With the tech-heavy index on track to record its best year since 2009, choosing the winners for 2021 is no easy task. Many analysts believe top tech stocks are vulnerable to a correction after a powerful rally in 2020 as they trade on extreme valuations.
The task of choosing the right stocks for next year becomes more challenging as the global economy continues to face the challenges of the pandemic and the uncertain path ahead. That said, savvy investors can still see the so-called megatrends reshaping consumers' preferences and buying habits as they try to capitalize on these long-term shifts.
These megatrends are defined as transformative forces that have the potential to change the global social, economic and political landscape in the coming decades.
Below we have identified three technology stocks from different sectors that we believe will continue to benefit from these shifts and provide additional upside potential for investors.
1. NVIDIA
NVIDIA Corporation (NASDAQ 🙂 has emerged as one of the top performing chip stocks during this global health crisis. The company thrived as demand for its products, which serve the data center and video game markets, boomed during the pandemic.
As a result, the company's stock price has more than doubled, making it the third best performing stock this year. These gains have pushed the market cap to over $ 325 billion, making it more valuable than its two main rivals – Intel (NASDAQ 🙂 and Advanced Micro Devices (NASDAQ 🙂 – combined.
But an important question for investors is whether this lightning-fast journey will continue in 2021?
According to Jefferies, companies like NVIDIA with a rapid shift to online entertainment and cloud solutions and fintech are at the forefront of this accelerating change and will continue to benefit from this powerful trend.
NVIDIA is a leading provider of chips used in data centers, while also deriving more than 20% of its revenue from online entertainment. The chipmaker posted strong sales of its graphics processing chips in the US, which are becoming increasingly important to both games and artificial intelligence developers.
Shares of NVIDIA closed at $ 533.29 Monday, up 0.45% on that day.
2. Amazon
For investors who want to play it safe but keep on hunting for extra capital, global e-commerce giant Amazon.com (NASDAQ 🙂 choice. The online retailer is experiencing an unprecedented wave and no other company is better positioned to capitalize on this shift than Amazon.
Last month, Amazon predicted a sharp jump in the current quarter, indicating that the giant e-tailer expects the boom in online shopping to continue during the pandemic and beyond. Amazon has benefited enormously from this health crisis as people shopped online and stocked a wide variety of goods, from electronics to groceries.
The e-commerce giant's increasing investment in facilities is a strong indicator of the company's fast-growing growth, Mizuho analyst James Lee said in a note to customers last week.
The Seattle-based company "aggressive expansion plan for fulfillment centers and logistics is a leading indicator of demand for new product lines," positioning the company to continue to gain market share in all of its businesses, Lee wrote in a note published by CNBC. .com
Lee said:
"We believe the growth path for Amazon will remain robust in FY21 and beyond due to increased grocery penetration, the continued recovery of discretionary products and the large TAM in online pharmacies."
J.P. Morgan analyst Doug Anmuth previously reiterated his review of overweight on Amazon, saying that AMZN remains his "top idea," with the 12-month price target of $ 4,050
.
Shares of Amazon are up more than 70% after this year, not much change since they hit a record high on September 2. Shares closed at $ 3,206.18 on Monday, up another 0.14% one day.
3. Uber Technologies
Ridehailing services have become an important indicator of the resurgence of normal life in this pandemic-stricken economy. Their bookings collapsed during the first part of the year as the rapid spread of the virus forced governments into lockdowns and massive business and office closures.
That situation put stocks of Uber Technologies (NYSE :), the world's largest taxi service, and competitors under pressure, causing them to collapse. But as economies around the world continue to cope with the virus, which has drastically changed our travel routines, it is becoming clear that some transportation companies can survive in this digital world.
What separated Uber from other players during this global health crisis was the diversification of the company. The company's food supply boomed during the pandemic and helped lessen the blow from people who drive fewer trips. The service registered a gross booking growth of 134% in the, while Uber's ride-hailing division fell 53%.
Many Wall Street analysts take an optimistic view of Uber in the hope that it will normalize global travel once the COVID-19 vaccination is widely available. After a 50% drop in March, Uber's share is now up 66% for the full year.
Shares of the San Francisco-based company closed at $ 51.80 Monday, adding 2.33% on that day.
