The technology sector is composed of businesses that sell goods and services in electronics, software, computers, artificial intelligence (AI), and other industries related to information technology (IT). The sector includes companies with the largest market capitalizations in the world, such as Apple Inc., Microsoft Corp., and Amazon.com Inc.
Tech stocks, represented by the Technology Select Sector SPDR Fund (XLK), have slightly outperformed the broader market over the past year. XLK has provided investors with a total return of -10.1% over the past 12 months, above the Russell 1000’s total return of -11.6%. These market performance numbers and statistics in the tables below are as of June 23, 2022.
Here are the top five tech stocks with the best value, fastest growth, and most momentum.
Value investing is a factor-based investing strategy that involves picking stocks that you believe are trading for less than what they are intrinsically worth, usually by measuring the ratio of the stock’s price to one or more fundamental business metrics. A widely accepted value metric is the price-to-earnings (P/E) ratio. Value investors believe that if a business is cheap compared to its intrinsic value (as measured by its P/E ratio, in this case), then its stock price may rise faster than that of others as the price comes back in line with the worth of the company. These are the tech stocks with the lowest 12-month trailing P/E ratio.
| Best Value Tech Stocks | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing P/E Ratio | |
| Hewlett Packard Enterprise Co. (HPE) | 13.62 | 17.7 | 4.9 |
| Mandiant Inc. (MNDT) | 21.80 | 5.1 | 6.0 |
| Arrow Electronics Inc. (ARW) | 107.28 | 7.1 | 6.0 |
| HP Inc. (HPQ) | 33.87 | 35.0 | 6.1 |
| Intel Corp. (INTC) | 37.41 | 153.0 | 6.2 |
Source: YCharts
- Hewlett Packard Enterprise Co.: Hewlett Packard Enterprise sells a broad range of products and services in areas including cloud services, high-performance computing and AI, software, and storage. The company has 55,000 customers globally, and its edge networking connects 10 million devices. On June 1, Hewlett Packard reported earnings results for its Q2 FY 2022, ended April 30 Net earnings declined by 3.5% on essentially flat net revenues year-over-year (YOY). Strong customer demand was offset by supply chain constraints and impacts related to inflation during the quarter.
- Mandiant Inc.: Mandiant is a provider of cyber-defense services, including cybersecurity incident response and strategic readiness consulting. The company has threat researchers, engineers, intelligence analysts, and incident responders located in 26 countries. On March 8, the company announced that it would be acquired by Google LLC in an all-cash transaction valued at approximately $5.4 billion. Mandiant is expected to join Google Cloud. The acquisition is anticipated to close later this year.
- Arrow Electronics Inc.: Arrow Electronics provides technology products and services, including electronic components, distribution, and solutions for clients in enterprise computing. Arrow employs nearly 21,000 around the world and serves more than 220,000 global customers. On June 21, Arrow announced it had opened a primary distribution center in Venlo, the Netherlands. This center serves all of the company’s electronics components customers across Europe and replaces existing facilities in the region. The new facility provides capacity for future growth in Europe.
- HP Inc.: HP sells desktop and notebook computers, workstations, retail point-of-sale systems, displays, printers and hardware, and support and services. HP’s customers include individual consumers, businesses, and governments. The company holds 27,000 patents and operates in 170 countries throughout the world.
- Intel Corp.: Intel develops and manufactures computing and technology products, including in the areas of artificial intelligence, 5G networks, and intelligent edge. The company operates six wafer fabrication sites and four assembly test manufacturing locations globally. On April 28, Intel reported earnings for Q1 FY 2022. Net income more than doubled as revenue fell by 6.6% YOY. Strong revenue growth in businesses such as the Network and Edge Group, Accelerated Computing Systems and Graphics, and Intel Foundry Services was offset by declines in Client Computing Group revenue.
These are the top tech stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in a company’s success. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with a quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
| Fastest-Growing Tech Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| GoDaddy Inc. (GDDY) | 67.76 | 11.0 | 583.3 | 11.3 |
| Black Knight Inc. (BKI) | 65.36 | 10.2 | 571.4 | 10.7 |
| TD Synnex Corp. (SNX) | 93.49 | 9.0 | -18.9 | 213.2 |
| ON Semiconductor Corp. (ON) | 50.47 | 21.9 | 490.0 | 31.3 |
| National Instruments Corp. (NATI) | 31.53 | 4.1 | 533.3 | 14.9 |
Source: YCharts
- GoDaddy Inc.: GoDaddy is a web platform for small businesses and other users to reach customers. It employs over 9,000 and serves more than 21 million entrepreneurs across over 84 million domain names.
