The 10 best tech stocks to buy for 2019.
Silicon Valley entered 2019 on weak footing following a steep fourth-quarter sell-off in tech companies. But volatility always produces opportunity, and while nothing on Wall Street is guaranteed, nine of U.S. News' 10 picks on the "Best Tech Stocks to Buy for 2019" list have rallied this year. This portfolio of names is up 26% year-to-date, dramatically outperforming the 15% return of the S&P 500. Here's a brief overview of the 10 best tech stocks to buy for 2019: how each pick has performed, why, and what catalysts investors are currently watching. One of the standout sectors in the 10-year bull run, tech shows no signs of slowing down.
Amazon.com (ticker: AMZN)
Amazon stock remains a winner -- and definitely one of the best tech stocks to buy for 2019. Having finally reached a stage in its corporate evolution where the company is consistently profitable, Amazon started off 2019 with its fourth straight quarter of record-setting profits on the back of AWS, its cloud computing business. Shares took a hit after Q2 earnings, however, when investing over $800 million in Prime same-day delivery boosted sales but hit profits. Believe it or not, foregoing short-term profit for long-term gains is wise, and AMZN remains a top-tier tech stock.
Year-to-date return (through Aug. 28): 17%
Baidu is the only pick on this list to underperform the S&P 500 so far in 2019. Shares of the company, known colloquially as the "Google of China," entered the year on a losing streak, with valuations that were too compelling to ignore. But shares have continued plunging as the trade war drags on, and now the stock trades at its lowest levels since 2013. One thing the search engine giant has going for it: its massive virtual assistant install base topping 400 million devices. BIDU overtook Alphabet's Google (GOOG, GOOGL) for second place in the global smart speaker market last quarter, with shipments topping 4.5 million, up 3,700% year-over-year.
YTD return: -34%
The world's second-most valuable company, Apple is a veritable cash cow due largely to its blockbuster product the iPhone. Founder Steve Jobs' decision to adopt a closed ecosystem in which Apple makes its own hardware and software has built a massive, cultish fan base that generates tens of billions in recurring revenue each quarter. Apple TV+, the company's long-awaited streaming video service, is coming this fall for $9.99 a month. The tech giant returned $21 billion to shareholders last quarter through buybacks and dividends, and will keep funneling back cash going forward. Services revenue -- Apple's biggest source of margin improvement -- grew 13% to an all-time high of $11.46 billion last quarter.
YTD return: 29%
NXP Semiconductors (NXPI)
Rarely do you have great insight into how a company's valuation is thought of by its peers -- unless, of course, a merger or acquisition comes along. This phenomenon occurred with NXP Semiconductors, which reached $125 a share in 2018 as Qualcomm (QCOM) was slated to acquire the company. The deal, however, fell through. The Dutch semiconductor powerhouse is a leader in making chips that help power areas like connected cars, the internet of things and cybersecurity. Even if shares today are conservatively worth $110, the fact that NXPI was trading in the low $70s to start the year was inexcusable, and clearly made the chipmaker one of the best tech stocks to buy for 2019.
YTD return: 34%
Alibaba Group Holding (BABA)
While this list has already examined one of China's top tech companies (Baidu, the analogue to Google and the only loser on this list), Alibaba shares thankfully don't convey quite the same grim tale. Entering 2019, the stock was down 30% from recent highs due to trade war concerns and the Silicon Valley sell-off And while BABA is beating the market this year, shares are still being held back by the endless tit-for-tat game of protectionism and tariffs playing out between the U.S. and China. Sometimes called "China's Amazon," you rarely see companies as large as BABA growing this fast -- last quarter, revenue rose 42% and EPS jumped 56%. Still, Alibaba goes for just 19 times forward earnings.
YTD return: 21%
Among the 10 best tech stocks to buy for 2019, StoneCo was the highest risk/reward play. A relative unknown in the U.S., the Brazilian fintech, analogous to Square (SQ) domestically, had been growing like a weed and was fresh off a 2018 IPO. Usually newly public companies debut at overhyped valuations and it takes time to settle into proper trading ranges. STNE has seen enormous volatility, but StoneCo's price in the months after its IPO is proving too conservative, not too inflated; revenue jumped 57% last quarter and EPS nearly tripled. The stock is the single biggest winner on this list, proving once again that Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B), an early investor, is as savvy as they come.
YTD return: 64%
Last year was a rough year for Facebook, as it dealt with fallout from its privacy breaches and role in meddling in the 2016 elections. CEO Mark Zuckerberg was called before Congress and grilled. It wasn't a good look. This year, however, came some practical consequences: Facebook settled with the Federal Trade Commission for $5 billion over its handling of user data and deceptive communications to users. That said, markets brushed that off, and despite the specter of further regulation as big tech firms come under the spotlight of domestic and international regulators, Facebook -- which owns Instagram and WhatsApp as well -- remains one of the best tech stocks to buy.
YTD return: 38%
One of the major beneficiaries of the shift to the cloud over the last decade, creative software powerhouse Adobe has been able to maximize scalability, boost margins and create more recurring revenue through its suite of software products. The company behind Photoshop, Lightroom, Illustrator, InDesign, Dreamweaver and Adobe XD, customers can subscribe to all of these services via the Adobe Creative Cloud for $600 per year. Millions of subscribers are doing just that, from individual artists and creators to corporate marketers, designers and advertisers all over the world. Adobe's name brand, ecosystem of products and superb reputation locks users in, and despite being worth well over $100 billion, revenue is still growing about 25% a year.
YTD return: 27%
The bearish sentiment on Silicon Valley entering the New Year was evident when looking at Twitter; although CEO Jack Dorsey had undertaken a large-scope campaign to clean up the platform and eliminate fake accounts -- and that had helped yield 29% revenue growth in Q3 2018 -- analysts were expecting just 13% revenue growth in 2019. This estimate was highlighted as "a conservative figure likely to be eclipsed" in U.S. News' list of the best tech stocks at the top of the year. Indeed, analysts now expect over 17% top-line growth in 2019, and shares have handily outperformed the market due to a series of impressive quarterly results.
YTD return: 46%
As China's top streaming video platform, iQiyi, a newly public company, was tough to ignore as one of the best tech stocks to buy for 2019. It posted blockbuster growth coming into the year, with subscribers jumping by 89% in the most recent quarter. That unsustainable pace has cooled off in 2019, and last quarter subscribers grew by 50% to top 100 million for the first time -- a number Netflix (NFLX) itself only recently surpassed. Still, revenue growth isn't quite so rapid at 15%, and the company currently operates at a loss; shares have fallen recently but due to a hot start to 2019 are still up meaningfully to-date. If you think streaming in China is a long-term bull market, IQ remains a must-own stock.
YTD return: 16%
The best tech stocks to buy now:
-- Amazon.com (AMZN)
-- Baidu (BIDU)
-- Apple (AAPL)
-- NXP Semiconductors (NXPI)
-- Alibaba Group Holding (BABA)
-- StoneCo (STNE)
-- Facebook (FB)
-- Adobe (ADBE)
-- Twitter (TWTR)
-- iQiyi (IQ)
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