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The best tech stocks come from companies that are making the future. Fast-growing tech stocks can put a portfolio into hyperdrive, whether they make sleek mobile devices or digital services you can’t live without. To help you take advantage of the huge opportunities in technology stocks, we’ve written profiles of the 10 biggest companies in this sector based on their market capitalization.
Steve Jobs and Steve Wozniak started Apple in 1976 in Los Altos, California. Apple started out small in Steve Jobs’ family garage, but now it is the most valuable public company in the world based on market capitalization. In fact, it’s one of only a few companies worth more than a trillion dollars. Because of how big it is, it can be hard to avoid when investing. The weight of the company in the S&P 500 is more than 6.7%, which means that almost any index fund you invest in will have shares in this tech giant.
Bill Gates and Paul Allen started Microsoft in Albuquerque, New Mexico, in 1975. At the start of the computer industry, the company changed everything by making some of the first software that let regular people use computers. MSFT grew quickly in its early days, even though it often competed with Apple, and it has continued to grow even after its founders left the company.
The alphabet was created in 2015 as part of a reorganization. It may be best known as the company that owns Google. Google was started in 1998 in Menlo Park, California, as a project led by Sergey Brin and Larry Page at Stanford University. It was both its crown jewel and its predecessor. Google started out as a simple search engine, but now it and its parent company are online advertising and web services, giants.
Alphabet is also known for the scary amount of information it collects about its users. Google keeps track of everything about users who don’t opt-out. This includes who they are, where they go, what they like, and what they do online. The company that used to be called Facebook is now called Meta Platforms to show that it is a part of the “metaverse.” Mark Zuckerberg and a few of his Harvard classmates started Facebook in 2004 in his dorm room.
Before it changed its name, META had a market capitalization of more than $1 trillion. This was due to the success of the Facebook social network and wildly popular subsidiaries like Instagram and WhatsApp. The company is trying to move its business away from the huge problems with Facebook and toward the potential of the metaverse and other Web3 technologies.
Samsung is a big electronics company in South Korea that is based in Suwon-si. The company is the oldest on our list. It was started in 1938 as a grocery store, but its electronics division didn’t start until 1969. In the past few years, the company has had its fair share of bad press, with many reports of devices catching fire. But the damage done to its reputation early on has been mostly repaired, and it is still a good company that makes high-quality electronics.
It is well known that it is hard for U.S. investors to buy shares of Samsung. The company trades on the Korean Exchange (KRX) and has Global Depositary Receipts (GDRs) listed in Europe, but there is no American Depositary Receipt (ADR) listed in the US. That means you have to go through a broker in South Korea to buy Samsung or invest directly. The second way requires an Investor Registration Certificate (IRC) from South Korea’s Financial Supervisory Service and a trading account with a Korean securities firm.
Alibaba is a Chinese tech company that was started in 1999 by a group that included Jack Ma, a business tycoon who has been mostly out of sight for more than a year. Alibaba began as an online wholesaler that brought together manufacturers, distributors, importers, and exporters. Even though e-commerce is still its main focus, it has grown to include more tools and services, such as web portals, payment transfers, and cloud computing. Shares of Alibaba are traded on exchanges in New York, Hong Kong, and Frankfurt.
Companies that grow make more money. When investors buy tech stocks, they can increase the risk in their portfolios to make more money. Even though risk can go both ways, buying fast-growing tech companies is a great way to make more money when interest rates are low.
There is innovation all the time. Tech companies are always ahead of the curve when it comes to new ideas. When investors buy shares, they can share in the profits from innovations that change the computers and internet products people use every day.
Demand is high because of indexing. Over 20% of the S&P 500 stock market index is now made up of tech firms. Index funds get hundreds of billions of dollars every year, which helps the shares of the biggest tech companies keep growing.
Low dividends. Most tech companies don’t pay out much in dividends. The average dividend yield for tech companies in the S&P 500 is less than 2%. Many of these companies don’t pay dividends because they want to keep investing in their growth.
The biggest gains might have been made. The biggest tech companies have already grown quickly, and it may no longer be the best time to invest in them. Investors might get better returns if they put their money into smaller companies, but that comes with the risk of not knowing how to pick the best ones.
Disruption. Even though companies that come up with new ideas can make a lot of money, their business could be hurt by new players with a better game.
Changing rules and regulations When things go wrong, regulators can quickly change the way things work for new technologies. Data breaches, news about how data is collected, and other news stories push regulators to pass new laws and rules that could slow the growth of the tech sector in the future.
Investors who want to buy tech stocks can do so in a brokerage account, an individual retirement account (IRA), or, in some cases, a 401(k). Check out our list of the best online brokers and the best investment apps if you’re new to investing or looking for a new way to trade.
Buying an index fund is not the same as buying individual stocks. Before investing in individual stocks, it’s important for investors to do research on companies and look at their finances. Individual stocks can be very risky, and you need to know what those risks are before you buy.
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