The S&P 500 is off to a shaky start to 2022, down 5.5% year-to-date. As bad as things have been for the S&P 500, they have been even worse for the tech-heavy Nasdaq Composite, which is down 9.9% so far in this year.
Investors are dumping Nasdaq stocks due to concerns over rising interest rates, which negatively impact the valuation of growth stocks and unprofitable companies. But the rotation out of Nasdaq stocks has also created some buying opportunities for long-term investors willing to stomach the volatility.
Here are seven of the best Nasdaq stocks to buy, according to Bank of America.
Apple Inc
Shares of iPhone maker Apple have held up relatively well so far in 2022, down just 2.4% year-to-date. Analyst Wamsi Mohan says Apple's robust cash flow provides defense for investors against a volatile market backdrop. Mohan is projecting a strong iPhone upgrade cycle in fiscal 2023 driven by 5G upgrades that will enable more virtual reality and augmented reality applications. In addition, he says an increasing mix of high-margin Services segment growth will boost Apple's profitability and reduce its reliance on iPhone sales numbers.
Bank of America has a Buy rating and $215 price target for AAPL stock.
Microsoft Corporation
Microsoft shares haven't fared as well as Apple so far in 2022, falling 9% year-to-date. Microsoft made major headlines in January when it announced a $68.7 billion buyout of video game developer Activision Blizzard, Inc., Microsoft's largest acquisition in company history. The tech giant is clearly going all-in on gaming, but analyst Brad Sills says there are plenty of other reasons to like the stock, including its potential for accelerating Azure cloud services growth and its sustainable free cash flow growth in the high teen percentage range.
Bank of America has a Buy rating and $365 price target for MSFT stock.
Alphabet, Inc.
Google and YouTube parent company Alphabet has held up relatively well so far in 2022, trading lower by just 1.2%. Alphabet made a big splash with its fourth-quarter earnings report in early February, beating analyst expectations for earnings and revenue and announcing a 20-for-1 stock split. Analyst Justin Post says Alphabet is facing difficult year-over-year comps in 2022, but the stock split underscores Alphabet's shareholder friendly management team. Post says Alphabet has more earnings stability than many of its big tech peers.
Bank of America has a Buy rating and $2,510 price target for GOOGL stock.
Amazon.com, Inc.
Cloud services and e-commerce leader Amazon recouped much of its early-year losses when the company reported a big earnings beat in early February, and the stock is now down just 3.3% year-to-date. Post says Amazon's AWS cloud revenue growth acceleration, its improving margins and its rising Prime subscription prices make it his top FANG stock pick for 2022. Post says the Prime membership price hike alone could generate an extra $1.5 billion in annual profits for Amazon.
Bank of America has a Buy rating and a $4,450 price target for AMZN stock.
Meta Platforms Inc
Meta Platforms is the parent company of popular social media platforms Facebook, Instagram and WhatsApp. Unlike most of the other stocks on this list, 2022 has been a total disaster for Meta Platforms so far, and the stock is already down 31.4% year-to-date. Most of the sell-off came after Meta reported its metaverse business lost $10 billion in 2021 and said Apple's privacy changes will cost the company $10 billion in revenue in 2022. Despite all of Meta's issues, Post says investors should buy the dip and wait out the company's content, targeting and metaverse transition year.
Bank of America has a Buy rating and $333 price target for FB stock.
NVIDIA Corporation
Semiconductor giant NVIDIA has also struggled in 2022, and its shares are down 15.7% year-to-date. Analyst Vivek Arya says Nvidia remains a top stock pick given his confidence in Nvidia's gaming, data center, omniverse and auto market opportunities. Demand outpaces supply in the semiconductor industry in 2021, but Arya says constraints should start to ease in the second half of 2022. The U.S. Federal Trade Commission sued to block Nvidia's $40 billion buyout of chip designer Arm in December, but Arya says Nvidia's long-term strategy is not reliant on the completion of the deal.
Bank of America has a Buy rating and $375 price target for NVDA stock.
ASML Holding NV
ASML is the world’s second-largest semiconductor manufacturing equipment supplier. ASML shares are down 17.4% year-to-date, but analyst Didier Scemama says the company's fiscal 2023 is shaping up to be a big year. Scemama is modeling for 17% revenue growth in fiscal 2023, and management has expressed confidence in customer demand, capacity expansion and supply chain improvements. Scemama says these tailwinds suggest there could be significant upside to ASML's long-term 2025 financial targets that the company announced back in September.
Bank of America has a Buy rating and $956 price target for ASML stock.