Our homes, workplaces and even our governments are leaning more heavily into digital systems, smarter automation and cloud-driven technology. And when huge structural shifts like these occur, investors who position themselves early often reap the biggest rewards.

Fortunately, you don't need to be a tech expert or chase risky individual stocks to participate.

Several thematic ETFs provide simple, diversified exposure to the industries shaping the next decade. And if these megatrends continue gathering momentum, the ASX ETFs in this article could be among the strongest performers on the market.

BetaShares Cloud Computing ETF (ASX: CLDD)

Cloud computing is one of the most powerful long-term structural trends in technology. Every year, more businesses move their operations into the cloud, relying on scalable platforms for data storage, workflow management and AI-driven tools. The BetaShares Cloud Computing ETF gives investors access to the companies building and enabling this infrastructure.

The ASX ETF's portfolio includes global names such as Shopify (NASDAQ: SHOP), which powers cloud-based e-commerce; ServiceNow (NYSE: NOW), a leader in digital workflow automation; and Salesforce (NYSE: CRM), the world's largest cloud CRM provider. These companies don't just benefit from cloud adoption, they help accelerate it, creating sticky recurring revenue and deep customer integration.

BetaShares Global Cybersecurity ETF (ASX: HACK)

As the world becomes more digital, cyber threats are increasing at an alarming pace. Businesses, governments and individuals all require greater protection, and this is driving explosive growth in the cybersecurity sector. The BetaShares Global Cybersecurity ETF offers exposure to key players in this space.

This fund includes heavyweights such as CrowdStrike (NASDAQ: CRWD), known for its AI-powered endpoint protection; Palo Alto Networks (NASDAQ: PANW), a leader in enterprise network security; and Fortinet (NASDAQ: FTNT), which provides integrated cybersecurity solutions. These companies enjoy rising demand regardless of economic cycles because cybersecurity is no longer optional, it is essential.

And with cybercrime expected to cost trillions globally over the next decade, the BetaShares Global Cybersecurity ETF is positioned at the heart of a growth story that shows no signs of slowing.

BetaShares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ)

Finally, robotics and artificial intelligence are transforming industries from manufacturing to healthcare. The BetaShares Global Robotics and Artificial Intelligence ETF provides access to companies leading these innovations.

Its holdings include Nvidia (NASDAQ: NVDA), the chipmaker powering most of the world's AI systems; ABB (SWX: ABBN), a global leader in industrial robotics; and Fanuc (TSE: 6954), which produces factory automation technologies used across automotive, electronics and aerospace manufacturing.

As automation spreads and AI becomes embedded in everyday business operations, companies in this ASX ETF's portfolio could enjoy substantial growth tailwinds.

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But with signs that cooler heads will prevail and a full-blown trade war likely to be avoided, attention is turning back to what could come next.

And if history is any guide, periods of uncertainty often set the stage for the next major market rally.

For long-term investors, that means now could be the ideal time to focus on high-quality, growth-focused exchange-traded funds (ETFs) positioned to lead the next upswing.

Here are three ASX ETFs that could be standouts when the next market boom arrives.

Betashares Nasdaq 100 ETF (ASX: NDQ)

The Betashares Nasdaq 100 ETF is one of the simplest and most effective ways to gain exposure to the world's leading growth companies. It gives investors access to the 100 largest (non-financial) stocks on the Nasdaq index.

While technology dominates the fund, it is more than just the usual household names. The Betashares Nasdaq 100 ETF's portfolio includes global leaders such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), Amazon (NASDAQ: AMZN), Starbucks (NASDAQ: SBUX), and Costco (NASDAQ: COST).

These businesses are highly profitable, globally diversified, and many sit at the centre of megatrends like artificial intelligence, cloud computing, and digital transformation. If optimism returns and investors re-embrace growth, the Betashares Nasdaq 100 ETF could once again be a front-runner in the next bull market.

Betashares Australian Momentum ETF (ASX: MTUM)

The Betashares Australian Momentum ETF offers investors a unique way to capture strong-performing Australian shares. Unlike traditional index funds, this ASX ETF doesn't hold the same shares all the time. It dynamically adjusts its holdings based on momentum, focusing on shares that are already trending higher.

This strategy can work particularly well in rising markets, as it systematically identifies and holds the shares leading the charge. At present, the Betashares Australian Momentum ETF's portfolio includes Qantas Airways Ltd (ASX: QAN), Coles Group Ltd (ASX: COL), and Evolution Mining Ltd (ASX: EVN). These are a blend of cyclical and defensive names that reflects the current market's mixed sentiment.

If market confidence improves and Australian equities regain upward momentum, this ASX ETF's strategy is designed to capitalise automatically, keeping investors exposed to the strongest trends without the need to trade in and out of individual shares.

Analysts at Betashares recently recommended this fund.

Betashares Cloud Computing ETF (ASX: CLDD)

The Betashares Cloud Computing ETF is another ASX ETF to consider. It gives investors access to one of the most powerful long-term growth stories in technology. That is the global shift to the cloud.

Businesses across every industry are moving their operations, data, and services online, and this transformation is still only in its middle stages.

The Betashares Cloud Computing ETF holds a portfolio of companies driving this revolution, including Shopify (NASDAQ: SHOP), ServiceNow (NYSE: NOW), and Salesforce (NYSE: CRM). These provide the digital tools, infrastructure, and platforms that modern enterprises rely on to operate efficiently and scale globally.

This fund was recently recommended by analysts at Betashares.

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Let's take a look at the three biggest events to monitor, according to eToro market analyst Josh Gilbert:

1. Australian inflation figures

The latest consumer price index numbers are due out Wednesday.

