The 15 Best Tech Stocks to Buy for 2021
The technology sector sprang into action in 2020. But despite stretched valuations, hopes are high heading into 2021, especially for these 15 top tech stocks.
Technology stocks are arguably the most dynamic of all the flavors of publicly traded companies on Wall Street.
In other industries, businesses can run into headwinds in a hurry thanks to changing consumer tastes or the capital big outlays that come with scaling up physical storefronts or manufacturing facilities. However, the best tech stocks sometimes need little more than a good idea and a few hundred ambitious employees – the next thing you know, you've got a massive winner on your hands.
Of course, plenty of tech stocks get a bad rap for not having follow-through, not thinking about long-term profitability and simply presuming that gullible investors will buy up shares no matter what. Workplace sharing firm WeWork is a prime example of that: The company was forced to shelve its 2019 initial public offering (IPO) because of pie-in-the-sky valuations that simply didn't square with reality.
The challenge for investors in 2021, then, is to sift through the noise to find the top technology stocks – companies with impressive numbers to back up their growth as well as durable narratives that aren't driven by fads.
Here are the 15 best tech stocks to buy for 2021. All have top ratings from Wall Street analysts, show amazing top-line revenue growth and enter the new year with strong momentum at their back.
Data is as of Dec. 27. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Analyst ratings from S&P Global Market Intelligence. Companies are listed by strength of analysts' average rating, from lowest to highest.
- Market value: $2.2 trillion
- Dividend yield: 0.6%
- Analyst ratings: 20 Strong Buy, 7 Buy, 9 Hold, 2 Sell, 1 Strong Sell
It's hard to make a list of must-own tech stocks and not include Silicon Valley giant Apple (AAPL, $131.97). The company is a mainstay of consumer electronics stores, with its iconic iPad and iPhone seen as the gold standard for many gadget lovers across the globe.
But Apple is increasingly becoming much more than just a mobile-device manufacturer. In its fiscal Q4 that ended in September, AAPL notched record revenue in part because of its Services arm that includes paid content such as Apple TV, iTunes and its App Store. Services now represent about 19% of total revenue for Apple, clocking in at $53.7 billion annually in fiscal 2020 – and up 16% from the prior year. What's more, that tally is actually the second-largest business line for Apple behind iPhones; it's just about equal to the total sales recorded by iPads and accessories including AirPods and the Apple Watch.
This is a crucial trend because this cashflow is "stickier" than device revenue that can be reliant on broader consumer tastes and spending trends. It's also much higher-margin, since it doesn't involve manufacturing and supply chains.
While consumers might be enamored with the latest flashy devices that Apple is putting out, investors should pay close attention to the Services division. AAPL could be one of the best tech stocks to buy for 2021 as it builds on its dominant market share and squeeze additional cash from users via its services in 2021.
- Market value: $16.7 billion
- Dividend yield: N/A
- Analyst ratings: 12 Strong Buy, 5 Buy, 4 Hold, 1 Sell, 0 Strong Sell
Though a technology company, Zendesk (ZEN, $142.83) is closely tied to consumer-related businesses as it operates tools that drive customer service interactions including chat interfaces, analytics and other services.
As with many tech stocks on this list, ZEN was in the right place at the right time in 2020. The preceding years clearly showed the value of its services, but the COVID-19 pandemic forced many potential clients to hurry up and get on board. After all, if you can't rely on in-person interactions, then it's crucial to connect digitally with your customers.
The result? A 25% surge in sales over fiscal 2020 and a leap of more than 85% in its share value since Jan. 1.
In a shareholder letter in October, the company noted that "churn and contraction rates improved significantly, moving closer to historical levels" as a result of the obvious value proposition of these customer service tools during the pandemic. This is evident in the company's expectations for an additional 25% revenue growth in the next fiscal year; many of the new customers brought on by the instant pressures of the pandemic are sticking to become long-term clients.
Unlike some stocks that were simply situational plays over the last several months of unique economic circumstances, ZEN has a great product suite that is in-line with modern customer service needs. That should ensure its standing among the best tech stocks in 2021.
13. PayPal Holdings
- Market value: $279.6 billion
- Dividend yield: N/A
- Analyst ratings: 23 Strong Buy, 12 Buy, 7 Hold, 0 Sell, 1 Strong Sell
PayPal Holdings (PYPL, $238.64), one of the oldest payments technology stocks on Wall Street, was acquired in 2002 by online auctions giant eBay (EBAY) then spun back out again in 2015 after it became clear that PayPal had a very different business model and growth path.
