The information technology sector spans a myriad of industries, from software startups to billion-dollar hardware providers. Before you invest, know what you’re investing in and familiarize yourself with the company’s key competitors.
What are information technology stocks?
Information technology (IT) stocks belong to the IT sector, defined by The Global Industry Classification Standards 11 stock market sectors — each named for a distinct slice of the market. The information technology sector is characterized by companies responsible for the research and development of electronic goods and services. It houses some of the most recognizable names on the market, including Apple, Amazon, Google and Microsoft.
What subcategories does it include?
The technology sector is broken down into three major industry groups:
Software. Companies that fall within the software industry include service providers connected to IT, data processing, search engines, systems software, home entertainment software and the Internet. Big names in this industry include Google, eBay, Amazon, PayPal and Microsoft.
Hardware. Providers in the hardware industry include companies that manufacture communications equipment, PCs, cell phones, electronic equipment, transformers and point-of-sale hardware. Some of the biggest players in this industry are Apple, HP, SanDisk and Motorola.
Semiconductors. A semiconductor is a piece of material — typically silicon — that conducts electricity across electronic circuits. Companies that manufacture semiconductors fall within this industry, including Intel, Microchip Technology and Texas Instruments.
How to invest in the information technology sector
There are two ways to invest in a stock sector: individual stocks and sector-tracking ETFs. If you’d prefer to invest in individual companies and not the sector as a whole, stocks are your best bet. They tend to be more volatile than ETFs but can offer high-yield returns. If you’re interested in following the entire sector, consider an ETF. ETFs are more stable than stocks and offer more exposure, but come with expense ratios that typically range from 0.03% to 2.5%. To purchase stocks or ETFs, you’ll need a brokerage account. Here’s what to expect of the investment process:
Compare platforms. With so many online brokerages to choose from, explore your platform options to find the broker best suited to your needs.
Open an account. Applications for web-based brokerages can be completed online.
Fund your account. Before you can begin trading, fund your account with a transfer from an external account.
Pick your securities. Use a screening tool to filter your options by sector.
Place an order. Once you’ve found a security you’d like to purchase, submit your order.
Track your investments. Log into your brokerage account to track the progress of your investments.
What stocks are in the information technology sector?
See how the following stocks are performing, and view details like market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield.
Company summary
Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in Google Play and YouTube; and devices, as well as the provision of YouTube consumer subscription services, such as YouTube TV, YouTube Music and Premium, NFL Sunday Ticket, and Google One. The Google Cloud segment offers consumption-based fees and subscriptions for AI solutions, including AI infrastructure, Vertex AI platform, and Gemini enterprise. It also provides cybersecurity, and data and analytics services; Google Workspace that include cloud-based communication and collaboration tools for enterprises, such as Calendar, Gmail, Docs, Drive, and Meet; and other enterprise services. The Other Bets segment sells transportation and internet services. Alphabet Inc. was incorporated in 1998 and is headquartered in Mountain View, California.
Amazon.com, Inc. engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It also manufactures and sells electronic devices, including Kindle, fire tablets, fire TVs, echo, ring, blink, and eero; and develops and produces media content. In addition, the company offers programs that enable sellers to sell their products in its stores; and programs that allow authors, independent publishers, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content. Further, it provides compute, storage, Artificial intelligence, database, analytics, machine learning, and other services, as well as advertising services through programs, such as sponsored ads, display, and video advertising. Additionally, the company offers Amazon Prime, a membership program. The company's products offered through its stores include merchandise and content purchased for resale and products offered by third-party sellers. It serves consumers, sellers, developers, enterprises, content creators, advertisers, and employees. The company was incorporated in 1994 and is headquartered in Seattle, Washington.
Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; and wearables, home, and accessories comprising AirPods, Apple Vision Pro, Apple TV, Apple Watch, Beats products, and HomePod, as well as Apple branded and third-party accessories. It also provides AppleCare support and cloud services; and operates various platforms, including the App Store that allow customers to discover and download applications and digital content, such as books, music, video, games, and podcasts, as well as advertising services include third-party licensing arrangements and its own advertising platforms. In addition, the company offers various subscription-based services, such as Apple Arcade, a game subscription service; Apple Fitness+, a personalized fitness service; Apple Music, which offers users a curated listening experience with on-demand radio stations; Apple News+, a subscription news and magazine service; Apple TV, which offers exclusive original content and live sports; Apple Card, a co-branded credit card; and Apple Pay, a cashless payment service, as well as licenses its intellectual property. The company serves consumers, and small and mid-sized businesses; and the education, enterprise, and government markets. It distributes third-party applications for its products through the App Store. The company also sells its products through its retail and online stores, and direct sales force; and third-party cellular network carriers and resellers. The company was formerly known as Apple Computer, Inc. and changed its name to Apple Inc. in January 2007. Apple Inc. was founded in 1976 and is headquartered in Cupertino, California.
