Apple stocks make up
23.4% of Warren Buffett’s portfolio. He is the most famous and successful money manager of the present days, whose tips and advice are highly embraced by investors. He is the fourth-richest person in the world with a net worth of over $80 billion! And this is largely due to his investing and entrepreneurial skills.
Earlier, he avoided dealing with tech companies. Buffet explained it by fast-paced changes in the sector and the lack of understanding of technology to make well-informed decisions. However, in 2016 he made a surprising bet on Apple’s stocks worth $1 billion. Since then Buffett has increased his share to $50 billion making Apple the top investment in the portfolio. The reason he changed his mind is Apple’s competitive advantage over competitors.
Buffett is right regarding the rapid changes in the tech industry, it has grown tremendously since the dotcom crash in 2004. Still, this sector is rather young and is more vulnerable to stock price fluctuations than established sectors like finance and real estate. Yet, volatility comes with both downward and upward trends making investing in tech companies promising. From 2009 to 2017, the
returns on the tech stocks outperformed those in all other sectors. So what are the top tech stock performers capable of bringing good gains in the long term?
1. Apple
Apple is a sure bet. It’s the world’s second valuable company whose branded products like iPad, Apple Watch, Mac, and iPhone have a massive fan base that generates billions in recurring revenue.
The main source of the company’s income is still iPhone — 48.29%. Yet, the company works hard on expanding its product range with video-streaming Apple TV+ and gaming platform Apple Arcade. Plus, the surge in sales of wearables like AirPods and Apple Watch makes the company a top performer in the tech sector.
What’s more, the tech giant is a shareholder-friendly company. Apple has returned $21 billion to shareholders in the third quarter, with $17 billion through repurchases and $3.6 billion in dividends. Currently, the stock offers a 1.20% dividend yield. Analysts expect that Apple’s earnings will record the
growth of about 9% in the coming years, thus, pushing the stock price up too.
The growing market share, strong brand name, and huge cash flows make Apple’s stocks the safest and most profitable investment in the tech sector.
2. Microsoft
Microsoft is a dominant company in the PC market, which has shifted its focus to cloud computing at the proper time. Since 2010, Microsoft’s stocks have surged
427%, becoming the true high performers. In 2019, Microsoft dethroned Apple and became the world’s most valuable company. The stock is up almost 40% along with the company’s revenue from cloud services (a 39% growth). Nonetheless, there is still an opportunity to benefit from purchasing Microsoft stocks.
The fast growth of the Azure cloud platform powered by AI and ML makes Microsoft a major innovator in the cloud computing business. The other ways the company leverages its capabilities to boost its growth are video game streaming and the Internet of Things. Given the analysts’ bullish expectations on the stock price and an increased dividend yield of
1.28%, Microsoft is a very appealing tech stock to buy and hold for decades.
3. Amazon
Amazon is on the list of the most profitable tech stocks as it constantly progresses due to technology adoption, acquisitions, and coverage of new markets. Once established as an online bookstore, Amazon has experienced amazing transformations. Now, it’s the leading e-commerce company worldwide, which implements ML to offer customers the most in-demand products. Also, Amazon has a huge market share of 32% in the cloud space due to Amazon Web Services. After the launch of its Alexa voice assistant and Echo smart speakers, the company entered the fast-growing market of IoT. Furthermore, Amazon invests in robotics to improve its workflow.
2019 started for Amazon by setting another record in profit for the fourth quarter in a row. However, since quarter 2, the stock price has been down 10%. Many associate this with Amazon’s investment in infrastructure for its new one-day Prime delivery. They spent nearly $1 billion on this initiative. Still, the investment bank is optimistic about the future of the project and expects Amazon’s long-term gains to grow by
18.9% in 2020. The current price decline is estimated as a good time to acquire top-tier tech stock.
4. NetEnt
NetEnt is a representative of the gaming market. The company has earned a reputation as a leading
casino solutions developer and is among the big three names in the industry. Established in Sweden in 1996, NetEnt has been on the market for over 20 years, which makes it a true whale in online gaming. The company is highly interested in innovative tech. Therefore, it now puts a special focus on the development of games powered by virtual reality and live dealer software. In 2018, NetEnt presented its first VR-based slot game — Gonzo’s Quest. It is now regarded as a benchmark of quality for VR gambling solutions.
When it comes to the stock market, NetEnt’s shares are considered B-shares and are listed at Nasdaq, London Stock Exchange, etc. Recently, the stocks have been performing not so well. Within a year, they have dropped 20%. Although the company’s stocks are now traded at their 10-year low, many investors believe it is a good time to buy in as the price may go up.
5. Nvidia
Nvidia is at the forefront of AI and ML. It implements the tech in gaming products and self-driving vehicles that are expected to be a hot trend in the years to come. The company is one of the major producers of the AI-powered chips but has strong competitors like AMD and Semiconductor.
Despite the recent decrease in the earnings by 8%, the Nvidia fundamentals are strong. The company increased its data center capacity by acquiring Mellanox Technologies to improve its positions in AI, smart self-driving cars, and gaming sectors. Analysts indicate that it is a good buy point of Nvidia’s stocks as they believe the company offers a prosperous long-term opportunity.
Stick to the leaders
You may not know much about the technology market just like Warren Buffett. But you can follow his approach and buy the stocks of the tech giants we’ve mentioned in the list. The established companies will ensure the best profit because they enjoy strong positions in the market and they are a few steps ahead of their competitors. An additional benefit is a high dividend yield paid to the shareholders of large enterprises. Despite the recession, the stocks of Apple, Microsoft, Amazon, NetEnt, and Nvidia are investments that promise alluring gains in the long-term perspective.