Inflation peaked at 8.4% for the year ending December, but four consecutive declines since then were not enough to stop the Reserve bank of Australia from raising interest rates in May.

All eyes will be on whether inflation can head down for the fifth consecutive month.

"The RBA will have welcomed employment and wages data coming in weaker than expected earlier in May as well as lower than expected retail sales," said Gilbert.

"Another decline in inflation will show that the RBA's massive tightening cycle is having the desired effect, and the Reserve Bank can keep rates on hold to allow the lag of its 12 rate rises to have the full impact."

Gilbert cautioned against getting too excited though.

"Investors shouldn't get ahead of themselves, with [RBA] governor Philip Lowe continuing to re-emphasise that further rate hikes may be ahead."

2. Qantas investor day

On Tuesday, the nation's largest airline, Qantas Airways Limited (ASX: QAN), will hold its first investor day in four years.

"Investors will be looking for an update on the group's strategy and what's next for the [airline] after what looks set to be their best fiscal year on record," said Gilbert.

"Investors will be hoping for some reassurance that this stellar performance can continue as Alan Joyce hands the reins over to Vanessa Hudson later this year after 15 years at the helm."

Back in 2019, investor day definitely had an impact on Qantas shares.

"The market liked what it heard, and shares jumped by 5% in the days after the event," said Gilbert.

"Qantas announced last week it was on track to hand down a full-year profit of $2.5 billion thanks to soaring demand, falling fuel prices and higher airfares, which we should hear more about this week."

The market will also be anticipating whether Qantas will return to paying out dividends — a practice that stopped after the COVID-19 pandemic struck.

"Given Qantas is on track to record its most profitable year ever, it would be a surprise not to see a return of the dividend when it hands down its full-year results later in the year."

After years of bruising battles, the presentations could allow Qantas to reset its relationships with key stakeholders.

"The day may also be a valuable opportunity for Qantas to give investors a better understanding of how they plan to improve relations between passengers and unions — and keep growing competition from the likes of Virgin Australia at bay."

3. Salesforce quarterly results

On the other side of the Pacific Ocean, software giant Salesforce Inc (NYSE: CRM) will reveal its latest quarterly earnings on Thursday.

According to Gilbert, the current US reporting season has been "better than feared" with "some big surprises and solid results".

"The focus this quarter will be on [Salesforce's] progress as they pivot from sales growth to profitability and how well management is executing this directional shift," he said.

"Margins will also be on watch after announcing its restructuring plan in January, which included a 10% cut to its workforce as they look to drive efficiency."

The last quarterly results really moved the dial for Salesforce shareholders.

"Following its FQ1 earnings in March, shares soared by 11.5% after beating expectations across the board and raising its guidance for the full year."

Investors will also await news on how the company's going with artificial intelligence, which it's been working on since 2016.

"Expectations are for Salesforce to report earnings of US$1.37 a share on sales of US$8 billion."

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This year has served an unpleasant but necessary reminder that the stock market doesn't move up in a straight line. Since the beginning of 1950, there have been more than three dozen double-digit percentage corrections in the broader market. Of course, few have been as painful as the bear market we're experiencing now.

However, pain historically brings with it opportunity on Wall Street. When given enough time, every stock market correction and bear market throughout history has been wiped away. That makes bear markets an especially intriguing time to do some shopping.

Arguably one of the best places to begin your search for stocks to buy is the Dow Jones Industrial Average (DJINDICES: ^DJI). The Dow Jones is a 126-year-old index comprised of 30 historically profitable, time-tested, multinational businesses. In other words, these are mature companies that have proved their worth over decades (or more than a century), and they could make smart buys during the bear market decline.

What follows are three attractively priced Dow stocks that have the capacity to turn an initial investment of $400,000 into $1 million by 2028.

Salesforce

The first Dow Jones Industrial Average stock with the tools needed to turn a $400,000 investment into a cool $1 million over the next six years is cloud-based customer relationship management (CRM) software solutions provider Salesforce (NYSE: CRM).

The biggest headwind Salesforce is contending with is the growing likelihood the US or global economy will enter a recession. It's not uncommon for growth stocks to see their valuation multiples contract during recessions as investors become more focused on traditional metrics (e.g., price-to-earnings ratios). Thankfully, Salesforce has a clear-cut edge in the CRM software space that commands a premium valuation.

For those wondering, CRM software is what allows businesses to enrich existing relationships with their customers to generate more revenue. It can cover simple tasks, such as resolving product or service issues, as well as handle more complex chores, like running predictive sales analyses to determine which customers would be likely to buy a new product or service. Keep in mind that while CRM software is perfectly designed for service-oriented companies, it's gaining plenty of traction in the healthcare, industrial, and financial arenas.

What makes Salesforce special is its absolute dominance of the CRM software space. It's been ranked as the No. 1 CRM solutions provider for nine consecutive years, according to IDC, and accounted for close to 24% of worldwide CRM spend in 2021. While Salesforce's share of the CRM market has grown every year since 2017, its top four competitors have shrunk to a combined 19.6% market share.  In short, Salesforce won't be knocked off its pedestal in this double-digit annual growth category anytime soon.

As noted previously, co-founder and co-CEO Marc Benioff has done a phenomenal job of using bolt-on acquisitions as a source of growth. A steady diet of deals has broadened the company's service ecosystem and provided additional cross-selling opportunities.

If Benioff's forecast of $50 billion in annual sales by the end of fiscal 2026 proves accurate -- this would mark just shy of 100% growth from fiscal 2022 -- Salesforce would have a very good chance to generate 150% returns over the next six years. 

