Technology companies have yielded impressive returns to investors over the last decade. Yet investors should take care in selecting their tech picks.
Consider companies with wide moats, stable growth rates and reasonable valuations - such as payments processing company Square run by Twitter CEO Jack Dorsey or Etsy's social marketplace that's expanding to provide new services such as logistics and insurance.
1. Apple
Apple is an iconic consumer devices and technology giant; one $1,000 invested back in 1980 would now be worth over $2.5 million!
Apple stands to benefit from its wide moat, strong cash flows and culture of innovation in order to achieve long-term growth. An increased focus on services could further bolster shareholder value as it diversifies revenue sources and stabilizes earnings. Finally, its powerful brand and large install base of loyal users ensure the company can thrive for decades more.
2. Alphabet
Alphabet, Google's parent company, is an AI giant with vast potential. Their products and services span across search, digital advertising, YouTube, Google Cloud services and Waymo's autonomous driving technologies.
Products and services of this company collect massive amounts of data, giving it a distinct edge over competitors and giving it the power to increase shareholder value through product development and market expansion efforts. Instead of paying out dividends, profits from sales are reinvested back into growth-focused pursuits rather than given as dividends.
3. Amazon
Amazon is poised to become a global leader in several of its businesses, such as e-commerce, cloud computing (Amazon Web Services) and digital streaming.
Amazon can take advantage of emerging markets as their populations become wealthier and shift from discretionary spending towards convenience purchases. Furthermore, it has made strides to increase profit margins - this can help strengthen shareholder value during uncertain economic times.
4. Microsoft
Microsoft is one of America's premier corporations and an integral component of most major stock market indexes - making it an essential addition to any tech portfolio.
Tech giant Intel is already reaping significant dividends from artificial intelligence's surge, including cybersecurity and cloud enterprise services.
Warren Buffett refers to these competitive advantages as providing it with a "wide economic moat", as well as paying out an increasing dividend over time.
5. Facebook
Reopening plays like this are always attractive to investors and the company offers potential advertising growth and VR/AR expansion that should benefit investors. Furthermore, its massive understanding of users can be leveraged to drive up ad revenue.
Stockholder value may have already been overstated but still has the opportunity to increase. Cambridge Analytica's role in spreading fake news has created reputational issues that have hindered user and revenue growth.
6. Amazon Web Services
Amazon may be best known for its online retail business, but the company also boasts a robust service business encompassing third-party seller services, advertising and subscriptions that generate higher-margin recurring revenue and help secure its lead over time.
Amazon Web Services, an Amazon division led by Andy Jassy for 15 years and providing software developers with online services and tools, stands out as an intriguing part of this company's business. It is one of the company's most profitable divisions.
7. Netflix
As digital connectivity has increased worldwide, Netflix has captured an increasingly larger portion of the streaming market. They have developed a robust platform with extensive content offerings; their growing customer base fosters growth for them as a company.
Operating margin is steadily rising and its stock has rebounded by more than 60% from its May lows. Furthermore, there remains considerable untapped potential in its ad-supported tier and expansion into live events.
8. Baidu
Baidu is China's preferred search engine and boasts an enormous user base that it can draw upon to expand and thrive. Baidu also benefits from the AI revolution by investing in innovative technologies like its own AI chips which optimize performance while simultaneously cutting costs.
Investors can capitalize on BIDU stock's turnaround by following Warren Buffett's advice to "be fearful when others are greedy, and greedy when others are fearful". Given its lofty analyst price targets and leading domestic position in AI, cloud computing, and autonomous driving technologies, investors should treat BIDU seriously as an undervalued play.
9. IAC
Barry Diller has established an impressive track record at IAC of incubating promising businesses and then spinning them off into successful standalone entities, such as Vimeo's imminent initial public offering (IPO).
IAC shareholders will gain tax-free ownership of home services marketplace Angi through its spin-off. Furthermore, this action eliminates dual class shares and converts them to one share/one vote shares, providing improved market valuation.
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