In this article, we will discuss the 10 best tech stocks to buy now. If you want to skip our detailed analysis of the technology sector and these stocks, go directly to the 5 Best Tech Stocks to Buy Now.
The technology sector remains an attractive investment avenue for investors around the globe, whether they are novices just starting out their investment journey, or seasoned investors like Warren Buffett, Cathie Wood, Ken Griffin, and John Armitage, whose investment portfolios are brimming with tech stocks.
The COVID-19 pandemic affected industries and markets worldwide, however, if a sector thrived during the global health crisis, it had to be the technology sector. Tech companies like Zoom Video Communications, Inc. (NASDAQ:ZM), experienced a pandemic-driven growth of 369% in Q4 2020, and an increase in market cap of $58 billion as compared to the year before the global COVID-19 pandemic.
According to Forrester, the US tech industry outlook is positive, with the budget for the technology sector expected to increase by 7.4% in 2021 and 6.7% in 2022. As companies adjust to the new normal, they will automate more processes and shift to the cloud, which will result in strong software spending: 10% growth in software spending is expected in 2021 and 11% in 2022.
Higher investment in technology equipment is expected in the upcoming years, due to data center capacity expansion, 5G buildout, and growing electronics content in automotive and industrial applications.
Some of the most popular tech stocks among hedge funds are the Big Five US tech giants, namely Amazon.com, Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), and Apple Inc. (NASDAQ:AAPL).
With this context in mind, let’s discuss the 10 best tech stocks to buy now. We considered the hedge fund sentiment around each stock, analysts’ ratings, long-term growth potential, and fundamentals while selecting these stocks.
Why are we using hedge fund popularity as a metric in our stock selection methodology?
Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Tech Stocks to Buy Now
10. salesforce.com, inc. (NYSE:CRM)
Number of Hedge Fund Holders: 108
Salesforce.com, inc. (NYSE:CRM) is a Californian software company, best known for its cloud-based solutions. The company markets itself primarily as a customer relationship management (CRM) service provider. salesforce.com, inc. (NYSE:CRM)’s suite of applications also targets marketing automation, customer service, application development, and data analytics.
Out of the 873 hedge funds monitored closely by Insider Monkey, 108 funds were bullish on salesforce.com, inc. (NYSE:CRM), with stakes valued at $11.76 billion, at the end of June. This is compared to 91 hedge funds in the previous quarter, with stakes worth $8.83 billion.
On September 24, Rishi Jaluria, an RBC Capital analyst, kept an Outperform rating on salesforce.com, inc. (NYSE:CRM). He raised the price target to $325 from $310.
RV Capital Management mentioned salesforce.com, inc. (NYSE:CRM) in its Q2 2021 investor letter. Here is what they had to say:
“Part 5: A New Investment in Salesforce.com
The assertion that mega caps can also be mispriced is a good segue to our second new investment in Salesforce.com. Salesforce is one of the largest software companies in the world with a market value of around US$ 250 bn. It is best known for its customer relationship management or “CRM” solution, known as its Sales Cloud. It has three additional clouds (“Service,” “Marketing” and “Commerce”) as well as a thriving platform business with both owned and 3rd party software solutions.
I first came across Salesforce in 2013. I was invested in Bechtle, a German company that provides companies with their in-house IT. I kept hearing about a strange new concept called “the Cloud” and wanted to get up to speed on the topic in case it was a risk to Bechtle. As a result, I picked up a copy of “Behind the Cloud”. It documents how Salesforce.com pioneered cloud-based software and revolutionised the software industry.
Since then, I have followed Salesforce from a distance and visited it several times in San Francisco. I did not consider it seriously as an investment though as for much of the period, I had not yet overcome my aversion to loss-making companies.
This changed in December last year when Salesforce announced the acquisition of Slack (a former investment of the Business Owner Fund, described in my 2020 half-year letter) for US$ 27 bn. On the date of announcement, Salesforce’s market value fell by around US$ 20 bn. Effectively, the market was saying that Slack was almost worthless, which, as an enthusiastic owner of Slack, I disagreed with. Initially, I decided to keep our Slack stock and roll it into Salesforce (as part of the consideration was in Salesforce’s own stock). As Salesforce’s price fell further in the subsequent months, I bought its stock directly to make it a full-size position post the closing of the Slack acquisition…” (Click here to see the full text)
9. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 113
The next top tech stock to buy now according to our research is Netflix, Inc. (NASDAQ:NFLX), a California-based online streaming service and an original programming production company. Netflix, Inc. (NASDAQ:NFLX) offers subscription-based access to films and TV series to customers around the globe. Netflix, Inc. (NASDAQ:NFLX) is categorized as a Silicon Valley high-tech company, and is one of the most trusted global brands. As of Q2 2021, Netflix, Inc. (NASDAQ:NFLX) reported approximately 209 million paying customers.
