The Top Emerging Tech Stocks
Many investors might be wondering where to put their money. The markets bounced back promptly, setting record highs. The NASDAQ 100, which consists of about 100 companies (many of which are in the technology sector), rose by about five percent in 2016. But this does not mean there have not been big movers in the technology space. Tech stocks have both lost and gained. Over the past year, the S&P 500 North American Technology Sector Index has risen about six percent. But what are the best emerging tech stocks? Which companies are the best tech startups?
Emerging Tech Stocks to Buy in 2017
We shall limit the analysis to five of the best emerging tech stocks; especially, technology stocks for long-term investors. Some of your favorites might be missing, and if they are not included here, it does not mean they aren’t worthy of consideration. Now, the term “emerging technology stocks” implies companies at the startup stage, or thereabouts. Yet to limit the analysis to “emerging tech” under that narrow definition would go against the point of this article, which is to suggest some profit opportunities, which just happen to be tech-related.
1. NVIDIA Corporation
NVIDIA Corporation (NASDAQ:NVDA) is one of my favorites. It’s been a sleeper, but investors have taken notice; it’s definitely one of the stocks to own for the next technology boom. NVIDIA stock has almost doubled in growth, thanks to an ever-increasing market share in graphics processing units and personal computer (PC) graphics cards, which are so important to gaming. NVIDIA’s not alone; it has to contend with rival Advanced Micro Devices, Inc. (NASDAQ:AMD)—itself an interesting emerging tech stock—but NVIDIA is winning the market war now. Investors and analysts were pleased by NVIDIA’s revenue growth and its expansion into new and promising markets.
NVIDIA earned record revenues of $1.43 billion in its second quarter of 2016, an increase of 24% year over year. About 55% of this revenue is derived from the gaming segment, but the company is growing income in other segments too. And this is what makes it such a candidate for the next technology boom. Indeed, NVIDIA is fast becoming a major player in the driverless car industry, which has high demand for NVIDIA’s graphics processing unit (GPU) as the main processor.
Driverless technology will need more time to deliver returns to investors but, in the meantime, investors are reaping the benefits of NVIDIA’s gaming dominance. Its recent release of four new graphics cards in recent months should keep the positive revenue.
2. Facebook Inc
Still, there is an emerging tech aspect to the list. That said, one of the major emerging tech trends is virtual reality (VR). Facebook Inc (NASDAQ:FB) happens to be an emerging tech stock. It’s also one of the stocks to own for the next technology boom. Facebook made its stock market debut just a few years ago. Few understood at the time how and why Facebook stock was going to grow. But grow it did, and now FB stock is one of the most solid stocks in the tech sector, rising above expectations every time. But Facebook has more than just “a lot” of users. One of its big projects for 2017 involves the emerging technology of VR.
Facebook has taken a major presence in VR technology with its “Oculus” VR, a technology startup it bought for $2.0 billion. This alone could be one of the main drivers for Facebook stock in 2017. Facebook wants to adapt the concept of VR to that of the social media platform. New teams at Facebook Inc are already developing what could be its next generation of products: VR social apps. (Source: “Mark Zuckerberg Has A Plan To Bring Facebook Users Into Virtual Reality,” Forbes, February 24, 2016.)
3. Alphabet Inc
The VR market will be one of the hottest in the next few years, and the stocks cited here play a major role in these developments and more. The huge success of “Pokémon Go” worldwide has proven the potential for VR and its relative, augmented reality (AR), to influence the tech sector, and this technology alone may be worth some $30.0 billion in sales by 2020. This is where Alphabet Inc (Google) (NASDAQ:GOOG) comes in. (Source: “Augmented/Virtual Reality to hit $150 billion disrupting mobile by 2020,” Digi-Capital, last accessed August 23, 2016.)
VR/AR headsets and videos are going to be the most immediate source of revenue, but investors should focus on those actually developing the technology. Google has already established itself as one of the leading VR technology companies, and its stock value will grow increasingly reliant on this technology. Google’s “Cardboard” offers a quick-and-dirty-version of VR to games and entertainment apps. Google has also made a deal with Magic Leap, which uses holograms that can be seen through special AR viewers. (Source: “Here’s the best look yet at what Google-backed Magic Leap is building,” Business Insider, October 20, 2015.)
This technology has a strong return-to-investment ratio. The VR field is still in its infancy, considering the potential and the range of applications. This means that companies like Google, which are involved in all manner of computing and technology developments, still have much room for growth. There is no saturation point in sight for Google, which is still growing.
4. BYD Company Ltd.
One of the hot emerging tech stocks with a heavy lithium component is BYD Company Limited (OTCMKTS:BYDDF). If BYD stock is good enough for Warren Buffett, it’s good enough for you. Warren Buffett knows a lot about investing in stocks that make sense. Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) acquired Duracell for $4.7 billion in 2014. Duracell’s roster of products includes lithium batteries.
But the merging tech to consider is not Berkshire; it’s BYD Company Limited, in which Berkshire just happens to own a 10% stake since 2008. You may not have heard of BYD, but it is one of the world’s leading makers of lithium batteries. BYD stock, meanwhile, has gained over 160% in the past five years. But lithium batteries are going to become even more important in the next five years, when a number of manufacturers start introducing electric vehicles.
BYD also manufactures batteries to power houses, as in energy storage systems. Recently, the Korean industrial giant better known for its flat-screen TVs, Samsung Electronics Ltd (KRX: 005930, 005935) has taken a stake in BYD in order not to miss out on the rising demand for lithium batteries. You might also consider pure lithium plays, but that is the subject of another list and you can get related ideas here.
5. Under Armour Inc
Under Armour Inc. (NYSE:UA) stock lost almost half of its value last April. Under Armour stock has been trading around the $40.00 line, but lately it has started to pick up some momentum. Under Armour is not what might first come to mind when you think of emerging tech stocks. Still, it is at the leading edge of an important new trend. UA makes technology that you can wear. Another way to put it would be that Under Armour makes the clothing of the future. It’s a bit like the Apple Inc. (NASDAQ:AAPL) of clothing.
In that sense, UA is poised to exploit a wave of demand. It is about to launch the wearable tech version of the “iPhone.” UA has been limited by its association with athletic wear. Investors would have sooner compared it to Nike Inc (NYSE:NKE), but it is much more than that. On a hot and humid day like today, imagine how comfortable it would be to have a shirt that adjusts temperature automatically, making you feel instantly more comfortable. And all without wasting energy for air conditioning or sticking your head in the fridge. (Source: “3 predictions for the future of athletic wear, according to Under Armour,” Tech Insider, June 29, 2016.)
Temperature control is just one of the features that will eventually include heart-rate monitoring, calorie-burn monitoring, and all kinds of other functions that currently demand that users carry around additional accessories. UA is a combination fashion/tech stock. And, after all, it is that combination of style and science that has made Apple Inc such a successful company. UA is one of the leaders of this new trend, and one of the few that allows you to own a stake in it.