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These companies are some of the most important in the tech space and could make great additions to your portfolio if you’re looking to add some tech stocks.
Technology stocks can be a fantastic sector for investors to grow their wealth. But traditionally, they can also be a volatile corner of the market.
That’s because the very nature of technology companies involves trying to disrupt their peers, which creates a lot of competition. The companies that are successful at outpacing their rivals can be fantastic investments. But the ones that don’t keep pace can cause big losses in your portfolio.
That said, selecting the best technology stocks with the potential for long-term growth isn’t impossible. And to help you get started, we’ve compiled a list of some of the best tech stocks to invest in.
You may recognize many of the companies on this list because they have long track records of innovation and continue to expand into new markets. Others are bigger bets on emerging tech trends that have lots of upside potential, but with more risk involved.
In either case, we think you’ll find at least a few stocks on this list that fit your investing strategy. So let’s dive in!
7 Top Tech Stocks
1. Nvidia (NASDAQ: NVDA)
- Nvidia (NASDAQ:NVDA)
- Price: $219.44 (as of close Jan 26, 2022)
- Market Cap: $569.3B
Let’s kick off this list with one of the best tech hardware stocks around. Nvidia’s graphics processing units (GPUs) are second to none in the gaming industry. But over the years, the company has evolved far beyond just rendering graphics for games.
Companies including Alphabet’s Google use Nvidia’s GPUs for artificial intelligence (AI) processing power in their servers. In fact, Nvidia’s chips hold about 80% of the AI processor market right now. And as the AI chip market expands into a $91 billion market by 2025, Nvidia is poised to benefit.
Chips for the gaming market still make up the bulk of Nvidia’s sales, but data center chips (for AI and other uses) are closing in. Investors looking for a hardware tech company that’s hitting home runs in gaming, data centers, AI, and even the crypto space will have a hard time finding a better company than Nvidia.
2. Amazon (NASDAQ: AMZN)
- Amazon (NASDAQ:AMZN)
- Price: $2792.75 (as of close Jan 27, 2022)
- Market Cap: $1.416T
If there were ever a question of whether or not customers need a massive online store that delivers everything from toilet paper to sofas to their front doors, 2020 put it to rest.
With the pandemic surging over the past couple of years, customers flocked to Amazon for many of their household needs. The company’s leading position in the space is incomparable.
Amazon has a whopping 41% of the U.S. e-commerce market right now. Its closest competitor — a small mom-and-pop store called Walmart — holds just 6.6%!
But that’s not Amazon’s only long-term tech advantage. The company also holds the leading position in the public cloud computing space with its Amazon Web Services (AWS) offering. Amazon sells everything from web hosting to AI services to companies and developers through AWS. It has 32% of the cloud infrastructure market — more than the combined market share of both Microsoft and Google.
With cloud computing and e-commerce still fast-growing markets with lots of growth potential, long-term investors would be wise to add this tech giant to their portfolios.
3. Shopify (NYSE: SHOP)
- Shopify (NYSE:SHOP)
- Price: $815.76 (as of close Jan 27, 2022)
- Market Cap: $102.46B
While we’re on the subject of e-commerce, let’s take a look at another fantastic tech stock that’s carving out its niche in this space: Shopify.
Nearly 2 million businesses across 175 companies use the company’s platform for their e-commerce needs. And there’s likely more room for this company to grow.
The U.S. Census Bureau estimates that about 13% of all retail sales in the U.S. occurred online toward the end of 2021, up from 10% at the beginning of 2019. Not only does that show significant e-commerce growth over the past few years, but it also shows that there’s a lot more room for online sales to expand as well.
The pandemic proved that even small businesses need an online store. And Shopify is one of the best ways for them — or any business — to set one up.
4. Microsoft (NASDAQ: MSFT)
- Microsoft (NASDAQ:MSFT)
- Price: $299.84 (as of close Jan 26, 2022)
- Market Cap: $2.224T
Microsoft has successfully transformed itself from a slow-moving tech stalwart to an innovative cloud computing giant.
The company’s Azure cloud computing services compete directly with Amazon. And while the company can’t boast the same market share as its competitor, it’s closing in on it. Microsoft now has 21% of the cloud infrastructure market share, up from about 18% at the end of 2019.
As the global cloud computing market reaches $5.7 billion in 2022, it’s likely Microsoft will continue benefiting from its growth and potentially eating into some of Amazon’s dominance at the same time.
But the cloud isn’t Microsoft’s only tech play. The company is also knee-deep in the video game market and recently expanded its gaming position through the $75 billion acquisition of popular game developer Activision Blizzard.
The purchase now makes Microsoft the third-largest gaming company (by revenue) in the world. More importantly, it gives Microsoft a huge opportunity to tap further into the growing cloud-based video game market. Microsoft’s Game Pass, an online gaming subscription, already has 25 million subscribers. The acquisition of Activision Blizzard could help it build out this space even further.
Pick Like A Pro
Where to invest $500 right now
Lots of new investors take chances on long shots instead of buying shares of great companies. I prefer businesses like Amazon, Netflix, and Apple — they’re all on my best stocks for beginners list.
