Best Tech Stocks to Invest in 2023

If you are looking for the best tech stocks, then you are at the right place. Today, we’ll take a look at technology stocks, which have been slow-moving in 2022 but have since come roaring back to life. 

Known for their volatility and high growth potential, tech stocks have consistently been the most popular choice among investors. But you must keep in mind that many tech stocks are known to have sky-high valuations and unproven business models. 

So, the best tech stocks are the ones that have reasonable valuations, generate consistent profits even in a contracting economy, and provide investors with long-term growth. Now, let’s take a look at the 10 of the best tech stocks for you to invest in.

Top 10 Tech Stocks to Invest in 2023

Here are the top tech stocks:

  1. Apple Inc. (AAPL): With a market capitalization of $2.80 trillion, Apple is the largest technology stock. The company produces iPhone, iPad, Apple Watch, Mac computers, and other personal computing devices. Meanwhile, its services segment includes its App Store, Apple Music, iCloud, and licensing businesses. Apple’s massive, loyal customer base makes it a valuable long-term investment. Despite being up 34.68% YTD to trade at $175.46, the value is warranted given the company’s impressive free cash flow generation and capital return program. 
  2. Microsoft Corp. (MSFT): The dominant software company known for its Windows PC operating system and office productivity software, Microsoft is a $2.48 trillion company. Besides being the second-largest provider of cloud infrastructure — which represents nearly two-thirds of the company’s total revenue, Microsoft also has a tremendous opportunity for AI-related upside through Copilot and ChatGPT. MSFT shares are currently trading at $330.26, up 37.93% year-to-date. 
  3. Nvidia Corp. (NVDA): The hottest tech stock of this year, Nvidia designs and sells high-end graphics and video processing chips used for desktop and gaming personal computers, workstations, and other advanced computing servers and supercomputers. It is one of the best-performing stocks in the entire market in the past 15 years, and its year-to-date performance is a solid 190%. With its stock trading at $423, this gives the company a market cap of $1.12 trillion.
  4. Taiwan Semiconductor Manufacturing Co. (TSM): With a market cap of $469.16 bln, Taiwan Semiconductor’s shares are currently trading at $92.2, having increased $23.29% in 2023 to date. The world’s biggest manufacturer of semiconductor chips by revenue beat analyst estimates for the third quarter of 2023 and is expecting good days ahead.
  5. Advanced Micro Devices Inc. (AMD): Trading at $102.69, AMD shares recorded a surge of 57.36% YTD, which gives the company a valuation of $172 bln. Advanced Micro Devices is a microprocessor and graphics semiconductor company that has substantial upside potential thanks to the growing AI technology opportunities, Moreover, the company’s rollout of its next-generation processors, as well as its exciting graphics processing unit portfolio, adds to its value.
  6. Cisco Systems, Inc. (CSCO): This is a cloud and cybersecurity hardware and software solutions provider. While Cisco shares have lagged the tech sector this year, the company has beaten analyst EPS estimates in all four of its latest quarters. Trading at $53.31, which is only an increase of 11.42% YTD, the Cisco system is currently valued at $218.03 billion. With 5G core deployments and the Wi-Fi 6 upgrade serving as demand drivers, the long-term prospects for Cisco remain bullish.
  7. Salesforce Inc. (CRM): The world’s largest cloud-based customer relationship management software provider, Salesforce, is already trading at an attractive price of $53.09, representing an increase of 54.2% this year. Despite a market cap of $200.44 bln, Salesforce has the potential for ongoing growth and improving profitability thanks to building the most impressive suite of CRM offerings in the market and its strategic acquisitions. Currently, the company accounts for roughly 30% share of the CRM market.
  8. Broadcom Inc. (AVGO): A diversified global analog semiconductor supplier, Broadcom’s chips are used in modems, smartphones, and other devices. The company stands to benefit from the shift to 5G as well as the growing demand for AI products. Moreover, the extension of the chip supply deal with Apple significantly improves its financial visibility, given that Apple represents 20% of Broadcom’s total sales. With its shares up 54.11% YTD to trade at $867.69, this gives the company a valuation of $372.52 billion. 
  9. Adobe Inc. (ADBE): The company specializes in producing creative content software and applications for marketing and e-commerce. With its generative AI model Firefly, it stands to benefit significantly from AI monetization opportunities in the coming years. Currently valued at $250.71 billion, Adobe’s shares are trading at $546.8, reflecting a 60.58% increase this year.
  10. Meta Platforms, Inc. (META): Previously known as Facebook, Meta is a social media and communications company. The company is expected to significantly benefit from artificial intelligence when it comes to providing users with advertisements and content recommendations based on their preferences. It has even announced a new AI model that enables users who speak different languages to communicate with each other. Reflecting these advancements, META shares are trading at $310.5, marking a significant surge of 156.7% YTD, with a market cap of $826.37 bln.

