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The good news for growth investors is there are still solid opportunities in technology, the bad news is that companies that have driven the huge year-to-date gains, like Nvidia and Meta Platforms, are very overbought and likely due to consolidate some.

The analysts at Goldman Sachs have refined the firm’s popular Conviction List of top stock picks, and the truncated list will be refreshed monthly with new ideas and updates. Here is what they said about the new research launch:

We introduce a new investment list highlighting a selection of fundamental Buy-rated US stocks across the Goldman Sachs Americas Global Investment Research department — sourced from our US research analysts, but chosen by members of our Investment Review Committee. This new “Conviction List – Directors’ Cut” is designed to provide investors with a curated and active list of 20-25 of what we believe to be our most differentiated fundamental Buy ideas across our US stock coverage. We intend to refresh and publish this list monthly in an easily digestible framework that emphasizes the key criteria underlying the analyst’s investment thesis to best aid a portfolio manager’s investment process.

We decided to screen the list of the top technology, media and telecom (TMT) sector picks for the names that made the first Director’s Cut list. While they all are rated Buy at Goldman Sachs, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Amazon

This is very possibly the best value for investors, after the stock took a harsh beating this year. Amazon.com Inc. (NASDAQ: AMZN) engages in the retail sale of consumer products and subscriptions globally. It sells merchandise and content purchased for resale from third-party sellers through physical and online stores.

The company also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Rings and Echo and other devices. It provides Kindle Direct Publishing, an online service that allows independent authors and publishers to make their books available in the Kindle Store, and it develops and produces media content.

Amazon also offers programs that enable sellers to sell their products on its websites, as well as its stores, and its programs allow authors, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content. Further, the company provides computing, storage, database, analytics, machine learning and other services, as well as fulfillment, advertising, publishing, and digital content subscriptions.
Its Amazon Prime membership program provides free shipping of various items, access to streaming movies and series, and other services.

Given the incredible logistical needs for Amazon, the company has incorporated AI hybrid applications across much of its overall business for years. From e-commerce algorithms for search to the popular Alexa personal assistant and AWS advancements for customers that include advanced text analytics, automated code reviews and chatbots, AI has provided the company with a massive leg up.
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Goldman Sachs has a $165 target price on Amazon.com stock, well above the $136.79 consensus target. The stock closed over 4% higher on Thursday at $130.15.

Apple

It is almost hard to comprehend that this legacy technology giant makes up a stunning 40% of Warren Buffett’s Berkshire Hathaway portfolio. Apple Inc. (NASDAQ: AAPL) designs, manufactures and markets consumer electronics worldwide, including the iPhone line of smartphones, the Macintosh family of notebook and desktop computers, iPad multi-purpose tablets, and such wearables and accessories as AirPods, Apple TV, Apple Watch, Beats and HomePod.

It also provides AppleCare support and cloud services, and it operates various platforms, including the App Store, that allow customers to discover and download applications and digital content, such as books, music, video, games and podcasts.

Its services include Apple Arcade, a game subscription service; Apple Fitness+, a personalized fitness service; Apple Music, which offers users a curated listening experience with on-demand radio stations; Apple News+, a subscription news and magazine service; Apple TV+, which offers exclusive original content; Apple Card, a co-branded credit card; and Apple Pay, a cashless payment service. Apple also licenses its intellectual property.

The company serves consumers, and small and mid-sized businesses and the education, enterprise and government markets. It distributes third-party applications for its products through the App Store. The company also sells its products through its retail and online stores, and direct sales force, as well as third-party cellular network carriers, wholesalers, retailers and resellers.

Apple stock investors receive a dividend of 0.52%. The Goldman Sachs price target of $209 compares with a $186.40 consensus target and the most recent close at $187.00 per share.

Salesforce

This company was an innovator in customer relationship management software. Salesforce Inc. (NYSE: CRM) provides customer relationship management technology that brings companies and customers together worldwide. Its Customer 360 platform empowers its customers to work together to deliver connected experiences for their customers.
Salesforce’s Service offerings include:

• Sales, to store data, monitor leads and progress, forecast opportunities, gain insights through analytics and relationship intelligence and deliver quotes, contracts and invoices
• Service, which enables companies to deliver trusted and highly personalized customer service and support at scale

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Its Service offerings also comprise flexible platform that enables companies of various sizes, locations and industries to build business apps to bring them closer to their customers with drag-and-drop tools; online learning platform that allows anyone to learn in-demand Salesforce skills; and Slack, a system of engagement.

