Best tech stocks

Looking for the best tech stocks to invest in? Find out the benefits and drawbacks of investing in technology, along with tips and ideas for finding top stocks.

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Technology is evolving at a rapid pace. The world looks a lot different today than just 10 or 20 years ago, and with the introduction of artificial intelligence (AI), we could be on the verge of another technological revolution.

Today, the biggest 10 global tech stocks have a combined market cap of over $12 trillion (around £9.75 trillion). If these 10 tech stocks formed a country, only the US and China would have bigger economies. The challenge for investors, however, is finding the best tech stocks to buy today, which will also be tomorrow’s superstars.

What are the best tech stocks?

Choosing the best tech stocks is subjective because different types of investments will suit various investors. Like people, every stock has its flaws.

So, to build our list of the best tech stocks right now, we’ve used data from the S&P Global 1200 Information Technology Capped Index. This is the industry benchmark used by most major tech-focused exchange-traded funds (ETFs).

IconStock1 year performance (February 2024)5 year performance (February 2024)Link to invest
Nvidia logoNvidia (NVDA)213.72%1,686.18%Invest with CMC InvestCapital at risk
Broadcom logoBroadcom (AVGO)103.62%346.74%Invest with CMC InvestCapital at risk
Adobe logoAdobe (ADBE)69.17%146.99%Invest with XTBCapital at risk
Salesforce logoSalesforce (CRM)68.98%82.33%Invest with XTBCapital at risk
Microsoft logoMicrosoft (MSFT)60.15%289.15%Invest with CMC InvestCapital at risk
ASML Holding logoASML Holding NV (ASML)34.55%391.89%Invest with XTBCapital at risk
TSMC logoTaiwan Semiconductor Manufacturing (2330)22.81%184.58%Invest with CMC InvestCapital at risk
Apple logoApple (APPL)22.49%336.27%Invest with CMC InvestCapital at risk
Samsung logoSamsung (005930)20.62%65.85%Invest with XTBCapital at risk
ASML Holding logoCisco Systems (CSCO)5.49%6.34%Invest with XTBCapital at risk

What is a technology stock?

For investment purposes, this usually refers to companies within the “Information Technology” bracket in the Global Industry Classification Standard (GICS).

This is because most businesses use technology in some regard. So, to be classified as a tech stock, the primary business purpose needs to revolve around technology, whether that’s hardware or software.

Types of tech stocks

The 3 main types of tech stocks available to investors include:

  • Software and services. Includes stocks with a primary focus on digital software, including the likes of Adobe, Salesforce, Oracle and Microsoft.
  • Hardware and equipment. Stocks in this category include tech companies that build physical products like our much-beloved laptops and smartphones. It includes firms like Apple, Samsung, Dell, Sony, LG and HP.
  • Semiconductors. A category that’s recently blown up. Stocks that design or manufacture semiconductors include Nvidia, ASML, Intel, Taiwan Semiconductor and Arm.

Keep in mind that some tech stocks will have blurred boundaries. Many software companies, like Microsoft for example, now make hardware. Also, many top tech stocks, like Apple, have involvement across all 3 areas.

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Why do people want to invest in tech stocks?

This sector has seen meteoric growth in the last few decades. Technology touches just about every part of our lives, except maybe when it comes to brick-laying and the circus. Jokes and mortar aside, technology is vital to the world. And this has been reflected in the fast price-growth of these stocks.

Most growth in the flagship US stock market index, the S&P 500, has been driven by the best-performing tech stocks. Although tech stocks make up only 27.5% of the index, they account for the majority of its expansion in recent years. Or if you look at an even more tech-heavy index like the Nasdaq 100, it’s returned close to 80% in the past 5 years and over 350% in the last 10 years.

Unsurprisingly, investors want to get involved by putting a slice of these technology stocks into their portfolios. However, it’s important to remember that past performance doesn’t dictate future results. The top sectors from the last few decades may not continue to outperform. There was a time when car manufacturers and oil companies were the bee’s knees. Just saying.

Benefits of investing in tech stocks

Here’s an overview of some of the main advantages of investing in this category of stocks:

  • The sector has been the fastest-growing investing space globally.
  • Technology stocks include some of the biggest and best companies in the world.
  • You can still invest in a variety of tech-related stocks for some diversity.
  • Tech companies tend to have high profit margins.
  • There are tech stocks listed on most stock exchanges around the world.
  • Some tech stocks have massively disrupted industries (just look at Netflix and Blockbuster).
  • There are several high-growth tech stocks that also pay dividends.

Risk of investing in tech stocks

There are some downsides worth considering if you’re thinking about investing:

  • Finding the best tech stocks in the early stages of growth is difficult.
  • Lots of tech stocks don’t make any profit for many years.
  • Many top tech stocks trade at high valuations.
  • The bulk of the biggest tech stocks are located in the US.
  • Tech stocks don’t usually pay a high dividend.
  • Most of these companies have to borrow funds and run on high levels of debt.
  • The technology sector tends to be more volatile than other sectors.
  • Higher interest rates and higher levels of inflation tend to be bad news.

Expert comment - What’s the best tech stock?

georgesweeney profile pic
George Sweeney

Deputy editor

The best-performing mainstream tech stock over the past 5 years has been Nvidia (NVDA) with growth of just under 800%. However, an argument could also be made that Tesla (TSLA) is somewhat of a technology stock and that has witnessed an 830%+ gain.

What’s worth remembering is that these stocks are very unlikely to see anywhere near that kind of growth again anytime soon, if ever. So, your challenge is to find the best tech stocks of tomorrow, ideally the investments that haven’t yet seen such explosive growth.

Alternative ways to invest in tech

Aside from trying to pick the best tech stock to hold in your portfolio, there are some alternative ways you can invest to get exposure:

  • Index funds and exchange-traded funds (ETFs). It is possible to invest in ETFs or index funds that follow a technology industry benchmark. This can be a simple and cheap way to get diverse exposure to the best tech stocks with a single investment.
  • Investment trusts. For a more active approach, investment trusts focusing on the tech sector might be a good option. These tend to have slightly higher fees, but the benefit is that experts will be picking and managing a technology portfolio for you.
  • Investment funds. Another option is investment funds with a focus on technology. The key difference with these funds is that because they’re open-ended, sometimes holdings must be sold if a large number of investors want to make withdrawals.

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

Pros and cons

Pros

  • Historically high returns in the technology sector
  • Wide variety of stock choice
  • Lots of opportunities for future growth

Cons

  • Can be more risky and volatile
  • Valuations tend to be much higher than in other sectors
  • Less likely to pay dividends.

Bottom line

Technology stocks have been the driver of most of the recent global growth around the world. And it’s definitely worth considering at least a certain level of exposure within your portfolio.

Finding the best tech stocks is where the difficulty lies because newer technology could come along and disrupt today’s top companies or make it harder for them to make giant piles of cash. Technology isn’t a sector to be ignored. Just keep in mind that the world is constantly changing. So don’t bet your entire future on tech stocks.

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