US tech shares have staged a revival over the past year. The so-called Magnificent Seven technology shares, which include Meta, Amazon and Alphabet, have been making a comeback after a difficult year last year. The rising interest rate environment had hit the shares but they are making a recovery thanks to recent strong results. Shares in Meta saw their best-ever one-day increase in the company’s market value on the day of its fourth quarter results in February, adding $197 billion.

However, some US technology shares are performing better than others. While Meta and Amazon shares have risen strongly off the back of financial results, Apple’s have been hit by disappointing sales in China. Indeed, some analysts think we could see the Magnificent Seven shrink to the Magnificent Three or Four.

Here are what we think may be some of the five best tech stocks to watch.

Best tech shares to watch

These stocks have been selected for recent market news. Always do your own research. Past performance is not a guide to future performance.

1. Apple
2. Microsoft
3. Alphabet
4. Amazon
5. IBM

Apple (NSQ: AAPL)

Apple shares have lost some ground this year following disapponting sales of its phones in China, where foldable phones are more popular. The tech giant doesn't currently have a foldable product. Nevertheless, its figures remain solid. Although total revenues fell by 4% to $90.8 billion in the second quarter compared to the same period last year, service revenue hit an all-time high once again.

Apple generated net income of $23.64 billion, or $1.53 per share, down 2% from $24.16 billion, or $1.52 per share from the same period in 2023. Chief executive Tim Cook said this was due to tough comparative figures from last year, which were boosted by $5 billion in delayed iPhone 14 sales due to supply issues relating to the Covid-19 outbreak. iPhone sales dipped by 10% during the period. Meanwhile, the company is returning $110 billion to investors. Analysts at broker Bank of America recently upped their price target on the shares to $230.

Microsoft (NSQ:MSFT)

These days Microsoft Corporation is perhaps more like a utility company than a pure-play tech firm, albeit it doesn’t pay as fat a dividend. That said, like an increasing number of tech firms, it does at least pay one.
Recent results were strong, with full year revenues up 17% to $61.9 billion and net income up 20% to $21.9 billion, boosted by strong sales at the Microsoft Cloud division, which rose 23% to $35.1 billion.

The company is also reaping the benefits of its investment in artificial intelligence, which is delivering sales. “Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry," said Satya Nadella, the company's chairman and chief executive officer.

The shares have had a good run this year but are worth keeping an eye on, given the momentum that has returned to the sector and its success in AI. A handful of brokers have recently upgraded their price targets on the shares - analysts at broker Wells Fargo think they could reach $500.

Alphabet (NSQ:GOOGL)

Shares in the owner of Google have seen a resurgence, rising 56% this year. Alphabet is another company benefiting from the buzz from artificial intelligence and the growth in AI-powered search.

First quarter revenues rose 15% to $80.5 billion, while net income increased by 57% to $23.7 billion. Chief executive Sundar Pichai said the results reflected a "strong performance from Search, YouTube and Cloud," while the company's "leadership in AI research and infrastructure, and our global product footprint" [position it well] for the next wave of AI innovation.”

Alphabet has been busy trimming its cost base and operating margins improved to 32% from 25% last year. Analysts at broker BMO Capital Markets recently raised their price target on the shares to $215, while those at Susquehanna think they could reach $225. Although the shares trade on a relatively expensive price earnings ratio of 26.5, they continue to be worth watching.

Amazon (NSQ:AMZN)

Online retailer and streaming giant Amazon recently unveiled solid first quarter results. Net sales rose by 13% to $143.3 billion in the quarter, compared with $127.4 billion in the same period in 2023. Net income increased to $10.4 billion ($3.2 billion in 2023). North America segment sales increased by 12% to $86.3 billion, while international sales rose by 10% to $31.9 billion. Its AWS cloud computing service is enjoying good growth, boosted by its AI capabilities, while the company is also trimming its cost base and trying to deliver goods faster to its customers.

The shares have had a good run recently and are up 78% this year. Nevertheless, analysts at broker Wells Fargo, have increased their price target on the shares to $234 from $217.

IBM (NSQ:IBM)

IBM may not be the first stock that comes to mind when you think of artificial intelligence, but the tech firm still looks set to benefit from the trend. IBM’s consultancy arm helps clients integrate AI into their businesses. While sales at its legacy mainframe business are falling, its consulting arm is enjoying decent growth.

Admittedly, first quarter revenues for 2024 were relatively flat at $14.5 billion – up 3% - while software revenues rose 6% excluding currency fluctuations. However, Arvind Krishna, IBM chairman and chief executive officer, says the company is seeing excitement and demand for its enterprise AI, with its book of business for watsonX and generative AI now worth more than $1 billion. Meanwhile, the company recently snapped up Hashicorp for $6.4 billion to boost its AI offering. Analysts at broker Jefferies think the shares could reach $210.

The stock trades on a reasonable price earnings ratio of 18 – lower than many of its peers - and also pays a dividend, yielding 3.6%. The shares are up 34% this year to $183 but analysts at broker BMO Capital Markets recently upped their price target on them to $210 and have a hold recommendation on the shares.

Past performance is not a guide to future returns.

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Top tech stocks to watch summed up

The above companies are just a small selection of top tech stocks to watch. Remember that any company can also fail and always do your own research.

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