In this article, we will take a look at the 12 best big tech stocks to buy right now.
It would be an understatement to say that the technology sector is the backbone of the modern world. Instead, a more apt statement would be that in today’s world, technology is the binding glue that enables governments and industries to function according to modern standards as it allows them to communicate and operate in manners unthought of just a couple of decades ago.
At the heart of the technology industry is the semiconductor, which is a collection of circuits that in today’s era combine in the billions to form a processor or other electric equipment such as a modem. This collection then allows the software to rapidly compute calculations and allow its users to analyze data, communicate over thousands of miles instantaneously and operate and develop machines straight out of science fiction.
Despite the rapid boom over the past decade which has made companies like Cupertino tech giant Apple, Inc (NASDAQ: AAPL) multi billion dollar enterprises, the evolution of the sector has in itself opened up new avenues for growth. Some of these areas include machine learning, artificial intelligence, large scale data center computing and fifth generation (5G) cellular networks.
The growth of the technology sector is evident in the presence of what The Brookings Institute refers to as the digital economy. This economy, according to the body, constituted 16% of the global gross domestic product (GDP) as it stood at a whopping $11.5 trillion in 2018.
Another emerging field in the technology sector, which is being targeted by heavyweights such as Amazon.com, Inc (NASDAQ: AMZN) and Microsoft Corporation (NASDAQ: MSFT) is cloud computing. This sector is set to rapidly grow by the end of next year according to research conducted by Deloitte. The firm’s 2021 Technology Industry Outlook Report highlights that global public cloud service revenue will stand at $308.5 billion at the end of this year and it will sit at $354.6 billion by the end of next year. For artificial intelligence, which is another growth sector that we’ve highlighted above, Deloitte estimates that revenues can touch $100 billion by the end of 2025.
Research conducted by the United Nations Conference on Trade and Development (UNCTAD) as part of its Technology and Innovation Report 2021 identifies 11 emerging technologies that are expected to play a crucial role in the technology sector. These technologies are 3D Printing, Gene Editing, Nanotechnology, Blockchain, 5G, Internet of Things (IoT), Drones, Solar Photovoltaics, Big Data, Robotics and Artificial Intelligence. Cumulatively, the agency expects these technologies to grow from a value of $350 billion in 2018 to $3.2 trillion by the end of 2025.
Finally, research conducted by Fortune Business Insights reveals that the big data market, which is a highly growing market spurred by the advances in computing power, is set to grow at a compound annual growth rate (CAGR) of 14% from 2020 to 2027. This market stood at $41.33 billion in 2019 and it is expected to stand at $116 billion by 2027 according to the research firm.
Photo by Javier Esteban on Unsplash
Our Methodology
In order to sift out the best big technology stocks to buy right now, we have decided to take a look at hedge fund investments. Commonly referred to as the ‘smart money,’ these investors form the backbone of the financial community and often hold billions of dollars of equity in large companies. Insider Monkey compiles this data (of over 873 hedge funds) and updates it regularly to gain insight into the thought process of these institutional investors. Therefore, in this piece, we have ranked the biggest technology companies which are targeting the growth sectors mentioned above by using the ‘stakes’ the hedge funds have in them.
We also took into account long-term growth catalysts and fundamentals while picking these stocks.
Why should we pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Big Tech Stock to Buy Right Now
12. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 64
Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) is a company that sits right at the heart of the technology industry. It is responsible for manufacturing semiconductors, which are commonly referred to as chips, and which power every technology product or gadget in existence today. Except for orders from Intel Corporation, TSMC is responsible for wholly or partially fulfilling the chip demands of nearly every big technology firm out there.
As of the second quarter of this year, 64 out of the 873 hedge funds surveyed by Insider Monkey held stakes in TSMC.
In the Q2 2021 investor letter of Wedgewood Partners, the fund mentioned Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM). Here is what the fund said:
“We initiated a new position in Taiwan Semiconductor Manufacturing, the largest contract manufacturer of logic semiconductors in the world. The Company has invested prodigious amounts of capital ($17 billion in 2020 alone and as much as $28 billion this year) over the past several years, at returns that suggest to us a very steep and sustainable competitive advantage. The Company has a very long runway to grow its business at a double-digit rate, driven by several favorable industry and company-specific trends including semiconductor architectural design changes, increasing manufacturing process complexity, and the proliferation of more logic semiconductors in more devices.