Top Tech Stocks Worth Investing Today 

When choosing the top tech companies to buy, you’ll have to consider factors like current and potential stock price, market cap, and financial health. You’ll also need to take a look at the respective technology company’s fundamentals – such as revenue, income, and operating expenses.

Below, we take a closer, in-depth look at the top tech stocks to buy today.

1. Apple (AAPL) – Overall Best Tech Stock Trading, Up 36.17% YTD

One of the “Magnificent Seven” technology titans, Apple’s shares have fallen 12.78% from their record high of $198.23 in July, when it became the first ever to have a closing market cap of over $3 trillion. Despite this, Apple’s dividend yield is 0.56%, so for every $100 invested in the company’s stock, you would receive $0.56 in dividends per year. Meanwhile, its payout ratio is 15.8% which means that this much of Apple’s earnings are paid out as dividends.  

Apple Price Chart

But while the company’s internal financial dynamics have been making headlines, external market forces are also at play.

The latest losses come as investors worry about a slower-than-expected recovery in smartphone demand. According to Counterpoint Research, “the global smartphone market contracted by 8% to its lowest third-quarter level in a decade” because of “subdued demand for major brands” such as Apple. 

This trend is further exacerbated for the California-based company due to concerns around sales growth in its largest geographical segment, the United States, which is likely to slow again in the fourth quarter. The growing U.S.-China tensions are also a big risk for Apple. But this just shows that, much like any other company, it is also vulnerable to global economic headwinds. 

For Apple, its brand value, innovation, research focus, and top-quality customer experience work superbly in its favor. Not to mention, Apple continues to monetize its active base of 2 billion devices by selling subscriptions, streaming TV, warranties, advertising, payment services, and other products. 

Apple has increased the prices of several of its subscription offerings — Apple TV+ will now cost $9.99, Apple News+ $12.99, and Apple Arcade $6.99 in the US and select international markets. All these products are part of Apple’s services business, which generated $21.21 billion in revenue during the fiscal third quarter. Being a major revenue generator for Apple, it shows promise for the company’s stock.

Just last month, Apple launched its new iPhone 15 but without raising prices. The silver lining for Apple could be that India — the world’s most populous country with a growing and aspirational middle class — is becoming a top-five market for iPhones. The company is further focused on delivering its augmented reality headsets and further diversifying into multiple other industries, including financial services and healthcare. 

2. Microsoft (MSFT) – Cloud-AI Tech Giant, Up 157.25% YTD

In Oct. 2021, Microsoft briefly became the world’s largest company but has since been in 2nd place. While down 9.92% from its all-time high (ATH) of $366.46, Microsoft stock is holding firm amidst the ongoing market volatility after reporting total revenue of more than $56 billion last quarter. The company’s dividend payout ratio is 0.31, and the P/E (TTM) ratio is 33.76.

Microsoft Price Chart

Currently, Investors are evaluating the possible implications of its $1 billion agreement with the cloud computing behemoth Amazon (AMZN). Amazon is reportedly set to deploy Microsoft 365, a set of cloud-focused office and productivity tools, among its workforce that will see the e-commerce giant spend $1 billion over five years to Microsoft for workforce licenses. The company’s ROE (TTM) has been about 39%.

Building on its cloud prowess, Microsoft categorizes its operations into three main divisions: productivity and business processes, personal computing, and intelligent cloud. Intelligent Cloud is the largest and the fastest growing of them all, with Azure being the star of this show. CEO Satya Nadella stated that Azure has, for the first time, contributed over half of the revenue for the intelligent cloud segment, with a growth rate of 27%. The company’s AI business could also be the next big growth area. However, the field is getting increasingly crowded.

3. Nvidia (NVDA) – The Top Beneficiary of AI Mania, Up 196% YTD

The best-performing stock of this year, Nvidia, has shown exceptional growth driven by generative AI demand. The darling of the chip industry, Nvidia, reported its earnings for the second quarter of fiscal year 2024. Its revenue grew by 101% annually, and its net income by 422% annually. The company’s ROE (TTM) is also fairly good at 40.21%. 

NVIDIA price chart

The 30-year-old company is heavily involved in the AI space, and the surge of excitement over the potential of AI over the past few months has been fueling investor enthusiasm that pushed its stock price by 245% over the past year.

Recently, shares of the company experienced pullback due to the U.S. Department of Commerce imposing export restrictions on the sales of its data center chips to China. The restrictions will be imposed on the sales of Nvidia’s AI chips, the H800 and the A800, to Chinese customers in the next few weeks after the sales of the H100 processor were banned to China last year.

