Investors have been able to reach great heights over the past decade through investments in tech giants that dominate the business world. Amid strong demand for tech stocks, the tech-heavy Nasdaq Composite has managed to generate a multi-bagger return of over ~450% over the past ten years (as of Jan 12, 2022). Meanwhile, the Nasdaq Composite has returned over 20% in 2021, fueling speculation about the future of tech stocks in 2022.
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The year 2021 has seen a far-reaching development in the tech space, with finance moving towards fintech, healthcare towards telehealth and now social media towards the meta-universe and the COVID-19 pandemic giving result in a strong digital economy. The phenomenal shift in tech sector dynamics portends a bright future for high-growth tech stocks in the new year.
Mega-Cap tech stock bandwagon set to continue
Diving into some top tech stocks, Nasdaq-listed Apple Inc. (AAPL) has produced an attractive return of more than 33% in 2021 while reacting quickly to market changes. The coming year will likely be shaped by the company’s major product updates, including the potential launch of the iPhone 14 and AirPods Pro 2. Meanwhile, some potentially impactful products from the company are in advanced stages of development, such as glasses and other devices using augmented reality. (augmented reality) or the most talked about Apple car.
The year 2022 is set to bring a paradigm shift in the way the world experiences the internet with the advent of the metaverse. US tech giant Facebook rebranded itself as Meta Platforms Inc (NASDAQ:FB) this year to allow its users to immerse themselves in a virtual reality space. After Facebook, Apple should jump on the metaverse bandwagon in 2022 thanks to its mixed reality headsets.
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Interestingly, the year 2021 has been a banner year for the semiconductor industry and the wafer fabrication equipment (WFE) market. Investors can keep LSE-listed semiconductor company ASML Holding NV (0QB8) on their radar, which posted an impressive return of over 77% in 2021. meet the insatiable demand for semiconductors through its highly complex machines capable of manufacturing the most advanced chips
The future of technology investments
The coming year could also see the rise of AI-enabled driverless cars hitting city roads. One such top tech stock, Intel Corporation (NASDAQ:INTC), is poised to go public with its self-driving car unit in the United States in the coming year. The company intends to diversify into new markets via the IPO of Israeli self-driving company Mobileye. If the IPO is successful, it could boost Intel’s stock price.
Another biggest tech story of 2021 was the 5G revolution. Investors looking for exposure to 5G stocks can consider companies such as Verizon Inc (NYSE:VZ), T-Mobile Inc (NASDAQ:TMUS), Advanced Micro Devices Inc (NASDAQ:AMD) and AT&T Inc (NYSE: T). Although several technology developers are advancing 5G technology, it is imperative that investors be selective when choosing these stocks and conduct appropriate technical and fundamental research.
Amid the growing popularity of cryptocurrencies, investors can also jump on the existing trend of blockchain technology. Speculation is rife that the year 2022 could witness further widespread adoption of cryptocurrencies, with several industries turning to blockchain.
To jump on the bandwagon, investors can keep certain ASX-listed companies on their watchlist that have blockchain as part of their operations or have significant exposure to the crypto space. Some of these companies include RAIZ Invest Ltd (ASX:RZI), Digital X Limited (ASX:DCC), Kyckr Limited (ASX:KYK) and Yojee Limited (ASX:YOJ).
While one cannot fully discern what the future of technological innovations will look like, one can certainly expect the birth of some next big budget companies or breakthrough technologies that could lead the next decade.
Mega-Cap software companies such as Microsoft (NASDAQ: MFST) or Adobe (NASDAQ: ADBE) or Alphabet (NASDAQ: GOOGL) are in a unique position with the ability to increase their subscription fees each year and growth largely subdued costs hold ground for next year’s growth as well.
Despite some promising trends in the tech space, one cannot rule out challenges emerging from the Omicron variant and the potential tightening of monetary policy next year. Historically low interest rates have helped several tech players borrow at a reasonable rate over the past two years, which may not be a possibility in the coming year. Thus, investors should proceed with caution and maintain an overview of market movements before exposing themselves to a stock.
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