The Rise of Tech Stocks: Five Key Areas Investors Should Watch

By Prodosh Kundu    24 Jun,2024

 Over the last decade, the world’s financial markets have greatly progressed thanks to technology businesses. Tech shares have been providing investors with huge profits since they are always brimming with new ideas that have the potential to disrupt industries.

On the other hand, this fluid environment calls for a good understanding of where and what issues are taking place. In order to be able to make informed decisions in the tech sector, here are 5 key areas that every investor should take note of.

●Artificial intelligence and machine learning

Artificial intelligence (AI) and machine learning (ML) have become the talk of the technology sector due to their transformative potential. They are changing industries by automating tasks, enabling better decision-making processes, and creating new business models.

Why it Matters: Broad sectors such as healthcare, finance, retail, and transportation can apply AI and ML techniques. Businesses that utilize AI stand to benefit from cost savings and competitive advantages.

For example, with AI-powered diagnosis in healthcare, they can achieve faster recovery periods for patients with greater accuracy, while financial services firms can improve fraud detection and risk management using AI systems. 

Investor Insight: Seek companies developing artificial intelligence technologies but also those integrating them into their operations.

Some examples include NVIDIA, which makes GPUs necessary for doing AI computations, or software companies like Alphabet (Google) or Microsoft, where the company is incorporating AI into its products.

Evaluate their AI strategies, partnerships, and how much of a role it plays in their primary business direction.

●Cloud Computing

Cloud computing has definitely changed the way businesses operate by providing IT resources that are flexible, efficient, and scalable.

This change from on-premises infrastructure to cloud services has been a game-changer, especially after the pandemic where virtual work has become the norm. 

Why It Matters: The cloud market is growing fast, with Amazon Web Services (AWS), Microsoft Azure, and Google Cloud as major players. Current applications require the storage and processing of data in the cloud, which makes cloud services indispensable.

Investor Insight: Look for companies that offer cloud infrastructure and software-as-a-service (SaaS).

Besides the majors like Amazon and Microsoft, focus on companies offering niche services in this area as well as innovative solutions under SaaS. Notice growth metrics such as customer acquisition, retention rates, and revenue growth of cloud services. 

●Cyber Security

The importance of cybersecurity has never been greater. This is because cyber risks continue to increase, and the need for a robust cyber security solution is also skyrocketing.

Why It Matters: Cyberattacks as well as data breaches can be detrimental to businesses and their clients. 

Consequently, companies are spending heavily on it so that they can protect their digital properties. Awareness and regulatory requirements will push the market for cyber security significantly. 

Investor Insight: For businesses providing end-point protection, network security, and threat intelligence, find those that offer all-inclusive cybersecurity solutions. 

In this respect, Palo Alto Networks, Fortinet, and CrowdStrike are the standouts in the industry. Measure them based on technological competences, share of the market achieved so far, and adaptive response capabilities against emerging risks.

●5G Technology

The coming of 5G networks will completely transform communication as they promise faster speeds, a reduced delay in message transmission, and the ability to connect many devices at one time.

This new wireless technology will help boost areas like the IoT (Internet of Things), autonomous cars, and intelligent cities. 

Why it Matters: Indeed, 5G technology will create new business prospects and revenue streams across multiple industries. For example, 5G will offer enhanced mobile broadband, ultra-reliable low-latency communication, and massive machine-type communication capabilities.

Investor Insight: You may want to focus on the likes of Verizon, AT&T, or T-Mobile, which are leading the way with regard to rolling out 5G services.

Furthermore, put emphasis on companies involved in the supply chain, such as Qualcomm for manufacturing 5G chips and Ericsson network equipment; others should evaluate their investment in 5G infrastructure, spectrum acquisition, and strategic partnerships.

●Fintech and digital payments

The fintech industry is revolutionizing how people control their money, invest, and carry out transactions. Financial services are being made more accessible and efficient through fintech innovations such as mobile banking, blockchain technologies, and cryptocurrencies.

Why It Matters: The increasing significance of digital payments and fintech solutions stems from the need for faster transactions, security, and convenience. In addition to this, firms offering creative financial products can acquire a substantial market share.

Investor Insight: Invest in leading organizations that are active in creating fintechs. Among them is PayPal, which has a digital payment platform.

Coinbase, on the other hand, uses blockchain technology. Evaluate their user growth, transaction volumes, and ability to expand service offerings.

Top 10 Tech Stocks to Look Out For in 2024

Among the most impactful and fastest-growing technological companies that investors could be watching closely in 2024:

●Microsoft Corporation (MSFT): cloud services and software innovation dominate.

●Nvidia Corp. (NVDA): AI and gaming tech leadership.

Apple Inc. (AAPL) is continuously revolutionizing consumer electronics.

Alphabet Inc., Class A (GOOGL): AI, hardware rather than just search engine.

Meta Platforms Inc. (META) is the pioneer for social media as well as virtual reality spaces.

Taiwan Semiconductor Manufacturing Company (TSM) is crucial to the global chip supply chain.

Broadcom Inc. (AVGO): is a semiconductor key player with infrastructure software.

Tencent Holdings Limited [TCEHY]—the entertainment industry’s giant technology services company

ASML Holding NV (ASML): Semiconductors Manufacturing Lithography Systems Innovator

Oracle Corp. (ORCL): A key force in database management as well as cloud services

These firms are fundamentally altering the future of technology while also offering potential investment opportunities for investors.

Conclusion

The tech sector continues to be a fertile ground for investment, with numerous opportunities arising from rapid technological advancements. 

By focusing on AI and ML, cloud computing, cybersecurity, 5G technology, and fintech, investors can position themselves to benefit from the ongoing transformation across industries. 

However, it is crucial to conduct thorough research and stay updated on market trends to make informed investment decisions in this dynamic and ever-evolving sector.

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