However, it is worth noting that Nvidia reportedly gets 20% to 25% of its data center revenue from China. Those losses can be mitigated by the massive demand for Nvidia’s AI chips globally. Meanwhile, the size of the AI hardware market in China was reportedly $8 billion last year, according to IDC, which could jump to $15 billion in 2026, while the global spending on AI systems could surge to $300 billion by 2026. 

So, Nvidia has a massive end-market opportunity it can tap into even without China. The company is also expanding its partnership with Apple supplier Foxconn to develop data centers to harness AI to power a wide range of applications, including EV platforms.

4. Taiwan Semiconductor Manufacturing (TSM) – Leading Chip Manufacturer, Up 20.97% YTD

The leading global contract chip manufacturer surpassed expectations for Q3 ending Sept. 2023, earning $1.29 per U.S. share on sales of $17.28 billion. The company has a P/E (TTM) ratio of 17.13. However, TSMC earnings fell 24% year-over-year while sales declined by 10% for the third straight quarter as its clients navigate a declining chip demand. TSMC’s customers include Apple (AAPL), Nvidia (NVDA), AMD (AMD), Qualcomm (QCOM), and more. The company’s ROE, trailing twelve months, has been 29.4%.

Taiwan Semiconductor Manufacturing Price Chart

Despite a positive Q3, TSMC is still seeing the largest profit decline since 2019, with the company expecting weakened demand in China. Moreover, due to the company’s bulk operations being in Taiwan, it further faces heightened geopolitical hazards. According to BlackRock, US-China relations have a “high” risk rating, with Taiwan being the “biggest flashpoint.”

To counter the effects of the escalating risk, TSMC has been building its presence abroad, including Germany, where it agreed to build a $11 billion plant with the government providing as much as $5.3 billion of subsidies for the factory, whose 70% will be owned by TSMC.

The chipmaker has also committed to spend $40 billion to build two facilities in Arizona, for which it is seeking up to $15 billion of subsidies from the US. An $8.6 billion plant is also being constructed in Japan with support from the government along with Sony Group Corp. and Denso Corp. 

5. Advanced Micro Devices (AMD) – Leading US-based AI Chip Maker, Up 66% YTD

Shares of microprocessor and graphics semiconductor stock Advanced Micro Devices have rallied a whopping 2,350% over the past decade. On Nov. 29, 2021, AMD hit its ATH at $161.91, following which it experienced a downturn and went on to drop under $56 in Oct. 2022, with its share price still down by over 37%.

Advanced Micro Devices Price Chart

After the launch of the Ryzen line of CPUs in 2017 helped AMD massively in taking a significant chunk out of Intel’s market share, the semiconductor company has now set its sights on the booming AI market. 

Currently, Nvidia is dominating the graphics processing units (GPUs) with a 90% market share, as the chips are crucial to building AI models. But AMD is also ramping up its operations to compete with Nvidia with its next-generation MI300 line of chips, calling the new product its most powerful GPU ever, which will begin shipping in 2024.

In addition to new hardware, AMD also acquired AI software firm Mipsology, which will allow developers to use it alongside its GPUs to create AI models and complete various computing tasks. 

With the AI market projected to expand at a compound annual growth rate of 37% through 2030, according to Grand View Research, AMD sure seems to have a lucrative future ahead. The company, however, doesn’t pay any dividends.

6. Cisco Systems, Inc. (CSCO) – Leading Networking, IoT, & Cybersecurity Solution Provider, Up 10.14% YTD

Cisco is engaged in designing, manufacturing, and selling IP-based products related to the communications and information technology industry. CSCO’s stock price is currently down 16% from its $64.26 peak hit in late Dec. 2021. The CSCO stock pays a 2.9% dividend, and the company’s P/E (TTM) ratio is 17.31.

Cisco Systems Price Chart

For the quarter ending July 29, 2023, Cico reported total revenue of $15.20 billion, increasing 16.9% year-over-year. Its return on equity (TTM) meanwhile has been 30%. The company benefits from growth in bandwidth consumption and data center solutions. 

In Sept. 2023, CSCO announced that it was working with one of Indonesia’s leading fixed broadband internet and cable TV providers, PT Link Net Tbk (Link Net), to deploy their Content Delivery Network solution to more than 3 million homes across the country. 

7. Salesforce Inc. (CRM) – Cloud-based CRM Platform, Up 55.76% YTD

CRM’s stock price hit an all-time high of $309.96 in Nov. 2021 and in Dec. 2022, falling to $129. While the price is down about 34.3% from its peak, CRM’s stock price has recovered more than 57% from last year’s low. The stock has a trailing twelve-month Price-to-earnings (PE) ratio of 128.15. Such an elevated trailing PE ratio suggests that the company’s shares have been trading at a premium to their fair market value.

