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Technology stocks have always been a favorite among investors due to their high return potential and the opportunity to invest in innovative, dynamic companies. The technology sector is ever-evolving, and identifying stocks with strong fundamentals and growth prospects can be challenging.

In the last year, tech-centric ETFs have shown impressive results. The Technology Select Sector SPDR® ETF (XLK) led the pack with a remarkable 56.02% annual total return, significantly outperforming broader market indices. Not far behind, the iShares Global Tech ETF (IXN) delivered a 53.00% return, highlighting the worldwide reach of the tech industry. The Vanguard Information Technology ETF (VGT) also excelled, posting a 52.65% return, largely due to its holdings in major tech corporations. These performances underscore the tech sector’s robust growth and its increasing importance of tech industry.

Key Takeaways:

• The technology sector offers a range of investment opportunities, from established companies to innovative startups.
• These seven technology stocks provide a mix of established leaders and growth-oriented companies, each with unique strengths and market positions.

What is a Technology Stock?

Technology stocks represent shares in companies that primarily focus on the research, development, and distribution of technology-based goods or services. These companies operate across various subsectors, including:

• Software and Services
• Hardware and Equipment
• Semiconductors and Semiconductor Equipment
• Internet and Direct Marketing Retail
• IT Services
• Communications Equipment
• Electronic Equipment, Instruments, and Components

Technology Market Growth:

The global tech market, encompassing consumer, business, and government sectors, is projected to expand from $8.51 trillion in 2022 to $11.47 trillion by 2026, according to MGI Research. This growth represents a 5-year Compound Annual Growth Rate (CAGR) of 7.75%, indicating substantial development in the technology industry worldwide.

The global technology market, valued at $802.07 million in 2024, is projected to experience rapid growth. Analysts forecast a robust compound annual growth rate (CAGR) of 25.73% over the next seven years. If this trend continues, the market is expected to reach a substantial $3,168.13 million by 2031.

Performance Comparison of Top Technology Stocks

7 Best Technology Stocks to Buy

The Technology industry is primed for sustained growth, propelled by revolutionary technologies. Seven Technology stocks have emerged as particularly compelling investment prospects, well-positioned to leverage the sector’s expansion. These standout companies have garnered significant interest from hedge funds, according to Insider Monkey’s Q2 2024 report.

1. Salesforce, Inc. (CRM)

Number of Hedge Fund Holders (Q2 2024): 120

Salesforce is a global leader in customer relationship management (CRM) software, offering cloud-based solutions that revolutionize how businesses manage customer relationships and sales processes.

Salesforce’s Q2 fiscal 2025 results showcased robust growth, with revenue hitting $9.33 billion, up 8% year-over-year and 9% in constant currency. Subscription and support revenue grew to $8.76 billion, a 9% increase. The company reported a GAAP operating margin of 19.1% and a non-GAAP operating margin of 33.7%, both showing significant improvement.

Current Remaining Performance Obligation reached $26.5 billion, up 10% year-over-year. Operating cash flow increased by 10% to $0.89 billion, while free cash flow rose 20% to $0.76 billion. Salesforce returned $4.3 billion to stockholders through share repurchases and $0.4 billion in dividends.

According to insidermonkey, Fisher Asset Management, led by Ken Fisher, holds approximately 12 million Salesforce (CRM) shares, valued at roughly $3.1 billion.

CEO Marc Benioff highlighted the new Agentforce AI platform, aiming to revolutionize enterprise software. CFO Amy Weaver emphasized disciplined growth, with record-high operating margins. The company raised its fiscal year guidance for non-GAAP operating margin and cash flow growth, underlining its strong performance and optimistic outlook.

According to Wall Street Analyst on CRM stock. Of the 52 analysts following the stock, 33 give it a Buy and 13 has it at Hold.

Why We Picked CRM:

We selected Salesforce for its dominant position in the CRM market and its consistent ability to innovate and expand its product offerings. The company’s strategic acquisitions, such as Slack and Tableau, have strengthened its ecosystem and diversified its revenue streams. Salesforce’s focus on AI integration through its Einstein platform demonstrates its commitment to staying at the forefront of technological advancements. With the increasing importance of data-driven customer relationships, Salesforce is well-positioned to benefit from the ongoing digital transformation trends across industries.

2. Crowdstrike Holdings Inc (CRWD)

Number of Hedge Fund Holders (Q2 2024): 69

Crowdstrike is a leading cybersecurity company, providing cloud-delivered endpoint protection and threat intelligence services. Crowdstrike’s Falcon platform offers next-generation antivirus and endpoint detection and response capabilities, protecting organizations from advanced cyber threats.

