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All Contents © 2018The Kiplinger Washington Editors
By Dan Burrows, Contributing Writer
| Updated September 2017
Tech stocks weren't born during the dot-com boom of the 1990s. In fact, many of today's biggest publicly traded technology companies got their starts decades earlier. One of the most storied names in Big Tech dates back more than a century.
The surprising longevity of many of the top tech stocks, combined with their explosive growth, helps explain why several are among the greatest stocks of all time, according to research conducted by Hendrik Bessembinder of Arizona State University's W. P. Carey School of Business. After analyzing the lifetime returns of 25,782 common stocks over a 90-year span, the finance professor found that 96% of all stocks collectively performed no better than risk-free 1-month Treasury bills. The remaining 4% – just 1,000 stocks – generated all of the nearly $32 trillion in wealth created by the stock market between July 1926 and December 2015. Even more striking, the top 30 stocks accounted for one-third of that amount. Seven of the 30 top-performing stocks are tech stocks.
Given the way technology continues to advanced by leaps and bounds, the greatest stocks of the next 90 years might all end up being tech stocks. Take a look at the seven top-performing tech stocks since 1926.
Stocks are listed in order of the dollar amount of lifetime wealth creation, which includes reinvested dividends, from lowest to highest. Current stock data as of Sept. 8, 2017. Analysts’ ratings provided by Zacks. For more details on Bessembinder’s study methodology and findings, download a copy of his paper, "Do Stocks Outperform Treasury Bills?"face
Ticker symbol: ORCL
Lifetime wealth creation: $203.7 billion
Lifetime cumulative return: 60,750%
Current share price: $51.58
Current dividend yield: 1.5%
Current analyst ratings: 17 strong buy, 2 buy, 7 hold, 0 sell, 0 strong sell
Founded in 1977 and publicly traded since 1986, Oracle got its start as a provider of database management software. As much as any high-tech company of the era, it rode the late-1990s tech bubble to lofty heights – and then crashed. It’s been a long, slow recovery ever since, driven by a wide portfolio of software aimed at corporate customers. Where Oracle goes from here is less clear. Larry Ellison is still with the company after 40 years, though now in the role of chief technology officer. Management, led by co-CEOs Mark Hurd and Safra Catz, is in the midst of a major transformation, trying to reinvent the company and embrace the rush to cloud-based services.
Ticker symbol: INTC
Lifetime wealth creation: $246.0 billion
Lifetime cumulative return: 119,590%
Current share price: $35.19
Current dividend yield: 3.1%
Current analyst ratings: 11 strong buy, 2 buy, 7 hold, 1 sell, 2 strong sell
Intel is an old-timer among publicly traded technology companies. The semiconductor manufacturer held its initial stock offering way back in 1971. Intel ran away with the market for the chips that are a computer's brain in the early years of PC sales. The company had close to 100% market share in central processing units for personal computers at one point. It still has 80% today. But PC sales are like a slowly melting iceberg. Softening the blow, Intel remains the biggest player in making CPUs for back-end servers, which are very much in demand in order to power the rapid shift to cloud-based computing. What's troubling is that Intel missed opportunities to make chips for mobile devices, which is where much of future growth lies. Intel was added to the Dow in 1999, near the height of the dot-com boom.
Ticker symbol: GOOGL
Lifetime wealth creation: $276.5 billion
Lifetime cumulative return: 1,520%
Current share price: $941.41
Current dividend yield: N/A
Current analyst ratings: 21 strong buy, 3 buy, 3 hold, 0 sell, 0 strong sell
Alphabet has certainly made the most of its relatively short time as a publicly traded company. Shares of what was then known as Google – the corporate name was changed to Alphabet in 2015 – were initially offered to the public just 13 years ago, and by the end of the first trading day in August 2004 the company was worth $27 billion. Today, Alphabet has a market value of $635 billion. The Google search engine is Alphabet's most important business, but not its only one, thus the name change two years ago. Alphabet is also home to self-driving car startup Waymo; Nest Labs, a developer of gadgets for the Internet of Things; and X, which describes itself as a “moonshot factory” trying to invent technologies that will make the world a radically better place.
