The 10 best tech stocks to buy for 2019.
A standout sector during the decade-long expansion from March 2009 lows, technology heads into 2019 as the redheaded stepchild of Wall Street. Here’s the good news: A swift sell-off made the best tech stocks to buy for 2019 far cheaper, and thus more attractive, to long-term investors. In truth, it’s healthy for a bit of caution to return to tech, and a “correction,” or 10 percent decline, in the Nasdaq never portends a permanent decline — you’d expect one or two of these in an average year. With the economy still on solid footing, what follows is a list of the 10 best tech stocks to buy for 2019.
Amazon.com (ticker: AMZN)
E-commerce’s most dominant name, Amazon shares have pummeled the broader market for years now, racking up extraordinary gains. During October’s tech sell-off shareholders saw the flip side of that relationship, as AMZN fell 25 percent in a month. For investors willing to bear the short-term volatility of a long-term winner, Amazon’s definitely one of the best tech stocks to buy for 2019 (and hold for decades). Its high-profile new HQ2 locations will add 50,000 high-level jobs as Amazon doubles down on investing in its long-term growth. After years of foregoing profits, Amazon Web Services is bringing hyper-fast earnings growth to AMZN: profit margins soared from 0.6 percent to 5.1 percent last quarter.
Colloquially known by many investors as the “Google of China,” BIDU was once a Wall Street darling. But 2018 wasn’t so kind to the Asian search engine giant, and unlike many large-cap tech stocks, Baidu trades at extremely modest multiples — shares go for just 13 times earnings. Steadily growing revenue around 20 percent or so annually, Volvo recently chose Baidu’s autonomous driving software to power its future fleet of Chinese robotaxis. More immediate catalysts for BIDU include iQiyi (IQ), a leading Chinese streaming video company of which Baidu owns a majority stake, and a virtual assistant install base that grew 41 percent to 141 million between July and September.
Just because Apple is one of the most valuable companies on the planet doesn’t automatically mean it’s one of the best tech stocks to buy for 2019. But it does de-risk shares significantly: Apple’s gargantuan size gives it economies of scale and negotiating leverage with suppliers. Apple’s strong brand — which translates to pricing power with consumers — plus over $237 billion in cash, virtually guarantee AAPL’s long-term survival. Apple’s late 2018 sell-off gives investors the opportunity to buy the iPhone-maker on a pullback, an opportunity that has historically worked quite well. Apple’s decision to go to a recurring revenue model, in which consumers pay in monthly installments gives it even further stability.
NXP Semiconductors (NXPI)
NXP’s chips are industry leaders in areas like connected cars, the internet of things and cybersecurity. The Netherlands-based globally diversified semiconductor company is clearly respected by peers — NXPI stock reached $125 per share in 2018 as Qualcomm (QCOM) was slated to acquire the company. After China failed to approve Qualcomm’s bid, NXPI shares plunged. But even if, conservatively speaking, NXPI is worth $110, that represents roughly 40 percent upside from mid-January levels in the high $70s. There’s something to be said for a company with a stranglehold on high-growth markets trading at just 13 times earnings, and that makes NXPI one of the best tech stocks to buy for 2019.
Alibaba Group Holding (BABA)
While not the only stock to fall over fears of trade wars and China’s slowing economy, Alibaba stock was arguably the most prominent casualty of Wall Street’s pessimism on Asia. Down roughly 30 percent from 2018 highs, it’s certainly not BABA’s business that caused the sell-off. In fact, Alibaba is growing more quickly than even Amazon was when Amazon was Alibaba’s size. In 2011, Amazon revenue grew 40 percent from $34.2 billion to $48.1 billion. This year, analysts expect Alibaba to grow 54 percent, from $36.1 billion to $55.6 billion. With “China’s Amazon” selling at a discount, BABA is easily one of the best tech stocks to buy for 2019.
Perhaps the most interesting tech stock on this list, StoneCo is a bit of an enigma: A young, relatively small Brazilian fintech company fresh off an initial public offering, STNE sounds like an archetypal “hold your breath and pray” play. Still, there’s no denying the elite pedigree of StoneCo’s early backers: Berkshire Hathaway (BRK.A, BRK.B), Alibaba’s Ant Financial, 3G Capital and the Walton heirs are all major investors in STNE. Analogous to Square (SQ) in the U.S., StoneCo provides point-of-sale hardware, software and digital payments solutions to merchants. Growth is bonkers, with revenue soaring 92 percent and adjusted profits surging 425 percent in the first half of 2018.
As one of U.S. News’ 10 best stocks to buy for 2019, it’s no surprise Facebook also goes down as one of the top tech stocks to buy for the year ahead. Sure, 2018 was no cakewalk for FB, but at just 20 times earnings, Facebook’s high growth — analysts expect revenue to double from $40 billion to $80 billion between 2017 and 2020 — is too great to ignore. Though earnings growth will decelerate due to lower-margin video ads and much-needed investments in cybersecurity and news-vetting, billion-user-plus platforms WhatsApp and Facebook Messenger represent huge monetization opportunities. Alphabet (GOOG, GOOGL), by contrast, sells for 40 times earnings despite much slower top-line growth.
Adobe, the leading provider of creative software, has regularly been one of the best large-cap growth stocks around, and still registers as one of the best tech stocks to buy for 2019. While a price-earnings ratio approaching 50 certainly means ADBE isn’t for the faint of heart, the company is backing it up with growth, with revenue up 24 percent and profits up 56 percent in fiscal 2018. For investors, Adobe’s most convincing advantage is its massive moat: a suite of creative software — including Photoshop, Illustrator, Premiere, InDesign, Dreamweaver and others — is unrivaled. A cloud-based subscription business model means two magical words: recurring revenue.
For the cultural lynchpin it is, Twitter doesn’t get a proportionate amount of love. At this writing, its market value of $24 billion was about one-seventeenth Facebook’s. While Twitter is objectively smaller and less valuable than FB, CEO Jack Dorsey’s efforts to clean up the social media platform are paying off: The culling of millions of fake accounts is landing with advertisers, and revenue growth unexpectedly hit 29 percent in the third quarter as profits more than doubled. Twitter’s price-earnings-growth ratio sits at 1, an attractive number rarely seen in high-growth companies. Analysts only expect 13 percent revenue growth in 2019, a conservative figure likely to be eclipsed.
The last of 2019’s best tech stocks to buy is iQiyi, China’s leading video-streaming platform. With arguably the highest risk (and reward) potential on the list, IQ is seeing prodigious growth, with revenue jumping 48 percent last quarter and subscribers up 89 percent to 80.7 million. Ninety-eight percent of users are paying subscribers, with consumers flocking to iQiyi’s for its self-produced content. One series, “Story of Yanxi Palace,” saw 20 billion video views over its run. Be aware IQ is still unprofitable, focusing heavily on content investments to grow market share. With majority owner Baidu playing sugar daddy, that shouldn’t be a problem as iQiyi’s ambitious expansion continues into 2019.
The best tech stocks to buy now.
To review, these are the 10 best tech stocks to buy for 2019:
— Amazon.com (AMZN)
— Baidu (BIDU)
— Apple (AAPL)
— NXP Semiconductors (NXPI)
— Alibaba Group Holding (BABA)
— StoneCo (STNE)
— Facebook (FB)
— Adobe (ADBE)
— Twitter (TWTR)
— iQiyi (IQ)
More from U.S. News
Update 02/07/19: This story was first published on Nov. 19, 2018 and has been updated with new information.