With over 50% market share, more than 3X that of its next largest competitor, Samsung, the Company dominates the contract foundry industry for logic semiconductors (source: Trendforce). Taiwan Semi has erected a formidable competitive barrier with its manufacturing capacity, as the Company carries over $150 billion in gross PPE (property, plant, and equipment) on its balance sheet. This would put the Company in the top echelons of invested tangible capital, globally. Further, the Company has committed to a multi-year, $100 billion capital investment program aimed at building out some of the only capacity capable of manufacturing leading-edge, sub 7 nanometers (nm) resolution integrated circuits. While semiconductor cycles are notoriously boom-bust, the Company has already secured enough demand to drive very high utilization rates for this new bleeding-edge capacity much earlier compared to previous capacity rollouts…” (Click here to see the full text)
11. Peloton Interactive, Inc. (NASDAQ:PTON)
Number of Hedge Fund Holders: 67
Peloton Interactive, Inc. (NASDAQ: PTON) came at the forefront of the technology sector in the wake of the ongoing pandemic which forced global populations to move indoors for their work and leisure activities. This brought Peloton Interactive, Inc. (NASDAQ: PTON) into importance as it utilized cloud resources to allow its users to exercise remotely from the comfort of their homes and experience a community-like experience through its applications.
Like Salesforce.com, inc (NYSE: CRM), NVIDIA Corporation (NASDAQ: NVDA), Intel Corporation (NASDAQ: INTC) and QUALCOMM Incorporated (NASDAQ: QCOM), Peloton Interactive, Inc. (NASDAQ: PTON) is one of the notable big tech stocks gaining the attention of the smart money.
In the Q2 2021 investor letter of Carillon Tower Advisers, the fund mentioned Peloton Interactive, Inc. (NASDAQ: PTON). Here is what the fund said:
“Peloton Interactive operates a connected fitness platform offering live and on-demand classes allowing users to exercise at home. The firm’s shares were pressured in the quarter after Peloton announced a voluntary recall for both its legacy treadmill (Peloton Tread+) and its newly-launched base model treadmill (Peloton Tread). The issue surrounding the latter is somewhat troubling, as it appears it may be the result of an engineering flaw. This new treadmill offering was expected to be a key growth driver in the second half of 2021, and this development reduces our confidence in Peloton’s product pipeline. Therefore, we sold the stock.”
10. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of hedge fund investors: 72
QUALCOMM Incorporated (NASDAQ: QCOM) is one of the largest chip designers in the world, who sits at the heart of not only the Android smartphone ecosystem but also emerging technologies. These technologies include fifth-generation (5G) cellular networks, the internet of things (IoT), and connected vehicles.
So naturally, hedge fund interest in the company is high with our research revealing that by the end of the second half of this year, 72 out of the 873 hedge funds tracked by Insider Monkey held stakes in QUALCOMM Incorporated (NASDAQ: QCOM).
9. Intel Corporation (NASDAQ:INTC)
Number of hedge fund investors: 78
Intel Corporation (NASDAQ: INTC) is widely credited with the invention of the metal oxide semiconductor field-effect transistor (MOSFET) which spurred off circuit miniaturization that has resulted in generating sufficient computing power to kick off the modern-day tech boom. The company is the world’s largest chip supplier and its products also serve the growing data center and cloud computing market.
Research conducted by Insider Monkey reveals that by the end of the first half of this year, 78 out of 873 hedge funds held Intel Corporation (NASDAQ: INTC)’s shares.
8. NVIDIA Corporation (NASDAQ:NVDA)
Number of hedge fund investors: 86
NVIDIA Corporation (NASDAQ: NVDA) is a pioneer of what is known today as a graphics processing unit (GPU) and over the years the company has taken an aggressive approach to continually transforming itself as required by the industry needs and trends of the time. This has led to NVIDIA Corporation (NASDAQ: NVDA) now targeting the machine learning and artificial intelligence markets with its products and creating a virtual platform for big companies to experiment with.
