The technology sector is composed of businesses that sell goods and services in electronics, software, computers, artificial intelligence (AI), and other industries related to information technology (IT). The sector includes companies with the largest market capitalizations in the world, such as Apple Inc., Microsoft Corp., and Amazon.com Inc.
Tech stocks, represented by the Technology Select Sector SPDR Fund (XLK), have outperformed the broader market over the past year. XLK has provided investors with a total return of -0.8% over the past 12 months, above the Russell 1000’s total return of -5.2%. These market performance numbers and statistics in the tables below are as of May 23, 2022.
Here are the top five tech stocks with the best value, fastest growth, and most momentum.
Value investing is a factor-based investing strategy that involves picking stocks that you believe are trading for less than what they are intrinsically worth, usually by measuring the ratio of the stock’s price to one or more fundamental business metrics. A widely accepted value metric is the price-to-earnings (P/E) ratio. Value investors believe that if a business is cheap compared to its intrinsic value, as measured by its P/E ratio in this case, then its stock price may rise faster than that of others as the price comes back in line with the worth of the company. These are the tech stocks with the lowest 12-month trailing P/E ratio.
|Best Value Tech Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Hewlett Packard Enterprise Co. (HPE)||14.51||18.9||5.2|
|Dell Technologies Inc. (DELL)||41.22||31.3||5.8|
|Mandiant Inc. (MNDT)||21.89||5.1||6.0|
|HP Inc. (HPQ)||35.06||36.9||6.3|
|Arrow Electronics Inc. (ARW)||118.70||7.8||6.7|
- Hewlett Packard Enterprise Co.: Hewlett Packard Enterprise sells a broad range of products and services in areas including cloud services, high performance computing & AI, software, and storage. The company has 55,000 customers globally and its edge networking connects 10 million devices.
- Dell Technologies Inc.: Dell Technologies designs, develops, and manufactures desktop computers, workstations, notebooks, displays, projectors, and other products. The company also offers multi-cloud, big data, and storage services. Dell has a sales force of 32,000 and operates in 180 countries around the world.
- Mandiant Inc.: Mandiant is a provider of cyber defense services, including cybersecurity incident response and strategic readiness consulting. The company has threat researchers, engineers, intelligence analysts, and incident responders located in 26 countries. On March 8, the company announced that it would be acquired by Google LLC in an all-cash transaction valued at approximately $5.4 billion. Mandiant is expected to join Google Cloud. The acquisition is anticipated to close later this year. On May 3, Mandiant reported results for Q1 FY 2022, ended March 31. The company reported a widening net loss attributable to shareholders as revenue climbed by 13.5% YOY. The larger net loss was fueled largely by a major increase in operating losses.
- HP Inc.: HP sells desktop and notebook computers, workstations, retail point-of-sale systems, displays, printers and hardware, and support and services. HP’s customers include individual consumers, businesses, and governments. The company holds 27,000 patents and operates in 170 countries throughout the world. On May 19, HP declared a a cash dividend of $0.25 per share of common stock. The dividend is payable July 6 to shareholders of record as of June 8, 2022.
- Arrow Electronics Inc.: Arrow Electronics provides technology products and services, including electronic components, distribution, and solutions for clients in enterprise computing. Arrow employs nearly 21,000 around the world and serves more than 220,000 global customers. The company announced on May 2 that Sean J. Kerins, Arrow’s current chief operating officer, will become president and chief executive officer effective June 1, 2022. Kerins will succeed Michael J. Long, who will become executive chairman of the company’s board.
These are the top tech stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in a company’s success. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
|Fastest Growing Tech Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|GoDaddy Inc. (GDDY)||72.23||11.7||583.3||11.3|
|Black Knight Inc. (BKI)||71.11||11.1||571.4||10.7|
|TD Synnex Corp. (SNX)||98.38||9.5||-18.9||213.2|
|ON Semiconductor Corp. (ON)||55.89||24.3||490.0||31.3|
|National Instruments Corp. (NATI)||35.48||4.7||533.3||14.9|
- GoDaddy Inc.: GoDaddy is a web platform for small businesses and other users to reach customers. It employs about 9,000 and serves more than 21 million entrepreneurs across over 84 million domain names. The company reported financial results on May 4 for Q1 2022. Net income surged by more than sixfold as total revenue climbed 11.3% YOY. Revenue growth was driven by gains across GoDaddy’s applications & commerce, core platform, and international businesses.