Atlassian Corporation provides a collaboration software that enables organizations to connect all teams through a system of work that unlocks productivity at scale worldwide. Its product portfolio includes Jira, a project management platform for planning, tracking, and managing work; Confluence, a connected workspace to create, organize, and share team knowledge, documents, and collaboration content; Loom, an asynchronous video communication tool to record and share videos; Jira Service Management, an intuitive service management solution for IT, HR, and other teams; and Rovo, an AI offering that assists teams with its Search, Chat and Agent capabilities. The company also offers Bitbucket, a git-based source code management platform for professional development teams; Compass, a developer portal that provides a unified view of engineering components; Jira Product Discovery, a tool to capture, prioritize, and roadmap product ideas; Jira Align, an enterprise agility solution that connects business and technology teams to align strategy with execution; Focus, a strategy hub for leadership teams; and Talent, a workforce planning app. In addition, it provides Trello, an AI-powered personal productivity tool; and Guard, an app for detecting and responding to security threats. The company has a strategic collaboration with Mattermost, Inc. for the development of Mattermost Docs, a sovereign, self-hosted successor to Confluence for defense, intelligence, and critical infrastructure organizations. The company was founded in 2002 and is headquartered in Sydney, Australia.
Cisco Systems, Inc. designs, develops, and sells technologies that help to power, secure, and draw insights from the internet in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China. The company offers data center switching; network security, identity and access management, and secure access service edge; threat intelligence, detection, and response solutions; interconnects public and private wireline and mobile networks, delivering connectivity to campus, data center, and branch networks; WEBEX suite, collaboration devices, and contact center; communication platform as a service software, including perpetual licenses, subscription arrangements, and hardware solutions; network assurance, monitoring and analytics, and observability suite; issue resolution, software support, and hardware replacement; professional services, such as planning, design, implementation, and high-value consulting; service and support packages, financing, and managed network services; and regional, national, and international wireline carriers, webscale products, internet, and cable. It also delivers connectivity to campus, data center, and branch networks; wireless products, including indoor and outdoor wireless coverage designed for seamless roaming use of voice, video, and data applications; end-to-end collaboration solutions through cloud, on-premise, or within hybrid cloud environments, transition collaboration solutions from on-premise to the cloud; and network assurance, monitoring and analytics, and observability suite. In addition, it offers technical support and advisory services. The company serves businesses, public institutions, governments, and service providers. It sells its products and services directly, through systems integrators, service providers, resellers, and distributors. Cisco Systems, Inc. was incorporated in 1984 and is headquartered in San Jose, California.
The index measures the performance of this Dynamic Buffer Strategy based on the S&P 500 Index using a long position in the S&P 500 Index along with three different S&P 500 Index options that have one day to expiration. Under normal circumstances, the fund will invest at least 80% of its total assets in components of the index or in instruments with similar economic characteristics. The fund is non-diversified.
Intel Corporation designs, develops, manufactures, markets, sells, and services computing and related end products and services in the United States, Ireland, Israel, and internationally. It operates through three segments: CCG, DCAI, and Intel Foundry. The company offers client computing group products, including client and commercial CPUs, discrete client GPUs, edge computing, and connectivity products; data center and AI products, such as server CPUs, discrete GPUs, and networking products; and semiconductors comprising wafer fabrication, substrates, and other related products and services. It also provides driving assistance and self-driving solutions; and develops and manufactures multi-beam mask writing tools. The company sells its products through sales organizations, distributors, resellers, retailers, and OEM partners. It serves original equipment manufacturers, original design manufacturers, cloud service providers, and other manufacturers and service providers. Intel Corporation has a strategic collaboration with Infosys Limited to develop a multi-layer AI fabric that unifies infrastructure, models, data, applications, and workflows into a composable and agent-ready ecosystem. The company was incorporated in 1968 and is headquartered in Santa Clara, California.
