Unless someone carved out this article for you on a clay tablet, chances are you’re reading this on a computer or a smartphone. Of course this is only possible with the technological advancements of recent decades. Our lives have been transformed by technology to such an extent that it’s safe to say we live online.
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The technology sector is made up of businesses that sell products and services such as electronics, computers, software, wireless communications, cloud technology, AI, and other businesses connected to information technology (IT). The sector accounts for around 10% of the US economy. If a company’s product has anything to do with technology, that company is probably a part of the tech industry. The US tech sector includes companies with the largest market capitalizations in the world, such as Apple, Microsoft, and Amazon.
The tech market experienced a selloff due to a recent peak, that’s why many stock prices are showing a downward trend. This doesn’t mean this trend will continue long-term and can be viewed as a good opportunity to buy technology stocks now.
So let’s talk about how to invest in tech companies, what are some of the best technology companies to buy now and how to choose the best ones for you.
12 Best Public Tech Companies to Invest in
Deciding what to invest in is not a simple question. Articles like “Best Tech Companies to Invest in” or “Biggest Tech Companies on the Stock Market” are very common. But we believe that there is no such thing as best for everyone.
The stock market is a bit like a grocery store. If three different people go to a store to buy food for breakfast, you will end up with different carts: one likes bacon and eggs, someone else might get avocado toast and salmon, and the third will get cereal. To all of them it will be the best breakfast, but it will be different in each case.
Gainy is an attempt to step away from the mentality of “top 10 best stocks for everybody” and more towards a personalized approach, taking into account a person’s goals, level of psychological risk that’s acceptable to them and their interests.
Ideally, you need to believe in a business to invest into them, you need to be at least somewhat interested in their activity and what’s happening to the company.
Your investment goals are also important, because some companies will provide reliable gains over a long period of time and some grow fast but are more likely to fail.
So here are some of the best tech companies to invest in, as far as we can see now.
FAANG Stocks: Best for Conservative Investors
Five of the most popular US tech giants are commonly referred to as FAANG: Facebook aka Meta, Amazon, Apple, Netflix and Google aka Alphabet. Now that both Google and Facebook changed their names, these stocks might as well be called MAAAN. These companies are some of the largest tech companies to invest in. They are leaders in their industries with nearly $7 trillion of combined market capitalization. These companies are also very profitable. These companies’ stocks are the closest you get to a 100% guarantee of long-term growth and are some of the top tech companies to invest in.
Even though they are laced in controversy and ethical issues characteristic of large corporations, these companies have strong positions in their respective markets and all of them appear to be too big to fail.
Apple (NASDAQ: AAPL)
The largest corporation in the world that needs no introduction is definitely one of the best technology companies to invest in. Even Warren Buffett owns 5% of Apple even though he doesn’t like tech stocks. Apple was the first US company to surpass the $1 trillion market cap mark in 2018. The business generates half of its revenue from iThis-time-we've-changed-everything aka iPhone that barely changes over the years, yet the brand's marketing is so strong everyone wants to get the new one. Even though iPhone sales have slowed down in recent years, in Q3 2021 Apple recorded $17.5 billion in revenue from subscriptions to its services such as iCloud storage, Apple Music and subscription apps, up 33 percent from the same quarter last year.
Amazon (NASDAQ: AMZN)
The company that turned from an online bookstore into an immense corporation that owns a third of the Internet through Amazon Web Services (AWS). This is a company that is so into cutting costs their chief cowboy-spaceman Bezos used to work on a table made from a door and they are famous for not wasting any extra money on unnecessary costs like taxes.
Alphabet (NASDAQ: GOOG)
Alphabet generates the majority of its revenue through Google—the synonym for searching for something online. Every time someone googles something, Google makes money through ads, which brought them $147 billion in 2020, 80% of their total revenue of $183 billion. Google is very efficient at implementing new services and is not shy to *borrow* functionality from other apps, sometimes eating up whole businesses in doing so. Remember Foursquare? Not so much of a thing anymore since Google started offering reviews in Maps. Still use Microsoft Word much? No? We thought so. Google is great at creating a universe around users by offering top quality free services that people use every day. They also own YouTube of course. And they manage businesses in AI and lots of exciting new technologies. All of this and more make Google one of the best technology companies to invest in.