Like Salesforce.com, inc (NYSE: CRM), Intel Corporation (NASDAQ: INTC), QUALCOMM Incorporated (NASDAQ: QCOM) and Peloton Interactive, Inc. (NASDAQ: PTON), NVIDIA Corporation (NASDAQ: NVDA) is one of the notable big tech stocks gaining the attention of the smart money.
In its Q2 2021 investor letter, Baron Opportunity Fund highlighted a few stocks and Nvidia Corp. (NASDAQ:NVDA) is one of them. Here is what the fund said:
“NVIDIA Corporation is a fabless semiconductor company and a leader in gaming cards and accelerated computing chips. Shares of NVIDIA rose in the second quarter on financial results and guidance significantly above Street expectations, as it benefited from the upgrade cycle in its gaming franchise along with continued AI-related strength driving its data center segment. NVIDIA’s total revenues of $5.66 billion beat Street expectations by $266 million, growing 84% (including the benefit of acquisitions, 65% organic), with its gaming business growing over 100% and its data center business expanding nearly 80%. We remain confident in NVIDIA’s leading position in gaming, data centers, and autonomous machines.”
7. Twitter, Inc (NYSE:TWTR)
Number of hedge fund investors: 89
Twitter, Inc (NYSE: TWTR) is one of the most popular social media platforms in the world, which has become one of the leading tools for open information sharing in a digestible format all over the world. It also highlights the technology revolution that has enabled users to stay up to date with events happening all over the globe by simply owning a smartphone or a computer.
Out of the 873 hedge funds polled by Insider Monkey by the second half, 89 held stakes in the company for a total value of $6 billion.
Like Salesforce.com, inc (NYSE: CRM), NVIDIA Corporation (NASDAQ: NVDA), Intel Corporation (NASDAQ: INTC), QUALCOMM Incorporated (NASDAQ: QCOM) and Peloton Interactive, Inc. (NASDAQ: PTON), Twitter, Inc (NYSE: TWTR) is one of the notable big tech stocks gaining the attention of the smart money.
6. salesforce.com, inc. (NYSE:CRM)
Number of hedge fund investors: 108
Salesforce.com, inc (NYSE: CRM) is headquartered in San Francisco, California and it targets the enterprise or business segment by providing companies with cloud based software for customer relationship management. Salesforce.com, inc (NYSE: CRM) has a market capitalization of $255 billon as of mid September. This platform lets its customers gather and analyze data from their customers and drive insights fueled by the growth of the big data era. Salesforce.com, inc (NYSE: CRM) has also made countless acquisitions since its inception, with the latest one involving Acumen Solutions for $570 million.
Data surveyed by Insider Monkey reveals that as of the start of the second half of this year, 108 out of 873 hedge funds held stakes in Salesforce.com, inc (NYSE: CRM) with a total value of $11.8 billion.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 138
Apple Inc (NASDAQ: AAPL) is perhaps the most well known technology firm in the world, particularly due to its late co-founder Mr. Steve Jobs. Apple has a market capitalization of $2.4 trillion as of mid September and it prides itself on being one of the most innovative companies in the world, particularly due to is success with the iconic iPhone smartphone lineup. With billions of dollars in its cash reserves, and an ever evolving technology landscape fueling rumors that Apple is planning on targeting the automotive sector, Apple also has a large umber of hedge funds holding its shares.
Out of the 873 hedge funds analyzed by Insider Monkey by the end of the second quarter of this year, 138 had a stake in Apple Inc (NASDAQ: AAPL) for a total value of $145 billion.
4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 190
Alphabet Inc. (NASDAQ: GOOGL) lies at the backbone of what is known as the modern-day Internet. It is the parent company of Google, which is the world’s largest and most widely used search engine. Both Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) and Google have other companies under their wing which target a diverse range of growing technology sectors such as cloud computing and the Internet of Things (IoT).
By the end of the second quarter this year, 190 of the 873 hedge funds analyzed by Insider Monkey had owned GOOGL shares, which was equal to $26.8 billion.