Salesforce Price Chart

One of the first companies to adopt a software-as-a-service (SaaS) business model, Salesforce sells software products on a subscription plan. Over the years, the company has expanded its ecosystem to cover additional roles like marketing and sales and has made several acquisitions, such as Tableau for analytics, Slack for collaboration, and MuleSoft for automating. 

For the second quarter, Salesforce reported better-than-expected results, with the enterprise cloud computing solution provider’s non-GAAP earnings increasing by 78% to $2.12 per share, driven by higher sales, trimming of the workforce, and a reduction in office spaces. 

The company’s quarterly revenues of $8.60 billion climbed 11% year over year, benefiting from the resilient demand for its cloud and business software offerings as well as the initiative to integrate AI into its offerings like Slack and the launch of a generative AI-enabled Einstein GPT product.

8. Broadcom Inc. (AVGO) – Major US-based Semiconductor Player, Up 55.74% YTD

The stock price of AVGO has been on the rise over the past year and has surged almost 90% during this period. It was only recently that AVGO hit its ATH of $923.24 in August 2023. Currently, the stock price is down 6.53% since then. The company’s trailing twelve-month P/E ratio is 26.34.

Broadcom Price Chart

Founded in 1961 and headquartered in San Jose, CA, the global technology company designs, develops, and supplies semiconductor and infrastructure software solutions. While Broadcom does not produce AI chips like Nvidia, many of its chips can support generative AI. For instance, its Jericho3-AI helps customers complete AI workloads at a faster pace, and Tomahawk 5 can speed up data transfer between AI endpoints.

The company uses debt in its business and, as of July 2023, had US$39.3b of debt, about the same as the year before. At the same time, it had $12.1b in cash, and so its net debt is US$27.2b. The company’s ROE for the trailing twelve months has been pretty good at 64.57%.

The US chipmaker began acquiring enterprise software and cybersecurity companies in 2018, but its latest acquisition of cloud software company VMware is being held up by China as the US tightened rules to block the country’s access to high-performance semiconductors. China’s State Administration of Market Regulation has not signed off on the blockbuster deal announced last year. Prior to this, in 2018, Broadcom’s $142bn bid for chipmaker Qualcomm was also blocked due to national security concerns. 

9. Adobe Inc. (ADBE) – Cloud Service Provider Leveraging AI, Up 65.56% YTD

ADBE’s stock price is up 43.24% over the past six months but down about 20.5% from its $699.30 peak in Nov. 2021. Still, the company has a relatively high P/E ratio of 49.26.

Adobe Price Chart

Adobe is a software-as-a-service provider, and most of its sales are subscription-based. The company reported nearly $2 billion in operating cash flow last quarter, and as of early Sept., it was sitting on $6.6 billion of cash, providing plenty of resources to Adobe for any repurchases or directing growth initiatives like AI. The company’s ROE over the past twelve consecutive months has been almost 34%.

The company’s revenue was up 13% last quarter, implying solid demand for cloud services. If we take a look at customer engagement, Adobe’s recent beta releases of Photoshop and Illustrator recorded more than 3 million downloads and over 2 billion images were created within the first six months of its AI product Firefly’s release. 

In recent times, Adobe has announced several AI features and updates across its Creative Cloud applications, including Illustrator, Photoshop, Premiere Pro, Lightroom, After Effects, and Adobe Stock.

10. Meta Platforms, Inc. (META) – Tech Giant focused on Virtual Reality, Up 156.82% YTD

The tech giant Meta dominates the social media landscape with its app family — Facebook, Instagram, and WhatsApp — collectively having 3.88 billion monthly active users. The company makes most of its revenue from selling ads to brands, and according to Statista’s Market Insights, ad spending on social media is expected to grow from $146 billion to $262 billion by 2028.

Meta Price Chart

The company has been busy rolling out AI-powered tools to increase engagement on its apps and for advertisers to market better. This comes after Meta made a costly bet on the metaverse, which saw the firm pouring billions of dollars into the technology in 2021, as well as changing its name to reflect the change. However, it came at the wrong time, making it one of the worst-performing stocks in 2022. But, the price of META shares has rebounded an impressive 246% from its Nov. 2022 low of $88.9 and is only 19.4% off its $382 high from about a year prior to that. 

But while the company’s metaverse ambitions have cost a lot of money, Meta is now positioning itself to be a leader in the age of AI. In Sept. 2023, Meta also introduced a new generation of Ray-Ban Meta smart glasses that allow users to livestream from the glasses to Facebook or Instagram and engage with Meta AI.

META shares are currently trading at a forward P/E ratio of 37.39. Meanwhile, the company’s total revenue generated over the past twelve consecutive months has been $126.95 bln.

