Navigating the Tech Sector's Volatility: Veteran Investor Reveals 4 Stocks to Watch

The tech sector has been a whirlwind of activity, with recent sell-offs and rallies leaving investors uncertain. However, veteran tech investor Trent Masters remains optimistic, highlighting four stocks he believes hold a "high degree of conviction." From the AI powerhouse Nvidia to the reliable Motorola Solutions, Masters' picks offer a diverse range of opportunities in the ever-evolving tech landscape.

Uncovering Promising Prospects in the Volatile Tech Sector

Nvidia: Riding the AI Wave

Nvidia, the artificial intelligence darling, has been the talk of the town, dominating headlines in the past year. Despite a 9.7% dip in the last three months, the stock has soared by nearly 141% year-to-date, showcasing its remarkable resilience. Masters, a portfolio manager at Alphinity Investment Management, is particularly impressed by the "degree of movement" in such a substantial stock, calling it "quite phenomenal."The company's recent earnings report has further bolstered Masters' confidence. Nvidia's adjusted earnings per share came in at 68 cents, surpassing the expected 64 cents, while its revenue of $30.04 billion exceeded the forecasted $28.7 billion. Masters notes that the market is now more aware of the potential of Nvidia's AI accelerators, and the demand for these innovative products remains strong. With the company's cloud demand staying robust and hyperscalers' capital expenditure on the rise, Masters sees a clear path for Nvidia to reach $5 in earnings per share, making the current valuation quite attractive.

Motorola Solutions: A Steady Performer in the Tech Landscape

While Nvidia may grab the headlines, Masters is also bullish on Motorola Solutions, a company that operates in a "very unsexy end of tech." However, this doesn't diminish its appeal, as Masters describes it as a "really nice, strong, compounding business that always just manages to execute well and beat market expectations."Motorola Solutions' strength lies in its Land Mobile Radio devices, which account for 70% of the business. These walkie-talkies are essential for various communications, particularly during emergencies. Masters highlights an "upgrade cycle with a new device that's come out called APX," which is providing a "nice little tailwind to growth." The company's consistent execution and ability to outperform market expectations have made it a compelling investment for Masters.

Trane Technologies: Capitalizing on the Tech Industry's Needs

Beyond the traditional tech plays, Masters has set his sights on Trane Technologies, a company specializing in heating, ventilation, air-conditioning, and refrigeration systems. While not a typical tech stock, Trane Technologies is well-positioned to benefit from the industry's growing demands, particularly in the data center space.Masters describes Trane Technologies as one of the "top four players" in its industry, with a market share of 75%. The company's exposure to the tech sector through data centers, coupled with its "incredibly well-executing business" and strong free cash flow generation, make it an attractive investment. Masters is encouraged by the company's recent performance, with its second-quarter revenue reaching a record $5.3 billion, a 19% year-over-year increase.

Sherwin-Williams: Diversifying Beyond Tech

Stepping outside the tech realm, Masters has also identified Sherwin-Williams, a paint manufacturer, as a promising investment. While not a traditional tech play, Masters sees the company's "very strong ... business (with a) good returns profile" as a compelling opportunity.Masters notes that Sherwin-Williams' business typically grows at a mid-single-digit rate, but with the potential for a resurgence in housing activity, he believes the company could see its growth rate climb towards the high single digits. This diversification beyond the tech sector provides an additional layer of stability and growth potential to Masters' portfolio.Navigating the volatile tech landscape requires a discerning eye and a willingness to explore unconventional opportunities. Trent Masters' four-stock portfolio, encompassing industry leaders like Nvidia, Motorola Solutions, Trane Technologies, and Sherwin-Williams, offers a balanced approach to capitalizing on the tech sector's dynamism while mitigating risk through diversification. As the tech industry continues to evolve, investors would be wise to heed the insights of seasoned professionals like Masters.