Boeing

A second Dow Jones stock that has the ability to turn a $400,000 initial investment into $1 million by 2028 is commercial airline and military aircraft manufacturer Boeing (NYSE: BA).

If there's a Dow stock that perfectly embodies the battle of short-term risk versus long-term reward, it's Boeing. Although the COVID-19 pandemic ravaged the airline industry for a period of about two years, many of the company's issues have been self-inflicted. This includes having its lauded 737 MAX cumulatively grounded for two years due to mechanical and electrical issues, as well as dealing with a roughly 15-month stretch (May 2021-August 2022) where 787 Dreamliner deliveries were halted. 

The key point here is that it's a lot easier to fix internal shortcomings than it would be to deal with persistent demand issues. With 787 deliveries back on track and the company expected to boost 737 MAX output from 27 planes monthly at the beginning of this year to 47 per month by the end of 2023, operating cash flow could really begin to ascend over the next 12 months. 

Something else investors should take into account is that Boeing's backlog remains robust. Through the first half of 2022, Boeing had $372 billion in orders on backlog, including more than 4,200 commercial planes.  Considering that the global energy supply chain is somewhat broken following the pandemic and Russia's invasion of Ukraine, crude oil, and therefore jet fuel prices, are liable to remain high. This could be the spark to encourage commercial airlines to order more fuel-efficient aircraft.

Boeing's defense, space, and security division is another positive for long-term investors. Since most government contracts span multiple years, revenue and operating cash flow for this segment tend to be highly predictable from one year to the next. 

Owning Boeing stock will require patience. But if the company can use the next six years to right the ship and simply get back to where it was on an operating basis prior to the pandemic, it should be able to deliver a 150% return to its shareholders from its current level.

Visa

The third Dow stock that can turn $400,000 into $1 million by 2028 is payment processor Visa (NYSE: V).

One of the most interesting things about Visa is that its biggest headwind at the moment is also one of its greatest catalysts. Visa is a cyclical business, which means that it fires on all cylinders when the US and global economy are expanding, and it struggles when recessions arise and consumers/enterprises spend less. With a number of pundits expecting a US recession, it's no wonder we've witnessed weakness in shares of Visa.

But here's the thing about being cyclical: It strongly favors the patient. Virtually every period of expansion lasts substantially longer than contractions or recessions. This is what allows Visa to grow in lockstep with the US and global economy over time.

Visa finds itself well-positioned for high-single-digit or low-double-digit growth domestically and internationally. In the US, Visa held a 54% share of credit card network purchase volume, as of 2020.  Among the four major processors in the US, none gobbled up more share following the Great Recession than Visa. Meanwhile, it has a multidecade opportunity to expand into emerging market regions considering that most overseas transactions are still being conducted in cash.

A generally conservative management team is a feather in Visa's cap, too. While it could easily enter the lending arena and generate interest income, Visa chooses to focus on payment processing. This choice means the company isn't directly affected by rising loan delinquencies or credit losses during a recession. Not having to put cash aside to cover losses is what allows Visa to emerge from inevitable economic downturns in such great shape.

It's rare that a nearly $395 billion company can sustain a 10%+ growth rate over a long period, but that's exactly what long-term investors are getting with Visa.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened

Shares of leading large-cap growth tech stocks Nvidia (NASDAQ: NVDA), Amazon (NASDAQ: AMZN), and Salesforce.com (NYSE: CRM) all fell today, with each down nearly 3% in intraday trading, before recovering to losses between 1% and 2% as of 3:50 PM EDT.  

Technology growth stocks that trade at relatively high multiples have been some of the worst-hit names this year, as the Federal Reserve raises interest rates in a bid to tame inflation. That's leading to a double whammy for high-growth stocks, as higher rates compress these companies' price-to-earnings valuations, while investors also fear rising interest rates will slow growth going forward.

Tech stocks have been nearly the mirror image of bond yields this year, as tech stocks have cratered while bond yields have risen dramatically in a short amount of time.

On Tuesday, this theme played out yet again. Even exciting announcements out of Salesforce's Dreamforce conference today weren't enough to overcome this bonds-versus-stocks tug-of-war.

So what

As the Federal Reserve has raised interest rates, short-term yields have gone up. In September, the Fed's tightening posture accelerated, as it began to allow even more Treasury bonds and mortgage-backed securities to roll off its balance sheet, in what is referred to as quantitative tightening.

Since the Federal Reserve won't be buying bonds anymore, that leaves the rest of the investing world to do so, and that world will likely demand a fair market price amid high inflation. Today, the 10-year Treasury Bond yield actually rose past the previous high set in June, hitting 3.6% briefly, before retreating to around 3.57% as of this writing.

Higher bond yields are competition for stocks, and that goes double for high-growth stocks that trade at high price-to-earnings ratios, such as these three. If bond yields rise, stock investors will demand a lower price and a higher earnings yield than they otherwise would have, all things being equal.

In addition, rapidly rising interest rates have dramatically slowed down growth in certain sectors of the economy, especially those that boomed during the pandemic. This includes gaming and crypto mining, which is hurting Nvidia in a big way right now.  On the last earnings call, management forecast revenue and earnings to decline in the upcoming quarter, largely driven by plummeting gaming and PC demand.

Amazon is also seeing dramatically slower growth in its e-commerce business, as consumers are now venturing out of their houses to shop more and more, while also buying fewer goods overall amid higher inflation for necessities.

While Salesforce's enterprise software franchise may be the "stickier" of the products among these three, with recurring subscription revenue, management also gave weaker-than-expected growth guidance last quarter, noting lengthening sales cycles among more cautious customers.

