The technology sector is made up of companies that operate in the semiconductor, artificial intelligence (AI), software, computer hardware, and other industries related to information technology. This sector includes some of the world’s most well-known and largest companies, such as Microsoft, Google, Amazon, and Nvidia.
Stocks in the tech sector, which are holistically represented by the Invesco S&P 500® Equal Weight Tech ETF (RYT), have gone down with the rest of the market as RYT has provided investors with a return of -18% over the past 12 months.
Here are the top technology stocks with the highest growth, greatest value, strongest momentum, and most searches on Google.
Best Technology Stocks Right Now
Session: Feb 9, 2024 4:00PM EST – Feb 12, 2024 3:59PM EST
What are Tech Stocks?
From 2007 to 2017, the tech industry zoomed from $65.2 billion to $263.6 billion. However, this phenomenal growth in the tech sector doesn’t come without risks. Innovations constantly cause disruptions within the market. For example, in 2007, the introduction of the iPhone created many new businesses and ruined others. It caused the tech industry to evolve into what it is today.
This sector offers more than just sturdy mega-cap stocks and household brands like Amazon. The tech sector niche includes companies of all sizes, including start-ups. You must do your research to successfully invest in tech stocks.
Best Online Brokers for Tech Stock
A good online broker can make investing and trading tech stocks more efficient and can help you be more successful. Here are some great online brokers you should consider.
Features to Look for in Tech Stocks
Here are the top features investors should look for before investing in technology stocks.
- Profitability: Hands down, the best way to determine whether you should buy a particular stock is to get a firm grasp on whether it can turn a profit. Look at its profitability ratios to find out how it stacks up.
- Total addressable market (TAM): The total addressable market (TAM) reveals the maximum amount of money a company can earn in a select market — provided a company has 100% of the market share.
- Growth capacity: When a company is in the process of releasing a new product, a new customer segment or plans to cross-sell an existing product to customers, you want to evaluate the company’s potential growth capacity.
- Revenue: Look at a company’s operating revenue and nonoperating revenue and what tech companies make from their core business (operating revenue) and one-time business activities (nonoperating revenue). You’ll want to carefully consider both before you pull the trigger on a tech stock.
Things to Consider With Technology Stocks
As you look at a tech company, you should take pause when you run across certain issues. These issues might not prevent you from buying, but you need to know how certain tech startups, artificial intelligence outfits, semiconductor companies, etc operate. If you can’t find good information, you may want to move on. Remember, the stock price is just one step in reading what’s going on with Wall Street. The rest is buried in these little details:
When you invest in a company, it should have products that you can see people or businesses using. Sure, a chatbot or new style of wearables is cool, but do they have potential to grab some marketshare?
Where is the money coming from? Big tech companies don’t need endless investment, but a new software company has developers and venture investors to satisfy. If the company isn’t performing well, it could burn through its funding. Would it still be a good investment when it’s behind schedule and over-budget?
The Supply Chain
The supply chain hits everyone from semiconductor companies to cloud computing firms and everyone in between. Venture capital investment can pay for the supplies, but if those supplies never come, what next? The parent company may need to put projects on hold, the company could go under or it could be delisted in a worst-case scenario. So, if cars are running low on semiconductors or parts, your favorite tech ventures could be struggling, too.
Putting Tech Stocks in Perspective
The technology sector can attract you with its stability and growth potential. Investigate tech stocks’ potential to expose you to lucrative returns.
To find other top-performing stocks see below:
Compare online brokers, here are some of Benzinga’s favorites:
Frequently Asked Questions
Tech stocks add more risk to ones portfolio, however, this risk can come along with high returns. Keep in mind tech stocks may be more volatile in a bear market.
No, the tech sector has many segments, and you need to decide which segment is best for your trading strategy.
Many tech stocks could grow so much that you can hold them for many years to come, but that’s not true of every tech stock. Research your tech assets carefully to learn how much they can grow over time.