The best tech stocks to buy offer a blend of strong fundamentals and leading price performance. And with the Nasdaq composite back on a confirmed uptrend, more and more growth stocks in the tech sector are showing renewed strength.

The best tech stocks to buy and watch aren’t hard to find, as long as you’re fishing in the right pond. A top stock like Arista Networks (ANET) might not get a lot of attention, but it does have a lot of characteristics seen in past stock market winners before big price moves.

The best tech stocks to buy and watch now include ANET, Taiwan Semiconductor (TSM), CrowdStrike (CRWD), ServiceNow (NOW) and Monday.com (MNDY).

Despite sizeable year-to-date gains for the Nasdaq composite and S&P 500 in 2023, the year was challenging for many of the best stocks to buy and watch, in part due to rising interest rates and an increasingly hawkish Federal Reserve.

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But the interest rate and Federal Reserve narrative has changed dramatically with the Fed now set to start cutting rates this year. As a result, a large number of tech stocks to buy and watch are acting better with the stock market back in a confirmed uptrend. The market has dialed back rate-cut expectations, but Wall Street is still feeling comfortable about a soft landing for the economy.

It was a sensational year for Magnificent Seven stocks like Nvidia (NVDA) and Meta Platforms (META), which closed out the year with gains of 239% and 195%, respectively.

But in a year that saw the S&P 500 rise 24%, the S&P 500 Equal Weight ETF (RSP) only mustered a gain of 12%.

Best Tech Stocks To Buy

The 10-year Treasury yield has come under pressure in recent days after recently finding support near 4.33%. It wouldn’t take much for the 10-year yield to break out of its latest downtrend. A move above the 4.50% level would do  it.

A rising interest rate environment isn’t good for the best stocks to buy in the tech sector with high multiples. Why? Because it makes for a more challenging operating environment. If the stock market senses any possibility of a slowdown in earnings growth from high P-E names, the selling will hit these stocks first.

At one point, fears of a recession and concerns about contagion in the financial sector after the collapse of SVB Financial and Signature Bank made it an extremely challenging environment for many of the best stocks to buy and watch.

But fresh follow-through day for the Nasdaq composite and S&P 500 in early November gave a buy signal and market breadth started to broaden out almost immediately. The Nasdaq jumped 1.6% in higher volume on Nov. 1, confirming a new uptrend. The S&P 500 followed suit on Nov. 2 with a 1.9% rise in higher volume.

Top Traits Of Best Tech Stocks To Buy

The best tech stocks to buy and watch boast strong fundamentals along with leading price performance in their industry group. Many also show favorable fund ownership trends.

The best tech stocks also tend to show resilience in down markets. Use IBD Stock Checkup to quickly identify industry group leaders with the potential to be stock market leaders.

Join IBD experts as they analyze leading stocks in the stock market rally on IBD Live

Screening for the best stocks to buy and watch is as easy as looking at the MarketSurge Growth 250, a daily screen of high-quality stocks. Click on any column header to sort the screen as you wish, either by those closest to their highs, stocks with the highest Composite Rating, or stocks trading up in price with the heaviest volume.

The best stocks to buy and watch aren’t guaranteed to be huge stock market winners. But they do have qualities seen in past stock market winners before big price gains.

Best Tech Stocks To Buy: Arista Networks

Arista Networks initially fell sharply last week after Nvidia (NVDA) called out strength in its networking business, a major market for Arista. But the stock fought off lows after coming close to a test of the 50-day moving average. A 303.74 entry is still in play.

ANET gapped up on May 8 after reporting Q1 results. Earnings and revenue came in better than expected and guidance was slightly ahead of views. The company also set a $1.2 billion share buyback. Arista sells network switches that speed up communications in data centers.

Arista management forecast $750 million in AI-related sales for 2025, with much of it coming from Ethernet network switches.

ANET continues to be a strong performer in the stock market and is one of the best stocks to buy and watch in the networking space. After topping a 292.66 buy point on March 21, sellers quickly knocked ANET stock broke out with conviction on May 10, clearing a 307.74 entry.

Shares were volatile on Feb. 12 despite another strong earnings report. Adjusted profit of $2.08 a share was well ahead of the Zacks consensus for $1.71 a share. Revenue increased 21% to $1.54 billion, a whisker ahead of the $1.53 billion consensus.

Arista Networks, which counts Meta Platforms (META) and Microsoft (MSFT) as large customers, shows bullish earnings and revenue growth in recent quarters, fueled by strong demand for its cloud networking software and hardware for the fast-growing data center market.

Over the past eight quarters, revenue growth has ranged from 15% to 57%.

Full-year earnings are expected to rise 12% this year and 10% in 2025.

Composite Rating: 96 (on 1-99 scale with 99 tops)

Latest-quarter EPS % change: +39%

Latest-quarter sales % change: +16%

Five-year EPS growth rate: 29%

Annual return on equity: 36%

Up/down volume ratio: 0.7

CrowdStrike

CrowdStrike fell hard with other security stocks on Feb. 21, weighed down by a weak earnings report from industry bellwether Palo Alto Networks (PANW). But it didn’t take long for CrowdStrike to find support at the 10-week line.

