It’s no secret that tech stocks have taken a beating this year. While some investors would see this as a reason to stay away, others see a buying opportunity. If you think it’s time to get into — or back into — tech, here’s what you need to know.
What Companies Are Considered Tech Stocks?
First, it’s important to define tech stocks. You probably know some of the big ones: Amazon, Google, Meta, Apple and so on. These are well-known names to most investors — and most consumers. But there are many other tech stocks as well. In fact, any company that sells products or services in the technology sector is considered a tech stock — so, everything from cloud computing and software as a service companies, to smart energy providers, to manufacturers of computer hardware and microchips, to streaming services and smart phone manufacturers. It’s a big sector, so there are a lot of companies to choose from.
Why Invest in Technology Stocks?
Most tech stocks are traded on the Nasdaq exchange, so looking at the performance of the Nasdaq Composite Index is a good indicator of the health of the sector. From Jan. 1, 2022, to Aug. 31, 2022, the Nasdaq Composite was down 25.37%.
At first glance, this may seem like a really good reason to stay as far away from tech stocks as possible. But, looking a little closer, it’s possible that tech stocks are due for a rally. While the days of making millions by buying the IPOs of Apple or Google are a distant memory, there’s still some running room in tech stocks.
In fact, tech stocks are no strangers to seemingly catastrophic downturns. In 2000, during the so-called “tech wreck,” the Nasdaq dropped 25.2% from March to November 28. The sector fared somewhat better in the Great Recession of 2008, dropping just 13.8% in a similar timeframe during that bear market.
Here are some tech stocks to look at in September 2022:
|Company||YTD Performance — As of Sept. 8, 2022||Closing Price on Sept. 8, 2022|
|Micron Technology (MU)||-42.50%||$55.07|
|Citrix Systems (CTXS)||5.50%||$103.70|
|ON Semiconductor (ON)||0.50%||$70.55|
|SolarEdge Technologies (SEDG)||11.20%||$314.16|
|Fleetcor Technologies (FLT)||-7.50%||$213.80|
Clearly, some of these tech stocks, particularly some of the bigger names, are way down this year. Some are only down slightly, and a few are even up year to date. So, what makes these stocks attractive buys now? Here’s how it breaks down.
The CHIPS and Science Act of 2022 was passed to encourage companies to manufacture microprocessors in the United States, reducing the dependence of U.S. companies on foreign manufacturers for these tiny silicon chips that go into everything from washing machines to smartphones to cars.
Some of the companies likely to benefit from this law include Micron Technology, GlobalFoundries, Wolfspeed and ON Semiconductor. Micron Technology just announced plans for a new $15 billion fab in Idaho. GlobalFoundries is a contract chip maker that can expect more orders due to not only the CHIPS act but also the current chip backlog. Wolfspeed has already announced plans to build a new manufacturing facility in North Carolina to produce the raw materials that go into chips for electric vehicles and other applications. ON Semiconductor makes semiconductors for automotive, industrial, medical and aerospace applications, plus 5G and Internet of Things applications.
Cloud Computing, Energy and Fintech
These are players in industries that had been hitting their stride prior to the pandemic and, despite having had some setbacks this year, look poised to continue their previous upward trajectories.
SolarEdge provides smart energy technology to take advantage of the trend toward renewable energy. Citrix Systems is a cloud computing company that continues to benefit from the increase in remote work and the need for companies to provide flexible access to their computer systems. Fiserv provides fintech and payment processing technology to companies worldwide. FleetCor Technologies automates and digitizes business payments and employee purchases, making it easier for companies to stay on top of their expenses.
Some tech stocks need no explanation. While the days of these companies’ IPOs making overnight millionaires, or billionaires, are over, companies like IBM, Amazon, Alphabet — parent company of Google, and Apple continue to deliver returns for investors over the long term. While some of these companies have declined significantly since the beginning of 2022, it may be time for a rally for some of these tech titans. Industry analysts still hold these stocks in high regard, and it’s hard to argue with their past success.
Can’t decide which tech stocks to add to your portfolio? Consider the Technology Select Sector SPDR Fund ETF (XLK) which tracks the index of tech stocks in the S&P 500. This exchange-traded fund gives you the ability to participate in any future upside in the tech sector while diversifying so that a single poor decision won’t bring down your portfolio.
Technology stocks, while not the high-flyers they once were, can be solid long-term investments. The products and services they provide keep businesses running and have become irreplaceable in our personal lives. Companies in this sector will continue to innovate and their stocks should provide solid returns over the long run.
Top Stocks To Invest In
Best Energy Stocks:
- Gold Stocks
- Lithium Stocks
- Mining Stocks
- Oil Stocks
- Natural Gas Stocks
- Energy Stocks
- Renewable Energy Stocks
- EV Stocks
- ESG Stocks
Best Tech Stocks
- Biotech Stocks
- Artificial Intelligence Stocks
- Semiconductor Stocks
Information is accurate as of Sept. 8, 2022.
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