Introduction
Earlier, one was required to move to the United States of America to live the American Dream. But now, it is possible to enjoy the same by partaking in the growth journey of high-growth tech stocks. The world over, investors are looking to ride the journey of stock market gains from some of the best-performing tech stocks.
And rightly so, as the tech sector has consistently delivered exceptional returns on the back of its dynamic nature and constant innovation. Investors are drawn to the super-normal returns by investing in high-growth tech stocks. We at Equentis Wealth Advisory Services Private Limited, a SEBI registered investment advisory, as leading wealth creation advisors, are committed to partner with you in helping you pick high growth stocks in the technology sector.
To know what makes tech stocks attractive, let us look at their performance in 2023.
Top-performing Tech Stocks in 2023
The year 2023 rang in gains for MAMAA, or the group comprising Meta, Amazon, Microsoft, Apple, and Alphabet. The group is said to have collectively added $3.9 trillion to their stock value in 2023. The combined stock value has crossed $10 trillion, making it the biggest annual increase in the history of US stock markets.
The group more than made up for the losses in 2022 after a robust performance in 2019 when they garnered $1.73 trillion in stock value. The following two years further boosted their stock values owing to the tech boom of 2020 and 2021. However, the debacle of 2022 came about on the back of uncertain economic conditions, high inflation, and steep interest rates. Incidentally, MAMAA made up the same amount in 2023, viz, $3.9 trillion.
The real heroes of the growth story were Nvidia Corp, Meta, and Amazon. The NASDAQ accelerated 43% on the back of robust performance from Nvidia Corp. The chipmaker’s stock value rose by a whopping 239% in 2023. Meta followed at a near 200% increase in its price. Amazon stock rose 81%, while Microsoft reported a 58% rise in its stock price. Apple took a beating as it suffered revenue declines in four straight quarters.
Factors Driving Interest in High-growth Tech Stocks
Technological development: The tech sector depends heavily on ongoing technological development. Businesses that can maintain their innovative edge by creating ground-breaking products and services or utilize cutting-edge technology like Blockchain and Artificial Intelligence, are well-positioned for rapid expansion and thus, higher stock price valuation.
Shifting consumer behavior: Shifts in consumer behavior help high-growth tech stocks. Businesses that can predict and take advantage of emerging consumption trends have an excellent opportunity to increase their market share as technology becomes increasingly integrated into daily life. For instance, the expansion of cloud computing, e-commerce, and the growing use of digital services have all contributed to the recent growth of numerous IT companies.
Global expansion: Tech firms have unprecedented prospects for global expansion thanks to the interconnectedness of today’s world. Their strong international presence allows them to tap into opportunities in global markets and thus capitalize on the rising demand for technology around the globe.
Options to Invest in High-growth Tech Stocks
- Exchangе-tradеd funds (ETFs) and mutual funds: If invеsting in individual stocks sееms overwhelming, consider tеch focusеd ETFs or mutual funds. Thеsе funds pool money from multiplе invеstors to invеst in a divеrsifiеd portfolio of tеch stocks. ETFs like Technology Sеlеct Sеctor SPDR Fund (XLK) are a great option that providе еxposurе to large-cap tеch companies such as Applе, Microsoft, and Nvidia.
- Embracе indеx funds: Index funds mirror еstablishеd indicеs likе thе NASDAQ and offеr another avеnuе for tech invеstmеnt. Thеsе funds passively track the performance of the undеrlying indеx and provide a simplе and low-cost option to gain exposure to thе broadеr tеch sеctor. Rеturns or lossеs closely reflect thе indеx being trailеd.
Stocks to Look for in 2024
Going by the performance of the tech stocks in 2023, an investor may consider adding these high-growth stocks to their portfolio in 2024. These are some stocks besides the top gainers of 2023.
Electronic Arts Inc. (EA)
Industry: Consumer Entertainment
Holding a top position in the gaming industry in 2024, EA has a diverse portfolio of franchises with a solid base of global players. Its emphasis on PC, mobile, and console gaming content generates a sizable income stream. Furthermore, EA’s dedication to innovation, seen as launches of new titles and expansion into cloud gaming, also encourages future growth.
Tencent Holdings
Industry: Technology/Internet Content & Information
Some factors making it an excellent stock to hold are, diversified revenue streams, a solid SM presence, investments in global companies, continuous innovation, and a diverse investment portfolio that offers stability and growth potential.
Copart
Industry: Services/Automotive Retail
Copart is a leader in the online vehicle auction industry and its innovative, tech-driven approach. It has a strong market presence, consistent revenue growth, and a business model focused on technology that benefits from the increasing shift toward digital platforms.
Gilead Sciences
Industry: Healthcare/Biotechnology
The factors making Gilead Sciences a top pick for 2024 are a strong-research driven approach, strategic acquisitions, and leadership position in pioneering breakthroughs in developing antiviral drugs and treatments.
Tesla Inc.
Industry: Auto Manufacturing
Presently holding a second position in EV production, Tesla Inc., with its strong focus on sustainability and clean energy, is looking to start a megapack battery manufacturing plant by Q4 ‘24. With steady revenue growth, plans to scale capacities, launch new manufacturing units, and strong brand recognition, make it a good stock to hold in the new year.
Conclusion
Tech stocks have returned exponential returns and are expected to perform well in the near future, too. Today, one can partake in the tech stock-led growth story without relocating. However, consulting a registered stock advisory will prove helpful even as options such as ETFs and index funds are available to invest in these tech stocks.
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