As of the end of the second quarter of 2021, 113 hedge funds tracked by Insider Monkey were long Netflix, Inc. (NASDAQ:NFLX), with reported stakes of $13.2 billion.
Benjamin Swinburne, a Morgan Stanley analyst, kept an Overweight rating on the stock, raising the price target to $675 from $650.
“For Netflix, we believe the underlying businesses for the company remain strong. With Netflix, we anticipate content spending to moderate as subscriber growth continues, which we believe should result in attractive double-digit earnings and cash flow growth over the next five years and beyond.”
8. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 135
Another great tech stock to buy now is Uber Technologies, Inc. (NYSE:UBER), a mega company that has made transportation feasible for millions with its mobility-as-a-service business model. The San Francisco-based company serves customers in more than 900 metropolitan cities around the world.
At the end of June, 135 hedge funds in Insider Monkey’s elite database were bullish on Uber Technologies, Inc. (NYSE:UBER), up from 130 in the previous quarter.
Mark Mahaney, an Evercore ISI analyst, added Uber Technologies, Inc. (NYSE:UBER) to the “Tactical Outperform List”, while keeping an Outperform rating on the stock with a price target of $70. He believes that Uber Technologies, Inc. (NYSE:UBER) is one of the least risky stocks to invest in, and its growing position as a food delivery service adds even more value to the shares.
Uber Technologies, Inc. (NYSE:UBER) is quite popular amongst the smart money, making it a feasible investment, just like Amazon.com, Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), and Apple Inc. (NASDAQ:AAPL).
“The pandemic has also brought attention to the question of gig worker employment status for companies, including ClearBridge holdings Uber and Lyft. In the U.K., Uber proactively classified its drivers as “workers” ahead of final rulings from the British court system. The worker status in the U.K. is a designation between self-employed and employed status that entitles drivers to minimum wage, holiday pay and in some cases a pension.
ClearBridge has engaged with Uber on labor issues since its IPO, and we have given feedback over that time to the CEO, CFO, Chief Legal Officer and Investor Relations on labor relations as well as strategy and communications. Uber’s agreement on this designation is ahead of other competitors in the market and the legal mandate represents a step forward in the company’s thinking about labor. The agreement represents a short-term hit to earnings, yet in some ways it places Uber ahead of the market in its ability to balance labor and shareholder interests. Workers benefit from improved conditions, with new contributions amounting to roughly 3% of a driver’s earnings, while Uber establishes more certainty on costs and visibility into its regulatory environment and operation conditions in the future.”
7. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 138
Apple Inc. (NASDAQ:AAPL)’s Macintosh operating system is one of the most widely used and well-liked among masses. As of 2021, Apple Inc. (NASDAQ:AAPL) is the fourth largest smartphone and computer manufacturer. The company has extremely loyal customers and Apple Inc. (NASDAQ:AAPL) is one of the most valuable brands in the world.
As of the end of the second quarter of 2021, 128 hedge funds tracked by Insider Monkey were bullish on Apple Inc. (NASDAQ:AAPL), up from 127 in the previous quarter.
Evercore ISI analyst Amit Daryanani kept an Outperform rating on Apple Inc. (NASDAQ:AAPL)’s shares, with a $180 price target on October 15. He said that Apple Inc. (NASDAQ:AAPL) had great chances to expand in the digital advertising market over the next few years.
ClearBridge Investments mentioned Apple Inc. (NASDAQ:AAPL) in its Q1 2021 investor letter. Here is what they said:
“As we actively manage holdings and position sizes, we look to regularly recycle capital into more compelling opportunities. Maintaining our valuation discipline, we sharply reduced our position in Apple, whose shares more than doubled following our initial purchase in mid-2019 with an earnings multiple rising from the low-to-mid teens to nearly 30x.”
6. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 143
PayPal Holdings, Inc. (NASDAQ:PYPL) is an American financial technology company that offers online money transactions via its digital payment system. The company operates in most countries, allowing a safe online alternative to paper money and manual transfer of funds.
The stock is quite popular among hedge funds. 143 hedge funds in Insider Monkey’s database were bullish on PayPal Holdings, Inc. (NASDAQ:PYPL) at the end of June. This is compared to the same number of hedge funds in the previous quarter as well. Axel Capital Management is the leading stakeholder in PayPal Holdings, Inc. (NASDAQ:PYPL), with stakes valued at $11.4 million.
“Top performance detractors for the first quarter include PayPal. PayPal reported +40% growth in total payment volume to $311 billion during the second quarter’s most recent report. In spite of this impressive growth, the stock detracted from performance as the market became overly concerned about the pace at which its legacy eBay business rolled off. Despite the stock’s premium valuation, we continue to hold PayPal as a core position and think eBay represents short-term noise in PayPal’s longer-term drive to become a “super-app” with payments at its core.”
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Disclosure: None. 10 Best Tech Stocks to Buy Now is originally published on Insider Monkey.