And in recent years, as cash and checks have become increasingly a thing of the past, PYPL has lived up to that promise in a big way.
Revenue has more than doubled since 2015, from about $9 billion to an estimated $21 billion this fiscal year. The growth rate isn't slowing down, either, with the fiscal 2020 total about 20% higher than the prior year and another 20% or so expected again in fiscal 2021, according to consensus estimates on Wall Street.
PayPal has evolved far beyond a simple alternative to cash-based transactions, however, via its namesake platform as well as its Venmo subsidiary. In 2020, PYPL has also said it plans to incorporate cryptocurrencies such as Bitcoin and Ethereum into its payment platform and purchasing interface that is used by some 26 million merchants worldwide.
It's difficult to bet against a tech stock that shows this one-two punch of continued innovation to remain relevant for the future, as well as hard numbers showing continued growth in the here and now. Yes, shares have more than doubled in 2020 to trade at new all-time highs, but investors still might want to load up on PYPL as it remains one of the most attractive tech companies to invest in as we enter 2021.
- Market value: $175.5 billion
- Dividend yield: 3.3%
- Analyst ratings: 19 Strong Buy, 8 Buy, 5 Hold, 1 Sell, 0 Strong Sell
Named as one of the best weak-dollar stocks to consider by Kiplinger, Broadcom (AVGO, $431.46) is a semiconductor firm that designs communications chips used in a wide array of electronics that need connectivity via Wi-Fi, Bluetooth or 5G.
Since it is a third-party provider of materials rather than the end manufacturer of actual gadgets, AVGO is reasonably insulated from the challenges of anticipating consumer tastes and simply can play this broad trend of connectivity. And given continued adoption about the "Internet of Things" that involves connected thermostats, doorbells, televisions and appliances, it's safe to say Broadcom looks like one of the best tech stocks to buy as we enter 2021.
More importantly, a stunning announcement in 2020 that semiconductor giant Intel (INTC) might consider outsourcing manufacturing in the future means big competitors like Broadcom could be gifted an influx of new business at their foundries. Granted, making other firms' branded chips is a much lower-margin business, but the sheer volume alone from any potential deal is worthwhile – and with a wave of consolidation in recent years, few companies could handle the sheer volume Intel would require. AVGO is one such firm.
That adds an extra element of interest above the already impressive organic performance of Broadcom. Shares are up by more than 35% in 2020, and the current fiscal year should close with near double-digit revenue growth.
- Market value: $26.1 billion
- Dividend yield: N/A
- Analyst ratings: 9 Strong Buy, 4 Buy, 3 Hold, 0 Sell, 0 Strong Sell
Cloud computing and cybersecurity stock Cloudflare (NET, $84.98) isn't the biggest tech name out there, but it's a red-hot one. Shares have more than quadrupled in 2020, including a doubling since the start of October. This fast-growing the player just posted another blowout earnings report, and it continues to set new 52-week highs like clockwork.
In a nutshell, Cloudflare is a web performance and security company that makes sure the internet works as it should – without downtime, without the risk of hacking and without the cost and complexity of big in-house operations. You can understand that appeal, both from a bottom-line perspective as well as a security and privacy perspective.
And as most companies see the internet as a vital part of their day-to-day operations, Cloudflare has seen huge growth. Specifically, fiscal 2020 revenue is expected to surge 50% over the prior year – and the top line should expand by more than 30% again in 2021 if Cloudflare's current estimates hold.
The company is operating a little under breakeven as it invests heavily in growth, but as we've seen with many high-octane tech stocks, this should not be seen as a red flag. If anything, we could see a big catalyst for another move higher in 2021 if NET stock finds itself in consistently profitable territory.
That's not unrealistic, either. The massive run in November after Q3 earnings was sparked by the fact that losses narrowed to just 2 cents a share on the quarter on 54% revenue growth. Those are fundamentals to get excited about as Cloudflare looks to build on its success in the new year.
- Market value: $58.2 billion
- Dividend yield: N/A
- Analyst ratings: 15 Strong Buy, 6 Buy, 3 Hold, 1 Sell, 0 Strong Sell
One of the hottest tech stocks of 2020 was cloud services provider Twilio (TWLO, $362.88), which has shot 270% higher since Jan. 1. But investors' window of opportunity has not necessarily closed. As is so often the case with red-hot momentum stocks, the "buy high and sell higher" mentality could create a nice payday for late entrants in TWLO, which could be one of the top tech stocks of 2021.