Meta (NASDAQ: FB)
No matter the kind of controversy it may be caught in, and what Mark Zuckerberg is promising to follow up on with the Congress this time, Facebook, now Meta, still remains the largest social network with 2,8 billion active users. They also own WhatsApp and Instagram and all these users bring them billions in revenue through advertising. Their revenue has grown by 211% in the last 5 years.
Meta is investing heavily into AI technology, virtual reality and their metaverse, which could bring them more billions in the future. FB stock is currently in a dip, which likely means it’s a decent time to buy this stock, because the company will probably be alright over time.
Netflix (NASDAQ: NFLX)
Some will say Netflix is not a tech company but an entertainment company. Even though CEO Reed Hastings has said so himself, the largest movie streaming company relies heavily on fast Internet connection, cloud computing and advanced recommendation system (hey that’s a little like Gainy). And even though they have competitors like Hulu and HBO that could potentially take a big share of their market, Netflix is likely to remain a strong player in the field exactly because they were the ones that figured out how to use technology to sell entertainment in this way. Which may as well be one of the best tech companies to invest in since winter is coming xoxo.
Best for Value Investors
One approach to investing is to pick stocks that are undervalued. Value investors tend to look for stocks that are cheap in comparison to the company’s actual value, hoping that it will rise faster and yield more profits. This is Warren Buffett’s favourite approach to investing.
A useful metric for finding out cheap tech stocks is the price-to-earnings (P/E) ratio. This measures a company's earnings in relation to their share price. You can read more about the P/E ratio and other useful metrics in this article.
Here are some stocks with relatively low P/E ratios (12 months trailing):
HP Inc. (NYSE: HPQ)
Hewlett-Packard is a relatively old company for the tech sector, founded in 1939. HP makes computers, printers, displays and provides a range of services. The company operates in 170 countries worldwide. In July 2021, HP announced their plan to acquire Teradici, a company that specializes in remote computing. HP’s P/E ratio is 8.6.
Arrow Electronics (NYSE: ARW)
Arrow is a provider of electronic components and computing solutions to enterprises. They are also a distributor of a range of electronic components such as batteries, displays, sensors, and memory. The company's P/E ratio is 10.2.
Intel (NASDAQ: INTC)
Intel (INTC) is a major manufacturer of computer components like processors, chipsets, memory and storage, server products and more. Intel is actively working with traditional as well as new technologies like 5G networks, cloud computing, Artificial Intelligence and autonomous driving. Intel’s P/E ratio is 12.1.
Best for Futurists: 5G and AI
Tech companies are often actively engaged in the most current technologies, because that’s what will bring them profits in the future. Some companies are famous for particular interest in new fields, like 5G and AI. These may be some of the top tech companies to watch in the near future. If these new fields of tech excite you, these may be some of the best tech companies to buy stock in.
NVIDIA (NASDAQ: NVDA)
Famous for being a manufacturer of graphics processors (GPUs) originally designed for computer graphics, the technology turned out to be very useful for new technology fields that made NVIDIA (NVDA) a big player in cryptocurrency mining, AI and 5G. In fact, NVIDIA is so trendy they have a solution called "AI-on-5G."
Qualcomm (NYSE: QCOM)
As a producer of hardware and for wireless networks, such as 4G, 5G and Wi-Fi, the company has over 140,000 existing or pending patents it licenses to organizations around the world. Qualcomm is showing high growth and high revenue and has recently acquired Veoneer, a Swedish company that specializes in advanced driver assistance systems. Which means the future is near and also it looks like a great stock to buy.
Best for Blockchain Enthusiasts
Ok, some will say the best thing for blockchain enthusiasts is just to buy Bitcoin. But there are some tech large companies that are heavy investors in blockchain technology. These are just a couple of great tech companies to watch in this field.
Square Inc. (NASDAQ: SQ)
Square is a mobile payments company led by Jack Dorsey of Twitter who is a big believer in blockchain technology. In addition to owning $400 worth of Bitcoin, the company is developing a decentralized exchange. The company recently reported a quarterly profit of $1.14 bn, 91% higher than last year and is probably one of the best new tech companies to invest in.