11. Intel (INTC) – Microprocessor & Data Center Solutions Provider, Up 41.77% YTD

With a market cap of $153.11 bln, INTC shares are currently trading at $34.92, up 33.8% YTD but down 48.4% from its ATH of $69.29, which was hit in April 2021. The company has a dividend yield of 2.75% and a P/E ratio of 12.69%.

Intel Price Chart

It’s been a good year for Intel investors, but much like the shares of chip-related stocks dropped recently, INTC also got hit by the clamp down on AI chip exports by the US, cutting into Intel’s ability to sell existing or new products in China. The company’s total revenue generated over the past twelve consecutive months has been $54.044 bln while earnings before interest, taxes, depreciation, and amortization (EBITDA) during the same period has been $9.525 bln.

Intel Corp. delivers computer, data storage, and communications platforms. Most recently, the company announced a new initiative, the AI PC Acceleration Program, to help developers create new AI-powered features that take advantage of Intel’s upcoming Core Ultra mobile chips. So far, the program includes over 100 software vendors and more than 300 AI-powered features, with participants including Adobe, BlackMagic, Audacity, Webex, and Zoom. 

12. Lockheed Martin Corporation (LMT) – The Largest Defense Company in the World, Down 6.25% YTD

With LMT stock prices trading at $445.9, the company has a valuation of $112 bln. The stock price is down 8.44% YTD and 12.2% from its $507.9 peak. Lockheed Martin is currently offering a 3% dividend yield, and its P/E (TTM) ratio is 16.38%. The company has been raising its dividend for 22 consecutive years, making it an appealing income stock.

Lockheed Martin Corporation Price Chart

Headquartered in Maryland, Lockheed Martin Corporation is a global security and aerospace company that bought back $1.8 worth of stock in the third quarter and increased its share repurchase authorization by $6 billion. The company had a solid quarter amidst rising global tensions and intensifying war between Israel and Hamas.

The Defense giant reported net sales of $16.9 billion in the third quarter of 2023, with net earnings coming in at $1.7 billion, or $6.73 per share. Cash from operations was $2.9 billion during this period, while free cash flow was $2.5 billion, with “nearly 100% returned to shareholders through dividends and share repurchases.” The quarterly dividend was increased to $3.15 per share.

The largest defense company in the world generates approximately 60% of its revenues from the U.S. Department of Defense, on top of 10% from other U.S. government agencies. Lockheed’s aeronautics segment generates about 40% of total sales and is known for producing military aircraft like the F-35, F-22, F-16, and C-130.

13. Qualcomm Incorporated (QCOM) – The Wireless Technology Provider, Up 7.05% YTD

QCOM shares are only up by 0.15% YTD as they trade at $110.01 per share, giving the company a valuation of $122.77 bln. Moreover, the price is also down by 43.15% from its ATH of $ 193.50. QCOM has a P/E (TTM) ratio of 14.29, while its three-year median payout ratio of 32% is neither too high nor too low. 

Qualcomm Price Chart

Over the nine-month period ending in June 2023, QCOM registered $1.38 billion from its investment-related cash inflows, with a total of $6.09 billion in cash and equivalents on hand.

The rapid stride of digital transformation and hybrid work culture makes it wise to watch out for resilient technology stocks, and Qualcomm is a company that develops fundamental wireless technologies on a global scale. In Sept. 2023, QCOM collaborated with Charter Communications to launch the next-generation Advanced Wi-Fi router that will provide Spectrum Internet users with Wi-Fi 7 and 10 Gbps capabilities. This could help Qualcomm expand its reach into untapped markets.

In addition, QCOM partnered with Apple to supply Snapdragon® 5G Modem-RF Systems for smartphone releases over the next three years, further expanding Qualcomm’s market presence. Qualcomm and Google have also announced their plan to transition to the open-source RISC-V architecture for their forthcoming wearable devices.

The company’s total revenue generated over the past twelve consecutive months has been $38.58 bln, while return on equity (ROE), which measures the company’s profitability in relation to its shareholders’ equity, during the same period has been 47.02%.

14. Sony Corporation (SONY) – Leading the Virtual Production, Up 13.24% YTD

SONY is a company with a market capitalization of $105.73 billion, with its shares trading at $83.19, showing a YTD performance of 9.36%. The Japanese multinational conglomerate’s stock price surged to $128.5 in Jan. 2022. The company’s payout ratio of 0.16% is below the market average, while P/E (TTM) is 15.97.

Sony Price Chart

The company, recognized for its cutting-edge electronics, music, and film ventures, recently unveiled a new PlayStation 5 (PS5) variant featuring a 1TB SSD and a connectable ultra-HD Blu-ray drive. The product is much slimmer than earlier PlayStation models, with about 30% less volume and 24% lighter. 

