Tech companies have long been of interest to investors because of their growth potential. But while these companies have a role in how modern society will evolve in the future, they also have a place in the here and now.
Those lucky enough to be on the first waves of tech innovation — investors in Apple (AAPL), Google (GOOGL), Microsoft (MSFT), and Amazon (AMZN), for example — made significant sums of money by buying and holding for years. But this required patience and a stomach for enduring bouts of major volatility.
The pandemic might have been a catalyst for increased interest in companies that could provide innovative solutions for a changed world, but the last couple of years have not always been kind to the technology sector. Worries about a potential recession, extensive and wide-ranging layoffs, high inflation, and the perception that these stocks are often overvalued have all taken some of the shine off an industry sector that many investors have at times considered bulletproof.
However, tech stocks can still bring value to your portfolio. Not just in terms of being able to invest in tech solutions that we use or access on a daily basis, but in acknowledging the impact that next-generation offerings such as artificial intelligence, robotics, data analytics and quantum computing will have on society as a whole.
With that in mind, here's an overview of what tech stocks are, a list of the best-performing tech stocks right now and your options for buying them.
Best-performing tech stocks
Below are the seven best-performing stocks in the Nasdaq-100 index from the technology sector, in order of one-year returns.
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The best-performing Nasdaq-100 tech stock by one-year return is Sandisk Corp (SNDK), which is up 4493.77%. | ||||
|---|---|---|---|---|
Ticker | Company | Performance (Year) | ||
SNDK | Sandisk Corp | 4493.77% | ||
WDC | Western Digital Corp | 832.83% | ||
LITE | Lumentum Holdings Inc | 787.14% | ||
MU | Micron Technology Inc | 784.65% | ||
STX | Seagate Technology Holdings Plc | 512.93% | ||
INTC | Intel Corp | 485.60% | ||
ALAB | Astera Labs Inc | 408.39% | ||
Source: Finviz. Data is current as of July 1, 2026, and is intended for informational purposes only. | ||||
What is a technology stock?
Technology stocks are publicly traded shares of companies specializing in the development and sale of technology products and services.
You’re likely at least familiar with four of the major players in this sector that we noted above, all of which are part of what stock market analysts refer to as the "Magnificent Seven” — Meta Platforms (META), Nvidia (NVDA) and Tesla (TSLA) round out the list. These companies are all considered to be tech behemoths with some of the highest market capitalizations on the stock market.
However, you might be less aware of companies like Palantir Technologies (PLTR), Strategy (MSTR) and Shopify (SHOP).
Palantir, a data analytics platform that works in both the public and private sectors, has been around since 2003 but didn’t go public until 2020. Its stock price has increased nearly 600% in the past five years, and the company is widely considered to be at the forefront of AI-driven data collection.
Fun fact: Palantir is probably the only tech firm in the Nasdaq-100 index that has a direct link to the Lord of the Rings trilogy.
The tech sector is also one of the largest and most diverse sections of the stock market. Companies that fall under the tech umbrella span multiple industries and offer a huge range of services and products.
The Global Industry Classification Standard makes this easier to digest by grouping tech stocks into three main categories: software and services, hardware and equipment, and semiconductors. Companies can fall within one category or stretch across a few, depending on their offerings.
Software and services | Hardware and equipment | Semiconductors and semiconductor equipment |
|---|---|---|
Companies that produce software or services for technology-based industries such as cybersecurity, data analysis, cloud computing and storage, artificial intelligence, workflow and project management, video streaming and conferencing, and social media. | Companies that manufacture or sell physical tech products such as laptops and computers, printers, hard drives, AI home assistants, GPS devices and smart watches, phones or appliances. | Companies that create and manufacture various chips, circuits and other physical components that power electronic devices such as phones, computers and cars. |
Brokerage firms | |
|---|---|
The pros and cons of investing in tech stocks
Deciding to invest in tech stocks also means looking beyond the performance and earnings of one company. It’s important to understand the positives and negatives of how tech stocks function within the marketplace. Some considerations:
Pros of tech stocks
Diversification. The tech sector spans a broad array of industries as well as product/service categories, including cloud computing, e-commerce and social media services. This gives investors space to diversify their holdings across a swath of companies big and small.
Growth. With big risk sometimes comes big reward. This mantra is especially salient in the tech sector. Tech stocks are viewed by many investors as opportunities to invest in cutting-edge technology, which can be rewarding if a company’s product or service takes off.
Cons of tech stocks
Volatility. Data breaches, competition and economic trends, such as interest rate hikes, can affect a tech stock’s performance, which can impact a stock’s value. Compared with other sectors, tech also contains a higher concentration of less-established companies that might not have turned a profit yet, which can make it more difficult to assess the risks of investing.
Sky-high valuations. Tech stocks are known for being valued at very high prices. This might sound good, but when stocks are highly valued, their performance must keep up with the valuation to justify their price. When performance and earnings lag behind the initial valuation, the stock’s value can quickly plummet, leaving investors who bought in at a high feeling very … well, low.
Few offer dividends. If dividends are important to you as an investor, tech stocks might leave you wanting more. Though a few major industry players, such as Apple (AAPL) and Intel (INTC), offer this perk, the majority of companies that make up this sector tend to reinvest their earnings rather than distribute payouts to their shareholders.
How to invest in tech stocks
How you choose to invest in tech stocks depends on your investment strategy and goals.
Investing in individual tech stocks
Choosing to drop serious cash on a single company is not an investment strategy that is well-suited for everyone. Doing so requires caution, research and the weighing of risks.
Basic due diligence should include understanding what the company does, what products or services it offers and how its business model addresses future needs. Reviewing the company’s financials, such as price-earnings ratios, profit margins and balance sheets, is also key.
Experts maintain that a good rule of thumb is to limit individual stocks to about 10% of your overall investment, so choose wisely. Finally, ensure that new investments you undertake jibe with your risk tolerance and your portfolio’s asset allocation.
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Investing in tech funds
If you’re not sure investing in a single company is right for you, consider exploring tech exchange-traded funds or mutual funds instead. These funds are composed of a broad range of stocks that will often provide some exposure to the tech sector. Purchasing a fund also allows you to diversify your holdings and can help you avoid the risks of funneling your hard-earned money into one specific stock.
Index funds, which follow existing indices such as the Nasdaq, are another option. Any returns or losses you make will mirror the index the fund is tracking.
» Looking for Nasdaq index funds? Check out some of the best Nasdaq index funds for beginners
Neither the author nor editor held positions in the aforementioned investments at the time of publication.