Salesforce held its annual Dreamforce conference today, in which it announced several exciting new innovations. These include a new real-time customer relationship management platform called "Genie," that gives up-to-the minute data and insights, as well as a new carbon credit trading platform for businesses.

Despite the excitement, Salesforce was trading in-line with other large-cap growth stocks, as even interesting company-specific announcements are currently being overwhelmed by the market's fixation on interest rates and tomorrow's Fed meeting.

Now what

With tech stocks down significantly and the mood incredibly pessimistic, long-term investors may want to look for opportunities in certain types of tech stocks.

While some would say to look for those that have sold off the most -- those being unprofitable and newly public software and electric vehicle stocks -- I would tend to be more cautious, and gravitate toward higher-quality names like these three. 

That's because while the post-2008 environment has generally seen very low interest rates, it's possible we could be adjusting to a new, higher-rate regime. In that light, large-cap technology stocks that don't need to go out and raise money would be safer bets, especially if the economy goes into a recession.

Even better are profitable large-cap technology stocks that can generate enough cash even in a downturn to repurchase their shares at these discounted prices. Fortunately, all three of these companies have implemented share repurchase programs this year.

Amazon announced a $10 billion repurchase plan in March, marking its first repurchase plan since 2012. Nvidia has bought back stock in recent years, but announced in May that it was increasing its buyback plan to $15 billion. Meanwhile, even Salesforce announced its first ever share repurchase plan in August, suggesting management sees value in its beaten-down share price as its growth investments slow.

While the near term may be rough going, the Fed will eventually get a handle on inflation. It may take a slowing economy or even a recession to get there, but all three of these companies have survived recessions before. With management teams now buying back heavily discounted shares, these three stocks are looking more and more attractive for long-term investors after a brutal 2022 decline, despite today's dip.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Amazon and these other leading tech stocks fell today appeared first on The Motley Fool Australia.

What happened

A broad cross-section of technology stocks dipped on Tuesday, as Wall Street focused on macroeconomic headwinds and the resulting challenges for businesses.

iPhone maker Apple (NASDAQ: AAPL) was down as much as 2.3% on Tuesday morning, social media giant Meta Platforms (NASDAQ: META) slipped as much as 2%, and customer relationship management (CRM) specialist Salesforce (NYSE: CRM) was off by as much as 1.1%. As of market close on Tuesday, the trio had recovered somewhat, but shares were still trading lower, down 1.5%, 1.3%, and 0.3%, respectively. These stocks were dragged lower by the broader market, as the S&P 500 and Nasdaq Composite each declined by roughly 1.1%.

There was very little company-specific news behind the sell-off, but a key economic indicator pointed to spiraling costs for qualified workers.

So what

A jobs report early Tuesday confirmed recent trends that suggested hiring costs may continue higher for the foreseeable future. The Job Openings and Labor Turnover Summary for last month revealed that the number of job openings far outpaced the number of available job seekers, by a margin of nearly 2-to-1. The total number of available positions climbed to 11.24 million, up from 11.04 million in June -- and much higher than the 10.3 million predicted by economists. 

The Federal Reserve Bank watches this report closely. It views a strong report -- such as this one -- as an indicator of continuing inflation. The shortage of candidates for each position causes employers to offer higher compensation to entice job candidates, which results in wage inflation.

The Fed was hoping that the back-to-back rate increases of 0.75% that it announced in June and July would help cool the red-hot job market. The central bank is already dealing with consumer prices at 40-year highs, driven higher by supply chain constraints and rocketing fuel costs. A tight job market will only add to the momentous challenge of bringing inflation under control.

Just last week -- and contrary to the presiding opinion -- Fed Chair Jerome Powell left little doubt that the central bank would continue to pull out all the stops to tame runaway inflation. "While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses," Powell said. "These are the unfortunate costs of reducing inflation." 

Powell's comments increased the chances that the Fed would raise the key borrowing rate by another 0.75% when it meets again in September, making it the third such increase in just four months.

Now what

There was some company-specific news for two of our trio of technology stocks, though it's doubtful any of these revelations were sufficient to move the stock prices.

Antitrust regulators in the EU won't appeal a court ruling that found in favor of Qualcomm, according to a report by Reuters. The judges in that case invalidated a conclusion by the European Commission that suggested payments made to Apple were anti-competitive. The decision would have little impact on Apple or its business prospects. 

For its part, Meta Platforms announced that it would shutter the Facebook Gaming app later this year, pulling functionality for Apple's iOS and Alphabet's Android. The app will no longer be available from the Apple App Store or Google Play Store after Oct. 28. The ill-fated app was launched during the early days of the pandemic, designed to help gamers connect with their favorite streamers. Unfortunately, it ran afoul of Apple's terms of service and had trouble getting off the ground.

Given the tangential nature of these developments, they likely had a minimal effect on the prices of their respective stocks today. Rather, it was more likely the prospect of increasing wage inflation -- particularly in the big tech space -- that drove these stocks lower.

In the face of the ongoing bear market, shares of Apple, Salesforce, and Meta Platforms are currently trading 13%, 49%, and 59% off their respective highs reached late last year. Furthermore, these industry leaders are selling at six, four, and three times next years' sales, respectively, near their lowest valuations in years. Since these companies dominate their respective industries and have a long track record of overcoming challenges -- particularly those of the macroeconomic variety -- now may be a great time to buy.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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At the time of writing, Apple, Microsoft, Alphabet, and Amazon are the only four U.S. companies with a market capitalization of $1 trillion or greater. Tesla is not far behind, with a market cap of $907 million.

