These tech stocks offer safe harbors if the sector sell-off continues

Some large-cap tech stocks are likely to fare better than others if investors continue to move into smaller companies. Artificial intelligence-adjacent mega-cap tech titans have been the driving force behind the current bull market rally, which began last October. Nvidia — with a market value above $2.9 trillion — has soared 136% this year alone, after climbing 239% in 2023. But a combination of disappointing tech earnings and impending interest rate cuts has weakened some of the bullish sentiment toward mega-caps. Instead, investors have recently been rotating into smaller-cap names, sending the Russell 2000 index 10.9% higher in July. By comparison, the S & P 500 notched a 1.1% gain, while the tech-heavy Nasdaq Composite eased 0.8%. In a search for safe-haven tech stocks that could weather this summer storm, CNBC Pro screened the S & P 500 for companies that met the following criteria: Market beta under the S & P 500’s 1.0 Earnings per share growth of at least 10% in the past three years Free operating cash flow growth of at least 10% in the past three years Here are the stocks that made the cut: One company that emerged was credit card services provider Visa . Analysts currently see upside of approximately 16% for the stock. Shares of Visa are up just 2% on the year after declining 4% last Wednesday following a fiscal third-quarter revenue miss. The company reported sales of $8.9 billion, while analysts polled by LSEG had forecast $8.92 billion. Analysts see potential price upside of 10% in AI-adjacent stock ServiceNow . The cloud platform provider has rallied 15% in 2024. Last Thursday, ServiceNow surged more than 13% after posting earnings that exceeded analyst expectations . The company also raised its subscription revenue forecast for the full year. Following ServiceNow’s earnings beat, Mizuho raised its price target for the company to $850 from $820. “NOW defied the skeptics by reporting a stronger than expected 2Q,” wrote analyst Gregg Moskowitz. “The strength was headlined by momentum in the right places.” The analyst added that ServiceNow “remains very well positioned for high growth over the next few years” due to demand for workflow automation and potential cross-selling opportunities. Cybersecurity stock Fortinet is unchanged for the year, but could rally 24% based on analysts’ consensus price target. Earlier this month, TD Cowen upgraded Fortinet to buy from its previous hold rating. Analyst Shaul Eyal cited a recovering business outlook and generative AI ramp up as potential catalysts. “As enterprises prepare for the adoption of Gen-AI driven networks, we see hybrid security players such as FTNT (on-premise & cloud) benefiting near- and mid-term from an overall hardware refresh cycle,” he wrote. Other companies that turned up on the screen included electronics equipment manufacturer Keysight Technologies and management software provider Automatic Data Processing . — CNBC’s Fred Imbert contributed to this report.