Further Service offerings include:

• Marketing, which enables companies to plan, personalize and optimize one-to-one customer marketing journeys
• Commerce, which empowers brands to unify the customer experience across mobile, web, social and store commerce points
• Tableau, an end-to-end analytics solution serving various enterprise use cases
• MuleSoft, an integration offering that allows its customers to unlock data across their enterprise

The company provides its Service offerings for customers in financial services, health care and life sciences, manufacturing and other industries.

The company also offers professional services and in-person and online courses to certify its customers and partners on architecting, administering, deploying and developing its service offerings. The company provides its services through direct sales and consulting firms, systems integrators and other partners.

The $325 Goldman Sachs price objective towers above the consensus target of $237.48. Salesforce stock closed at $213.29 on Thursday, so hitting the Goldman Sachs target would be almost a 45% gain.

Shift4 Payments

While lesser known than some of the big-time digital payment competition, this very solid company has big upside potential and some feel it is a takeover target. Shift4 Payments Inc. (NYSE: FOUR) provides software and payment processing solutions in the United States.

The company provides omnichannel card acceptance and processing solutions, including credit, debit contactless card; Europay; Mastercard and Visa; QR Pay; and mobile wallets. It provides alternative payment methods; merchant acquiring; proprietary omnichannel gateway; complementary software integrations; integrated and mobile point-of-sale (POS) solutions; security and risk management solutions; reporting and analytical tools; and web-store design, hosting, shopping cart management and fulfillment integration; and tokenization, payment device and chargeback management, fraud prevention and gift card solutions.

Its VenueNext provides mobile ordering, countertop POS, and self-service kiosk services, as well as a digital wallet to facilitate food and beverage, merchandise and loyalty for stadium and entertainment venues. Shift4Shop offers an e-commerce platform that provides everything a merchant needs to build their business online.
Its Lighthouse is a cloud-based business intelligence tool that includes customer engagement, social media management, online reputation management, scheduling and product pricing, as well as reporting and analytics. SkyTab POS are POS workstations preloaded with software suites and integrated payment functionality, and SkyTab Mobile is a mobile payment solution and marketplace technology for integrations into third-party applications.
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The company also provides merchant underwriting, onboarding and activation, training, risk management and support services, as well as software integrations and compliance management and partner support and services.

The Goldman Sachs target price is $90, and Shift4 Payments stock has an $81.19 consensus target. Thursday’s closing print was $62.86, so hitting the Goldman Sachs target would be a 43% gain.

TE Connectivity

This somewhat lesser-known stock is also another top pick at Jefferies. TE Connectivity Ltd. (NYSE: TEL) manufactures and sells connectivity and sensor solutions to approximately 140 countries in Europe, the Asia-Pacific, the Americas and elsewhere. The company operates through three segments.

The Transportation Solutions segment provides terminals and connector systems and components, sensors, relays, antennas and application tooling products for use in the automotive, commercial transportation and sensor markets.

The Industrial Solutions segment offers terminals and connector systems and components. Its products include interventional medical components, relays, heat shrink tubing and wires and cables for industrial equipment, aerospace, defense, marine, medical and energy markets.

The Communications Solutions segment supplies electronic components (such as terminals and connector systems and components), relays, heat shrink tubing and antennas for the data and devices and appliances markets.

TE Connectivity stock comes with a 1.75% dividend. Goldman Sachs has set its price target at $160. The $140.10 consensus target is closer to Thursday’s $134.51 closing share price.

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With all five stocks having double-digit upside potential, they make good sense for growth stock investors looking for ideas that will continue to work regardless of the economy or the inflation picture. With second-quarter earnings right around the corner and a strong year-to-date rally that has driven many stocks higher, it makes sense to buy partial positions here and see how the results for the quarter come in.

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