In the Q2 2021 investor letter of Qualivian Investment Partners, the fund mentioned Alphabet Inc. (NASDAQ: GOOG). Here is what the fund said:
“The opportunity in online advertising remains very attractive for Alphabet’s subsidiary Google. In the recent June quarter, Google’s ad sales grew 69%. Alphabet’s subsidiary YouTube’s ad revenue soared 84%, to $7 billion, in the second quarter, putting the business on par with Netflix, which reported quarterly revenue of $7.3 billion. Netflix is expected to grow sales by 19%, to $29.7 billion this year, while YouTube’s ad revenue is forecast to rise 45%, to $28.7 billion.
Alphabet slashed operating losses for the Google Cloud by more than half, as the business continues to scale, growing at 50%+ clips. Furthermore, the company continues to have potentially new growth options via its investments in autonomous driving (Waymo) and various healthcare businesses such as Verily and Calico.”
3. Microsoft Corporation (NASDAQ: MSFT)
Number of Hedge Fund Holders: 238
Microsoft Corporation (NASDAQ: MSFT) is one of the largest technology companies in the world and it is primarily known for its Windows operating system. Due to the fact that it can work with computers from every brand, except Apple Inc’s (NASDAQ: AAPL) notebooks, Windows is one of the most popular software in the world. Microsoft also offers cloud and data center services through its Azure platform.
238 out of the 873 hedge funds polled by Insider Monkey held a stake in the company by the end of the first half of this year, with the stake equaling $62.5 billion.
In its Q2 2021 investor letter, Baron Opportunity Fund highlighted a few stocks, and Microsoft Corp. (NASDAQ:MSFT) is one of them. Here is what the fund said:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft was a top contributor in the period because it trades at reasonable free cash flow and earnings valuations, has cloud and digital transformation tailwinds at its back, reported a solid March quarter, and beat Street expectations by a wide margin. Microsoft’s results continued to be strong across the board, with Azure cloud computing revenues up 46% in constantcurrency (“cc”) terms and commercial cloud bookings growth of 38% cc, the best in years. Microsoft also reported robust profitability growth, with operating income expanding 31% and GAAP earnings up 45%. We believe the company is well positioned for continued solid growth and profitability through market share gains as more companies look to transform and digitize their businesses as they move operations to the cloud.”
2. Facebook, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 266
Facebook, Inc. (NASDAQ: FB) is one of the largest and most popular social media platforms in the world. It is at the forefront of demonstrating the power of modern day technology to connect populations spread over thousands of miles all over the globe, as it enables people to connect with each other, businesses to market their products and governments to stay in touch with their populations.
Data surveyed by Insider Monkey reveals that as of the start of the second half of this year, 266 out of 873 hedge funds held a stake in Facebook, Inc (NASDAQ: FB) with a total value of $42.3 billion.
In the Q2 2021 investor letter of First Eagle Investment Management, the fund mentioned Facebook, Inc. (NASDAQ: FB). Here is what the fund said:
“Leading contributors in the First Eagle Global Fund this quarter included Facebook, Inc. Class A. Facebook has continued to post impressive results for both revenue and active users of its traditional platforms. In the meantime, the social media giant continues to make progress on new initiatives—like Facebook Horizon (virtual reality) and Facebook Shops (e-commerce)—and maintains attractive monetization optionality around services like Messenger and WhatsApp.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 266
Amazon.com, Inc. (NASDAQ: AMZN) is one of the largest technology firms in the world and it is primarily known for its digital retailing platform. The company also has a substantial presence in the growing cloud and datacenter markets, through its Amazon Web Services (AWS) platform. AWS is a highly advanced cloud computing and data center offering, with Amazon.com, Inc. (NASDAQ: AMZN) even having designed its own processors under the Graviton lineup to cater to this segment.
Out of the 873 hedge funds polled by Insider Monkey by the second half, 271 held a stake in the company for a total value of $60 billion.
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Disclosure: None. 12 Best Big Tech Stocks to Buy Right Now is originally published on Insider Monkey.
