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The technology sector is large and diverse. It comprises software developers, cloud technology providers, cybersecurity companies, payment processors, hardware manufacturers, e-commerce conglomerates, and so much more.
With the rise of digitization and the advancement of computing, the technology sector is poised to grow and mature at a speed that may catch investors off guard. We rounded up the best tech stocks for investors to consider. These equities offer an attractive investment opportunity for investors seeking additional exposure to the broader technology sector.
Summary: Best Tech Stocks to Buy
Here’s our list of the 7 best tech stocks to buy in 2022:
- Nvidia (NVDA)
- Alphabet (GOOG, GOOGL)
- Apple (AAPL)
- Block (SQ)
- CrowdStrike (CRWD)
- MicroStrategy (MSTR)
- Amazon.com (AMZN)
Let’s jump in and examine the investment potential of each one of these stocks.
Top Tech Stocks to Buy
#1. Nvidia (NVDA)
- Performance over 1-Year: +124%
- Market Cap: $735 billion
Nvidia altered the course of computing when it created the first graphics processing unit, or GPU, in 1999.
Today, Nvidia’s GPUs are unlocking the next era of supercomputing across various markets, such as gaming, robotics, self-driving cars, cloud computing, and more.
Nvidia’s hardware and software are the bottlenecks of progress in the field of artificial intelligence.
The most capable individuals and companies in the world can only go as far as Nvidia allows them – that puts a lot of pressure on Nvidia, but it’s a good spot for a business to be in.
Generally speaking, Nvidia is probably involved in a computer is doing something special. And the company is moving at lightning speed. Here’s an overview of Nvidia’s areas of dominance:
- Gaming (grew 40% in 2021, launched the biggest upgrade to GPU suite in two decades)
- Data Center (High-performance computing, Cloud, AI)
- Professional Visualization (Omniverse)
- Automotive (platform used by makers of self-driving trucks, EVs, & autonomous buses)
It’s hard to keep up with everything that Nvidia does. For example, it recently launched the Nvidia Omniverse, a virtual world simulator that is physically accurate.
Nvidia Omniverse allows companies to train their robots in a virtual world to make mistakes and learn without the consequences of doing so in the physical world.
Nvidia Omniverse can also create a real-time, digital twin of a factory, for example, and monitor or explore ways to improve the factory’s productivity. The possibilities are endless.
Nvidia experienced staggering growth in 2021, and another 2X might take some time, but it’s now amongst the tech giants – and doesn’t appear to be going anywhere.
#2. Alphabet (GOOG, GOOGL)
- Performance over 1-Year: +67%
- Market Cap: $1.9 trillion
After lagging behind the pack for several years, Alphabet outperformed the rest of Big Tech in 2021, almost doubling in size.
Google Search might just be the best business in the world – it printed $65 billion in the last quarter alone, recording a 40% year-over-year increase in revenue.
So the best business on Earth is still growing at a rapid pace.
Alphabet has started releasing YouTube revenue numbers as well. The video platform generated over $7 billion in ad revenue in the previous quarter.
Alphabet controls the two sources of information that the free world relies on for answers, news, education, and entertainment. And it faces very little competition.
Search gets better every year, but it feels like YouTube is just getting started with its foray into live sports, streaming, and other premium offerings.
These two revenue-generating machines subsidize Alphabet’s other business segments, such as Google Cloud, Waymo, X Development, Calico, and other moonshot projects.
Google Search funds the potentially asymmetric projects that spawn under the Alphabet umbrella.
Ninety-nine out of one hundred projects can fail because the one that does deliver can change everything.
#3. Apple (AAPL)
- Performance over 1-Year: +37%
- Market Cap: $2.9 trillion
Continuing with Big Tech dominance: Apple.
The Apple ecosystem continues to improve and further cement its suite of products into the lives of its loyal customers.
The iPhone is the gateway drug that leads to incredibly sticky products and services, such as the Apple Watch, iPad, AirPods, Apple TV, and the Mac computer line.
Like Google, Apple is growing revenues at an astonishing rate despite its size.
The App Store is to Apple as Search is to Google – cash-generating machines that are borderline monopolies, if not one entirely.