There’s a company that “called” these businesses long before they hit it big. They first recommended Netflix in 2004 at $1.85 per share, Amazon in 2002 at $15.31 per share, and Apple back in the iPod Shuffle era at $4.97 per share. Take a look where they are now.
That company: The Motley Fool.
For people ready to make investing part of their strategy for financial freedom, take a look at The Motley Fool’s flagship investing service, Stock Advisor. They just announced their top 10 “best buys now” across the entire stock market. Whether you’re starting with $100, $500, or more, you should check out the full details.
5. Block (NYSE: SQ)
- Block, Inc. (NYSE:SQ)
- Price: $105.64 (as of close Jan 27, 2022)
- Market Cap: $49.117B
Block, formerly known as Square, is a bet on the burgeoning financial technology (fintech) market. Block first got its start with its Square-branded payment terminals and has since expanded to an array of fintech apps and services.
While the company still sells Square terminals, one of its largest revenue drivers is its Cash App. The payment app allows people to easily pay each other for everything from the monthly rent check to splitting the bill at dinner. It can even be used to pay for goods in stores.
The Cash App brings in more than 60% of Block’s total sales and nearly half of its gross profit. But it’s nowhere near finished growing yet. The app has 40 million monthly active users and recently started allowing customers aged 13 to 17 to begin using it.
Block is just getting started in the fintech space. The company has also expanded the Cash App so users can buy and sell cryptocurrencies and has two other companies that are working on crypto and blockchain projects.
With the company already a fintech leader and moving into the crypto market, it’s likely that investors will continue hearing a lot about Block in the coming years.
6. Ethereum (CRYPTO: ETH)
Putting together a list of technology stocks that doesn’t include a cryptocurrency didn’t seem right. So while Ethereum isn’t exactly a stock, you can invest in it. And there are a couple of solid reasons why investors would want to.
First, Ethereum is the second most valuable investment in the crypto world. While its value hasn’t reached the level of Bitcoin, Ethereum skyrocketed more than 2,000% between 2019 and 2021.
Of course, there’s no guarantee that it’ll keep climbing. But Ethereum has already established itself as the go-to blockchain for building decentralized finance (DeFi) apps.
Each month, more than 4,000 developers use Etheruem’s blockchain as the foundation for everything from recording smart contracts for financial transactions to selling non-fungible tokens (NFT) like art and music.
With one of the largest (and growing) developer communities and a trusted blockchain already firmly in place, Ethereum could see its value continue to climb in the coming years as part of the vast $2 trillion crypto market.
7. Apple (NASDAQ: AAPL)
- Apple (NASDAQ:AAPL)
- Price: $159.22 (as of close Jan 27, 2022)
- Market Cap: $2.601T
For many years, Apple relied on the iPhone for eye-popping profits. But while its phones still play an important role in the company’s vast ecosystem, there are a lot of other areas investors should be paying attention to.
For example, Apple’s services have become very important to the company. Gross margins for the company’s services segment — which includes everything from Apple Music to App Store sales, Apple TV+, and more — are a generous 70% (compared to a still-impressive 35% for its products.
Apple appears to be just getting started with some of these offerings as well. The company will spend $8 billion on original Apple TV+ programming in 2022 and began offering a bundled version of its apps less than two years ago.
But services aren’t the only thing Apple is betting on for its future. The tech giant has been rumored to be working on a mixed-reality — both augmented reality (AR) and virtual reality (VR) — headset and AR-specific glasses that could debut in the next few years.
Some analysts think that Apple could sell 22 million of the mixed-reality devices by 2030 and that mixed-reality devices could account for one-fifth of the company’s total revenue by 2040.
What’s clear from all of this is that Apple isn’t done innovating. The company’s tech prowess is still intact. Investors are likely to see some exciting new devices from Apple in the next couple of years.
How to Evaluate Tech Stocks
Picking the right tech stock for your portfolio depends on what type of company you’re looking for. Do you want one that is mature and has solid profits? Or are you looking for a fast-growing (but unprofitable) company with skyrocketing revenue?
If you want a mature company, focus your attention on the company’s price-to-earnings (P/E) ratio and compare it with its peers. A lower P/E ratio relative to the competition could indicate that the stock is a better value.
For high-growth companies, make sure that the company’s sales are growing quickly and that it’s moving toward profitability. Many young, fast-growing tech companies aren’t profitable. But you should try to look for ones that are narrowing their losses.
Benefits of Investing in Tech Stocks
There may be no other sector of the market with the same influence over other sectors as technology. Software and hardware are at the core of nearly every innovation these days. They provide us with faster, cheaper, and more efficient ways to create new products and do business.
That’s why tech stocks are so important. While they can sometimes be volatile and unpredictable, the companies in this sector are disrupting industries all of the time. If you have a few tech-stock winners in your portfolio, you’ll benefit from that disruption when it comes along.
If you’re overwhelmed by picking a few tech stocks, you’re in luck. You can always invest in a technology exchange-traded fund (ETF) that gives you exposure to the sector without the same risks. If that sounds more appealing to you, you may want to choose something like the Vanguard Information Technology Index Fund ETF (NYSEARCA: VGT).