Goldman Picks The Best Tech Stocks of 2023‍

With the fourth quarter earnings season over, Goldman Sachs suggests several ways investors can take advantage of an uncertain environment.

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In the last quarter, internet companies provided mixed financial results, caused mainly by the macroeconomic environment and consumer spending, along with the management's balancing act between long-term growth and market volatility.

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In a note Monday, Goldman Sachs' internet analyst Eric Sheridan said investors remain reluctant to invest in companies with low GAAP profitability and/or low liquidity or market capitalization. As we have discussed with investors over the past two months, many remain in a defensive posture with regard to the sector and see a regional/global consumer slowdown as likely within 6-9 months."

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Among several other large cap, buy-rated stocks, Goldman ranked Amazon as its top pick for the remainder of the year.

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According to Sheridan, "Looking at our stock coverage's risk/reward disparity exiting Q4 multi - cap earnings, we observe the most convincing risk/reward setups in the group as one of a collection of identities with a combination of traits, including steady income trends, ability to manage for enhanced margin path (in various economic outcomes), and investor "wall of worry" at the center of any key debates.

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The company's $145 price objective for Amazon represents a potential gain of approximately 54% over Monday's closing price. A "multi-year operating income margin increase story," according to Goldman, is what it sees for Amazon. Improved e-commerce margins, reduced international losses, and "greater profit margin mix contribution" from its computing and advertising businesses would all support that expansion.

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Goldman chooses Take-Two Interactive as its top gaming pick. Macroeconomic factors constitute a short-term hindrance, but a favorable backdrop for the gaming sector is emerging in the medium- to long-term, according to the note. Sheridan noted that after a year of Apple privacy issues, there are indications of stability in mobile activity. However, he pointed out that despite a reduced investment environment, content IP slates are still delaying debuts and that larger-scale games outperformed smaller games in December.

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Take-price Two's objective from Goldman is $155; this is roughly 34% higher than where it closed on Monday.

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In digital advertising, Goldman sees more positive risk/reward in the immediate term for Meta Platforms "with a dual factor of increased business momentum and intense concentration on efficiencies."

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Alphabet's stock is "among the very best corporations positioned for future iot cycles connected to AI/ML, augmented reality, and quantum computing," according to Sheridan, even though the stock's price is expected to fluctuate in the near future.

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He also mentioned Uber, Etsy, Expedia, Lyft, Match and Bumble