When you run a marathon, it’s better to focus on the finish line rather than each breath or stride. That was the first thing that came to mind this month as the tech-heavy Nasdaq sold off roughly 10% and Apple saw $180 billion erased from its market valuation in a single day, the most any U.S. company has ever lost in a trading day.
Focusing on the finish line is important not just in sports but also in the stock market. While the tech sell-off hammered markets over the last two weeks, it is important to look at the bigger picture. Just like a marathon runner might need to slow down to catch their breath, the market needs to do the same thing. A healthy pullback is good for any bull market.
Since the market collapsed in late February and early March the Nasdaq is still up roughly 60% and close to record highs. To me, the pullback is a blessing in disguise as the best tech stocks will continue to rise long into the future.
Remember, this is a marathon, not a sprint. Just look at Tesla Inc. (TSLA). Its stock dropped by almost 50% in 2018-2019, and in 2020, it had a similar drop. But if you would have held on for the ride instead of selling in the downturn, you would be up over 500% today.
The same could also be said for semiconductor company Nvidia Corp. (NVDA). It saw an over 50% drop at the end of 2019 and then in 2020 dropped 30%. But if you held on through the drops and even bought right at the previous peak, you would still be up over 70%. Going out even further, you could be up 10,000% and 30,000% respectively. Those are some big gains anyone would be crazy not to want.
That is why it is important to look at the bigger picture. The Nasdaq has its ups and downs and just like a marathon, it takes some time to get to the finish line. This month’s highs are still above the peak before the pandemic and this comes at a point when the economy is still far from recovered.
So, when I see pullbacks like this, I go back to tried and true companies that survive these market conditions and have the fundamentals to move higher.
And to help you do just that, I’ve keyed in on three of the best tech stocks you can buy. These companies will be stalwarts of your portfolio for decades, and they just happen to be “on sale” thanks to sellers with a short-term view of the world.
These Top Tech Stocks Should Be on Your Shopping List
Microsoft Corp. (MSFT) may be one of the most well-known companies in the world. There is a very good reason for it.
Almost every single person uses its products whether they know it or not. While you may have heard of Microsoft Windows, Word, Outlook, or Excel, it also provides cloud infrastructure for 85% of the Fortune 500. The company has also made sure that remote workers can continue to be productive with products like Microsoft Teams, its chat, meetings, calling, and collaboration tool. In April of this year, it was already up to 75 million daily active users. On top of providing worldclass products, Microsoft has increased its dividend for the last 18 years and just announced a 10% increase, making it a great stock to buy on a dip. It is currently 13% from it’s all-time high giving you the chance to get in on the price it was trading at in June.
Qualcomm Inc. (QCOM), while not as well-known as Microsoft, might as well be given its dominance in the semiconductor market. In 2019, the smartphone application processor market was roughly $20 billion in size, and Qualcomm had the largest market share at 36%. That means its product was in over one-third of all smartphones in the world. Even better, according to Strategy Analytics, it captured over 50% share in 5G smartphones. With 5G in the future, this could be good news for Qualcomm. Not only does it make semiconductors for smartphones, it makes chips for cars, cameras, networking equipment, and IoT solutions for the industrial market. This market is not going away anytime soon, and advanced semiconductors are getting more important every day as electronics get smarter. Right now, Qualcomm is trading around 8% from its high.
If you prefer not to hold individual stocks and like to hold a basket in the form of an ETF, look no further than ARK Next Generation Internet ETF (ARKW).
Up over 100% since March, this fund is the top-performing actively managed ETF. This fund aims to invest in companies that develop, produce, or enable cloud computing, e-commerce, artificial intelligence, blockchain, and many other technologies. In other words, this is the most exciting slice of the already hot tech sector.
Top holdings including electric car manufacturer Tesla Inc. (TSLA), streaming media player Roku Inc. (ROKU), mobile payments provider Square Inc. (SQ), online education provider 2U Inc. (TWOU), and Sea Ltd. (SE), one of the largest e-commerce companies in Southeast Asia. This fund looks to the future, and if that is where you want to invest, this should be the stock to hold. Down 12% from its high after a huge run this year, this could be a great time to get in.