- Black Knight Inc.: Black Knight is a software, data, and analytics company focusing on the real estate and housing finance markets. The company has roughly 6,500 employees. On May 4, data, Intercontinental Exchange Inc. (ICE) announced that it would acquire Black Knight for $13.1 billion in a cash and stock transaction. The transaction is expected to close in the first half of 2023.
- TD Synnex Corp.: TD Synnex sells information technology (IT) services and products. It distributes a broad range of IT products, including PC systems, consumer electronics, storage, networking, and servers. The company employs 22,000 and serves customers and vendors in over 100 countries.
- ON Semiconductor Corp.: ON Semiconductor is a semiconductor manufacturer serving markets including automotive, communications, computing, and medical. The company operates 43 design centers in 19 countries and employs about 33,000. ON Semiconductor released financial results for Q1 2022 on May 2. Net income attributable to the company grew nearly sixfold on robust revenue growth YOY. Strong performance in the automotive and industrial markets, which now represent nearly two-thirds of ON Semiconductor revenue, helped to fuel these gains.
- National Instruments Corp.: National Instruments, known as NI, makes automated testing and measurement products including modular hardware, application software, and operations management and analytic enterprise software. It sells to the semiconductor, transportation, aerospace, defense, and industrial machinery industries, as well as other customers.
Momentum investing is a factor-based investing strategy that involves investing in a stock whose price has risen faster than the market as a whole. Momentum investors believe that stocks that have outperformed the market will often continue to do so because the factors that caused them to outperform will not suddenly disappear. In addition, other investors, seeking to benefit from the stock’s outperformance, will often purchase the stock, further bidding its price higher and pushing the stock higher still. These are the tech stocks that had the highest total return over the past 12 months.
|Tech Stocks With the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Switch Inc. (SWCH)||33.37||5.0||76.2|
|ON Semiconductor Corp. (ON)||55.89||24.3||46.2|
|Palo Alto Networks Inc. (PANW)||500.27||49.8||38.0|
|Fortinet Inc. (FTNT)||286.37||46.0||35.8|
|Aspen Technology Inc. (AZPN)||192.00||12.8||35.2|
|Russell 1000 Index||N/A||N/A||-5.2|
|Technology Select Sector SPDR Fund (XLK)||N/A||N/A||-0.8|
- Switch Inc.: Switch is a technology infrastructure company that develops hyperscale retail colocation data centers. The company serves over 950 customers in industries including technology and digital media, cloud and managed services, finance, telecommunications, and more. On May 11, Switch announced that it would be taken private by digital infrastructure investment firms DigitalBridge Group Inc. (DBRG) and IFM Investors. The transaction, valued at about $11 billion, is expected to close in the second half of 2022.
- ON Semiconductor Corp.: See company description above.
- Palo Alto Networks Inc.: Palo Alto Networks is a network security company. It provides firewalls to identify and control applications, scan content, prevent data leaks, and perform a variety of other services. The company serves over 80,000 enterprise customers.
- Fortinet Inc.: Fortinet is a cybersecurity company serving companies, service providers, and government organizations worldwide. Its Security Fabric platform leverages AI and machine learning technology to provide clients with security solutions for networked, application, cloud, and mobile environments. The company has more than 500,000 customers around the world. On May 24, Fortinet announced the launch of FortiNDR, a network detection and response product that utilizes artificial intelligence to detect and respond to security threats.
- Aspen Technology Inc.: Aspen Technology provides software used to optimize designs, operations and maintenance in a broad range of industries including energy, chemicals, pharmaceuticals, food and beverage. As of the company’s latest annual report for the fiscal year ended June 30, 2021, it had about 2,500 customers globally.
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
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