Advanced Micro Devices Inc. (NASDAQ: AMD)
AMD is Intel’s main rival in computer processors with around a third of the processor market. They are actively involved with developing new blockchain technology, which heavily relies on processing power.
How to Analyze & Invest in Tech Companies?
Let’s look at some important things that matter when looking at potential investments. Analyzing tech companies is no different from analyzing companies in any other sector. The tech market is divided into industries: consumer electronics, software, semiconductors and so on. Buying stocks of industry leaders is usually a good idea, that’s why FAANG stocks are some of the most popular investments in the world. Look for signs like good news about company development, new partnerships and so on.
We’ve already mentioned market capitalization rate and the P/E ratio. Companies with large market cap ($10 billion and more) are usually more reliable investments.
Choose companies with relatively low price-to-earnings ratio
It's best to compare this with other companies in the field. This ratio means the trading price for their stocks is low in relation to the company’s earnings. You can read more about the P/E ratio and other metrics in this article on fundamental analysis.
Choose what you understand
It’s best to invest in businesses and industries you understand best. It’s best not to risk investing in something you don’t understand. If you don’t know anything about AI, neuronet or the multiverse, do your research. The reason Warren Buffett doesn’t invest in tech stocks is because he knows he doesn’t understand them enough. Incidentally, he still owns 5% of Apple. Conversely, it’s a good idea to invest in the products you choose and believe in, whether it’s an Apple phone, a Tesla car or an HP laptop.
How much money a company is making is a much more important metric of a company’s success than its stock price. When a company’s sales are high that means it’s doing the right things and the market responds favorably. If the company’s revenue has been growing consistently over the past few years, that’s an even better sign of future growth. In fact, if a company’s revenue is high with a low stock price, this can be the best opportunity to buy its shares.
Aside from revenue, cashflow is the amount of money moving in and out of a company. This is also a measure of good performance and shows good liquidity, which means a company is popular on the market and is more likely to be able to pay off its debts.
✅ Look at industry leaders first
✅ Choose stocks with low P/E
✅ Consider past performance
✅ Choose what you know and understand
✅ Look at company’s revenue and cashflow
Hopefully this article gave you some ideas for good tech companies to invest in. These are some of the best publicly traded tech companies. But the truth is there is no such thing as investments that will suit everybody. When you read an article like top 10 best companies to invest in in October, all this means is it may be a good time to buy those stocks right now, but that list can and will change like a cat’s mood because the financial markets are hectic and can be easily manipulated by big players. Furthermore, the majority of those trades are automatic and are more to do with trading than investment.
The whole tech sector is experiencing a downturn so it's important to look at the performance of individual companies against what’s happening in the industry overall. If a company’s stock price is lower than usual, this doesn’t necessarily mean they’re not a good investment. “Buying the dip” is a common strategy for traders and it can increase your returns by a few percent.
A good place to start is to invest into major tech companies. But keep up with the news and find out about the most interesting tech startup companies that exist. The largest and most successful businesses of today were all startups once, and it’s a good idea to look at some small tech companies to invest in.
The most important thing is what investments are good in the long-term, and the tech sector provides many opportunities for investors. It all depends on your investment goals, such as expected return, volatility and risks. It’s also good to base your investments on your personal interests, and Gainy can help you with that, with personalized lists like best tech companies to buy.
Is investing in tech a good idea?
Judging from the past performance of most companies mentioned above, tech stocks are some of the best investments out there. Unless the whole financial system collapses, but that’s for a different article.
Is it a good time to invest in technology stocks?
Many tech stocks look undervalued, so it might be a great time to buy them now at a lower price. Some technology investments are more worth it over the long term (which you should consider), so if that’s your approach you shouldn’t worry too much about the stock price at the time.
Why are most technology companies on Nasdaq?
Nasdaq is the first fully electronic stock market in the world. It was founded in 1971 and it’s a bit of a tradition for tech companies to trade there. However, some older companies like IBM and HP trade on NYSE.
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