Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
Whatever you may think of Trump’s administration, one thing is for sure. It has been exceedingly beneficial for big business, Big Tech specifically. Even amidst the worst economic downfall since the 2008 financial crisis, billionaire wealth surged by 27.5%, surpassing the $10 trillion milestone. Looking ahead and regardless of the election outcome, the well-oiled tech machine will continue to churn. So, given the ongoing big tech boom, what are the top tech stocks to look at right now?
Navigating Through the Economy’s Health Indicators
Although the Federal Reserve’s financial injections indeed played a critical role in rallying the stock market, these bandages cannot stop economic hemorrhaging indefinitely. At some point, fundamentals will have to offer support in the form of consumer buying power.
After all, consumer buying power determines the demand for products and services across the board. In turn, the unemployment rate indicates consumer buying power’s health. At the height of the covid-induced crisis, $1200 stimulus checks took the brunt of the blow. However, at least after the election, Congress postponed the next round of stimulus checks.
This leaves us with the current unemployment rate, holding at its lowest number since March. No doubt, this is good news, but one should take unemployment rates with a big truckload of salt. Before Trump was elected in 2016, he had this opinion of the bureaucratic apparatus that now serves him, in Fox News’ interview for Justice with Judge Jeanine:
“When you hear 4.9 and 5 percent unemployment, the number’s probably twenty-eight, twenty-nine, as high as thirty-five—in fact, I even heard recently forty-two percent.”
The current unemployment rate sits at around 8%, so you make of that as you will, given President Trump’s propensity for exaggeration. However, historical methodological massaging of unemployment claims by the Bureau of Labor Statistics is not exactly hidden either, regardless of who is the President.
The point being, no matter how the upcoming presidential elections impact the stock market, and no matter the narratives you may see on social media, the system in place has its own inertia. Tech stocks are poised to flourish in this ecosystem, based on their own merits.
Accordingly, here are some of the top-ranking tech stocks you should consider as a long-term investment.
As Microsoft dominates the desktop OS/software space, and as Google dominates the ad/search engine space, so does Nvidia dominate the GPU market. Although historically in fierce competition with AMD, the latter made huge progress in outpacing Intel CPUs, but not so much when it comes to GPUs.
This year, with the upcoming launch of the RTX 3000 GPU series, Nvidia opted for a massive performance jump, unlike the previous years when we saw marginal performance upgrades between the series. In addition to dominating discrete GPUs, Nvidia expanded into AI, could computing, and data centers. Nvidia’s latest acquisition in this direction is Arm Limited, worth $40 billion.
Arm Limited is one of those companies you don’t often hear about, but it serves as a critical cog within the tech infrastructure. Arm designs energy-efficient chip blueprints licensed to all other tech giants on the market. Almost all smartphones, over 90%, use these chips. However, this monumental deal with Arm must still go through regulatory approval.
Compared to its market peers, Nvidia’s stock accelerated by 170%, leaving behind the industry’s average at 45%. Coincidentally, coming up in 2021, analysts project Nvidia to increase its revenue by also 45%. Even without the approval of the Arm deal, Nvidia’s data center sales alone have increased by 167%. Covering all the bases – cloud computing, data centers, AI, and discrete GPUs – it is difficult not to recommend Nvidia for the foreseeable future.
One could say there are better and more advanced solutions as far as video-conferencing platforms go, but Zoom took the public spotlight during the height of coronavirus lockdowns. Thanks to its streamlined user-experience, it became a go-to video-conferencing platform across all ages and for both private and public organizations.
Many have suspected Zoom would falter as we leave coronavirus behind. Fortunately for Zoom, its subscription-based model thwarted such expectations. Prior to the pandemic, Zoom’s growth was impressive, at 88% by Q1 2020. After that period, Zoom’s revenue rose by 4x, to 355%. For the upcoming year, Zoom is projected to maintain this surge, only relatively lower at 286% ($2.4 billion), according to Zacks.
As more companies and educational institutions see video-conferencing as a way to cut operating expenditures, Zoom is poised to reap the profits. We can already clearly see this take place from Zoom’s 100% stock value surge in just the last three months.
In line with the theme of virtual activity supplanting physical one, just like Zoom, Salesforce also relies on a subscription-based model. As its name implies, it offers every tool one would need for e-commerce, from sales to analytics and marketing. And all of it is cloud-based, as SaaS (Software-as-a-Service).
We have seen this trend many times before, from Adobe to video games. Outside of steady income source, SaaS provides an outstanding defense against pirating. 2020 was Salesforce’s best year at 55% stock rise, compared to the industry’s 30%.
For 2021, Zacks puts Salesforce at a revenue rise of 21.5%, which would put its revenue at $20.77 billion compared to 2020’s $17.1 billion. However, keep in mind that giants like Microsoft are not sitting idly by; Microsoft’s recent push for its Dynamics CRM platform is poised to offer heavy competition.
Are you excited to get the new Nvidia’s GPUs or do you think they are still too expensive? Let us know in the comments below.
Disclosure:Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firms specializing in sensing, protection and control solutions.