Kalkine Media lists US technology stocks to watch in 2023

Highlights:

• The ADP stock rose about 11 per cent YoY.
• Revenue of Automatic Data Processing (ADP) surged 10 per cent YoY in Q1 FY23.
• ON Semiconductor Corporation (ON) noted a 26 per cent YoY growth in its Q3 FY22 revenue.

Technology is one of the major sectors in the US, comprising some of the biggest companies by market cap. Nearly all sectors rely on technology services for their operations.

In other words, tech firms are building the future. From manufacturing consumer electronics products to providing digital solutions, technology has its presence in the everyday life of consumers.

However, the year hasn't been great for the technology firms, with inflation, higher interest rates, and other uncertainties weighing over investors' spirits. The market participants have kept their distance from the mega-cap technology and growth stocks, amid growing uncertainties in the market.

Let's look at two technology stocks, which include Automatic Data Processing, Inc. (NASDAQ: ADP), and ON Semiconductor Corporation (NASDAQ: ON), and see how they have performed in recent months:

Automatic Data Processing, Inc. (NASDAQ: ADP)

The technology firm Automatic Data Processing Inc provides services related to the human resources industry, and its dividend yield was 1.6 per cent. The stock of the firm, which offers HR management software and solutions, surged over five per cent YTD and around 11 per cent YoY.

The Nasdaq-listed ADP stock soared close to 15 per cent QTD, and it was at its 52-week high of US$ 270.875 on December 2, 2022.

In Q1 FY23, Automatic Data Processing Inc's revenue ticked up 10 per cent YoY to US$ 4.2 billion, and its net earnings rose 11 per cent YoY to US$ 779 million.

ON Semiconductor Corporation (NASDAQ: ON)

The major American semiconductor manufacturing firm, ON Semiconductor Corporation, had a P/E ratio of 18.69. The stock of the American semiconductor supplier rose six per cent YTD and about 12 per cent YoY.

The ON stock jumped over 15 per cent quarter-to-date and was at its 52-week high of US$ 77.2812 on November 14, 2022.

ON Semiconductor Corporation's revenue increased by 26 per cent YoY to US$ 2.19 billion in Q3 FY22. Its attributable net income in the reported quarter was US$ 311.9 million compared to US$ 309.7 million in Q3 FY21.

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Bottom line:

Global digitalization has helped the sector in gaining more exposure. However, the soaring prices, and higher borrowing costs, among other macroeconomic factors have dragged down the technology sector throughout the year.

The S&P 500 information technology sector fell over 24 per cent YTD while adding more than 10 per cent QTD, while the broader index slumped more than 16 per cent YTD.

So, looking at the performance of the segment, investors should consider all the risks before building their investment portfolio.