5 Best Tech Stocks to Buy in September 2021

US tech stocks have been among the best performing asset class over the last decade. Even during the COVID-19 pandemic last year, tech stocks outperformed the markets by a wide margin.

However, some of the tech stocks have looked weak amid the sector rotation from growth to value stocks. Here are the five best tech stocks that you can buy in September 2021.

1. Alphabet (NYSE: GOOG)

Alphabet is the best performing FAANG stock of 2021 and despite the YTD (year-to-date) rise of 67%, it still looks among the best stocks to buy in September. Most Wall Street analysts are bullish on GOOG stock and 44 out of the 46 analysts polled by CNN Business rate it as a buy or some equivalent. One analyst each rates GOOG as a hold and sell. Its median target price of $3,190 is a premium of 10.4% over current prices. Alphabet’s street high target price of $3,600 implies an upside of 24.6% while the street low target price of $2,520 is a discount of 12.8%.

GOOG is among the best tech stocks for the long-term

GOOG is among the best tech stocks to buy and hold for the long term. The digital transformation bodes well for companies like Alphabet. The company would also benefit from pivot towards the cloud. Also, the current smartphone supercycle bodes well for Alphabet given its lead in the smartphone operating system.

Over the long term, better monetization of YouTube would add value for investors. Earlier this month, Guggenheim raised Alphabet’s target price from $3,140 to $3,400 while reiterating its overweight rating. “In the near term, we believe core search and digital advertising trends has remained robust in 3Q, while investment in YouTube and Cloud will continue to drive incremental revenue growth,” the brokerage said in its note.

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2. Uber (NYSE: UBER)

Ride-hailing and food delivery company Uber is another good tech stock to buy in September. The company has taken several measures to address its perennial losses and has exited some of the non-core markets, for instance, the food delivery market in India. It has also exited businesses like autonomous driving and flying taxi businesses. While both these businesses have a positive long-term outlook. Uber took the conscious decision to exit these markets and instead focus on the core ride-hailing and food-delivery business.

Uber stock price forecast

Uber stock is down over 22% YTD. Several factors have been weighing heavy on the stock. For instance, the steep losses in Didi Global, where Uber holds a significant stake, have dented market sentiments. Uber received another jolt when a judge in California invalidated Proposition 22 that had received 58% voter support last year and allowed gig economy companies to classify workers as contractors and not employees.

Wall Street analysts are bullish on Uber stock and 39 of the 43 analysts covering it rate the stock as a buy. Three analysts rate it as a hold while one has a sell rating on the stock. Uber’s median target price of $70 implies an upside of 77.1% over the next 12 months.

Uber is a good tech stock to buy and bet on reopening

Many of the US tech stocks would see a tapering down of their topline growth as the economies reopen. However, Uber’s ride-hailing business would benefit from the reopening. Mark Mahaney, Evercore ISI’s head of Internet Research sees Uber as a top tech stock to buy.

“We’re going to start getting more into regular work commutes, more social outings, and business travel is going to recover. It may not be this quarter, but it’s probably sometime in the next year,” said Mahaney. He added, “And Uber is one of your best plays off that. In the meantime, you’ve got its food order delivery business, its delivery business, that’s been a huge winner from the COVID crisis. And then as a company as a whole, kind of the unlock on the stock is I think they turn profitable in the back 1/2 of this year.”

Uber stock price technical analysis

Meanwhile, Uber stock is not looking too bullish on the charts and trades below the 50-day, 100-day, and 200-day SMA (simple moving average). There was also a death cross formation in the stock in July after its 50-day SMA fell below the 200-day SMA which signals a long-term bear market.

That said, if you are looking at a tech stock to play the reopening story, Uber looks like a good bet. The stock’s valuations look quite reasonable now after the crash and it could offer strong upside from these levels.