Twilio's platform was tailor-made for the prior year: It processes text messages, videos and other mobile-friendly content on behalf of third parties. As the pandemic kept more of us at home and on our devices, that naturally meant a big boost for TWLO.
But the reality is that the twin mega-trends behind this stock are not going away. Namely, consumers are increasingly consuming mobile-friendly content and internet companies are increasingly relying on cloud computing for their data needs.
Consider that after an admittedly impressive leap forward in 2020, with fiscal-year revenues set to surge more than 45%, TWLO is plotting an additional 30% growth in the New Year. This suggests that many clients won over during the pandemic will stick, and that cross-selling and growth opportunities remain. After all, customer communications have moved way beyond traditional phone banks or direct mailing.
Modern marketing requires modern solutions, and Twilio is the dominant force in this arena as we enter 2021.
- Market value: $108.1 billion
- Dividend yield: N/A
- Analyst ratings: 20 Strong Buy, 8 Buy, 4 Hold, 1 Sell, 0 Strong Sell
Cloud computing stock ServiceNow (NOW, $553.89) provides automated enterprise IT operations that include workflow optimization and integration of business processes to ensure things like your network infrastructure and data management are safe, secure and cost-efficient.
You don't need to know how to write computer code to understand the importance of this kind of service in a modern workplace, as information technology can be one of the costliest and most essential departments for any organization regardless of its business model.
As companies are increasingly spending on IT, then, they are also increasingly reliant on the expertise of NOW to make sure their technology needs are met. That's evident in the company's fiscal 2020, in which ServiceNow posted more than 20% revenue growth. And the company is expected to post another 20% growth again in fiscal 2021.
Even more impressive is that earnings per share (EPS) have skyrocketed more than 35% this year. Any time you see profits are expanding faster than your revenue, that's a sure sign that the company you're looking at has a powerful product that can command strong margins and scale up efficiently.
Admittedly, NOW is a highflier that has nearly doubled since Jan. 1. But as we enter 2021, it's important to differentiate between the short-term tactical trades that were dependent on the coronavirus and stocks like ServiceNow that are riding a much more durable and long-term trend.
Case in point: ServiceNow stock continues to trade near all-time highs through late December. This doesn't look like a stock that was merely lifted by the news cycle a few months ago. That's a hopeful sign for the many bullish analysts who believe NOW will be one of the best tech stocks of 2021.
8. Palo Alto Networks
- Market value: $35.5 billion
- Dividend yield: N/A
- Analyst ratings: 24 Strong Buy, 7 Buy, 6 Hold, 1 Sell, 0 Strong Sell
Cybersecurity stock Palo Alto Networks (PANW, $367.14) has outperformed in 2020, more than tripling the returns of the S&P 500. But the real potential of PANW in an admittedly crowded subsector of high-tech security firms is most evident in the last few months.
Shares have surged more than 66% since the start of November, largely on the back of great fiscal Q1 results. A few highlights include revenue expansion of more than 20%, and EPS that surged almost 60%. That trend should only continue; its billings also increased more than 20%, hinting that future revenue streams will be even more robust.
Part of that growth is thanks to natural tailwinds as the cyber spending spirals ever higher, with business and governments of all stripes prioritizing network security to protect operations. That need became even more evident recently in the wake of reports that Russian hackers made their way into U.S. government networks, even hitting our nuclear labs.
But it's also a result of continued innovation, including next-generation security services and improved firewall offerings. This product expansion isn't just a good way to stay relevant and compete for new business, but also a way to cross-sell and upgrade existing customers in 2021.
The icing on the cake is that as PANW is increasingly relying on subscription-based sales that offer a recurring revenue stream, the gains we've seen lately are sure to be sticky and power success beyond just a quarter or two.
- Market value: $206.6 billion
- Dividend yield: N/A
- Analyst ratings: 28 Strong Buy, 7 Buy, 6 Hold, 0 Sell, 1 Strong Sell
Salesforce.com (CRM, $225.78), an early entrant in cloud computing solutions for businesses, has been on a tear for some time. Over the past five years, the tech stock has tacked on about 190% gains to more than double the 80% returns of the S&P 500 in the same period. That includes a nearly 40% year-to-date gain for CRM through late 2020.
Those gains were slowed, however, after Wall Street reacted negatively to the company's recent $28 billion mega-deal for workplace collaboration icon Slack Technologies (WORK).
