Why You Should Invest in the Tech Market Now More Than Ever

During the first half of 2020, the five most valuable companies that traded on US exchanges all belonged to the tech sector. Despite the current global situation, their stocks dramatically outperformed the broader market. The impressive returns of tech companies present an unmissable opportunity for both new and seasoned investors.

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The 2020 Tech Market

The three best-valued stocks of 2020 were digital printing technology giant Xerox Holdings Corp. (3.2 12/month trailing P/E ratio), cyber safety business NortonLifeLock Inc. (3.4), and data-storage company Seagate Technology PLC (7.4).

The fastest-growing were AMD (an impressive 1,300% EPS growth), NortonLifeLock Inc. (620%) and Gartner Inc. (260.9%). In terms of momentum, measured as total return over the last 12 months, the top three performers were NVIDIA Corp. (144.4%), Apple Inc. (90%), and AMD (88.1%).

One of the reasons this sector has done so well is because the technologies it develops have had, and continue to have, a synergistic effect. Each advance makes it possible to innovate in even more products due to increased revenues, combined talent and technology, and cost reduction.

For example, the Internet of things (IoT) and cloud computing have become a permanent part of the modern technology landscape, while blockchain continues to grow as an enabling technology. Also, even though it’s still a few years away, quantum computing has already allowed companies to start planning for a type of exponential development that was previously unthinkable.

Top Tech Sectors

This all makes for a perfect environment to invest in the tech sector.

Of course, investment never comes without some degree of risk. The dot-com crash shows us how companies can become irrelevant overnight if someone else makes a breakthrough. One of the tech sector’s caveats is that they must consistently invest large sums of money to keep up with the fast pace. However, tech stocks offer enough of a variety of opportunities that can suit both fresh and experienced investors.

Advice for New Investors

In both cases, it’s recommended that you open a demo account first. Demo accounts let you simulate real trading using pretend money, and they can help you familiarize yourself with the way investing works without assuming any of the risks. Some popular apps are FXTM, AVA, Plus500, and eToro.

Investment comes in many shapes and forms, and you can find the one that best suits your personality and goals, depending on whether you prefer more risk or smaller yet steadier gains. Below you will find some of the most interesting tech companies of 2020, chosen based on growth, stability, and momentum. There are many others, but if you’re new to investing, these names might sound more familiar. The first thing you can do is take a look at them and familiarize yourself with this sector’s possibilities.

Once you’ve decided on an approach, picked a few possible candidates, and tested the waters using a demo, we advise that you develop the following habit: Every month, put money away and automate your investment plan. Then, sign up for a robo-advisor such as M1 Finance, Wealthfront, or Betterment, or install a stock trading app like Public or Robinhood and turn 2020 around!

Top Tech Companies of 2020

Microsoft Corp

Microsoft’s cloud computing division Azure soared an impressive 59% last quarter, while Microsoft Teams is being adopted globally with much success. Microsoft is not only attractive because of its steady growth. It’s also just won a lucrative contract with the U.S. Department of Defense worth up to $10 billion over the next ten years.

Tesla

Tesla is at the vanguard of an inevitable global shift toward sustainable energy and is already producing photovoltaic modules and solar cells in “gigafactories” built in the US and abroad. Their philosophy of constantly innovating places them high in our list of outstanding tech stocks.

Adobe

The company’s stock has risen considerably due to work-from-home during COVID-19 times. Adobe is on both the IBD 50 list of top growth stocks and the IBD Long Term Leaders list, which spotlights companies with superior performance and stable earnings growth.

Dell

The commercial PC business grew 60% last year, and the success of VMWare shot its shares from $25 in March to $50 in July 2020. Dell is that legacy hardware business, so its decision to go with VMWare is definitely a consistent one.

Facebook

Facebook’s biggest asset is its enormous ability to gather data. They know everything about their users and use that knowledge to create apps, giving businesses the capability to generate quality leads and close sales. Although Facebook faces some challenges in terms of government regulation, it still has considerable untapped growth capabilities.

IAC/Interactive Corp.

Its stakes include online dating giant Match Group (Tinder, Match, OkCupid, PlentyOfFish, and others), Expedia, Live Nation, and Lending Tree, as well as Vimeo and Dotdash. In an era of social distancing, the market for IAC’s products is likely to keep growing.

Disney

One of its newest additions is the streaming service, which capitalized on an enormous amount of exclusive content. Thanks to all these divisions, Disney continues to grow steadily and makes for a great investment opportunity.

Alibaba Group Holding

Alibaba has also expanded into food delivery, merging its service Ele.me with its lifestyle app Koubei in 2018. The group has been trading tightly near highs since July.

Alphabet

While they are less known, Alphabet also has a few hardware projects and investments in firms like Waymo, makers of autonomous vehicles. Mostly focused on growth, Alphabet has been reliably gaining share price since 2015 and seems to continue that trend in the foreseeable future.

Amazon

Amazon also holds a diversity of businesses such as Whole Foods, Kindle e-readers, and Echo smart speakers, not to mention Amazon Prime, which offers video, music, and audiobooks. If you had bought $1,000 Amazon stock in 2010, your investment would be worth $14,400 today.

Apple

This article was originally published in Startup Savant on August 28, 2020. Link: https://startupsavant.com/news/invest-in-tech-market

Written by

Anthropologist & User Experience Designer. I write about science and technology. Robot whisperer. VR enthusiast. Gamer. @yisela_at www.yisela.com

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