Top Tech Stocks in 2020
It’s been a crummy year. That’s hardly a hot take; between the coronavirus causing havoc to human beings around the globe—both physically and economically—and the unending pageantry of the U.S. presidential election, 2020 has sucked.
But not all that “sucking” has been distributed equally. On the stock market, certain shares, especially the top tech stocks, have seen huge gains despite Wall Street being in flux from COVID-19.
So what gives? It all comes down to the fact that we are currently set for one of the most revolutionary technological springs perhaps of all time. And with that great technological bound forward, there are going to be plenty of opportunities to profit.
If there had been a stock market as we conceive of it way back in the 1400s, you’d better believe that the printing press would have sparked a massive bull market related to all things printing: paper, ink, machinery, steel, etc. That’s because the printing press fundamentally altered the way people live. If you can do that, you’re almost guaranteed to see immense amounts of money pass through your industry, whatever it is.
And that is precisely the situation we find ourselves in right now. We’re at the dawn of, not just one, but at least three major technological advancements: 5G, artificial intelligence (AI), and electric vehicles.
As you’d expect, 5G stocks, AI stocks, and electric vehicle stocks have been surging based on their potential.
And boy, do they have potential. See the chart below for a small sample of top tech stocks in the three sectors.
Chart courtesy of StockCharts.com
The biggest revolutionary tech industry right now is AI. This technology, if and when it comes to full fruition, would radically alter our way of life pretty much overnight. It would redesign the job market and cause a huge turnover in computing technology.
As you might expect, AI stocks will likely have a market cap somewhere in the vicinity of trillions of dollars, with virtually no upward limit.
AI stocks (shares of any company that’s even remotely related to AI tech development) are among the most prized stocks right now on the market.
My top tech stock in this industry is NVIDIA Corporation (NASDAQ:NVDA). NVIDIA stock has more than doubled in value in 2020. Right now it’s trading around $500.00 a share, but I see no reason why it couldn’t one day hit $2,000 a share.
That’s because NVDA stock not only has a solid business, developing graphics cards for computers (a space where it is dominant), but it is also developing processing cards for all sorts of technologies, including AI.
NVIDIA stock is like having your cake and eating it too: you get a company with a very solid business and multiple avenues of recurring revenue, as well as huge potential for massive growth in the near future. This combination is rare and, as you’d expect, about as exciting as it gets for investors.
NVIDIA Corporation also benefits from being part of another revolutionary tech that I’ll dive into next.
Electric Vehicle Stocks
If I had to list the top tech stocks based on the shortest time frame for huge returns on investment, then I’d have to go with electric vehicle stocks.
In 2020, we’ve seen two of them rise to the top of the crop: Nikola Corporation (NASDAQ:NKLA) and Tesla Inc (NASDAQ:TSLA).
When it comes to Tesla stock, I’ve been bullish on that company for years now. At times, people may have doubted me, but TSLA stock is up by more than 300% year-to-date and it shows no signs of slowing down.
In fact, the future is about as bright as it could get for Tesla stock (you might even call it shining-star bright).
Tesla Inc not only has the electric vehicle market pretty much dominated, but it’s also looking to expand into powering homes with zero-emission batteries in the near future. When it comes to the top tech stocks in 2020 and revolutionary tech in general, Tesla is leading the way on a number of fronts.
Nikola stock, on the other hand, is a lesser-known and, frankly speaking, less ambitious company, but that hasn’t stopped NKLA stock from seeing huge gains in 2020.
In June, shares of the Phoenix-based hybrid truck company skyrocketed off some good news. The company announced that it’s set to start delivering $10.0 billion in truck sales next year. (Source: “Despite Market Plunge, These 10 Billionaires Gained $23 Billion This Week,” Forbes, June 13, 2020.)
This proves my long-held thesis that there is a huge appetite in the market for companies that could replicate the success seen by emergent-industry pioneers like Tesla.
Nikola stock debuted on the stock market in June with a $12.0-billion market cap, about four times its last private valuation. Again, these numbers speak to an investor optimism that is clearly is unconcerned about the long-term impact of COVID-19.
Now, like many hot tech stocks before it, NKLA stock plummeted somewhat after the initial buzz wore off (while TSLA stock continued to excel), but we’re seeing some good trends develop lately with Nikola stock.
Nikola stock has seen gains of better than 300% so far in 2020, and that’s after a pretty significant decline from its peak. Hype, after all, can only carry a company so far before the market eventually has to correct itself.
But that turbulence may be passing. While performances of securities like NKLA stock are often difficult to predict due to the volatility and huge media hype surrounding them, what we are seeing is a healthy return to form for the electric vehicle stock.
And, as mentioned earlier, NVIDIA stock is also a beneficiary of the surge toward zero-emission cars as the company helps develop the AI and machine learning tech in Tesla Inc’s autonomous vehicles.
In other words, as Tesla cars continue to sell, NVIDIA Corporation will be a beneficiary as the two companies tackle the next big thing in the auto industry: self-driving cars.
Back to Nikola stock: it recently jumped by 20% in a 10-day period, hopefully auguring a return to gains for the company as the market once again feels comfortable with Nikola’s valuation.
Chart courtesy of StockCharts.com
Remember, NKLA stock will remain volatile while TSLA stock has proven to be pretty consistent in terms of gains in 2020, so investors looking for a safe nest egg might want to look elsewhere.
But for those who are hoping to make a quick buck (and who aren’t risk-averse), Nikola stock could be a perfect play for you. Tesla stock wouldn’t be too bad of an option, either.
As evidenced by the NVIDIA-Tesla link, one of the beautiful things about the top tech stocks is how interconnected the companies are.
When it comes to 5G, for instance, top tech companies will play a huge part in machine learning. That’s because the introduction of blazing-fast Internet speeds will help computers receive, analyze, and disseminate data at a rate that has, up to this point, been impossible.
With more and more devices needed to exchange information at all times of the day, 5G stocks would profit immensely from the ability to pave the roads that will make up the 5G information superhighway.
In other words, this tech revolution is really a tide that will raise many boats.
The thing about 5G stocks, however, is that we’re still a few years out before they’ll really hit their stride (as evidenced by one of the top 5G stocks, Skyworks Solutions Inc (NASDAQ:SWKS) only having gained by a relatively pedestrian 20% in 2020.
Still, the fact that 5G stocks have yet to explode only means that there is still time to get in on the ground floor.
In fact, I’d argue that 5G stocks are the safest picks among the top tech stocks because we know that 5G is going to come. We’re going to see more people adopt it in a few years, as they have with every other iteration of mobile network tech.
It just takes time. While AI and electric vehicles remain competitive and fraught with potential setbacks, the road is relatively clearer for 5G, as the mobile tech handoff is almost certain to take place in the next few years. For that reason, 5G stocks are among the top tech stocks in 2020.
This year has been full of twists and turns, but one thing has remained constant through it all: progress. Progress can’t be stopped; it can only be delayed. And in the case of tech stocks, that delay was awfully short.
We have been seeing top tech stocks soar in 2020, and I anticipate that they will continue to do so for the remainder of the year and beyond.