The App Store is expected to generate $85 billion in 2021 revenues, an 18% year-over-year increase.
Not to keep plugging Google, but the App Store’s only competitor, Google Play, raked in $48 billion of its own app-generated revenues for the year.
So, Apple faces little competition in this market, whereas Google Search faces none.
Back to Apple. It’s reasonable to question what’s next for Apple, but it’s probably VR/AR.
It’s hard to imagine a world where Apple doesn’t get the VR/AR hardware exactly right – a feat that nearly all companies have failed to do except Meta’s Oculus.
One thing to watch is growing geopolitical tensions with the US and China.
Apple disproportionately relies on Chinese manufacturing for its products, so turbulence in the region could cause temporary pain for Apple shareholders.
#4. Block (SQ)
- Performance over 1-Year: -27%
- Market Cap: $75 billion
Jack Dorsey changed the name of his company to Block to “acknowledge the company’s growth” and create room for future growth.
The company’s core offerings remain unchanged, but the new name reveals the company’s north star: Bitcoin.
Dorsey said this, about Bitcoin, two weeks before his departure from Twitter, “I don’t think there’s anything more important in my lifetime to work on, and I don’t think there’s anything more enabling for people around the world.”
He is on a mission to deliver Bitcoin-enabled services to individuals and businesses worldwide.
In fact, Square and the Cash App have quietly been setting the stage for this initiative for years.
The Cash App has over 70 million users worldwide, but much of its initial growth occurred in unbanked or underbanked regions of the US and other parts of the world.
Whether they didn’t have banking infrastructure or were denied such services, fintech innovations like Square for merchants and Cash App allowed people to start businesses, process payments, and transact with one another.
All they needed was a cell phone and an internet connection.
The same pattern of adoption is happening around the world with Bitcoin.
There are billions of people that live under double, triple, or quadruple-digit inflation.
Their currencies are weakening at a rate that significantly decreases their purchasing power with each passing year.
Bitcoin’s immutable monetary policy allows them to opt-out of the system that creates these inflationary crimes.
They can preserve and grow their purchasing power in a parallel system that is not vulnerable to corruption and reckless monetary policy.
Block is putting these tools in the hands of people worldwide.
Of all the “fintech” companies, Block understands the power of embracing disruptive technology rather than fighting it.
#5. CrowdStrike (CRWD)
- Performance over 1-Year: +2%
- Market Cap: $47 billion
CrowdStrike is a cybersecurity company that offers a cloud-native platform to stop breaches and secure businesses of all sizes.
CrowdStrike’s platform, called Falcon, is an AI-powered security product that uses machine learning to improve upon itself as it consumes more data.
This allows CrowdStrike to actually prevent attacks instead of reacting after the hack.
The Falcon platform has various security modules that customers can add on a subscription basis.
The more they add, the more robust their cybersecurity becomes, and the more revenue CrowdStrike generates.
CrowdStrike’s annual recurring revenue model makes it easier to evaluate the success of their business and project future growth. Here are some highlights:
- ARR grew 84% year-over-year in FY21 to $874 million
- Customer Net Retention Rate of 125% in Q4 FY21
- 55% of customers have five or more modules
- 32% of customers have six or more modules
- Subscription gross margins grew to 79% in FY21
- The number of subscription customers grew 75% YoY to 14,687 in Q3 FY22
There’s a decent chance that your favorite company is using CrowdStrike. Here’s a breakdown of companies that rely on CrowedStrike for protection:
- 63 of the Fortune 100
- 234 of the Fortune 500
- 14 of the top 20 banks
CrowdStrike is a relatively small company that performs a critical service in an increasingly digital world.
In our estimation, cybersecurity is a subsector of the economy poised for serious growth in the coming decade.
It’s not something that companies can “cut back on” during tough times, like they might do with advertising, for example. Cybersecurity is non-negotiable.
We believe that CrowdStrike is best positioned to outperform the field given its lead and network effects, but there are several other cybersecurity stocks that will likely do well in this secular trend.
Consider a cybersecurity ETF, like the Global X Cybersecurity ETF (BUG), for secular exposure.
