While Microsoft
MSFT,
-2.36%
has been a bellwether for growth over the past few years, it, along with its FAANG compatriots, including Amazon.com
AMZN,
-8.43%,
Apple
AAPL,
+2.44%
and Alphabet
GOOGL,
-2.75%,
are under close watch. Recession headlines and the hawkish U.S. Federal Reserve are headwinds for the technology sector and delay its recovery. A wave of layoffs has also raised questions about tech’s near-term strength. No surprise that the markets are trying to determine whether a bottom is in, and a return to growth names is a real option.

This could be an opportunistic moment for tech companies to get ready for the growth cycle. Tech will be back, and we’re seeing positive signs of that now. While devices, peripherals, and semiconductors look to have a longer road back, some big players have stood out during this earnings season so far — with mixed market reactions. Here are some to watch: 

ServiceNow:
NOW,
-3.88%
A beat and raise for the fourth quarter with strength across the board. I’ve called this one for some time, and nothing has changed. ServiceNow CEO Bill McDermott’s confidence in the company mid- to long-term continues to be evident in both results and guidance.

I spoke with McDermott on the company’s earnings day. He is convinced that even as the U.S. economy slows, companies won’t stop investing in technology. They will seek to do more with technology under hiring and revenue growth constraints. Automation, analytics, AI and the cloud will be paramount to efficient execution, and ServiceNow effectively ticks all those boxes. 

IBM:
IBM,
+0.40%
IBM was another name I had expressed bullishness about over the past few quarters due to its strong enterprise ties and critical capabilities to enable businesses to do more with their current technology. CEO Arvind Krishna has been on the record recently, claiming that technology will grow 2%-4% faster than GDP in the coming periods and that IT will be the most protected line item in any enterprise budget.

This sentiment is readily justifiable because in a current period of cost-cutting measures not only in tech but in most industries, technology’s deflationary properties will drive material costs out of other parts of businesses, leaving technology to pick up the slack. For example, the trend toward enterprise investment in Hybrid Cloud and AI, IBM’s key focal areas, is gaining momentum. In a conversation with CFO Jim Kavanagh, he shared that in the fourth quarter of 2022, IBM saw margins improve, foreign-exchange challenges soften, albeit slightly, and most importantly, revenue accelerate.

Intel:
INTC,
+0.43%
There’s been no shortage of skeptics around Intel’s prospects, and the market reiterated its sentiment in response to Intel’s fourth-quarter slate. A brief conversation I had this week with CEO Pat Gelsinger gave both the good and the bad for the company, pointing to the back half of 2023 when a positive turn is most likely.

Most investors knew that 2022’s fourth quarter was tough for Intel. The ramp of its newest data center server chips (Sapphire Rapids) was a hopeful footnote, but as the numbers showed, it would take more time to impact Intel’s prospects fully. The company is in a multiyear turnaround to regain technology leadership and market share it has ceded to competitors including AMD
AMD,
-2.51%
and Arm .

Still, Intel is said to be on time with its commitment to delivering its next four processes in three years, a huge commitment that Gelsinger has led since taking the helm as CEO. Furthermore, the company has seen good momentum in its Foundry business, which was a bright spot in an overall rough set of earnings results. With policymakers pushing for more manufacturing of semiconductors in the U.S., Intel likely will be a huge beneficiary. 

Investors’ recent embrace of tech stocks still doesn’t seem truly reflective of tech’s mid- to long-term direction — which I firmly believe will be up. The depressed prices of many tech names from their 2021 highs is setting stock buyers up for solid returns. Yet patience is key. Tech’s usefulness and importance is clear, but investors’ return to these stocks will take time and a show of proof that the end of a tumultuous 18 months for both tech- and growth stocks is coming to an end.

Daniel Newman is the principal analyst at Futurum Research, which provides or has provided research, analysis, advising or consulting to ServiceNow, IBM, Nvidia, Meta Platforms, Oracle, MongoDB, Cisco, Juniper and other technology companies. Neither he nor his firm holds any equity positions in the companies mentioned. Follow him on Twitter @danielnewmanUV.

More: Tech stocks just had their best January in decades — here’s why that may not be a good sign