CRWD help up well again on May 21 despite the second straight earnings sell-off for PANW.

One of the best tech stocks to buy and watch in the security software group, CrowdStrike on March 5 reported its third straight quarter of triple-digit earnings growth. Revenue increased 33% to $845.3 million. The company also raised its fiscal 2025 earnings and revenue guidance.

CrowdStrike gapped up on Nov. 29 after the company reported its second straight quarter of triple-digit earnings growth.

Adjusted profit surged 105% to 82 cents a share. Revenue growth was also impressive, up 35% to $786 million, helped by continued strong performance of its AI-powered Falcon platform. Annual recurring revenue (ARR) increased 35% to $3.15 billion

“CrowdStrike’s record third quarter exceeded expectations, delivering new milestones across the business: net new ARR growth accelerated to a record $223 million and ending ARR surpassed $3 billion, making CrowdStrike the fastest and only pure play cybersecurity software vendor in history to achieve this milestone,” said George Kurtz, CrowdStrike’s president, chief executive officer and co-founder.

For its current year fiscal 2025, annual earnings are expected to surge 27%, with growth slowing a bit in fiscal 2026, up 24%.

CRWD recently pulled back 23% of its high, but the stock is back near highs as if forms a cup base. Watch for a low-volume pullback as CRWD gets some early resistance near the 350 level.

Composite Rating: 98

Latest-quarter EPS % change: +102%

Latest-quarter sales % change: +33%

Five-year annualized EPS growth rate: 148%

Annual return on equity: 40%

Up/down volume ratio : 1.2

Monday.com

The enterprise software firm soared on May 15 after reporting earnings. Before the report, MNDY was not a picture of technical health with the stock mired below the 50-day moving average. To its credit, MNDY found support at its 200-day line.

Monday.com is enjoying strong growth with its workflow automation and productivity platform. The latest results were impressive, with Q1 profit up 336% year over year to 61 cents a share. Revenue increased 34% to $216.9 million.

The number of paid customers with more than $100,000 in annual recurring revenue jumped to 911, up 55%.

“Q1 represents another great step forward for monday.com, with strong revenue growth and profitability, as well as record free cash flow, said Eliran Glazer, Monday.com CFO. “These results are supported by recent adjustments made to our pricing model, which thus far have exceeded our initial expectations.”

Monday.com has run up sharply in recent days. Rather than chase the stock at current levels., watch for a low-volume pullback closer to the stock’s prior high of 239.

Composite Rating: 96

Latest-quarter EPS % change: +336%

Latest-quarter sales % change: +34%

Five-year annualized EPS growth rate: n/a

Annual return on equity: 13%

Up/down volume ratio: 1.3

ServiceNow

ServiceNow, another one of the best tech stocks to buy and watch, surged above its 50-day line on May 15, but NOW is back below the line after two days of sharp declines.

After four straight quarters of accelerating revenue growth. Q1 revenue slowed slightly but still increased 24% to just over $2.6 billion. Adjusted profit rose 44% to $3.41 a share.

Subscription revenue rose 25% to $2.52 billion.

“ServiceNow is off to a fast start with an outstanding first quarter,” said ServiceNow Chairman and CEO Bill McDermott. “As leaders seek significant productivity improvements, ServiceNow has first mover advantage with years of investment in AI technology and talent. Our GenAI offerings are the fastest selling in the company’s history.”

In the first half of 2023, Now announced a partnership with Nvidia (NVDA) to develop enterprise-grade generative AI capabilities to speed up business processes with more intelligent workflow automation.

More recently, Service Now announced a five-year collaboration with Amazon Web Services (AWS) to offer the ServiceNow platform in the AWS Marketplace. Amazon (AMZN) and NOW will also co-develop and launch AI-powered applications.

Composite Rating: 93

Latest-quarter EPS % change: +44%

Latest-quarter sales % change: +24%

Five-year EPS growth rate: 32%

Annual return on equity: 35%

Up/down volume ratio: 1.1

Taiwan Semi

TSMC is the world’s largest chip foundry with high-profile customers like Apple (AAPL), Nvidia (NVDA), Advanced Micro Devices (AMD) and Broadcom (AVGO).

When the company reported earnings in April, it returned to bottom-line and top-line growth after four straight quarters of declines.

TSMC was poised to open nicely higher Thursday, helped by a strong earnings report from Nvidia, which accounted for 11% of TSMC’s revenue in 2023.

But for the current quarter ended in June,  TSMC guided revenue of $19.6 billion to $20.4 billion. The midpoint of the guidance, $20 billion, was above the $19.44 billion consensus.

TSMC recently cleared a double-bottom base with a 148.43 buy point. There was a good shakeout in the base when TSMC took out its prior low of 133.03. TSMC is just past the 5% buy zone.

Composite Rating: 95

Latest-quarter EPS % change: +11%

Latest-quarter sales % change: +4%

Five-year annualized EPS growth rate: 28%

Annual return on equity: 26%

Up/down volume ratio: 1.1

Follow Ken Shreve on X/Twitter @IBD_KShreve for more stock market analysis and insight.

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