CrowdStrike’s Q2 fiscal 2025 results show impressive growth, with total revenue reaching $963.9 million, up 32% year-over-year. Annual Recurring Revenue grew to $3.86 billion, with $217.6 million in net new ARR added this quarter.

GAAP net income surged more than fivefold to $47.0 million, while non-GAAP net income rose 45% to $260.8 million. The company reported record Q2 operating cash flow of $326.6 million and free cash flow of $272.2 million.

According to insidermonkey, Citadel Investment Group, led by Ken Griffin, holds about 1.5 million call options on Crowdstrike (CRWD), valued at approximately $574.6 million.

Despite a July cyber incident, CrowdStrike demonstrated resilience and innovation. Their focus on consolidating cybersecurity solutions has resonated with organizations, evident in high module adoption rates and strategic partnerships.

According to Wall Street Analyst on CRWD stock. Of the 51 analysts following the stock, 32 give it a Buy, 8 has it at Hold and 1 calls it a sell.

Why We Picked CRWD:

Crowdstrike made our list due to its cutting-edge approach to cybersecurity and its rapidly growing customer base. As cyber threats become more sophisticated, Crowdstrike’s cloud-native, AI-powered platform offers a compelling solution for businesses of all sizes. The company’s ability to quickly adapt to new threats and its high customer retention rates indicate strong product-market fit. With cybersecurity becoming an increasingly critical concern for organizations worldwide, Crowdstrike’s growth prospects appear robust.

3. Broadcom Inc (AVGO)

Number of Hedge Fund Holders (Q2 2024): 130

Broadcom is a leading provider of semiconductor and infrastructure software solutions, with a focus on wired and wireless communications. Broadcom’s semiconductor solutions are used across various industries, including data center networking, enterprise software, broadband, and wireless communications.

Broadcom Inc. reported strong second-quarter fiscal 2024 results, with revenue soaring 43% year-over-year to $12,487 million. GAAP net income reached $2,121 million, while non-GAAP net income hit $5,394 million. Adjusted EBITDA stood at $7,429 million, representing 59% of revenue. The company’s GAAP diluted EPS was $4.42, with non-GAAP diluted EPS at $10.96. Free cash flow amounted to $4,448 million, or 36% of revenue.

Broadcom announced a quarterly dividend of $5.25 per share and raised its fiscal 2024 revenue guidance to approximately $51.0 billion, including VMware’s contribution. The company also plans a ten-for-one forward stock split, effective July 15, 2024, aiming to increase stock liquidity and accessibility.

According to insidermonkey, GQG Partners, led by Rajiv Jain, holds a $5.2 billion position in Broadcom Inc (AVGO), consisting of 32,349,800 shares.

Hock Tan, President and CEO of Broadcom Inc., stated: “Broadcom’s second quarter results were once again driven by AI demand and VMware. Revenue from our AI products was a record $3.1 billion during the quarter. Infrastructure software revenue accelerated as more enterprises adopted the VMware software stack to build their own private clouds.” (Quote from the official site)

According to Wall Street Analyst on CRWD stock. Of the 46 analysts following the stock, 30 give it a Buy and 8 has it at Hold.

Why We Picked AVGO:

Broadcom’s inclusion is based on its diversified portfolio of semiconductor and infrastructure software solutions, which positions it well to benefit from multiple technology trends. The company’s strong cash flow generation and history of successful acquisitions (including the recent VMware deal) demonstrate its ability to grow both organically and through strategic expansion. Broadcom’s leadership in critical technologies like 5G, Wi-Fi 6, and data center solutions provides it with significant growth opportunities in the evolving tech landscape.

4. Qualcomm Inc. (QCOM)

Number of Hedge Fund Holders (Q2 2024): 100

Qualcomm is a global leader in wireless technology and a key player in the 5G revolution. Qualcomm’s chips and modems power smartphones, IoT devices, and automotive applications. Their 5G technology is expected to enable faster speeds and lower latency for the next generation of connected devices.

Qualcomm reported strong third-quarter fiscal 2024 results, with revenues reaching $9.4 billion. The company saw significant growth in its QCT automotive segment, with an 87% year-over-year increase. GAAP earnings per share stood at $1.88, while non-GAAP EPS hit $2.33.

CEO Cristiano Amon highlighted the successful execution of Qualcomm’s growth and diversification strategy. He expressed excitement about the launch of Snapdragon X Series solutions for PCs, marking a key milestone in the company’s transformation into an intelligent computing leader.