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3. Amazon (NYSE: AMZN)

Amazon stock has underperformed the FAANG pack this year amid concerns over a slowdown in growth. The company’s revenue growth had fallen short of estimates in the second quarter of 2021. It was the first time in three years when the e-commerce giant’s sales were short of estimates. Its guidance for the third quarter also looked weak.

AMZN stock price forecast

Meanwhile, AMZN is among those tech stocks where Wall Street analysts are overwhelmingly bullish. 47 of the 49 analysts polled by CNN Business rate the stock as a buy or higher while two rate them as a hold. Its median target price of $4,105 implies an upside of 17.7% over the next 12 months. Incidentally, Amazon is among those rare tech stocks that find a place in Berkshire Hathaway’s portfolio. While the purchase wasn’t made by Warren Buffett but a different investment manager at the conglomerate, in the past Buffett has admitted to missing out on Amazon.

Amazon is a good tech stock to buy and bet on secular growth

Earlier this week, Evercore ISI raised Amazon’s target price by $500 to $4,700. It said, “We reit our Outperform rating & raise our PT to $4,700 in the wake of recent analysis into Amazon’s substantial fulfilment network expansion. Simply put, we believe investors under-appreciate the magnitude and meaning of Amazon’s dramatic fulfilment capacity expansion—AMZN has grown its distribution capacity by more in 2020 and 2021 than in the entire prior 10 years put together!”

Analysts also issued a bullish note on the stock after its partnership with Affirm that will bring BNPL (buy-now-pay-later) payment options to buyers on the platform.

Amazon has a strong market leadership position in both cloud and e-commerce, the two industries which are in a secular uptrend. Amazon is a good tech stock to buy and bet on e-commerce and cloud industries. The stock’s valuations also look reasonable now after the recent underperformance.

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4. Cisco (NYSE: CSCO)

When we think of tech stock, Cisco is not something that comes to mind at first. However, the company has been pivoting its business towards software and subscription-based revenues. At its investor day, it said that over the next four fiscal years it expects to report an annual sales growth between 5-7%. The forecasts were above what the markets were expecting.

Cisco stock price forecast

After the investor day, several analysts turned bullish on Cisco stock and JPMorgan added it to the focus list. Credit Suisse analyst Sami Badri upgraded the stock from neutral to buy and said, “Investor sentiment is currently cautiously optimistic … but we believe the cautiousness will abate as CSCO executes on its [long-term] guidance while ramping its recurring revenue plans (software, subs. etc.).”

Cisco stock is up 30% so far in 2021 and consensus estimates call for an upside of almost 11% over the next 12 months. Usually, tech companies are quite frugal with the dividends. However, Cisco has a healthy dividend yield of 2.6%.

If you are looking at a tech stock with a high dividend yield, Cisco looks among the best bets. The stock trades at an NTM (next-12 months) PE multiples of 16.8x which looks reasonable. Cisco is looking bullish on the charts also and trades above the 50-day, 100-day, and 200-day SMA. The 14-day RSI is 45.6 which indicates neither overbought nor oversold positions.

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5. Microsoft (NYSE: MSFT)

Microsoft is another good tech stock to buy in September. The company has been transforming itself under the leadership of Satya Nadella and is focussing on emerging and high-growth industries. The growing sales of personal computers amid the digital transformation also bode well for MSFT.

MSFT stock now trades at an NTM (next-12 months) PE of 34.70x. The multiples have averaged 26.7x over the last five years and 20.4x over the last 10 years. The valuation premium is reflective of the changed perception of the company. The company has seen a valuation rerating as it diversified into high-growth businesses.

Analysts are bullish on MSFT stock

Most Wall Street analysts are bullish on Microsoft stock. Of the 38 analysts covering the stock, 34 rate them as a buy or some equivalent while the remaining four analysts rate it as a hold. None of the analyst rates MSFT stock as a sell.

Its median target price of $330 implies an 8.1% upside over the current levels. The stock’s street high target price of $411 is a premium of 34.6% while the street low target price of $275 is a discount of 9.9%

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