Three Tech Plays to Start 2026: Finding Value in Growth Stocks

The Market Setup: Where Tech Stands Today

The S&P 500 delivered nearly 18% returns throughout 2025, powered primarily by the technology sector’s relentless rally around artificial intelligence and cloud infrastructure. That momentum has lifted valuations across the board, making genuine bargains increasingly scarce. Yet selective opportunities remain for investors willing to look beyond the obvious mega-cap plays.

The challenge now is distinguishing between frothy valuations and reasonably priced quality businesses. Here’s a look at three tech-adjacent companies offering meaningful entry points as we head into 2026.

Microsoft: The AI Foundation Play

Microsoft (NASDAQ: MSFT) sits at the intersection of established software dominance and cutting-edge AI infrastructure. While the stock has already climbed 15% in 2025, its valuation tells a different story than pure hype suggests.

The real engine here is the Intelligent Cloud segment, which expanded 28% year-over-year in the company’s fiscal Q1 of 2026. More impressively, Azure revenue surged 40%, creating an annual run rate surpassing $120 billion. This segment’s expansion creates a natural tailwind for total company growth, as AI workloads migrate to cloud platforms.

Microsoft Cloud and the broader software portfolio—Windows, Microsoft 365, Dynamics—provide steady cash generation that funds innovation. Revenue across this base climbed 26% year-over-year, offering resilience beneath the growth story.

At a 26x forward P/E multiple, investors pay a fair price for a company analysts expect to compound earnings at 16-17% annually. For a world-class franchise with dual growth drivers, this represents genuine value rather than hype-driven excess.

Motorola Solutions: Value from Strategic Integration

Motorola Solutions (NYSE: MSI) operates in a completely different arena than the smartphones you might associate with the Motorola name. This company builds critical infrastructure: communications equipment, video security, body cameras, police drones, and command center software serving law enforcement, government, and enterprise clients.

The acquisition of Silvus Technologies for $4.4 billion earlier this year provides significant upside potential. Silvus specializes in proprietary communications for environments where standard networks fail—exactly the challenging scenarios Motorola’s customer base faces daily. Integration of this capability into the existing product suite creates cross-sell opportunities and stronger customer stickiness.

The market has priced this acquisition conservatively: the stock trades at 25x full-year earnings, a substantial discount to its 10-year average P/E of 32. Analysts project 9% annual earnings growth over the next three to five years—steady, predictable, and currently undervalued relative to historical precedent.

Automatic Data Processing: Dividend Aristocrat at a Discount

Automatic Data Processing (NASDAQ: ADP) has quietly built an essential business over decades. Nearly every company globally relies on ADP’s platforms for payroll processing, compliance management, employee training, and HR administration. Outsourcing this complexity to a specialized provider beats building internal infrastructure for most organizations.

The business model benefits from powerful secular tailwinds: workforce expansion, business creation, and global economic growth all drive more demand for ADP’s services. This structural advantage has enabled consistent performance across multiple economic cycles.

The dividend track record underscores this reliability: 50 consecutive years of increases, with an average annual raise of 11.5% over the past decade. Analysts expect 9% annual earnings growth going forward, providing ample room for dividend increases to continue accelerating.

Currently trading near its 52-week low at 23x forward earnings, ADP offers compelling entry timing. This is a proven compounder available at a rare discount, combining growth potential with meaningful income generation.

The Strategic Angle: Why These Three?

These three stocks operate across different ecosystems yet share a common thread: each trades at a reasonable valuation despite offering genuine growth drivers. Microsoft captures the AI infrastructure thesis, Motorola benefits from tactical integration upside, and ADP provides counter-cyclical stability with dividend acceleration.

Rather than chasing momentum, this portfolio approach to identifying top tech stocks blends growth, value, and income—positioning investors well for 2026’s opportunities.