In this article, we will take a look at the 12 hot tech stocks to invest in now. To skip our analysis of the recent technology trends, and market activity, you can go directly to see the 5 Hot Tech Stocks to Invest in Now.
The technology sector is going through a major transition with the advent of generative artificial intelligence. There have been rapid developments in the sector since the launch of OpenAI’s ChatGPT, a large language model (LLM), launched in November 2022. The platform received widespread acceptance with tens of millions of users flocking to the model. Alphabet Inc.’s (NASDAQ:GOOG) followed up with Google Bard which is giving strong competition to other LLMs.
With significant investment from Microsoft Corporation (NASDAQ:MSFT) in OpenAI, reportedly to the tune of billions of dollars, OpenAI has made significant improvements to its model. In addition, Microsoft has integrated some of the features of the LLM into its suit of products. Artificial intelligence is seen to be the main factor in the recent performance of Microsoft Corporation’s (NASDAQ:MSFT) share price as well as quarterly results. Several other companies are working on their own LLMs or have already launched their own models for different purposes. In addition, companies are focusing on utilizing the power of generative AI to improve processes, products and services, and experiences, in any shape and form. This has suddenly raised the demand for higher computational power and the hardware required to run it.
Invesco S&P 500® Equal Weight Technology ETF equally weights stocks in the information technology sector of the S&P 500® Index. The underlying Index for the ETF has generated a 1-year return of 33.20%, compared to a 30.45% return for the broader S&P 500 Index during the same period. According to a report, investments in generative AI software are forecasted to increase by 36% annually through 2030, reaching $227 billion, with major players like Microsoft and Google Cloud experiencing significant revenue growth in this domain. You can read more about this in our recently published article: Investing in Innovation: 10 Best Tech and Disruptive ETFs
The companies that have made onto our list of 12 hot tech stocks to invest in now are at the forefront of their market segments and industries and hold significant competitive advantage over their peers based on strong technological capabilities. NVIDIA Corporation (NASDAQ:NVDA) is arguably one of the biggest beneficiaries of the AI boom in terms of hardware. The demand for its processing units has picked up manifold, especially for data center usage. Its revenue increased by a whopping 265% y-o-y in the latest quarter and surpassed consensus estimates by $1.56 billion. In a similar vein, the stock price of the company has also skyrocketed in the recent past with nearly 239% surge during the last twelve months.
Our list of 12 hot tech stocks to invest in now is dominated by semiconductor companies including UK-based chip designer Arm Holdings plc. (NASDAQ:ARM), leading semiconductor foundry operator Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and memory and storage solutions provider, Micron Technology, Inc. (NASDAQ:MU), among others. A surprise entrant to the list is SoundHound AI, Inc. (NASDAQ:SOUN), a small-cap independent voice AI platform that came into limelight following news about NVIDIA’s ownership of its shares.
An aerial view of a high-tech factory, showing the impressive scale of the company’s semiconductor production.
Methodology
We first used stock screeners to identify tech stocks that have gained at least 5% year to date and have an average 3-month volume of more than 5 million as of March 26. From this resultant dataset we picked the stocks with highest volumes and share price gains. The list of 12 hot tech stocks to invest in now is ranked in ascending order of average 3-month share volume.
We have also mentioned the number of hedge fund investors having stakes in each of these companies. Data from around 900 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2023 was used to identify the number of hedge funds that hold stakes in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
12. Block, Inc. (NYSE:SQ)
3-Month Average Volume: 10.80M
Year-to-date Performance: 9.85%
Number of Hedge Fund Holders: 75
Formerly known as Square, Inc., San Francisco, California-based Block, Inc. (NYSE:SQ) is a global technology company with a focus on financial services. It comprises of Square, Cash App, TIDAL, and TBD, technology solutions that facilitate financial services for individuals and businesses of all sizes.
On February 22, Block, Inc. (NYSE:SQ) released its financial results for Q4 2024. Its revenue increased by 24% y-o-y to $5.8 billion while it posted a net income of $178 million, compared to a net loss of $114 million. Its EPS of $0.28 surpassed consensus estimates by $0.29.