The launch of the new PS5 in Nov. will come ahead of the holiday season and, as such, is expected to boost the company’s revenues. Sony’s gaming segment is the largest contributor to its top line, and the company forecasts the market for add-on style games to become a $19 billion opportunity by 2026. The company’s total revenue generated over the past twelve consecutive months has been $81.166 bln, while EBITDA during the same period has been $14.25 bln.

In recent decades, Sony has been focusing on games, movies, and music and is an investor in Epic Games, whose Unreal Engine is used to generate digital environments. The company is particularly increasing its focus on the virtual production business, which has grown by around 35% annually, faster than the overall market.

15. Oracle Corp. (ORCL) – Tech Software & Hardware Provider, Up 30.35% YTD

The Oracle stock is up 24.38% YTD as it trades at $101.85. However, over the past three months, it has lost 13.4% of its value, and ORCL prices are down from its $126.25 peak from just last month. The company, with a market cap of $296.54 bln, has a dividend payout ratio of 0.43 and a P/E (TTM) of 30.28.

Oracle Price Chart

The global technology company that provides cloud services, software, and hardware products to a range of businesses has been performing well this year thanks to Oracle’s generative AI services for business. Oracle-owned NetSuite is also adding generative AI capabilities to its finance software. It is using its parent company’s cloud-based systems to develop the new “Text Enhance” feature that automates the mundane day-to-day tasks of a finance department.

This month, Oracle hosted a forum to provide product updates to customers of the Oracle Cloud Infrastructure (OCI), which is its generative AI offering for businesses and is key to the company’s plan to become a bigger player in the cloud.

Meanwhile, in its first-quarter earnings for the fiscal year 2024, Oracle reported a total revenue of $12.5 billion, up 9% from last year, and a net income of $2.4 billion, up 56% year-on-year.

This growth was driven by the momentum in the company’s total cloud sales, which grew 30% YoY. The company also said that it has been betting heavily on high demand from enterprises, driven by generative AI-related workloads, to boost revenue in upcoming quarters.

Understanding Tech Stocks

Today, technology is impacting virtually every different part of the economy in all walks of life. After all, speed, efficiency, and scale generally don’t happen without technology.

When it comes to tech stocks, they are basically any stocks involved in the technology sector. They are often a leading indicator for not just the stock market but also the economy. 

The tech sector involves those companies that are engaged in the design, development, and support of computer operating systems and applications. It further includes companies that provide computer technology consulting services as well as those engaged in the manufacturing of computer equipment, data storage products, networking products, semiconductors, and components.

In the tech stocks sector, the acronym ‘FAANG’ has particularly extreme popularity. It is a group of stocks containing five prominent U.S. companies — Meta Platforms (formerly known as Facebook), Amazon, Apple, Netflix and Alphabet (formerly known as Google). Over time, it has expanded to cover tech giant Microsoft while Netflix has been failing out of favor with investors.

15 Tech Trends infographic

Investors have long considered the tech sector to be one of the more exciting segments in the stock market. This makes sense, given that innovations in the tech field often have a visible impact on society, capturing the attention of investors.

Technology, however, by nature evolves, which means new companies rise to the top while others fade away. For instance, once ruling the markets, Kodak saw its reign end with the onset of digital cameras and mobile phones. Now, much of the opportunity appears to be tied to artificial intelligence, machine-learning commerce, cloud computing, data analytics, blockchain, and data security services.

In recent months, significant attention has been given to advancements in generative AI systems, which are designed to develop original content by applying information the system “learns” from an existing database. This, in turn, has the potential to lead to much more innovation and greater efficiency.

So, as technology advancements continue, so will the new investment opportunities. However, at the same time, investors must recognize that this segment of the market is subject to challenges. For instance, the “dot-com” bubble in the early 2000s saw some tech startups achieve tremendous success while many firms failed. 

That being said, technology has a clear major role in the future. This means tech stocks represent an inescapably huge investment opportunity.

The Rationale Behind Investing in Tech Stocks 

Tech stocks first became popular in the late 1990s when investments in Internet-based companies resulted in a rapid rise in U.S. technology stock equity valuations. In recent years, their popularity has only grown more. And that’s for a good reason. 

So, let’s take a look at some of the most crucial reasons for investing in tech stocks:


One of the most important reasons for investing in stocks is that the sector benefits from favorable demographic trends. There is a wide degree of acceptance of technology among millennials and the generations that follow, who have much of their lives built around technology. 

So, with younger generations increasingly comfortable with and reliant on technology, it makes all the sense to invest in the future. This, in turn, increases the potential long-term upside for investors.

Strong Historical Performance 

The tech sector has outperformed the overall stock market by a wide margin over the past decade. In fact, information technology stocks currently represent the largest sector of the benchmark S&P 500 Index, coming in at over 28% of the index’s value.