These are elite businesses that have earned shareholders tremendous gains. It goes without saying that these companies all had much smaller market caps not too long ago. Amazon's market cap was $105 billion exactly 10 years ago. 

Generally, a good place to look for the next home-run stocks are growing companies with a market cap between $100 billion to $500 billion. But in this case, let's first look at Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), which has a higher market cap but could be a timely buy right now.

For higher return prospects, you'll want to consider Advanced Micro Devices (NASDAQ: AMD) and Salesforce (NYSE: CRM). These are solid growth stories that still have years to play out.

1. Berkshire Hathaway

Berkshire Hathaway is one of the safest stocks you can hold for the long term. After rising 50% over the last five years, it carries a market cap of $653 billion. That puts it within shooting distance of the $1 trillion milestone. There are a few reasons Berkshire will keep growing in value.

Berkshire has a sterling balance sheet with $122 billion of cash and fixed securities. The company has a large stock portfolio worth $327 billion at the end of the second quarter. Buffett's investment vehicle holds large stakes in Apple, Bank of America, and Coca-Cola, among other stocks. Buffett has most recently been adding to large stakes in Chevron, Occidental Petroleum, and leading PC brand HP (formerly Hewlett-Packard). 

Another piece of Berkshire's intrinsic value is its dozens of privately held businesses. The company's subsidiaries span everything from candy to railroads. It also owns several insurance companies that provide $147 billion in float, or money that Berkshire collects from insurance premiums that it can reinvest in stocks, bonds, or acquisitions. Many of these Berkshire-held businesses tend to be immune from the changes in technology, which adds a degree of predictability to their long-term performance -- something Buffett no doubt considered.

One of Buffett's best stock ideas lately has been Berkshire Hathaway itself. Through the first half of 2022, he bought $4 billion worth of the company's shares -- a sign that Buffett sees the stock as undervalued. The stock's price has tripled over the last decade and could repeat that return, which would push Berkshire's market cap over $1 trillion by 2032.

2. Advanced Micro Devices

Owning companies that serve megatrends in technology, such as spending on data centers, cloud computing, and other advanced computing needs could pay off big. Advanced Micro Devices has emerged as a key supplier of high-performance chips in these markets.

There is a reason why AMD CEO Lisa Su is considered one of the top business leaders right now. Su has done a marvelous job guiding this underdog to industry leadership, and its best days are still ahead.

AMD currently sports a low forward price-to-earnings ratio of 23, based on 2022 earnings estimates, and has a market cap of $159 billion. To reach $1 trillion in 10 years, the share price needs to climb at a compound annual rate of 20%. That is achievable for this fast-growing chipmaker.

For a long time, AMD was the underdog in the semiconductor industry. It's always played the role of a low-cost alternative to leaders like Intel and Nvidia, but not anymore.

While AMD is still way behind Intel in central processing units (CPUs) and Nvidia in graphics processing units (GPUs), it is winning over customers with its renewed focus on designing high-performance chips. Data center operators are now looking at AMD's Epyc server chips as a viable alternative to Intel. In the last quarter, AMD again gained market share over its CPU rival. Revenue grew 70% year over year in the second quarter, driven by strong growth in data center chips and consumer chips for notebooks and gaming.

The data center accelerator market, which includes spending on CPUs and GPUs, is expected to grow at a compound annual rate of 34% through 2027, reaching $75 billion. AMD just completed the acquisition of Xilinx, a leading supplier of field-programmable gate array (FPGA) chips, which fills out its product lineup to tackle this enormous opportunity. The strong tailwind in the data center market, along with AMD's modest valuation, could deliver market-beating returns to investors over the long term.

3. Salesforce

The name Salesforce doesn't sound like a growth tech stock that is worthy of the elite club of $1 trillion companies, but every investor should know about this amazing business.

Former Oracle executive Marc Benioff co-founded Salesforce in 1999 and currently serves as the company's chairman and co-CEO. Salesforce pioneered the software-as-a-service business model. Companies save money by subscribing to Salesforce's cloud-based software, which lowers in-house expenses by maintaining, installing, and keeping systems updated.

Salesforce has grown tremendously and has been ranked the No. 1 customer relationship management (CRM) software provider for nine years. Its flagship product is the artificial intelligence (AI)-powered Customer 360 platform, which offers a suite of software that helps companies manage sales, marketing, and e-commerce, and it continues to expand into new categories.

It has reinvested its growing profitability into strategic acquisitions that expand its offering and competitive lead in the market. Last year, it acquired Slack Technologies, which offers a communication platform for employees, for $27 billion. 

What's most remarkable about Salesforce is its consistency, which speaks volumes about the size of its long-term growth opportunity. After two decades of high revenue growth, Salesforce is still growing quarterly revenue over 20% year over year. 

It generated $27 billion in revenue over the last four quarters, but the total addressable market for the company's services is expected to reach $284 billion by 2026, according to Gartner Research. It can grow for a long time. However, if Salesforce continues its record of strategic acquisitions, its addressable market could widen even more as it expands its product offering.

With a market cap of $189 billion, Salesforce is well on its way toward $1 trillion. It has the industry leadership and massive market opportunity to deliver market-beating returns to investors.

Now is the perfect time to buy shares. At a price-to-sales ratio of 6.8, the stock is near its cheapest valuation in the last 10 years. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 US stocks that could be worth $1 trillion by 2032 appeared first on The Motley Fool Australia.