On March 11, Jefferies analyst Trevor Williams raised the price target for Block, Inc. (NYSE:SQ) shares from $90 to $100 and maintained a ‘Buy’ rating for the shares. The target price represents a potential upside of 17.69% based on the latest share price.
Like other stocks such as Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT), Block, Inc. (NYSE:SQ) is among the 12 hot tech stocks to invest in now.
11. Marvell Technology, Inc. (NASDAQ:MRVL)
3-Month Average Volume: 13.94M
Year-to-date Performance: 13.05%
Number of Hedge Fund Holders: 53
Santa Clara, California-based Marvell Technology, Inc. (NASDAQ:MRVL) is a fabless semiconductor supplier of high-performance standard and semi-custom products with core strengths in developing and scaling complex System-on-a-Chip architectures, integrating analog, mixed signal, and digital signal processing functionality.
On March 7, Marvell Technology, Inc. (NASDAQ:MRVL) announced that it is extending its collaboration with TSMC to develop the industry’s first technology platform to produce 2nm semiconductors optimized for accelerated infrastructure.
As of Q4 2023, 53 of the 933 hedge funds tracked by Insider Monkey owned shares of Marvell Technology, Inc. (NASDAQ:MRVL), valued at $1.8 billion. Matrix Capital Management was its lead hedge fund shareholder with ownership of 15.1 million shares valued at $908 million.
10. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
3-Month Average Volume: 15.24M
Year-to-date Performance: 34.48%
Number of Hedge Fund Holders: 105
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), based in Hsinchu, Taiwan, is a leading semiconductor foundry operator. It serves more than 500 customers and manufactures over 12,300 products for various applications including smartphones, high performance computing, the Internet of Things (IoT), automotive, and digital consumer electronics.
As of Q4 2023, 105 hedge funds tracked by Insider Monkey held shares of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), one of the highest on our list of 12 hot tech stocks to invest in now. Ken Fisher’s Fisher Asset Management was the largest hedge fund shareholder with ownership of 31.1 million shares valued at $3.2 billion.
Wedgewood Partners, an investment management company, made the following comments about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), in its Q4 2023 investor letter:
“The Company began shipping chips that were fabricated using its industry-leading “N3” node. Nearly all of the Company’s N3 capacity has been filled by high-end chip designers such as Apple, NVIDIA and even Intel. As high-performance computing, particularly related to AI in both data centers and edge devices, continues to build momentum, the Company will be a key supplier for many years to come. Despite the boom-and-bust cycle in demand seen for many semiconductors during Covid-19 and post-Covid-19, the Company should be able to post solid double-digit growth next year as inventories and end-market demand across most of its technology nodes get back to normal levels. The Company also maintains dominant market share in leading-edge nodes, which is in short supply, given the difficulties its competitors have had in scaling up EUV-based manufacturing. The Company has been able to secure higher prices because of this and can still generate excellent returns on elevated capital expenditures necessary for this scarce capacity.”
9. Arm Holdings plc. (NASDAQ:ARM)
3-Month Average Volume: 16.00M
Year-to-date Performance: 86.71%
Number of Hedge Fund Holders: 22
Cambridge, UK-based Arm Holdings plc. (NASDAQ:ARM) is the leading technology provider of processor IP. It architects, develops, and licenses high-performance, low-cost, and energy-efficient CPU products and related technology, on which many of the world’s leading semiconductor companies and OEMs rely to develop their products.
Arm Holdings plc. (NASDAQ:ARM) announced the closing of its IPO on September 18, 2023. The IPO comprised the sale of 102.5 million American Depositary Receipts of the company at a price of $51 per share. Its shares are currently trading nearly 167.84% above the IPO price.
On February 7, Arm Holdings plc. (NASDAQ:ARM) released its financial results for three months ended December 31, 2023. Its revenues increased by 14% y-o-y to $824 million, while it generated a net income of $87 million.