If we take a look at the past ten years, the technology sector has delivered double the gains recorded by the S&P 500. During this period, IT stocks had an 18.3% volatility compared to S&P 500’s 14.9%. Not just this, the tech-heavy Nasdaq has actually risen through each of the past four US Federal Reserve tightening cycles.

S&P 500 Index Annual Returns

On top of that, during economic downturns, when the overall stock market tends to be volatile, tech stocks tend to show resilience with a strong bounce back from losses.

Constant Innovation & Advancement 

The technology sector not only counts some of the most innovative companies in the world but is largely at the forefront of technological innovation. The likes of Amazon, Meta, and Tesla are constantly pushing the envelope and introducing new products and services that change the way we live. So, by providing investors opportunities to invest in cutting-edge technology, it allows for winning big from game-changing technologies if a company’s product or service takes off.

It is simply one of the fastest-growing industries in the world. Moreover, global spending on different technologies is expected to continue to rise, reaching tens of trillions of dollars in years to come.

Strong Fundamentals 

The technology stocks not only have tremendous potential for growth but also come with strong financial fundamentals, with many companies posting double-digit sales and earnings growth. For example, NVIDIA reported revenue of $13.51 billion for the second quarter that ended July 30, 2023, which was an increase of 101% from a year ago and 88% from the previous quarter. Meanwhile, the AI chip leader’s GAAP earnings per diluted share for the quarter were $2.48, up 854% from a year ago and up 202% from the previous quarter.

In addition, many tech companies also pay dividends, while some have significant dividend growth potential. For instance, Apple has increased its payouts by over 150% since it first began its dividend program over a decade ago in 2012.


Technology is utilized in many ways and impacts different parts of the economy. Hence, it allows us to construct a portfolio of tech companies that aren’t highly correlated.

For example, Apple (AAPL), Sony (SONY), and GoPro (GPRO) are tech companies that specialize in consumer electronics, while Microsoft (MSFT), Oracle (ORCL), and Adobe (ADBE) specialize in software infrastructure. Then there are semiconductor and semiconductor equipment makers like Nvidia (NVDA), Advanced Micro Devices (AMD), and Taiwan Semiconductor Manufacturing (TSM). In addition to this, tech industries further companies engaged in communication equipment, computer hardware, electronic components, information technology services, scientific and technical instruments, solar technology, and others.

Attractive Long-term Value

As we talked about above, tech stocks are known for their strong historical performance, but despite that, many tech stocks may still trade at relatively attractive valuations. Growth in the sector can actually be highly uneven, with small-cap tech stocks offering explosive growth when they achieve breakout success while larger companies have less room to grow. 

Not only that, many tech companies are still in their early stages of growth, offering lucrative opportunities for long-term capital appreciation. If we take a look at Amazon shares, its price has skyrocketed over 2,000% since the company went public in 1997. Even despite being one of the largest firms, companies like Amazon still maintain the potential for significant growth. 

With the technology sector benefiting from a number of long-term tailwinds, including the proliferation of mobile devices and the rise of artificial intelligence, it offers exciting growth potential and the possibility of generating strong long-term gains. 

As we saw, tech stocks have a strong track record of outperforming the overall S&P 500 index and offer investors several great benefits. However, they also come with a unique set of risks, such as extremely high valuations and dividends being not typical for stocks in this sector. Moreover, the tech industry is notorious for its fluctuations and is typically among the most affected amid periods of market decline.

But this is not all, tech is also notable for its intense competition and rapid obsolescence cycles, which don’t allow winners or losers to maintain their position for long. The constant drive to adapt and innovate means there’s always a danger, but at the same time, it makes the sector a lucrative option for investors.

So, it is crucial to take a look at tech stocks from different perspectives to really understand their value and potential. 

Deciding on the Top Tech Stocks for Investment 

While technology stocks are the way to generate prominent returns, not every tech stock is the same. So, how do you decide which stocks to invest in, or better yet, what makes a tech stock the prime choice for investment?


When it comes to the tech sector, it involves a higher concentration of less-established companies compared to other sectors. This means these companies may not have turned a profit yet and may actually be operating on debt, making it difficult to assess the risks. Besides this, competition and economic trends like interest rate hikes can affect a tech stock’s performance much like any other stock.

An investor can take advantage of the volatility to choose the right tech stock by identifying which company stock managed to recover the fastest and best from sudden price fluctuations.


In the tech sector, following the trend tends to pay off as these companies are at the forefront of technology, hence attracting all the attention. That’s why you may want to pay attention to what is hot in the current environment. For instance, currently, artificial intelligence (AI) is a topic that investors can’t seem to get enough of. 

But when investing based on what is popular or which stock is rising faster than others and then the market more broadly, the same behavior tends to push the price of the stock even higher. Also, the market tends to correct such discrepancies, which means significant correction.