The Dow Jones Industrial Average (DJINDICES: ^DJI) slipped about 177 points today, despite a better-than-expected earnings report from Salesforce (NYSE: CRM) that pushed the stock nearly 10% higher, which was by far the biggest move of any of the Dow's 30 stocks.

Contributing to the losses in the Dow were financials and consumer goods stocks, which struggled following a warning from JPMorgan Chase's esteemed CEO Jamie Dimon. The bank leader warned investors to prepare for what he described as an economic "hurricane."

Salesforce surprises

For the first quarter of fiscal 2023, which ended on April 30, Salesforce reported diluted earnings per share of $0.03 and adjusted earnings per share of $0.98. Total revenue came in at $7.41 billion. Both adjusted earnings and revenue beat analyst estimates during a quarter with difficult economic conditions, sending shares higher. 

"Our financial results once again demonstrate the strength and durability of our business model as we continue to see strong demand from customers across the entire Customer 360 portfolio," Salesforce's Co-CEO Bret Taylor said in a statement.

He added: "Salesforce has become even more strategic and relevant to our customers as we are providing them with the agility and resilience they need to drive growth and efficiency in these uncertain economic times."

Along with the strong financial results, Salesforce also raised guidance. The company now expects to generate revenue of at least $31.7 billion for the full 2023 fiscal year and adjusted earnings per share of roughly $4.75. For the current quarter, Salesforce expects adjusted earnings of at least $1.01 on revenue of at least $7.69 billion.

In a research note, Bank of America analyst Brad Sills called the results "solid" and that "renewed discipline" on core expenses should help Salesforce achieve "meaning margin expansion."

Dimon's warning

Although Salesforce is often seen as a precursor for tech earnings because of its reporting schedule, the positive results from the cloud software company were not enough to pull the Dow into the green. The stark warning from JPMorgan's top executive seemed to spook investors today.

Dimon said at a conference this morning that instead of "storm clouds" ahead for the U.S. economy, he now sees a "hurricane."

"You'd better brace yourself," he said. "JPMorgan is bracing ourselves and we're going to be very conservative with our balance sheet."

Dimon's fears stem from Russia's ongoing invasion of Ukraine, which he thinks will have an extraordinarily negative impact on commodities such as food and oil. Dimon said he is concerned that the price of oil could rise all the way to $150 or $175 per barrel, up from just below $115, as of this writing.

Dimon is also extremely worried about the Federal Reserve's unwinding of its nearly $9 trillion balance sheet in a process known as quantitative tightening, which will effectively drain liquidity from the economy. The Fed begins that process today and will eventually ramp up to running off $95 billion of bonds from its balance sheet every month by August. 

The Fed has never embarked on a quantitative tightening effort of such epic proportions, so it could end up having consequences that no one is prepared for and create more market volatility down the line than currently anticipated. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Market participants had hoped that the rally from last week would be able to continue into the last trading day of May, but unfortunately, the stock market gave back some of its gains. Losses for the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) were relatively small at roughly half a percent, but it still came as somewhat of a blow to investor confidence to see a lack of follow-through from prior big gains.

Data source: Yahoo! Finance.

However, there was some good news after the closing bell. Shares of Salesforce (NYSE: CRM) rose sharply in after-hours trading, as the blue chip software-as-a-service company reported its latest financial results. After seeing so many stocks lose ground despite strong business results in their quarterly reports, investors were happy to see Salesforce climbing, even as it faces some of the same challenges as companies across the tech industry.

What Salesforce said

Salesforce's quarterly results for the period ending April 30 included a lot of good news. Revenue of $7.41 billion was up 24% year over year. Subscription and support revenue rose at the same 24% annual rate, but gains for the much smaller professional services segment of 30% helped juice up Salesforce's top line slightly. Remaining performance obligations were 20% higher than year-ago levels at about $42 billion, about half of which consists of current obligations. 

Investors were also pleased with Salesforce's bottom-line performance, even though it reflected some of the company's challenges. Adjusted net income came in at $982 million, which was down from $1.14 billion in the year-earlier quarter. However, the resulting adjusted earnings of $0.98 per share still were better than most investors had feared the customer relationship software specialist would generate.

Salesforce attributed the solid performance to a couple of things. First, the company has worked hard to build a durable business model that can handle ups and downs in the business cycle. Also, the portfolio of products that Salesforce gives its clients is broad enough to address the needs of businesses across just about every industry, and smart internal corporate decisions have also made Salesforce more efficient operationally.

Will the rest of the year look better for Salesforce?

Salesforce had generally positive things to say about how the near-term future is likely to look. In the fiscal second quarter ending in July, the CRM specialist expects sales of $7.69 billion to $7.7 billion, which would be up about 21% from year-earlier levels. Adjusted earnings should rise slightly to between $1.01 and $1.02 per share, with roughly 15% expected gains in current remaining performance obligations.

For the full year, Salesforce has similar expectations. It projected revenue of $31.7 billion to $31.8 billion, up 20% from fiscal 2022. Adjusted operating margin should top 20%, and Salesforce is hoping to see adjusted earnings of $4.74 to $4.76 per share and a 21% to 22% rise in operating cash flow.          

Interestingly, Salesforce's full-year projections were changed in mixed ways. The earnings call was about $0.12 per-share higher than previously forecast. However, Salesforce reduced its sales estimate by roughly $300 million from its previous forecast of $32 billion to $32.1 billion.