#6. MicroStrategy (MSTR)
- Performance over 1-Year: +28%
- Market Cap: $5.6 billion
MicroStrategy is a small enterprise software company that owns a large amount of bitcoin.
The company’s CEO, Michael Saylor, is ensuring that MicroStrategy is properly exposed to this emerging technology by purchasing as much of it as he can.
We tend to agree with Saylor and believe that Bitcoin is perhaps the greatest technological achievement of our generation.
Money is a technology – and before Bitcoin, humanity had never designed something with the intention of it being sound money.
We simply looked for goods in our physical environment that best satisfied the properties of a hard monetary good.
Gold was the best option for most of human history. Then came Bitcoin.
Satoshi created absolute scarcity in the digital space – a feat that no other asset can claim.
He engineered a solution for a decentralized network to reach consensus without trusting one another: proof of work.
Bitcoin’s unchangeable monetary policy makes it the hardest form of money to ever exist.
Regardless of how much energy is expended to create more, the Bitcoin protocol adjusts to maintain its supply schedule.
This difficulty adjustment allowed Bitcoin to exit the cycle of debasement that has killed or greatly affected every monetary good before it.
Not to mention the energy innovations that will inevitably occur downstream of proof-of-work mining.
Bitcoin miners are economically incentivized to seek out the cheapest forms of energy to power their machines, which happens to be stranded energy that would otherwise be wasted.
Before going too far down the rabbit hole on the merits of Bitcoin, let’s get back to Michael Saylor and MicroStrategy stock.
MicroStrategy has acquired +120,000 BTC since it first began buying it in August 2020.
It has spent around $3.75 billion to do so, with an average price of ~$30K per bitcoin.
As you can see in the chart below, MSTR is an imperfect way to gain exposure to bitcoin in traditional investment accounts:
But it’s the best-worst bitcoin-exposed stock on the market.
It does not have execution risk like Coinbase or the various bitcoin mining stocks.
It’s a bitcoin holding company. And that’s how it’s being evaluated – perhaps trading like a leveraged bitcoin ETF to some degree.
>> Related: Grayscale Bitcoin Trust (GBTC)
#7. Amazon.com (AMZN)
- Performance over 1-Year: +5%
- Market Cap: $1.7 trillion
Despite shares trading flat since August 2020, Amazon kept doing Amazon things.
Owning a share of AMZN provides exposure to several different businesses – perhaps even more than owning Alphabet, which had to restructure its company to recognize those different businesses properly.
Here’s what a share of Amazon gets you:
- Top cloud computing company in AWS
- Rapidly growing advertising company in Amazon’s online retail operation
- An entertainment company in Prime Video
- Industry-leading shipping and logistics company
The company’s cloud computing operation, Amazon Web Services (AWS), generated over $16 billion in the recent quarter, up about 39% from a year ago.
AWS’s growth alone might be enough to buy the stock.
Also, Amazon is quietly becoming an advertising giant.
Companies pay Amazon to be a top search result for specific products sold on its platform, much like they do with Google and Meta.
Amazon’s advertising segment generated ~$8 billion in the last quarter, growing 50% year-over-year and eclipsing YouTube’s ad revenue.
Prime Video adds even more depth to the Amazon ecosystem. The company has steadily acquired valuable IP, buying film studio MGM and its catalog of 4,000 films and 17,000 TV shows.
And let’s not forget the backbone of Amazon: shipping and logistics.
Combining all of these revenue drivers makes it difficult to value the stock, but anyone that thought too much about Amazon’s valuation the last twenty years have missed out on the whole thing.
This company plays the long game in everything that it does. We’re excited to see what Amazon looks like ten years from now.
>> More: Join The Motley Fool Stock Advisor & see their top 10 stocks to buy right now.
Bottom Line: Best Tech Stocks to Buy
There you have it – the best tech stocks to buy. Each provides a little exposure to the most exciting trends in technology.
- Best Stocks to Buy Now
- Best AI Stocks
- Best Space Stocks
- Best Metaverse Stocks
- Best Cloud Computing Stocks
This article is for informational purposes only, and it is not intended to be investment advice. Learn more about our editorial integrity and public equities research framework to better understand how we selected the best technology stocks.