After a bumper year in 2019, the U.S. stock market looks poised to see a few bumps in the road in the year to come. Tech stocks had a great 2019, and were widely considered one of the best sectors of the year.
While most analysts aren’t expecting to see an economic downturn, political uncertainty and eroding corporate profits are likely to take a toll on share markets. For that reason, tech stocks with a growth story — as well as some financial security — are difficult to come by.
However, there are a handful of hot tech stocks that look likely to deliver in 2020.
Tech Stocks to Buy for 2020: PayPal (PYPL)
The electronic payments space has a huge growth runway, and PayPal (NASDAQ:PYPL) stock’s strong position in the industry makes it a good tech stock. The firm is expecting to see top-line growth in the high teens over the next few years, making it a solid bet throughout next year’s uncertainties. The firm’s Honey acquisition is likely to boost Paypal’s business in the years to come, as it will add to the firm’s value proposition and extend its reach.
Overall, PayPal has long been the preferred online payment partner. However, services like ApplePay have started to chip away at that dominance. The addition of Honey’s rewards and price-tracking capabilities to PayPal’s suite of services should boost PYPL’s appeal.
PayPal comes highly recommended among analysts as well. Of the 40 analysts covering the stock, more than 80% have given the stock a Buy rating.
While next year’s Presidential election adds a layer of uncertainty to the share markets, some tech stocks look likely to benefit tremendously from the race to the White House.
Facebook (NASDAQ:FB) stock is one of those beneficiaries. The firm is expected to see a $1 billion windfall from political ads. Plus, 2020 is expected to be a bright year for the social media firm as it concludes an investment period.
Additionally, Facebook is rolling out a series of innovative new features, including Instagram Checkout. This addition should increase engagement and translate into into rising ad revenue growth.
It’s been a bumper year for Microsoft (NASDAQ:MSFT) stock. The firm’s cloud business came into its own, winning a massive government contract worth $10 billion. More importantly, Microsoft was able to beat out Amazon (NASDAQ:AMZN), whose cloud platform has long dominated the industry.
With that big win under its belt, MSFT stock is likely to continue rising as its cloud business gains traction. The government contract win sends a message to the private-sector, which should help MSFT attract new corporate clients. Microsoft’s business apps have also garnered a lot of attention recently, adding to the firm’s long-term growth story.
While 2020 may not be quite as impressive as 2019 was, MSFT stock still looks like one of the best tech stocks to buy to win in the new year.
Adobe has a strong position as the preferred editing program for content creators. And its shift to subscriptions means predictable, reoccurring revenue for the company and a more manageable capital outlay for customers.
ADBE stock is reworking its business to include marketing services as well, which adds to the appeal of its Creative Cloud and should drive growth in the years to come. The firm’s fourth-quarter results showed the firm has been able to increase its user numbers and management’s full year guidance was in line with expectations. While Q1 guidance came in below analysts’ expectations, Adobe tends to issue conservative guidance — opening the door for upside surprises in the year to come.
Salesforce (NYSE:CRM) stock is an analyst favorite for 2020, with both JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) recommending the software as a service (SaaS) firm. JPM’s Mark Murphy pointed to CRM’s innovation as reason to rely on the stock in the new year saying the firm,”regularly increases the value of its core products and evolves the scope of its ability to digitally transform customer business models.”
Bank of America’s Kash Rangan noted that the coming year could see higher IT spending as macroeconomic conditions stabilize. CRM made the cut as one of his top 10 software stocks because, “Salesforce will continue to emphasize sales capacity growth, R&D, and tactical acquisitions, which will position it solidly going into the next economic cycle upswing.”
As of this writing, Laura Hoy was long FB and MSFT.