With China having the world’s largest population as well as serious technological ambitions, the Asian powerhouse obviously levers a huge impact on tech stocks to buy. Furthermore, most tech-related organizations have made overtures to the Chinese market, hoping to take advantage of these demographic and economic realities.
There’s just one problem: the U.S.-China trade war is still going on.
To be fair, the year-and-a-half-long conflict has shown positive signs of thawing in recent months. As a result, benchmark investment indices have moved higher to record-breaking levels. However, like anything involving the Trump administration, complications quickly arose that could cloud the narrative for tech stocks.
First, President Trump is heading into a critical election year. While securing a deal would be a net positive for the country, he cannot afford to look weak in front of his core voting base. Otherwise, he would lose credibility ahead of a surely divisive election. Thus, the outlook for tech stocks to buy isn’t nearly a sure thing as some analysts may claim.
Second, factors beyond this administration’s control have imposed themselves on the broader negotiations. Primarily, political unrest in Hong Kong threatens the recently thawing relationship due to the U.S.’s favorable sentiment toward the protesters. Not surprisingly, China has threatened counter measures if the U.S. continues “going down the wrong path.”
Thus, figuring out the tech stocks that will do well over the next few years is a tough call. Nevertheless, companies with a dominant position in their core industries should outperform, irrespective of the trade war outcome.
With this in mind, here are nine tech stocks that you’ll wish you would have bought in 2019.
Tech Stocks to Buy: Alphabet (GOOG, GOOGL)
On a year-to-date basis,Alphabet(NASDAQ:GOOG, NASDAQ:GOOGL) stock is up over 25%, a solid performance considering its blue-chip status. Still, this is roughly the same performance since January 2018, suggesting that shares still have some room to run.
Fundamentally, Alphabet owns the internet search engine market with Google. As of October 2019, Google has just under 93% global market share, according to Statcounter. In contrast, Baidu’s (NASDAQ:BIDU) 0.9% share barely registers as a blip. From that perspective, GOOG stock can easily mitigate the trade war risk.
But the other reason you should consider GOOGL stock is that the underlying company disrupts everything technology related. From its artificial intelligence platforms to its self-driving taxi service Waymo, along with its viable cloud computing and hardware divisions, this is an organization that does it all.
Typically an obvious pick for tech stocks to buy, Amazon (NASDAQ:AMZN) has somewhat lost its no-brainer status. That’s because AMZN stock has been very disappointing throughout 2019. Yes, shares are up 21% YTD, but that’s largely due to favorable technical comparisons (January was a bad month). Since the beginning of April, shares are almost flat.
However, I expect this to change in 2020 and beyond. You simply can’t keep a dominant disruptor like AMZN stock down in the doldrums indefinitely.
Although it’s an obvious bullish argument, you must appreciate Amazon’s leadership in e-commerce. Since the late 1990s, the percentage of online sales relative to all retail sales has never declined; it has only gone flat for a few quarters during recessionary periods. As our own Chris Markoch noted, Amazon took 50% of all U.S. e-commerce sales in 2018.
Imagine what they’ll do this year and the years ahead! And before I run out of room, I should mention that AMZN stock benefits from the company’s cloud computing market leadership, as well as various hardware initiatives. It’s an obvious name but a worthwhile one.
Another top candidate among tech stocks, Microsoft (NASDAQ:MSFT) has gotten harder to justify because of its outrageous performance. On a YTD basis, MSFT stock has rocketed 50%, clearly outshining its in-class competition. Nevertheless, a difference exists between dumb reasons for an equity to rise and justifiable ones.
MSFT stock belongs in the latter category for multiple reasons.
First, its Windows operating system dominates the PC market, owning just under 78% share. While the common retort is that the PC is dying, it’s actually not. As you know from personal experience, attempting to do anything other than artistic projects on a non-PC device is nightmarish.
This idea segues into my second point about MSFT stock: familiarity with the Microsoft infrastructure may have helped the company secure the Department of Defense’s “JEDI” cloud computing contract. This was a massive deal because analysts believed Amazon would easily win out.
Once one of the reliable names among tech stocks to buy, Intel (NASDAQ:INTC) incurred a crisis to its reputation over the past two years. While INTC stock is up nearly 25% YTD, that statistic hides a lot of dysfunction at corporate HQ. With an embarrassing fraternization controversy that ousted its CEO in 2018, along with frustrating supply issues for its next-generation chips, Intel has fallen out of favor.
But against a contrarian view, this is what makes INTC stock so interesting. Yes, rivals such as Advanced Micro Devices (NASDAQ:AMD) have advantaged Intel’s woes, taking the shine off INTC. Still, with AMD competing with Intel in the premium chip space, one wonders how long they can keep it up. Conversely, Intel simply needs to get its act together to become credible again.
