Goldman says these top tech stocks have plenty of upside ahead of earnings
There are plenty of tech stocks to buy heading into their quarterly reports, according to analysts at Goldman Sachs. The investment bank sees companies including Microsoft offering more room to run. Other buy-rated stocks that Goldman Sachs recommends and that were screened by CNBC Pro include: Alphabet, Zeta Global, Palantir and CoreWeave. Microsoft There’s alot to like about Microsoft, analyst Gabriela Borges, said ahead of the XBox maker’s earnings on October 28. “We believe discovery value now shifts to the breadth and depth of Microsoft’s AI platform; and unit economics and [return on invested capital] in Azure,” she said. Goldman likes Microsoft’s capex “flexibility” amid robust consumer demand for AI products and services. “We think Microsoft is the best positioned name in our Software coverage (also on ]Conviction List]) to benefit from compounding AI product cycles,” she added. Shares are up more than 8% this year, lagging the more than 11% gain in the S & P 500. Zeta Global The marketing technology company was recently upgraded to buy from neutral at Goldman. “Zeta is benefiting from enterprise share gains as customers modernize legacy marketing platforms and consolidate fragmented data, intelligence and activation tools,” analyst Callie Valenti wrote. The bank also said that while shares are up 67% this year, the stock still has plenty more room to run ahead of its next scheduled earnings in November. “Our industry conversations suggest that enterprises are prioritizing AI investments and increasingly evaluating where existing software spend can be consolidated, which should benefit Zeta’s platform breadth and differentiated consumer data,” Valenti went on. Alphabet Analyst Eric Sheridan is sticking with the Google and TouTube owner giant ahead of earnings next Wednesday. In a note to clients, Sheridan acknowledged some shareholder jitters but said they are mostly overdone. “…Investor concerns have increasingly centered on Search revenue growth, the absence to-date of a formal consumer agent launch, and the company’s positioning should consumer behavior migrate toward agentic interfaces,” he wrote. Still, Sheridan believes clients need to remain patient and keep buying the stock, which is only up 2% this year. Goldman went on to express confidence in Alphabet’s AI vision as well as its ability to produce consumer applications “which together represent possible catalysts that could help shift the near-term narrative more constructively.” Palantir “We believe agreements with the U.S. government can act as a growth driver as DoD modernization accelerates. These programs indicate that Palantir is moving deeper into mission critical workflows as DoD modernizes legacy systems and expands its use of commercial software and AI.” Read more. Microsoft “We believe discovery value now shifts to the breadth & depth of Microsoft’s AI platform; & unit economics & ROIC in Azure … MSFT appears to have control over more variables in their capex equation today (which in turn drives more flexibility) … We think Microsoft is the best positioned name in our Software coverage to benefit from compounding AI product cycles.” CoreWeave “We recognize the challenges with forecasting out further in time, and in particular, predicting when supply/demand will ultimately normalize and the implications for residual value. However, we believe that datapoints in the next 12 months are likely to be positive for CoreWeave, and we would use this recent correction as an opportunity to buy the stock.” Zeta Global “Zeta is benefiting from enterprise share gains as customers modernize legacy marketing platforms and consolidate fragmented data, intelligence, and activation tools. Our industry conversations suggest that enterprises are prioritizing AI investments and increasingly evaluating where existing software spend can be consolidated, which should benefit Zeta’s platform breadth and differentiated consumer data.” Alphabet “… Investor concerns have increasingly centered on Search revenue growth, the absence to-date of a formal consumer agent launch & company’s positioning should consumer behavior migrate toward agentic interfaces … we would highlight that we see GOOGL’s AI strategy as broad-based anchored around frontier model development, GOOGL Cloud and consumer applications – which together represent possible catalysts that could help shift the near-term narrative more constructively.”