Salesforce had come into its earnings report as one of the worst performers in the Dow in 2022. However, it now appears some investors see it as a good candidate for a bounce. If it can maintain its upward momentum, Salesforce has a lot of things going for it. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened

Shares of Apple (NASDAQ: AAPL), Meta Platforms (NASDAQ: FB), and Salesforce.com (NYSE: CRM) were plunging today, down 5.6%, 6.8%, and 7.9%, respectively, as of 2:05 p.m. ET. There wasn't any material news out of these companies today, although Apple did announce it was leading an initiative to implement passwordless sign-in open standards for the web. In addition, news out of the European Union suggested stiffer rules for big tech, and potential penalties could be in the offing.

More likely, these companies fell in sympathy with an overall market decline, with the S&P 500 index falling 3.7% and the tech-heavy Nasdaq Composite down a whopping 5.2% as of 2:06 p.m. ET.

So what

One could probably chalk today's market decline to a reversal from yesterday's big rally. Yesterday, the Federal Reserve released its minutes for its May meeting. The Fed hiked interest rates 50 basis points, as expected, and also announced plans for a gradual reduction in its balance sheet of Treasuries and mortgage-backed securities.

The market likely rallied because Chairman Jay Powell said the Fed was not yet considering a higher 75 basis-point hike at the next meeting, which some had feared. In addition, perhaps the gradual ramping up of balance-sheet reduction calmed the nerves of the markets, which were expecting the Fed to slam even harder on the brakes.

After a relief rally, there's usually a reversion back to skepticism. Investors are now likely turning their attention to the next inflation reports, which come out next week. If inflation stays high, the Federal Reserve may have to move faster, which could increase risks of a recession.

A first-time jobless-claims number also came out today, showing first-time claims ticked up above 200,000. That was higher than expected, although unemployment is still very low by historical standards. Still, the above-consensus number likely alerted some investors that the Fed could be hiking into a slowdown.

High inflation and higher interest rates also hurt the intrinsic value of high-growth stocks with their earnings well into the future. So even as bad as Apple, Meta, and Salesforce were today, the high-growth Cathie Wood-like stocks were down even more.

Still, often times, "tech" is painted with a broad brush, even though Meta Platforms trades at a bargain-basement valuation of 15.9 times earnings and Apple trades at a reasonable 25 times earnings. It's not surprising that Salesforce is down more than the others, as it trades at 116 times earnings, although just 37 times earnings based on forward estimates.

There could also be some hedge fund liquidations today. This could occur if funds are now forced to sell stocks due to higher rates on margin loans or a tidal wave of investors are asking for redemptions.

In terms of the news, Apple, in conjunction with Alphabet and Microsoft, announced they would work together to expand support for passwordless sign-ons across websites and apps. This is based on standards created by the FIDO Alliance (the Fast Identity Online non-profit for web security) and the World Wide Web Consortium. The consortium aims to grow more secure solutions such as fingerprint, face, or device PIN number sign-ins, as passwords have become cumbersome and a growing security liability in recent years.

European lawmakers also recently proposed regulations that could force Apple to open up its devices to other third-party payments systems besides Apple Pay. The EU is even contemplating a large fine on Apple for failing to provide access to other digital wallets in the past. European Commission Executive Vice President Margrethe Vestager said, "We have indications that Apple restricted third-party access to key technology necessary to develop rival mobile wallet solutions on Apple's devices."

Big tech has regularly been subjected to hefty fines from the European Union, and it looks like another could be coming. It's obviously not a great time for Apple and other tech companies for that to happen, given recent supply chain woes and fears over a consumer device demand slowdown.

Now what

It's hard to know what to do with all-star large-cap tech companies today. They're not unprofitable, like so many high-growth software, electric-vehicle, and meme stocks. The three I've previously mentioned are also reasonably priced, given their scale and growth potential as the world continues to digitize.

Today and the upcoming months could continue to be volatile, as every month will bring new inflation data, which will spur a debate over whether or not we might have a recession. And the ongoing war in Ukraine provides even more uncertainty.

However, for highly profitable, cash-rich tech companies with large moats and solid growth outlooks, such as these three names, this marketwide pullback is likely going to turn out to be a good long-term buying opportunity. Investors in these names should probably hold on over the summer, while those without a position who have a longtime horizon may wish to think about scaling gradually into owning these stocks. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Investors are breathing a sigh of relief on Dec. 2 following yesterday's Dow Jones Industrials (DJINDICES: ^DJI) 462-point decline. At 2:11 p.m. ET, the Dow Jones is up 680 points, or 2% higher, as investor worry about the Omicron variant of the coronavirus fades. Today's gains are broad, with 26 of the Dow Jones' 30 component stocks, including Boeing, higher today. 

Today's gains are led by aerospace giant Boeing (NYSE: BA), one of yesterday's worst performers. Shares are up more than 5% on both the reduced fears that Omicron will lead to broad travel bans and news that Chinese regulators are set to recertify the 737 MAX for commercial operation in that country. 

Following on Boeing's heels are payments and credit card giants Visa (NYSE: V) and American Express (NYSE: AXP), with shares up more than 4% on a hopeful outlook about the recovery of global travel and spending. Shares of yesterday's biggest loser, Salesforce.com (NYSE: CRM), are also up almost 3% today following yesterday's double-digit drop after giving underwhelming guidance for its fourth quarter. 

Today's worst-performing Dow stock is Apple (NASDAQ: AAPL), down more than 1% on rumors that demand for the iPhone 13 is falling. 

Boeing investors hopeful on China and continued travel recovery

Word first got out a couple of weeks ago that the Civil Aviation Administration of China (CAAC) was getting closer to letting the company's flagship, narrow-body jet return to commercial service. But a report in The Wall Street Journal on Thursday offered more detail, including what looks like a complete list of changes it requires Boeing to make. That's a serious step toward recertification that would also likely lead to a big jump in orders for Boeing aircraft to service Chinese markets after a multiyear freeze on sales to Chinese operators. 