According to insidermonkey, Matrix Capital Management, led by David Goel and Paul Ferri, owns a $2 billion stake in Qualcomm Inc. (QCOM), comprising 10 million shares.

Looking ahead, Qualcomm provided guidance for the fourth quarter, projecting revenues between $9.5 billion and $10.3 billion. The company continues to focus on innovation across major industries, leveraging its expertise in AI, high-performance computing, and connectivity to drive future growth.

According to Wall Street Analyst on QCOM stock. Of the 39 analysts following the stock, 17 give it a Buy, 13 has it at Hold and one calls it a Sell.

Why We Picked QCOM:

We chose Qualcomm for its pivotal role in the 5G revolution and its strong position in mobile chipsets. As 5G networks continue to expand globally, Qualcomm stands to benefit significantly from increased demand for its technologies. The company’s expansion into new markets such as automotive and IoT further diversifies its revenue streams and opens up additional growth avenues. Qualcomm’s extensive patent portfolio also provides a steady income stream and reinforces its technological leadership.

5. Cisco Systems, Inc. (CSCO)

Number of Hedge Fund Holders (Q2 2024): 62

Cisco is a renowned technology company, providing networking equipment, software, and services to businesses worldwide. Cisco’s networking equipment and software are used to build and manage IT networks, connect devices and people, and secure data and communications. Their products include routers, switches, wireless access points, and software solutions.

Cisco announced its Q4 and FY 2024 results, with Q4 revenue at $13.6 billion (down 10% YoY) and full-year revenue at $53.8 billion (down 6% YoY). Q4 non-GAAP EPS was $0.87, while full-year non-GAAP EPS reached $3.73.

The company reported strong growth in key areas, with total ARR up 22% to $29.6 billion and software revenue increasing 9% to $18.4 billion. Product order growth was 14% year-over-year, or 6% excluding Splunk.

According to insidermonkey, Harris Associates, under Natixis Global Asset Management, holds 10.45 million shares of Cisco Systems (CSCO), valued at $496.38 million.

Looking ahead, Cisco provided guidance for Q1 FY2025 with revenue between $13.65-$13.85 billion, and full-year FY2025 revenue projected at $55.0-$56.2 billion. The company also announced a restructuring plan with estimated pre-tax charges up to $1 billion.

According to Wall Street Analyst on CSCO stock. Of the 28 analysts following the stock, 8 give it a Buy and 20 has it at Hold.

Why We Picked CSCO:

Cisco’s inclusion is based on its enduring leadership in networking equipment and its successful transition towards software and subscription-based services. The company’s broad product portfolio and strong brand recognition make it a key player in enterprise IT infrastructure. Cisco’s focus on high-growth areas like cybersecurity, cloud networking, and 5G infrastructure positions it well for future growth. Additionally, the company’s consistent dividend growth makes it an attractive option for income-focused investors.

6. Dell Technologies Inc. (DELL)

Number of Hedge Fund Holders (Q2 2024): 88

Dell is a leading provider of computers, storage, and infrastructure solutions, serving a wide range of customers. Dell’s products include personal computers, servers, storage, and networking solutions. They also offer a range of services, including cloud computing, data storage, and cybersecurity.

Dell Technologies reported strong first quarter fiscal 2025 results, with revenue reaching $22.2 billion, a 6% year-over-year increase. The Infrastructure Solutions Group saw significant growth, with revenue up 22% to $9.2 billion, including record servers and networking revenue of $5.5 billion, a 42% increase. Client Solutions Group revenue remained flat at $12.0 billion, though commercial client revenue grew 3% to $10.2 billion. Diluted earnings per share rose 67% to $1.32, while non-GAAP diluted earnings per share slightly decreased by 3% to $1.27.

The Dell AI Factory integrates Dell infrastructure with partners like NVIDIA, Meta, and Microsoft. It features the PowerEdge XE9680L server, supporting 72 NVIDIA Blackwell GPUs per rack. PowerStore software updates offer 66% performance boost and improved multicloud capabilities. Dell also introduces AI PCs with Qualcomm Snapdragon processors, promising enhanced AI performance and battery life.

According to insidermonkey, Coatue Management’s Philippe Laffont holds a $1 billion stake in Dell Technologies Inc. (DELL), consisting of 7,311,852 shares.

Jeff Clarke, vice chairman and chief operating officer, Dell Technologies, stated. “No company is better positioned than Dell to bring AI to the enterprise.” (Quote from the official site)

According to Wall Street Analyst on DELL stock. Of the 26 analysts following the stock, 15 give it a Buy and 5 has it at Hold.