But just as cloud-based business tools like those provided by Salesforce fundamentally changed the way businesses operate and monitor customer performance compared with 10 years ago, the pandemic of 2020 has the potential to mark another step change in the way organizations manage their employees and find ways to collaborate.
The deal shows that $200 billion Salesforce has entered the top tiers of the tech sector, with deep pockets and big ambitions to become as dominant as other mega-cap tech stocks like Microsoft. And with revenue growth rates set to top 20% this year and another 20% next year, the deck looks stacked in favor of CRM compared with its smaller peers that simply can't compete with its scale and brand power.
6. Nuance Communications
- Market value: $12.5 billion
- Dividend yield: N/A
- Analyst ratings: 5 Strong Buy, 2 Buy, 1 Hold, 0 Sell, 0 Strong Sell
Nuance Communications (NUAN, $43.74), a leading provider of voice recognition and imaging technology software, saw its shares soar more than 15% in a single session in mid-November after it beat Wall Street expectations and analysts raised their price targets on the stock.
It wasn't really the fundamentals of the earnings that got investors excited, however. It was the continued development of an impressive new line of next-generation products, including artificial intelligence solutions for medical transcriptions and voice recognition and biometric authentication products to help companies with security needs.
It's this long-term potential that Wall Street is watching, and based on the 150% gains for NUAN stock in the last 12 months, the expectations are off the charts. A strongly bullish analyst consensus furthers the case for Nuance to be one of 2021's best tech stocks to buy.
There's a lot of talk about the promise of artificial intelligence, but Nuance is realizing that potential with solutions across healthcare, security, communications and government. Beyond the immediate momentum for shares, Nuance has a compelling long-term growth story that makes it worth a look.
5. Leidos Holdings
- Market value: $14.8 billion
- Dividend yield: 1.3%
- Analyst ratings: 9 Strong Buy, 3 Buy, 2 Hold, 0 Sell, 0 Strong Sell
Technology services and consulting firm Leidos Holdings (LDOS, $104.24) offers cybersecurity services, analytics, logistics and other solutions through three main segments: defense solutions, civil services, and public health.
Together, these workstreams offer a relatively stable stream of revenue, but the real gem in its portfolio is the arm that serves the U.S. Department of Defense.
For starters, the defense solutions line represents just over half of Leidos' top line. It's also incredibly stable thanks to its respected brand and long-term contracts with agencies including the Department of Homeland Security and the U.S. intelligence community, as well as with key overseas allies. But it's not just stability that's appealing; this segment grew an impressive 22% in Q3 thanks to both organic growth and important recent acquisitions.
What's more, next fiscal year, Leidos is plotting an additional 12% increase in revenue and similar growth in earnings per share. That's in part because the incoming Biden administration is telegraphing a reluctance to cut defense spending in the years ahead. But it's also because LDOS continues to beef up its cybersecurity and public health solutions to take advantage of opportunities in these areas.
With both federal agencies and local governments feeling pressures these days, Leidos is an in-demand tech partner that is vital to many public-sector services. LDOS shares are riding high, up roughly 25% since the end of October, as markets enter the new year, and it could become one of the best technology stocks across the next 52 weeks.
- Market value: $14.3 billion
- Dividend yield: N/A
- Analyst ratings: 9 Strong Buy, 5 Buy, 1 Hold, 0 Sell, 0 Strong Sell
In an age when tech behemoths such as Amazon.com (AMZN) seem to get ever wider in their influence, GoDaddy (GDDY, $84.96) seems almost quaint with its niche focus on domain name registration and website design and hosting services.
But it is a mammoth brand in the space. And it has added a staggering 1 million net new customers this year and counting, on top of its already deep bench of existing website relationships.
In August, GoDaddy surged almost 20% on the month thanks to a confluence of events. A strong quarterly report showed a 12% improvement in earnings and an even more impressive jump of 18% in its business applications line. That was a very important month for GDDY, as it showed the initial wave of domain registration and interest in internet services sparked by the pandemic had continued through the summer months.
GoDaddy was just getting started, it seems. The stock tacked on another 20% surge since the start of November thanks to powerful Q3 earnings. Revenue, total bookings and unlevered cash flow were all up by double digits over the prior year.
While initially seen as a play on the "stay at home" trend, GoDaddy has a wide array of ongoing services to websites that ensure recurring revenue well beyond 2020. That has allowed this tech stock to outperform the S&P 500 handily over the past year, and ensures it has a good chance of doing well again in 2021, too.
