The tech sector is one that investors have certainly been remiss to not own over the past decade. Indeed, many mid-cap tech stocks have transformed themselves into top mega-cap growth gems, with many of the market’s largest and most prominent companies in various sectors continuing to outperform the market by a rather wide margin.
Notably, the tech sector overall has provided investors with annualized returns of roughly 13% each year over the past decade. Compared to just over 7% for the rest of the S&P 500 over that time frame, that’s an incredibly high gap that’s hard to narrow, and is a key reason why the S&P and other tech-heavy indices have outperformed global counterparts over the past two decades.
Of course, there are questions as to whether this outperformance can continue. The rapid growth many companies have seen, buoyed by strong global spending on everything tech, could slow if we do see recessionary headwinds form. But for those who believe it’s going to be mostly blue skies ahead for tech stocks here are three top names I think are worthy of consideration right now.
Key Points About This Article:
- Owning tech stocks has been a must for investors in recent decades, and that trend is largely expected to continue in the months and years to come.
- The following three tech stocks remain top buys for investors looking to add exposure to this sector in December.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
Tesla (TSLA)
Over the past year, investors in Tesla (NASDAQ:TSLA) have been on quite the roller coaster ride, to say the least. Shares of the U.S. EV giant slumped heading into the November election, with uncertainty continuing to hover around the fate of this particular company, given CEO Elon Musk’s very close ties to Donald Trump.
But with Mr. Trump securing the presidency once again, investors have seen fit to bid up shares of Tesla stock, with the company’s share price now trading more than 30% higher than pre-election levels.
The question of course is whether this near-term momentum can be sustained. The company’s sales declined 12% in September and October (offset by an 11.6% increase in European sales over that time frame). But with Trump set to begin adding additional tariffs to various countries around the world (right now Europe hasn’t been discussed, but many speculate that many markets could be affected down the road) and with the potential loss of the $7,500 federal EV tax credit set to hit all EV makers in the coming months following Trump’s inauguration, the ultimate impact on Tesla stock is uncertain.
The market is currently pricing in a high likelihood that Tesla will be able to gain market share as a result of these measures, though it’s unclear if foreign markets (most notably China) will retaliate against Tesla with tariffs of their own. But for investors looking for a way to play the EV market in the U.S., Tesla remains a top option and one with incredible momentum heading into December. This is a growth stock investors may want to consider on dips from here.
Apple (AAPL)
Apple (NASDAQ:AAPL) has also seen somewhat of a bumpy ride this year, despite its stock price continuing to hover around all-time highs. News that Warren Buffett had begun to offload a large chunk of his Apple stock led to some previous selloffs by the overall market, though concerns around these sales appear to have diminished as investors continue to focus on Apple’s overall earnings quality and the strength of its brand and core ecosystem.
Indeed, Apple’s integrated product ecosystem fosters strong customer loyalty. This feature of the company’s overall business is one that investors clearly like, as it allows Apple to benefit seamlessly from the introduction of various AI-based features within its ecosystem. The company’s latest round of iPhones and Macs are now equipped with Apple Intelligence following a recent upgrade, and while reviews on this release have been mixed (I have my own mixed feelings on this release), the likelihood is that Apple will eventually provide some game-breaking updates that could really alter how our devices are used.
Additionally, the tech giant’s services such as Apple Pay and Apple TV are growing rapidly, and have continued to provide solid margins and the potential for margin expansion over time. I think Apple continues to be an earnings growth story rather than a top-line growth play, so I’ll be paying close attention to the company’s upcoming earnings reports to see if Apple’s recent AI investments are paying off on the bottom line.
Finally, in recent Apple news, the company proposed a $100 million investment to build a components plant in Indonesia after iPhone 16 sales were banned for not meeting local content rules requiring 40% locally made parts. This move should provide increased diversification for the device maker, and further reduce the company’s reliance on China (a good thing, given potential tariff wars which could be coming into play in the coming years).
Meta Platforms (META)
Last, but certainly not least, we have the world’s largest social media giant Meta Platforms (NASDAQ:META) on this list.
I’ve been very bullish on Meta for a very long time, and most of this bullishness has been a result of the company’s incredibly strong underlying core business. The company boasts 3.2 billion users, with an incredibly strong market position in the digital advertising space. This business continues to bring in $156 billion in annual revenue, which has allowed the tech giant to amass $43.9 billion in cash, allowing Meta to leverage its scale to focus on AI development, including its Llama foundational model. Unlike rivals targeting cloud computing, Meta aims its AI at everyday users and advertisers, with investors watching closely for returns on its significant AI investments.
With a valuation of around $1.5 trillion, Meta is a company I’ve thought should probably be valued much higher, given its price-earnings to growth ratio of less than 1. If the company is able to see a marked increase in its revenue and earnings growth potential due to improved monetization courtesy of its AI investments, this is a company that has plenty of room to run higher.
Analysts continue to agree with such a few, with 43 out of 52 analysts covering the stock rating Meta as a buy or strong buy, with around 15% upside baked into the current consensus target price according to analysts.
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