2 Tech stocks getting bullish upgrades ahead of Q1

Key Points

• Salesforce has had a great year, with further gains set to come in 2024. 
• It’s the same with JFrog, though it’s had a softer year and is still in recovery mode. 
• Both offer solid upside heading into January, with bullish fundamental trends emerging. 

There’s no doubt about it: equities have had a super strong end to the year, with the Dow Jones index already at fresh all-time highs and the others on its heels. The benchmark S&P 500 index, for example, has returned 16% since the end of October, and the widely used VIX index is close to multi-year lows. 

Much of these gains have come from ever-improving inflation readings from the last couple of months, suggesting the Fed has indeed managed to thread the needle and deliver a soft landing without causing a recession. Such is the risk-on appetite now apparent across equities in general that many are looking at 2024 as being one of the best years for stocks in a long time. 

For investors looking to refresh their portfolios and get them ready ahead of next week’s new year kick-off, it can be difficult to find true opportunities when so many stocks are enjoying sizable rallies. One way to separate the wheat from the chaff is to see what stocks the analysts are upgrading, as these tend to outperform their peers. With that in mind, here are two tech stocks that analysts have just upgraded ahead of 2024. 

Salesforce Inc NYSE: CRM 

With a 110% rally that’s been underway for the past twelve months, Salesforce shares can look forward to even further gains heading into January. So says the team over at Wolfe Research anyway, who recently upgraded their rating on Salesforce shares from Peer Perform to Outperform. 

Analyst Alex Zukin also set a new bullish price target of $315 per share, which points to a further upside of around 20% from where shares were trading this week. His optimism is based on several key factors, including the company’s expanding use and integration of generative artificial intelligence (AI).

He’s also expecting Salesforce to achieve double-digit topline growth over the coming quarters, driven by favorable pricing dynamics and upcoming product cycles, which should fuel decent improvements in the company’s margins. 

This was all echoed by Morgan Stanley, who also made the move last week to upgrade their rating on Salesforce shares. The team there now has the stock rated Overweight and gave it an even higher $350 price target, which points to a further upside of around 30% heading into the new year. In addition to the factors cited by Wolfe’s Zukin, Morgan Stanley’s Keith Weiss feels Salesforce is trading at a discount relative to other software companies, even with this year’s rally to date. 

JFrog Ltd NASDAQ: FROG

While they started the year poorly and had plenty of bumps along the way, shares of JFrog are set to finish up around 60%. The first few months saw them plunge close to all-time lows before they recovered into the summer before dipping again all through October. 

But then the company delivered a surprisingly strong earnings result, which topped both analyst expectations and the company’s own guidance. It’s been only one-way traffic since, and this is set to continue for some time to come. 

Last week saw the team at Morgan Stanley, this time led by Sanjit Singh, upping their rating on JFrog shares. They now have the stock rated as Overweight, with a fresh $42 price target pointing to further upside in the region of 20%. Like Salesforce, the company is also expected to benefit from AI, with more and more companies needing software developer tools and platforms like JFrog’s at an ever-increasing pace. 

Morgan Stanley is looking for the company to hit 20% revenue growth and 40% free cash flow growth in the coming quarters, which should push shares up to their highest levels since 2021.