- Black Knight Inc.: Black Knight is a software, data, and analytics company focusing on the real estate and housing finance markets. It employs around 6,400 people. On May 4, Intercontinental Exchange Inc. (ICE) announced that it would acquire Black Knight for $13.1 billion in a cash and stock transaction. The transaction is expected to close in the first half of 2023.
- TD Synnex Corp.: TD Synnex sells IT services and products. It distributes a broad range of IT products, including PC systems, consumer electronics, storage, networking, and servers. The company employs 22,000 and serves customers and vendors in over 100 countries.
- ON Semiconductor Corp.: ON Semiconductor is a semiconductor manufacturer serving markets including automotive, communications, computing, and medical. The company operates 43 design centers in 19 countries and employs about 33,000. On June 21, ON Semiconductor was added to the S&P 500 index after having been previously recognized as a Fortune 500 company.
- National Instruments Corp.: National Instruments, known as NI, makes automated testing and measurement products including modular hardware, application software, and operations management and analytic enterprise software. It sells to the semiconductor, transportation, aerospace, defense, and industrial machinery industries, as well as other customers. The company reported Q1 2022 earnings on April 28. Net income surged more than five-fold on rising revenue YOY. Strong order growth across all units and regions drove performance for the quarter.
Momentum investing is a factor-based investing strategy that involves investing in a stock whose price has risen faster than the market as a whole. Momentum investors believe that stocks that have outperformed the market will often continue to do so because the factors that caused them to outperform will not suddenly disappear. In addition, other investors, seeking to benefit from the stock’s outperformance, will often purchase the stock, further bidding its price higher and pushing the stock higher still. These are the tech stocks that had the highest total return over the past 12 months.
| Tech Stocks With the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Switch Inc. (SWCH) | 33.34 | 5.0 | 56.6 |
| Aspen Technology Inc. (AZPN) | 191.24 | 12.7 | 38.8 |
| ON Semiconductor Corp. (ON) | 50.47 | 21.9 | 36.8 |
| Palo Alto Networks Inc. (PANW) | 503.07 | 50.1 | 36.6 |
| Pure Storage Inc. (PSTG) | 26.60 | 7.9 | 34.8 |
| Russell 1000 Index | N/A | N/A | -11.6 |
| Technology Select Sector SPDR Fund (XLK) | N/A | N/A | -10.1 |
Source: YCharts
- Switch Inc.: Switch is a technology infrastructure company that develops hyperscale retail colocation data centers. The company serves over 950 customers in industries including technology and digital media, cloud and managed services, finance, telecommunications, and more. On May 11, Switch announced that it will be taken private by digital infrastructure investment firm DigitalBridge Group Inc. (DBRG) and an affiliate of investment management firm IFM Investors. The transaction, valued at about $11 billion, is expected to close in the second half of 2022.
- Aspen Technology Inc.: Aspen Technology provides software used to optimize designs, operations, and maintenance in a broad range of industries including energy, chemicals, pharmaceuticals, and food and beverage. Aspen employs more than 3,700 people across over 40 countries. On May 16, Aspen announced that it completed its transaction under which two businesses of engineering product and services provider Emerson Electric Co. (EMR) will be combined with Aspen Technology. Per the transaction, Emerson’s OSI Inc. and Geological Simulation Software businesses will be added to Aspen. As part of the deal, Emerson has paid $6.0 billion in cash in exchange for a 55% stake in Aspen Technology.
- ON Semiconductor Corp.: See company description above.
- Palo Alto Networks Inc.: Palo Alto Networks is a network security company. It provides firewalls to identify and control applications, scan content, prevent data leaks, and perform a variety of other services. The company serves over 80,000 enterprise customers.
- Pure Storage Inc.: Pure Storage is a technology company developing and manufacturing data storage hardware and software products. It serves over 9,500 customers globally. On June 1, the company reported financial results for Q1 FY 2023 ended May 8, 2022. Pure Storage’s net loss narrowed dramatically compared to the same quarter a year earlier as revenue rose 50.3%. Performance was driven by strong growth in revenue from both products and subscription services.
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