3. Keysight Technologies
- Market value: $24.4 billion
- Dividend yield: N/A
- Analyst ratings: 8 Strong Buy, 4 Buy, 1 Hold, 0 Sell, 0 Strong Sell
Keysight Technologies (KEYS, $130.95) isn't as well-known as some of the other tech stocks on this list. It is, however, a crucial provider of electronic design and testing solutions that are vital to a host of businesses, including those in the aerospace, automotive, energy and technology sectors.
That's because KEYS offers electronic testing and measurement services that are incredibly precise and ensure quality control on things like engine parts or semiconductor chips that don't have much margin for error.
The growth story speaks for itself, with revenue set to surge more than 10% this fiscal year if projections hold, and EPS projected to jump 15%. The June acquisition of smaller U.K.-based testing firm Eggplant for $330 million is yet another reason to put KEYS among the best tech stocks to buy for 2021.
Perhaps most importantly, however, KEYS has about $1.8 billion in cash on the books even after that deal. That's a massive war chest for future growth plans as well as fallback cash if things get rough in the short-term.
It's also worth noting that the tech firm just exhausted a $500 million share buyback plan this year, so shareholders might expect an even bigger repurchase plan on the horizon to further drive appreciation on top of organic growth trends.
2. Lattice Semiconductor
- Market value: $6.0 billion
- Dividend yield: N/A
- Analyst ratings: 7 Strong Buy, 1 Buy, 1 Hold, 0 Sell, 0 Strong Sell
At the end of 2018, Jim Anderson, the former chief executive of Advanced Micro Devices (AMD), took the reins of the much smaller and lesser-known chipmaker, Lattice Semiconductor (LSCC, $43.76). Since then, LSCC has exploded more than 500% higher thanks to shrewd leadership and an effective refocusing on LSCC's core portfolio to maximize profitability and stay competitive in the modern hardware marketplace.
Lattice might not be large, at just $6 billion, putting it in the lower tier of the industry when it comes to size. But LSCC just won the 2020 award for "most respected public semiconductor company" from the Global Semiconductor Alliance. That's proof of just how strong this company's strategy is right now, and how it's holding its own with better-known and better-capitalized competitors.
Supply chain issues caused by the pandemic in 2020 will cause revenue to remain mostly flat in the current fiscal year, but it's noteworthy that profitability continues to tick higher anyway. Gross margins expanded yet again when LSCC reported Q3 earnings in October, up to 60.5% compared with 59.4% the prior year.
Recent growth metrics and share momentum make Lattice very attractive. But the icing on the cake is continued consolidation in the chipmaker space that makes a small but profitable niche chipmaker like Lattice ripe for acquisition in the coming years. If a larger firm comes knocking with a juicy takeover offer in 2021, an instant, significant increase to shares likely would make LSCC one of the top tech stocks of the year.
- Market value: $1.7 trillion
- Dividend yield: 1.0%
- Analyst ratings: 25 Strong Buy, 7 Buy, 2 Hold, 0 Sell, 0 Strong Sell
Enterprise software giant Microsoft (MSFT, $222.75) is one of the few trillion-dollar stocks on Wall Street, and the reason why is well-known at this point. Since CEO Satya Nadella took over in 2014, he has steered MSFT into the future with mobile-friendly and cloud-based services; the Silicon Valley icon now generates more than a third of its revenue from "commercial cloud" software. Shares have increased more than five-fold since Nadella took over as a result of this rethinking of legacy products such as Windows and Office.
What's more, not only is its Azure segment is the second-largest cloud platform in the world behind Amazon Web Services, it's also the fastest-growing division within MSFT itself. Consider its October earnings report, where Azure revenue growth clocked in at a staggering 48% rate! When you're already a dominant force in enterprise technology, that kind of expansion is incredibly difficult to achieve and proves the power of Microsoft products and management.
Beyond this broader trend lifting Microsoft, MSFT could be one of the best tech stocks to buy for 2021 as its dominance in other divisions continues to pay dividends. Its Xbox content and services revenue jumped 30% in the latest quarter as stay-at-home orders have fueled massive growth in gaming. And its Surface revenue jumped 37% as consumers and businesses are in increasingly in the market for next-gen tablets to help with remote work and schooling needs.
If those growth prospects weren't enough, Microsoft has a staggering $138 billion in cash on its books – adding unrivaled stability to ensure this stock will continue to thrive for many years to come.