In 2022, plenty of investors headed for the exits and it's not hard to see why. Inflation surged to 40-year highs, the Fed is raising interest rates in response, Russia and Ukraine are at war, COVID-19 is still causing supply chain disruptions, and oil prices are elevated. The S&P 500 is flirting with bear-market level drops and the Cboe Volatility Index -- Wall Street's fear gauge better known as the VIX -- is up 82% since the start of the year and illustrating investors' distress.
Even tech giants that have shown so much resiliency over the past decade are feeling the pressure. Many investors have lost interest in the sector as a whole as they race to value stocks and safer assets for protection from the turbulent market. Several of the world's most dominant companies are now trading at bargain valuations. That suggests there are bargains to be had.
On that note, here are two top tech stocks that investors should pounce on today.
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1. Alphabet
Alphabet (GOOGL 0.35%) (GOOG 0.37%), the premier search engine operator, has seen its share price fall almost 25% since the start of the year. The company reported a largely in-line first quarter 2022 with total sales climbing 23% year over year to $68 billion, and earnings per share pulled back 6% to $24.62. The solid revenue growth was driven by a strong outing from its core advertising business, which increased 20% to $61.5 billion. Google Cloud continued to make headway as well, soaring 44% to $5.8 billion.
For the full year, analysts are forecasting total revenue to grow 16% year over year to $299.1 billion, and earnings per share to slightly decline to $111.51. I'm particularly impressed with Alphabet's ability to sustain robust top-line growth despite the magnitude of its business. And given its $20.9 billion cash position and free cash flow generation of $69.0 billion in the past 12 months, the company is well equipped to buy back shares and invest in further growth going forward.
As you can see, Alphabet's stock price pullback is disconnected from its financials. The stock is now trading at roughly 20 times earnings, representing a steep discount to its five-year average price-to-earnings multiple of 32. That's a clear buying signal for this technology juggernaut.
2. Microsoft
Similar to Alphabet, shares of tech giant Microsoft (MSFT -1.84%) are down roughly 25% year to date. CEO Satya Nadella's company is one of the most resilient businesses in the world, having beaten both revenue and earnings estimates in each of the past 12 quarters. In its most recent quarter, sales improved 18% year over year to $49.4 billion and non-GAAP (adjusted) diluted earnings per share rose 14% to $2.22. The software giant's business was firing on all cylinders, but its Intelligent Cloud segment wore the crown for best growth, expanding 26% to $19.1 billion.
This year, Wall Street is calling for total revenue and earnings of $199.2 billion and $9.32 per share, translating to 19% and 16% growth year over year, respectively. Again, the company's ability to maintain impressive growth at its colossal size says a lot about management and its core business. And Microsoft's current valuation is just icing on the cake. Today, the company carries a price-to-earnings multiple of 26, well below its five-year mean of 35, a good sign for investors to buy the stock right now.
