In this article, we will take a detailed look at the Top 10 Tech Stocks with Strong Return on Equity.
The stock market exploding from April lows and rallying to record highs is a point of concern. That’s the sentiment echoed at UBS, with the implied intra-day index volatility close to the bottom end of a range, signaling a potential reversal.
UBS expects US economic data to deteriorate, which will put significant pressure on the market’s bull run. With the stock market Bull Run likely to pause as economic growth slows, Andrew Garthwaite, Chief Global Equity Strategist at UBS, is calling for caution.
“We continue to think August will be a down month as US growth slows but the Fed can’t cut until September,” Garthwaite said.
The S&P 500, rebounding from April lows by more than 30% and rallying to record highs, has already given rise to premium valuations. Finding gems that are significantly cheaper than the S&P 500, which is trading at 23 times forward earnings, is already proving to be a challenge, with warnings of a potential reversal.
Amid the sky-high valuation, focus is increasingly shifting to companies with an impressive track record of generating and returning value to shareholders. Nevertheless, picking stocks amid the sky-high valuations and looking for value is not easy, according to BNY’s head of market strategy, Robert Savage.
Some of the best stocks in an equity market trading at historical highs are those of companies with a return on equity that is equal to or just above the average of the underlying sector. A higher return on equity ratio affirms a company’s ability to generate returns on its shareholders’ capital regardless of the underlying economic cycle.
With that in mind, let’s take a look at the Top 10 Tech Stocks with Strong Return on Equity.
Our Methodology
To compile the list of the Top 10 Tech Stocks with Strong Return on Equity (ROE), we scanned the Finviz stock screener for technology companies with a solid track record in generating profits on shareholders capital. We narrowed our focus on stocks with a ROE of more than 40% and that were popular among elite hedge funds (as of Q1 2025). Finally, we ranked the stocks in ascending order based on the stocks return on equity.
Why are we interested in the stocks that hedge funds pile into? The reason is straightforward: our research has demonstrated that we can outperform the market by replicating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Top Tech Stocks with Strong Return on Equity
10. CDW Corporation (NASDAQ:CDW)
Return on Equity: 46.39%
Number of Hedge Fund Holders: 44
CDW Corporation (NASDAQ:CDW) is one of the top tech stocks with a strong return on equity. On August 6, the company declared a quarterly dividend of $0.63 a share. The dividend is to be paid on September 10 to shareholders of record as of August 25. The stock’s dividend yield stands at 1.53%.
The quarterly dividend comes on CDW Corporation, delivering impressive second-quarter 2025 results, whereby sales totaled $5.98 billion, representing a 10.2% year-over-year increase. Non-GAAP net income per diluted share increased 3.9% year over year to $2.60 from $2.50 a share a year ago.
“We continue to optimize cash flow generation through effective management of our working capital, enabling flexibility across our capital priorities – as shown by our commitment to returning cash to shareholders,” said Albert J. Miralles, chief financial officer, CDW.
CDW Corporation (NASDAQ:CDW) is a leading provider of information technology (IT) solutions to businesses, governments, educational institutions, and healthcare organizations. It offers a wide range of products and services, including hardware, software, and IT solutions. It helps customers navigate the complexities of the IT market and maximize their technology investments.
9. Lam Research Corporation (NASDAQ:LRCX)
Return on Equity: 58.24%
Number of Hedge Fund Holders: 91
Lam Research Corporation (NASDAQ:LRCX) is one of the top tech stocks with a strong return on equity. On July 31, analysts at Stifel reiterated a ‘Buy’ rating on the semiconductor equipment maker and raised the price target to $115 from $110.
The stock price target hikes follow Lam Research delivering impressive quarterly results that exceed consensus estimates on revenues and earnings. The solid results were driven by record foundry segment results, backed by strong demand from China and increased NAND upgrades.
Stifel expects the strong momentum from Lam Research’s results to continue into the second half of the year. The research firm is projecting higher quarter-over-quarter revenue supported by higher China wafer fabrication equipment spending. Likewise, the research firm expects the company’s revenue to grow by approximately 30% this year, with systems revenue increasing at a significantly higher rate.
Lam Research Corporation (NASDAQ:LRCX) is a technology company that designs, manufactures, and services semiconductor processing equipment used in the fabrication of integrated circuits. It focuses on wafer fabrication, providing tools and services for chipmakers to produce smaller, faster, and more efficient electronic devices.