In the early stages of the pandemic, technology stocks were excelling and were everyone’s best friend. Companies that responded quickly and innovatively to the world’s needs were rewarded handsomely in the stock market.
Since then, the enthusiasm and hype have settled down and with a recession looming over everyone, tech companies have been quick. High inflation and interest rates mean profit margins are a lot lower for debt-heavy tech companies.
Many investors are still interested in what tech stocks have to offer – and for good reason. Technology is showing no signs of slowing down and is constantly evolving; it plays a vital role in answering questions and is helping areas around sustainability, automation, healthcare and housing.
What is a Tech Stock?
Technology stocks are publicly traded shares of companies that specialise in the development and sales of everything tech, whether that’s products or services.
You’re likely at least familiar with some of the most popular contenders: Apple (AAPL) and Google (GOOGL) are huge players in the game, with some of the highest market capitalisations in the stock market. Companies that fall under this wide tech umbrella span multiple industries and offer a huge range of products and services.
The Global Industry Classification Standard, or GICS, makes this easier to understand by grouping tech stocks into three main categories: software and services, hardware and equipment, semiconductors and semiconductor equipment.
Best Performing Tech Stocks
Below is a list of the top 5 tech stocks that you should keep a close eye on this month. In order of one-year returns.
- NVIDIA Corp (NVDA): 212.05%
- Broadcom Inc (AVGO): 80.95%
- Advanced Micro Devices, Inc (AMD): 79.10%
- Adobe Inc (ADBE): 70.57%
- Synopsys, Inc (SNPS): 62.74%
The Pros and Cons of Investing in Tech Stocks
Deciding whether to join the bandwagon of investing in tech stocks also means looking beyond the performances and fully understanding the positives and negatives that come with it. Here are some considerations:
Pros of Investing in Tech Stocks
The tech sector landscape is huge and reaches over to an array of industries as well as a vast amount of product/service categories. Including cloud computing, e-commerce and many more.
This gives investors space to diversify their holdings across a swath of companies big and small; the sky is the limit.
With big risk sometimes comes big reward. This mantra is especially salient in the tech sector. Tech stocks are monitored and viewed by many investors searching for opportunities to invest in cutting-edge, new and innovative technology.
This can be rewarding if the company’s product or service is a great success and takes off. It comes with searching and looking for companies with potential rather than the ones that have made their mark. Rest assured, you should always keep an eye on the best but always be looking for the next big thing.
Investment Fraud Lawyers
When it comes to investing, you’re always under threat of being robbed, but now there are services where you are protected. Scams happen all the time, but hope is not lost if a mistake is made. Qualified investment fraud lawyers are here to the rescue.
Cons of Investing in Tech Stocks
As touched on above, when investing any kind of money in stocks, there can be scams from all angles. Be sure to protect yourself from all angles, whether it’s forex trading scams, broker scams or crypto scams.
It’s always better to be safe than sorry, so ensure you aren’t listening to any hot tips, handing out sensitive information, or keeping passwords locked away.
Sky High Valuations
Tech stocks are notorious for having extremely high market values. This may seem reasonable, but in order for a highly valued stock to maintain its price, its performance needs to match the valuation. The stock’s value might drop sharply when performance and earnings fall short of the original estimate, leaving investors who bought in at a high feeling, well, low.