Boeing's gains, exceeding most stocks today, weren't just a product of good news out of China. Like the other consumer and travel-related companies that gained sharply today, investors are also betting that travel and spending will continue to trend higher, and the initial worries about the Omicron coronavirus variant are probably overdone. 

Omicron bull market?

It seems that many investors believe that to be the case, with most of yesterday's biggest losers and many of the Dow Jones stocks that fell yesterday reporting gains. These include Visa and American Express, which have seen most of their in-country payment volume recover and surge past 2019 levels. However, both have seen cross-border transactions from travel continue to lag pre-COVID numbers. Investors also sent bank stocks up today, with Goldman Sachs (NYSE: GS) and JPMorgan Chase (NYSE: JPM) up more than 2.5% on hopes for continued economic health and the potential that interest rates will move higher sooner rather than later. That's a positive for lenders. 

Shares of Caterpillar (NYSE: CAT) and Walt Disney (NYSE: DIS) also gained more than 2.5% today, on expectations that businesses will continue to buy heavy equipment, and consumers will continue to spend and increasingly travel, ideally to Disney resorts and theme parks. Home Depot (NYSE: HD), one of yesterday's biggest winners, gained another 2% today as investors remain convinced that the home improvement giant will continue to win customers looking to improve their current home or update the home they just bought. Housing demand continues to remain sky-high, a positive indicator for the home improvement giant's prospects. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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About the companies

Salesforce was founded back in 1999, and today provides customer relationship management services as well as marketing automation, analytics, and application development services. This company has been on a tear in 2020 (and before that). Salesforce shares have climbed 44.53% in 2020 so far. It gets better. The company has climbed 193% over the past 5 years, and 576% over the past decade. On the current share price of US$241.35 a share, Salesforce has a gigantic market capitalisation of US$219.6 billion.

Slack is a US$25 billion company which specialises in intra-workplace communication via its eponymous flagship app. Billed as an 'email killer', Slack allows colleagues to communicate and share data, documents and other items with each other. It has been growing handsomely in recent years, including posting an annual revenue growth number of 49% in a recent quarterly update.

Acquisition news

Salesforce announced it would be acquiring Slack in a stock/cash arrangement. Each shareholder of Slack will receive US$26.79 in cash per share under the deal, as well as 0.076 shares of Salesforce for every share of Slack owned. That offer values Slack at a market cap of roughly US$27.7 billion

Slack shares had been trading between US$25-$29 for most of November. However, the stock jumped almost 40% last week to roughly US$40 a share when rumours of this deal began circulating. Last night (our time), Slack shares closed at US$43.84, representing a market cap of US$25.01 billion.

Salesforce + Slack: A blessed union

Salesforce had this to say on the merger:

[The] combination of [the] #1 CRM platform with the most innovative enterprise communications platform will create the operating system for the new way to work, enabling companies to grow and succeed in the all-digital world… This is a match made in heaven. Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world. I'm thrilled to welcome Slack to the Salesforce Ohana once the transaction closes.

Slack's management was equally exuberant, with CEO Stewart Butterfield stating the following:

Salesforce started the cloud revolution, and two decades later, we are still tapping into all the possibilities it offers to transform the way we work. The opportunity we see together is massive… Personally, I believe this is the most strategic combination in the history of software, and I can't wait to get going.

It seems this announcement is a done deal. However, it's worth noting that, although the boards of directors of both companies have approved the deal, Slack shareholders have yet to sign off on it. Although, Slack's management has recommended they do so. If they indeed give the green light, the merger is only expected to be completed "in the second quarter of Salesforce's fiscal year 2022".

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Investor darlings include Australia's Afterpay Ltd (ASX: APT), which has rocketed more than 750% since March, and Tesla Inc (NASDAQ: TSLA), which surged 400% before a correction the last few days.

The Nasdaq Composite Index (NASDAQ: .IXIC) itself rose 75% since the COVID-19 trough before settling down a bit this month.

So naturally the big question on everyone's mind is: When will the rally stop?

No expert, let alone an amateur punter, has a crystal ball. 

But one fund manager reckons he has a sure-fire signal that will indicate when fortunes have peaked.

"The biggest risk… for the tech sector is when interest rates increase," said Wilson Asset Management lead portfolio manager Oscar Oberg.

"If you see that, that's a sign to get out of that space."

Oberg told an investor call that what's happened to tech stocks the last 6 months is not sustainable.

"You can't just look at companies like Afterpay, which went from $8 to $90, and think that's the new normal."

Calling the 'end of tech'

Wilson has been incorrectly "calling the end of the tech market for the last 3 years", admitted Oberg. 

Its flagship listed investment company (LIC) WAM Capital Limited (ASX: WAM) even reduced its exposure to tech this year from about 10% to 6%.

"The reason we have been wrong is purely because of where interest rates are," Oberg said.

"Interest rates, as we all know, are at record lows. That increases valuations and that's why we've seen this momentum in companies like Tesla and Salesforce."

Wilson Asset Manager founder and chair Geoff Wilson said the current situation reminded him of the tech bubble in the late 1990s.

"I've been thinking back to 1999–2000 when we had the 'tech wreck'," Wilson told investors.

"There wasn't a specific event that created the tech wreck… It was just over-evaluations, then heat coming out of the market."

Wilson forecast that current tech investors would have to prepare for a "reasonable-sized adjustment".

Wilson Asset Management operates 6 LIC products, with more than $3 billion under management.

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