Why We Picked DELL:

Dell Technologies was selected for its strong position in both the consumer and enterprise technology markets. The company’s successful pivot from being primarily a PC manufacturer to a comprehensive IT solutions provider demonstrates its adaptability. Dell’s focus on high-growth areas like hybrid cloud, edge computing, and as-a-Service offerings aligns well with current enterprise IT trends. The recent spin-off of VMware has also improved Dell’s financial flexibility, potentially paving the way for new strategic initiatives.

7. International Business Machines Corp. (IBM)

Number of Hedge Fund Holders (Q2 2024): 54

IBM is a veteran technology company that has successfully reinvented itself, currently focusing on cloud computing and artificial intelligence (AI) solutions. IBM offers cloud infrastructure, AI and data analytics platforms, cybersecurity, and IT consulting services. Their Watson AI platform is renowned for its natural language processing capabilities.

IBM’s first-quarter results for 2024 demonstrate resilience and growth across key segments. The Software division led the charge with a 5.5% revenue increase to $5.9 billion, driven by strong performances in Red Hat (up 9%) and Automation (up 13%). Consulting revenues remained relatively stable at $5.2 billion, with Business Transformation and Technology Consulting both showing modest growth of 3% at constant currency.

The Infrastructure segment saw a slight decline of 0.7% to $3.1 billion, but Hybrid Infrastructure grew by 5%, with IBM Z and Distributed Infrastructure both showing positive momentum. While Infrastructure Support faced challenges with an 8% decline, the overall performance indicates IBM’s continued success in adapting to evolving market demands and leveraging its strengths in cloud computing, AI, and enterprise solutions.

According to insidermonkey, Ken Griffin’s Citadel Investment Group holds 2,214,900 call options on IBM, valued at $383 million.

Arvind Krishna, IBM chairman and chief executive officer, stated. “To strengthen our position in today’s hybrid cloud and AI-driven technology landscape, we also announced our intent to acquire HashiCorp. IBM’s and HashiCorp’s combined portfolios will help clients manage growing application and infrastructure complexity and create a comprehensive hybrid cloud platform designed for the AI era.” (Quote from the official site)

According to Wall Street Analyst on IBM stock. Of the 22 analysts following the stock, 8 give it a Buy, 8 has it at Hold and 3 calls it a Sell.

Why We Picked IBM:

We included IBM due to its successful transformation into a hybrid cloud and AI-focused company. IBM’s strong position in enterprise IT services, coupled with its leadership in emerging technologies like quantum computing, positions it well for long-term growth. The company’s extensive patent portfolio and continued investment in R&D demonstrate its commitment to innovation. IBM’s stable dividend and focus on high-margin businesses make it an attractive option for investors seeking both growth potential and income.

CHECK OUT OTHER STOCKS

Conclusion

The technology sector continues to offer exciting investment opportunities in 2024, driven by ongoing digital transformation, innovation, and the increasing importance of technology in our daily lives and business operations. The seven stocks discussed in this article – Salesforce, Crowdstrike, Broadcom, Qualcomm, Cisco Systems, Dell Technologies, and IBM – represent a diverse range of technology subsectors and offer unique growth prospects.

FAQs

1. What are the key considerations when investing in technology stocks?

When investing in technology stocks, it’s crucial to assess the company’s financial health, market position, competitive advantage, and future prospects. Analyze revenue and earnings growth, market share, and the strength of their product pipeline. Additionally, stay informed about industry trends and the company’s ability to innovate and adapt.

2. How do I manage risk when investing in technology stocks?

Risk management strategies include diversification, setting stop-loss orders, and conducting thorough research. Diversify your portfolio across sectors and asset classes. Set stop-loss orders to automatically sell a stock if it reaches a certain price, limiting potential losses. Stay informed about company and industry developments to make timely investment decisions.

3. Are technology stocks suitable for long-term investment?

Technology stocks can be suitable for long-term investing, depending on the specific company and your investment strategy. Some technology companies are established leaders with stable businesses, while others are more dynamic and prone to rapid change. Assess the company’s business model, competitive advantages, and ability to adapt over time.

4. How do I evaluate the growth potential of a technology stock?

To evaluate growth potential, consider your investment goals and time horizon. Analyze the company’s financial health, market share, and competitive advantage. Assess their ability to innovate and adapt to new technologies. Also, consider the broader industry trends and the company’s position within those trends.

5. What are the common pitfalls to avoid when picking technology stocks?

Common pitfalls include investing in overly hyped stocks without proper research, failing to diversify your portfolio, and chasing short-term trends. Conduct thorough due diligence, understand the company’s business model and financials, and consider seeking advice from a financial advisor.