Ticker symbol: AMZN
Lifetime wealth creation: $300.2 billion
Lifetime cumulative return: 45,060%
Current share price: $965.90
Current analyst ratings: 22 strong buy, 4 buy, 4 hold, 0 sell, 0 strong sell
Amazon.com, which began life as a modest website for book buyers, is celebrating its 20th anniversary as a publicly traded company. It's been a heck of a ride for shareholders since the 1997 market debut, as evidenced by Bessembinder’s calculations of lifetime wealth creation and percentage return. The current bull market has been especially kind to Amazon investors, with the share price experiencing a 14-fold increase since March 2009. The stock now trades around $1,000, even after adjusting for three splits in the late 1990s. Amazingly, Amazon's best days may still lie ahead. In additional to evolving into the nation’s largest e-commerce company, Amazon is also a leader in cloud computing. Its recent acquisition of Whole Foods is threatening to disrupt the grocery business, and package delivery by drones could become reality in the not-too-distant future.
Ticker symbol: IBM
Lifetime wealth creation: $487.4 billion
Lifetime cumulative return: 9,456,410%
Current share price: $142.45
Current dividend yield: 4.2%
Current analyst ratings: 4 strong buy, 1 buy, 8 hold, 1 sell, 3 strong sell
Think of IBM as the granddaddy of tech stocks. The company, which began operating under its current moniker in 1924, was originally included in the Dow from 1932 to 1939. It was added back to the industrial average in 1979 and remains a component to this day. In many ways, IBM's history is a history of 20th century technological progress. As for the current century, it's a tougher call. IBM produces computer hardware and software for businesses. Consulting is another important area of operation. However, cloud-based services appear to be the future, and IBM has no shortage of competition. Amazon, Microsoft, Google, Oracle and Cisco Systems are some of the well-known tech companies jostling for space. Warren Buffett read IBM’s annual reports for decades before finally taking a stake in 2011. It’s looking more and more like Buffett made a rare bad call. So far, at least, his investment in IBM has been a major disappointment.
Ticker symbol: MSFT
Lifetime wealth creation: $567.7 billion
Lifetime cumulative return: 83,440%
Current share price: $73.98
Current dividend yield: 2.1%
Current analyst ratings: 16 strong buy, 0 buy, 4 hold, 1 sell, 1 strong sell
In 1975, Bill Gates dropped out of Harvard to start a computer company with childhood friend Paul Allen. In 1985, the first Windows operating system went on sale. A year later, Microsoft went public at $21 a share (or the equivalent of 6 cents a share once the price is adjusted for stock splits and dividends). The company quickly revolutionized personal computing and created a generation of so-called Microsoft Millionaires. Not long ago, Microsoft's glory days looked to be behind it as sales of desktop PCs slipped into a seemingly irreversible decline amid the consumer shift to mobile technology. However, the company is experiencing a renaissance thanks to the move away from licensed software to cloud-based subscription software. Today, Microsoft is a top player in cloud computing and its stock reflects this success. Shares have tripled the return of the S&P 500 index over the past two years alone. Microsoft joined the Dow in 1999 at the height of the dot-com bubble.
Ticker symbol: AAPL
Lifetime wealth creation: $677.4 billion
Lifetime cumulative return: 20,250%
Current share price: $158.63
Current dividend yield: 1.6%
Current analyst ratings: 19 strong buy, 6 buy, 5 hold, 0 sell, 2 strong sell
What’s left to say about Apple? With a market capitalization exceeding $800 billion, it’s far and away the most valuable publicly traded company today. Investors can thank the iPhone for the eye-popping run-up in the value of the stock in recent years. Before Steve Jobs debuted the revolutionary smartphone in 2007, Apple was a well-regarded maker of pricey personal computers that catered to niche markets. In the 10 years since more than a billion iPhones have been sold, and shares of Apple have gained more than 600%. Jobs died in 2011, but the company he co-founded lives on today. The new iPhone 8 and 8 Plus, starting at $699 and $799, respectively, will be in consumers' hands in late September; the high-end iPhone X (starting at a hefty $999) ships in November, just in time for the holidays. Adding to Apple’s many accolades was its inclusion in the Dow in 2015, replacing AT&T. The stock went public in 1980.
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