8. Lyft, Inc. (NASDAQ:LYFT)
3-Month Average Volume: 17.73M
Year-to-date Performance: 32.96%
Number of Hedge Fund Holders: 39
San Francisco, California-based Lyft, Inc. (NASDAQ:LYFT) is a technology company offering a mobility as a service, ride-hailing, scooters, a bicycle-sharing system, and food delivery in the United States and select cities in Canada.
On February 13, Lyft, Inc. (NASDAQ:LYFT) released its financial results for Q4 2023. Its revenue increased by 4% y-o-y to $1.2 billion while net loss shrunk 95% y-o-y to $26 million. Its normalized EPS, at $0.16, surpassed consensus estimates by $0.08.
On March 4, RBC Capital raised the price target for Lyft, Inc. (NASDAQ:LYFT) shares to $23 from $17 and upgraded the rating from ‘Sector Perform’ to ‘Outperform’ for its shares. The target price represents a potential upside of 33.80%.
Like other stocks such as Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT), Lyft, Inc. (NASDAQ:LYFT) is among the 12 hot tech stocks to invest in now.
7. Micron Technology, Inc. (NASDAQ:MU)
3-Month Average Volume: 17.75M
Year-to-date Performance: 40.32%
Number of Hedge Fund Holders: 92
Boise, Idaho-based Micron Technology, Inc. (NASDAQ:MU) is a leading semiconductor manufacturer providing memory and storage solutions. It delivers a portfolio of high-performance DRAM, NAND and NOR memory and storage products through Micron® and Crucial® brands.
On March 7, Stifel raised the price target for Micron Technology, Inc. (NASDAQ:MU) shares to $120 from $80 and changed the rating for its shares to ‘Buy’ from ‘Hold’. The price target represents a potential upside of 25.88% based on the latest share price.
According to the Insider Monkey data on 933 leading hedge funds, 92 hedge funds were long Micron Technology, Inc. (NASDAQ:MU) shares as of Q4 2023, with the total shares held by hedge funds valued at $6.1 billion. Ken Griffin’s Citadel Investment Group was the largest shareholder on record with ownership of 7.1 million shares valued at $604 million.
6. Uber Technologies, Inc. (NYSE:UBER)
3-Month Average Volume: 20.51M
Year-to-date Performance: 28.50%
Number of Hedge Fund Holders: 129
San Francisco, California-based, Uber Technologies, Inc. (NYSE:UBER) provides technology platforms matching consumers looking for rides and independent ride services providers. It also offers other forms of transportation including public transit, bikes, and scooters. Other offerings include food delivery on demand, freight services, business fleet services, and same day delivery options.
On February 14, Uber Technologies, Inc. (NYSE:UBER) announced that its Board of Directors has authorized the repurchase of up to $7 billion of the company’s common stock which marks the company’s first-ever share repurchase program.
RiverPark Advisors, an investment advisory firm, made the following comments about Uber Technologies, Inc. (NYSE:UBER) in its “RiverPark Large Growth Fund” Q4 2023 investor letter:
“UBER remains the undisputed global leader in ride sharing, with a greater than 50% share in every major region in which it operates. The company is also a leader in food delivery, where it is number one or two in the more than 25 countries in which it operates. Moreover, after a history of losses, the company is now profitable, delivering expanding margins and substantial free cash flow. We view UBER as more than a ride sharing and food delivery service; we also see it as a global mobility platform with 142 million users (by comparison, Amazon Prime has 200 million members) and the ability to penetrate new markets of on-demand services, such as package and grocery delivery, travel, and hourly worker staffing. Given its $5.2 billion of unrestricted cash and $5.1 billion of investments, the company today has an enterprise value of $128 billion, indicating that UBER trades at 21x our estimates of next year’s free cash flow.”
Like other stocks such as Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT), Uber Technologies, Inc. (NYSE:UBER) is among the 12 hot tech stocks to invest in now.
Click to continue reading and see 5 Hot Tech Stocks to Invest in Now.
Suggested Articles:
14 Best Defensive ETFs To Buy For Plunging Markets
25 US States with the Highest Number of Police Officers Per Capita
Disclosure: None. 12 Hot Tech Stocks to Invest in Now is originally published on Insider Monkey.