Exciting technology inspires great enthusiasm among investors, making the tech sector prone to bubbles and unrealistic valuations, as seen during the dot-com bubble of the late 1990s. So, when looking at the best tech stocks, you have to make sure that their performance actually justifies their sky-high value. When performance and earnings lag behind the valuation, the value of the stock can quickly plummet, leaving investors holding the bag.

One way to assess a company’s value is to look at a fundamental business metric like the price-to-earnings (P/E) ratio, which relates a company’s share price to its earnings per share. Generally, the lower the P/E ratio, the better the value of the stock. While best to avoid tech stocks priced at sky-high P/E ratios, price-to-sales (P/S) ratios, or price-to-free cash flow ratios, remember, when considering stocks based on these factors, it can also lead to misrepresentations of the success of a firm due to one-time benefits like changes in tax law.


If your goal from investment is dividends, then you must know that only a few tech companies offer dividends. So, if dividends are important to you, then tech stocks might not be for you. Having said that, a handful of major industry players, such as Apple (AAPL), offer attractive dividends. Meanwhile, the majority of companies in the sector tend to reinvest their earnings rather than distribute payouts to their shareholders.

For this, you have to look at the dividend payout ratio, which tells how much a company pays out its income in dividends. A payout ratio of greater than one means the company is using savings to maintain its dividend, which is not a healthy situation. 

Network Effect

One factor that can help you decide on the top tech companies, especially in the long term, is the economic moat, which is a single quality or combination of traits that help a company stay ahead of the competition while discouraging new entrants into their respective industries. The network effect is another source of an economic moat to think about, under which the value of a product or service increases when the number of people who use that product or service increases.

Where to Buy Tech Stocks 

eToro is one of the best options available in the market if you are looking to buy the top tech stocks. It is a trading and investing platform that empowers you to grow your wealth as part of a global community. eToro is known for its zero-dollar stock trading commission and support for fractional shares.

eToro tech stocks selection

Founded in 2007 by brothers Ronen Assia and Yoni Assia, eToro allows everyone to trade and invest transparently through its simple web-based platform and well-designed and integrated mobile app. The platform provides a wide selection of stocks, currencies, commodities, crypto assets, ETFs, and indices for you to invest in. 

While you may find the spreads on this market-maker broker slightly higher than the industry average, it is eToro’s social copy trading platform capabilities that make it so popular among retail traders. Using this feature, you can automatically copy the trades of a successful trader on the platform.

etoro copy trading

As for traders who allow other investors to copy their strategy, eToro offers them a program with four levels – ranging from Cadet to Elite – where traders can become eligible for various perks. Benefits available to traders who reach elite status include spread rebates, monthly payments, and even a management fee.

Opening an account on eToro only takes a few minutes — you just need to provide a username, password, and email address. And once you’ve verified, you’re good to go.

As a multi-asset broker, eToro goes above and beyond to make the trading experience smooth for traders. It offers VIP accounts with five tiers of membership that range from Silver to Diamond for traders who maintain balances between $5,000-$250,000 and feature varying benefits depending on the level of membership. These perks include access to Trading Central, discounted withdrawal and deposit fees, and a dedicated account manager to enhance the experience of eToro’s most loyal customers.

While its beginner-friendly presentation of stocks’ basic financial data adds to its appeal, eToro doesn’t offer stock limit orders, margin trading, robo portfolios, or advisory services. Also, options trading is limited to a separate mobile app.

For security, customers are encouraged to set up two-factor authentication (2FA) while assistance is available via help centers, support tickets, and live chat features.


eToro has established itself as a market-leading social trading network that offers a secure, regulated platform for trading stocks, ETFs, and crypto. 

In addition to a user-friendly app, demo account, and advanced charting capabilities, eToro comes with a unique social trading feature that allows traders to copy the trades of experienced investors with strong track records of outperformance or receive exclusive perks for sharing their own trading strategies.

This trading platform exchange is a good fit for investors and traders looking for a full-featured platform to invest in top tech stocks. 

Join eToro’s trading network to tap into top tech stocks and harness the collective wisdom of seasoned traders – start your journey today!



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Gaurav Roy

Gaurav is a seasoned content specialist and researcher with over 5 years of remote work experience, engaging with clients across the US, UK, Australia, Israel, Germany, Netherlands, Canada, India, New Zealand, Singapore, and more. His expertise spans email outreach, in-depth research, and versatile content creation. He boasts over 600 research projects completed with AskWonder and has successfully led a team of research analysts for two years. He has a diverse portfolio, having supported companies like Casino Tops Online, Sweep Stakes Casino, PayGamble, Odds Scanner US, and Sambafoot UK, demonstrating his proficiency in the iGaming sector. He has contributed as a…