Microsoft Corporation develops and supports software, services, devices, and solutions worldwide. The Productivity and Business Processes segment offers Microsoft 365 commercial, enterprise mobility + security, windows commercial, power BI, exchange, sharepoint, Microsoft teams, security and compliance, and copilot; Microsoft 365 commercial products, such as Windows commercial on-premises and office licensed services; Microsoft 365 consumer products and cloud services, including Microsoft 365 consumer subscriptions, office licensed on-premises, and other consumer services; LinkedIn; dynamics products and cloud services, such as dynamics 365, cloud-based applications, and on-premises ERP and CRM applications. Its Intelligent Cloud segment provides Server products and cloud services comprising Azure and other cloud services, GitHub, Nuance Healthcare, virtual desktop offerings, and other cloud services; server products, including SQL and windows server, visual studio and system center related client access licenses, and other on-premises offerings; enterprise and partner services, such as enterprise support and nuance professional services, industry solutions, Microsoft partner network, and learning experience. The Personal Computing segment provides windows and devices, such as Windows OEM licensing and devices and surface and PC accessories; gaming services and solutions, such as Xbox hardware, content, and services, first- and third-party content Xbox game pass, subscriptions, and cloud gaming, advertising, and other cloud services; search and news advertising services that includes Bing and Copilot, Microsoft News and Edge, and third-party affiliates. It sells its products through OEMs, distributors, and resellers; and online and retail stores. The company was founded in 1975 and is headquartered in Redmond, Washington.
Netflix, Inc. provides entertainment services worldwide. The company offers television (TV) series, documentaries, feature films, games, and live programming across various genres and languages. It also provides members the ability to receive streaming content through a host of internet-connected devices, including TVs, digital video players, TV set-top boxes, and mobile devices. Netflix, Inc. was incorporated in 1997 and is headquartered in Los Gatos, California.
Veeva Systems Inc. provides cloud-based software for the life sciences industry in North America, Europe, the Asia Pacific, the Middle East, Africa, and Latin America. The company offers Veeva Commercial Cloud comprising Veeva Vault CRM Suite for pharmaceutical and biotechnology companies; Veeva Medical that provides source of medical content across multiple channels and geographies; Veeva PromoMats, an end-to-end content and digital asset management solution; and Veeva Crossix, an analytics platform for pharmaceutical brands. It also provides Veeva Data Cloud, such as Veeva OpenData, a customer reference data solution; Veeva Link, which provides deep data; Veeva Compass, which includes de-identified and longitudinal patient data; and Veeva CRM Pulse that provides access and multichannel engagement metrics. In addition, the company offers Veeva Development Cloud consisting of Veeva Clinical Platform, which advances clinical trial execution; Veeva Clinical Data Management that helps sponsors and CROs design and run trials; Veeva Safety, which unifies systems and processes; Veeva RIM that provides regulatory information management capabilities, as well as Veeva Quality Cloud, which is used by the life sciences and consumer products industries; and Veeva Business Consulting services. Further, it provides professional and support services, including implementation and deployment planning, and project management; requirements analysis, solution design, and configuration; systems environment management and deployment; services focused on advancing or transforming business and operating processes; technical consulting services on data migration and systems integrations; training; and ongoing managed services, such as outsourced systems administration. The company was formerly known as Verticals onDemand, Inc. and changed its name to Veeva Systems Inc. in April 2009. Veeva Systems Inc. was incorporated in 2007 and is headquartered in Pleasanton, California.
Xerox Holdings Corporation, together with its subsidiaries, operates as a workplace technology company that integrates hardware, services, and software for enterprises in North America, Latin America, Europe, the Middle East, Africa, India, and internationally. It operates in two segments, Print and Other; and Xerox Financial Services (XFS). The company engages in the design, development, and sale of document systems, solutions, and services, as well as associated technology offerings, including IT and software products and services. It also offers workplace solutions, which include the sale of equipment, software, supplies, and the associated technical services; Entry, which is comprised of A4 desktop monochrome and color printers, and multifunction printers; Mid-range comprising A3 devices; and ConnectKey software. In addition, the company provides production solutions, including presses and solutions that provides black-and-white and full-color, as well as on-demand printing; xerographic and inkjet presses; and FreeFlow. Further, it offers Xerox services, which include Managed Print Services, IT solutions, Capture and Content Services, and Customer Engagement Services; XFS, which offers financing for direct channel customer purchases of Xerox equipment and solutions, and lease financing to Xerox equipment and solution purchases through indirect channels; CareAR; DocuShare; and XMPie. Additionally, it invests in startups and early/mid-stage growth companies. The company sells its products through its direct sales force, distributors, independent agents, dealers, value-added resellers, systems integrators, and e-commerce marketplaces. The company was formerly known as Xerox Corporation and changed its name to Xerox Holdings Corporation in August 2019. Xerox Holdings Corporation was founded in 1903 and is headquartered in Norwalk, Connecticut.
