What are technology stocks?
Technology stocks are the shares of publicly listed companies that are involved in the tech sector. They might encompass anything from bioscience to semiconductor companies. They’re usually on the cusp of innovation and often have proprietary services that no one else offers – or very few others.
What makes technology stocks so special?
Tech stocks are often, although not always, either growth, undervalued or momentum stocks. This means there are plenty of opportunities for traders to find companies that could make them a sizeable profit. Having said this, no trade or investment is a guarantee, and you could lose money on any company.
Still, growth tech stocks can flourish, going from being heavily undervalued to market-dominating. Typically, if their fundamentals are right and they have substantial market share, or a monopoly on a technology, they have the potential to make traders a decent profit.
Tech growth stocks don’t typically pay dividends (with the exception of a few, including Ubiquiti on our list). Instead, they reinvest their profits back into the company to fuel progress.
Momentum stocks are also worth considering. These belong to companies that are on a massive growth trajectory and are likely to continue their growth for some time to come.
Finally, the tech sector is always going to be a place to find innovative and well-priced stocks, because progress is speeding up at a lightning pace. With new inventions and the optimisation of existing tech constantly occurring, the tech sector is forever poised to deliver returns – if you know where to look.