Finally, the U.S.-China trade war actually benefits INTC stock in a comparative sense. No one can deny that among tech stocks, Intel levers enviable financial resources. In other words, they have the capacity to carry out a war of attrition.
A mainstay among tech stocks to buy, up until earlier this year, several issues confronted Qualcomm (NASDAQ:QCOM) and QCOM stock. From a hostile takeover attempt to a bitter royalties dispute with Apple (NASDAQ:AAPL), shares have meandered for some time.
But since the beginning of January, QCOM stock is up 49%. Despite trade war risk related to Huawei, along with the dark cloud of antitrust allegations, one word — actually, a number and a letter — help make the long-term bull case: 5G.
Qualcomm assumed 5G leadership in a practical way with its Snapdragon X50 modem. Furthermore, this is no small accomplishment. Recently, Apple bought out Intel’s modem business to advance its modem-building ambitions. But as great as Apple is, they’re having trouble actualizing their ambitions.
Additionally, 5G is a groundbreaking innovation in that it opens lucrative side channels. Most obviously, 5G will finally enable self-driving cars and smart cities. But it also plays a vital role in future counter-terrorism initiatives via image-recognition platforms.
Oh yeah, Qualcomm leads in that area too, providing even more reason to consider QCOM stock.
A crowd favorite among consumer-related tech stocks, Netflix (NASDAQ:NFLX) has incurred a rough ride this year. On paper, NFLX stock isn’t doing so poorly, considering that shares are up double digits on a YTD basis. Still, this covers up some longer-term anxiety over Netflix, considering the arrival of Disney’s (NYSE:DIS) Disney+ streaming service.
On the surface level, this is admittedly a massive roadblock for NFLX stock. Many millions jumped aboard Disney+ and I was among them, even though I’m not really into tech. Not only that, Disney is running a promo with Hulu, so I decided to upgrade my membership. Against the myriad streaming options available, I believe Disney offers a compelling one.
That said, Disney+ has one opportunity gap that Netflix can easily exploit: lack of mature content. While Disney’s The Mandalorian is a gamechanger, it’s just one current example. On the other hand, Netflix has several gritty dramas that are artistically and narratively attractive. Therefore, don’t overlook NFLX stock in your streaming portfolio.
Trade Desk (TTD)
Although one of the most exciting names among tech stocks, Trade Desk (NASDAQ:TTD) has a notable technical risk: TTD stock has killed it this year, gaining over 128% since the beginning of January. While that’s a positive for early shareholders, that’s not necessarily a selling point for prospective buyers. Still, the long-term narrative for Trade Desk should offer viable returns.
As you know, the future is cordless. Yes, some reasons to stay tethered to traditional TV subscriptions exist, such as preferences for live and sports broadcasts. However, streaming platforms have steadily addressed these and other concerns. This trend also means that advertising has become much more relevant in the streaming space, benefiting TTD stock.
However, Trade Desk isn’t just about advertising. Rather, the company uses AI to give advertisers the most legs for its ad spend by focusing on the most relevant content. It’s also important to note that Trade Desk doesn’t have its own content, eliminating conflicts of interest. Ultimately, I see further value for such a service, bolstering TTD stock.
Nowadays, it’s no longer enough just to own advanced technologies. Instead, what separates the top tech stocks from those that merely make up the ranks is the ability to convert innovations into practical applications. Essentially, that’s the driving force behind Synopsys(NASDAQ:SNPS).
As an electronic data automation software specialist, Synopsys helps semiconductor firms develop next-generation chips. This includes protocols designed for power, performance and impact optimization. And with processing needs becoming even more advanced to accommodate areas such as AI and machine learning, SNPS stock has unsurprisingly forwarded impressive returns.
But despite this outperformance, I believe SNPS stock has more room to run. One of the distinct qualities about the organization is its business model: it only offers a three-year subscription service that clients cannot cancel. Therefore, Synopsys provides revenue predictability that you don’t get with other tech stocks.
And that’s also a huge plus for SNPS stock given the uncertainties of the trade war.
ASML Holding (ASML)
One of the biggest changes to have impacted tech stocks over the last several years is semiconductor manufacturing diversity. Because of the increased demands placed on today’s devices, computer chips are infinitely more advanced than in prior generations. Not everything occurs under one house, which is the calling card for ASML Holding(NASDAQ:ASML) and ASML stock.
The tech firm specializes in a process called lithography, which uses light to print distinctive patterns onto silicon wafers. Through this methodology, ASML’s tech clients are able to jampack multiple capabilities in an increasing smaller space. But it’s not just the facilitation of innovations that drives ASML stock. Rather, lithography also makes the chip manufacturing process cheaper.
Right now, ASML stock faces some question marks due to the China exposure of the underlying company’s clients. Nevertheless, ASML represents a vital cog in the semiconductor supply chain, which should ultimately bolster shares.