What ETFs track the information technology sector?
Popular ETFs that track the information technology sector include:
Fidelity MSCI Information Technology Index ETF (FTEC)
First Trust ISE Cloud Computing Index Fund (SKYY)
First Trust NASDAQ CEA Cybersecurity ETF (CIBR)
First Trust Technology AlphaDEX Fund (FXL)
Global X Cloud Computing ETF (CLOU)
iShares Expanded Tech-Software Sector ETF (IGV)
iShares PHLX Semiconductor ETF (SOXX)
iShares U.S. Technology ETF (IYW)
Technology Select Sector SPDR ETF (XLK)
VanEck Vectors Semiconductor ETF (SMH)
Vanguard Information Technology ETF (VGT)
Why invest in the information technology sector?
There’s no way around it — information technology is an exciting space. Investing in the tech sector offers investors the opportunity to buy shares in real-world tech they use everyday. And the sector is so comprehensive that there’s plenty of room to diversify, whether you delve into hardware, software or semiconductors. If you can afford it, you can opt for one of the tried-and-tested blue chips, like Facebook, Google, Microsoft or Amazon. The problem with these tech monoliths? Not all pay dividends. Though some companies in the tech sector give back to their investors, some investors get into the tech industry for a different reason: growth potential. Technology is the largest segment of the market. With a solid grasp of the company you plan to invest in and its competitors, a nimble investor has the opportunity to make money in the tech sector by investing in small companies on an upward trajectory.
What unique risks does the information technology sector face?
The excitement that punctuates the technology sector gives way to fierce competition — a competition that fuels company acquisitions. Software tends to do well in a bull market, but during an economic downturn, companies can fold overnight. The opportunity for profit in the tech sector is accompanied by volatility — and this volatility has the potential to tank investments and cripple portfolios. The tech sector is also vulnerable to government jurisdiction, as evidenced by the European Union’s General Data Protection Regulation. Facebook was pulled in front of Congress, demonstrating that tech giants aren’t immune to regulation. Investors need to keep their finger on the pulse of the news to stay ahead of potentially damaging economic and political events.
How do mergers and acquisitions affect tech stocks?
Mergers and acquisitions can occur in any sector but are especially common in the tech industry. Mergers can trigger volatility within the sector, both for the companies affected and for competitors. If you own stock in a company that’s acquired by another company, one of three things may happen to your shares:
All-cash deal. Your shares disappear from your account and you’re reimbursed with cash.
All-stock deal. Your shares disappear from your account in exchange for shares of the purchasing company.
Combination deal. Your shares disappear from your account and you receive a combination of cash and stock of the purchasing company.
When acquisitions occur, the companies announce the deal and shareholders can vote to approve the deal. Acquiring companies are typically willing to pay more than the asset’s current market price to encourage shareholders to approve the deal. Once approved, regulators clear the deal. What does this look like in real life? Back in 2016, AT&T acquired Time Warner. Time Warner shareholders were offered a combination deal valued at $107.50 per share. In exchange for their Time Warner stock, shareholders were given $53.75 cash and $53.75 in AT&T stock. If you receive stock of the purchasing company during an acquisition, you’re not required to keep it. Shareholders can sell their shares at any time.
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The information technology sector offers investors the opportunity to back the hardware and software they use everyday. It’s an exciting field but it’s prone to volatility — especially during a down market. Explore trading platforms for the account best suited to your investment needs.
Frequently asked questions
Some companies in the tech sector pay dividends, including IBM, Oracle, Microsoft, Cisco and Apple.
The tech sector is the largest single segment of the market. In 2020, the US tech market is estimated to be worth $1.7 trillion.
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Shannon Terrell is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in personal finance. Her writing and analysis on investing and banking has been featured in Bloomberg, Global News, Yahoo Finance, GoBankingRates and Black Enterprise. She holds a bachelor’s degree in communications and English literature from the University of Toronto Mississauga.
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