It’s been a volatile year for tech stocks. While the Nasdaq Composite index suggests that heavily leading tech names has grown 21% so far in 2021, the gains have not been evenly distributed. Many of the best known and biggest technology companies have seen their share prices stagnate or fall steeply this year.
The ups and downs have been seen across sub-sectors of the technology space. Cybersecurity stocks such as CrowdStrike (NASDAQ:CRWD), for example, flourished in the spring and summer only to sell off sharply this autumn. Shares of semiconductor companies and consumer electronics firms saw similar peaks and valleys throughout the year. Yet technology companies remain key growth stocks and there is optimism that 2022 will be a better year.
Here are five tech stocks that should be on every investor’s 2022 buy list.
- Apple (NASDAQ:AAPL)
- Nvidia (NASDAQ:NVDA)
- Amazon (NASDAQ:AMZN)
- Twitter (NYSE:TWTR)
- Netflix (NASDAQ:NFLX)
Tech Stocks: Apple (AAPL)
After not doing much for most of the year, shares of Apple are ending 2021 strong having gained 17% since the start of November to reach a new all-time high of just over $177 a share. The catalyst for the year-end rally has been a number of bullish analyst notes and upgrades on AAPL stock.
Investment bank Morgan Stanley (NYSE:MS) recently raised its price target on Apple shares from $164 to a street high of $200, stating that major new products from the Silicon Valley-based company, such as an augmented reality headset and self-driving car, have not yet been factored into the share price.
Other analysts have been equally positive on Apple and its stock as they pick their top investments for 2022. With a market capitalization of $2.9 trillion, Apple remains the most valuable company in the world and holds a dominant position in the markets in which it competes — from smartphones to tablets.
While Apple has struggled with global supply constraints and a shortage of semiconductor chips that have slowed production of some of its key consumer products, such as the iPhone, those issues are widely viewed as temporary and beyond the company’s control. Moving forward, Apple should remain the world’s leading technology company and a reliable long-term investment.
Shares of microchip designer Nvidia continue to run hot. NVDA stock is at $302 per share, making it one of the top performing securities of 2021. And this after a 155% gain in 2020 during the height of the pandemic. In the past five years, shares of Nvidia have gained around 1,300%, making it one of the best performing investments around. The sensational growth has been fueled by strong demand for Nvidia’s chips and graphic cards that are widely used in video game consoles and personal computers, as well as exceptional earnings results.
Nvidia has an 80% share in the market for gaming graphics cards, which remain a key driver of the company’s growth. Nvidia’s gaming revenue rose 42% year-over-year in this year’s third-quarter to $3.22 billion. And, the graphics card market is forecast to grow to $246 billion in revenue by 2028.
If there is one problem that Nvidia is grappling with, it is the company’s proposed $40 billion acquisition of British chip maker Arm Holdings. Regulators around the world, including in the U.S., have moved to block the acquisition citing competition concerns. However, the torpedoing of the Arm Holdings deal appears to already be priced into NVDA stock as the share price has barely budged on news of regulators blocking the acquisition.
Tech Stocks: Amazon (AMZN)
The stock of e-commerce behemoth Amazon has not performed well in 2021, posting a paltry gain of 5% compared to over 25% for the benchmark S&P 500 index. However, things look likely to turnaround for the online retailer in the New Year.
Several analysts have named AMZN stock a top pick for 2022, including investment bank Goldman Sachs (NYSE:GS), which singled out Amazon as its top internet stock for the year ahead. Goldman says that Amazon is “exposed to a multitude of broader secular growth themes, including e-commerce, advertising, cloud computing, media consumption and consumer subscription adoption” that should drive the share price higher in the next 12 months.
The Seattle-based company has faced some headwinds this year due to global supply constraints. A recent system outage at Amazon Web Services also hurt the company’s deliveries during the crucial holiday shopping season. However, Amazon never really slows its growth efforts.
In November, the company announced a new partnership with PayPal (NASDAQ:PYPL) that will enable consumers to pay for purchases on Amazon using Venmo. The deal should help both companies, and will provide another means by which customers can interact with and make purchases on Amazon’s popular online site that sells everything from baking ware to motorcycles.
Twitter lands on this list because its stock is so undervalued right now. The social media company’s share price is down 16% on the year after a 24% decline over the past six months.
At $45 a share, TWTR stock is a bargain, and many on Wall Street see a rebound coming. The median price target on TWTR stock is $65, which would be 43% higher than its current level. The high estimate on the stock is $86.
Investors have been paying closer attention since it was announced that company co-founder and chief executive officer Jack Dorsey is stepping down from his role to focus exclusively on his other major tech concern, digital payments firm Square (NYSE:SQ).
Twitter is also taking several steps to grow and increase its revenue. The San Francisco headquartered company has set itself the goal of having 315 million monetizable daily active users and doubling its revenue by the end of 2023.
To help achieve those ambitions, Twitter has introduced several subscription based services, including a “super follows” feature that allows creators to generate monthly revenue by sharing subscriber-only content with their followers. Twitter is also allowing users to now send and receive tips using Bitcoin as part of a broader push into cryptocurrencies. All the moves should help TWTR stock rebound in coming months.
Tech Stocks: Netflix (NFLX)
Analysts have been practically tripping over themselves to upgrade streaming leader Netflix as we approach the end of the year. Morgan Stanley recently slapped an “overweight” rating on NFLX stock and said it sees the company’s earnings per share (EPS) growing at a compound annual growth rate (CAGR) of 30% through 2025. JPMorgan (NYSE:JPM) also gave Netflix an “overweight” rating. It said that, “they are getting ‘incrementally more positive‘ on the stock as Netflix gains traction in Asia Pacific, its fastest-growing region.”
The bullish views come as Netflix continues to dominate the global streaming wars with more than 214 million monthly subscribers and a slew of hit shows such as Squid Game and movies such as Red Notice. Netflix continues to invest heavily in new content, spending an estimated $13.6 billion on new programming this year alone. And, Netflix recently diversified to begin offering access to video games on its platform. Year-to-date, NFLX stock is up 12% at $609.38 per share.
While that’s a decent gain, the shares have underperformed the Nasdaq index, which is up 21% in 2021. Analysts see stronger growth in 2022 as Netflix puts more distance between itself and other competing streaming services.
On the date of publication, Joel Baglole held long positions in MS, NVDA and SQ. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.