2019’s top tech stocks to watch in 2020

In 2019, the tech stocks sector witnessed a remarkable surge, with the benchmark technology index recording an impressive 35 percent gain. This led to significant profits for savvy investors with diversified portfolios, and some even enjoyed triple-digit percentage point gains in certain tech stocks. Traditionally, a stock doubling in value over the course of a year is associated with high-risk sectors such as speculative gold mining or biotechnology stocks. However, 2019 proved to be an exception for tech stocks. Let’s take a look at some of the top-performing tech stocks from the previous year.

Apple – A Comeback Story

Apple’s total return for 2019 nearly reached 100 percent, a remarkable feat considering the year began with disappointment. In a surprising move on January 2, Apple significantly reduced its first-quarter sales outlook, causing its stock to plummet by 10 percent. This sent shockwaves through the U.S. stock market, leading many analysts to lower their estimates and raising concerns about the dominance of the iPhone. However, Apple swiftly rebounded. It not only recovered all its losses in the following days but also gained an additional 5 percent by the end of January 2019. This momentum continued throughout the year. Investors recognized that Apple was evolving beyond being solely an iPhone company. The company was focusing on growing its services business, including the App Store, which boasted attractive profit margins. This transformation was evident in Apple’s fiscal fourth-quarter earnings report in October 2019, where services revenue reached an all-time high of $12.5 billion. Apple’s ability to extract more value from each iPhone user was a significant driver for investors. The company’s progress included launching a new streaming video service and continuing to expand its wearables and earphones category, exemplified by the success of AirPods. Looking ahead to 2020, Apple’s plans and performance are of great interest. However, the company has a unique fallback option: its substantial cash reserves, totaling a quarter of a trillion dollars, which it can use for acquisitions to stimulate growth or distribute as dividends to investors.

Snapchat – A Turnaround Tale

Snap entered 2019 facing skepticism in the social media landscape. Its core platform, Snapchat, was plagued with issues on Android devices, and its young user base posed challenges in terms of advertising. Yet, Snap’s stock, which started the year below $6 per share, closed above $16 by the end of 2019. The company demonstrated clear signs of progress throughout the year.

Snap launched an improved version of its app for Android devices, addressing previous performance problems. This move opened up Snapchat to over 80 percent of global smartphone users who use Android. Additionally, Snap engaged in talks with major music record labels to enhance the music experience for users and explored partnerships with media outlets to feature news content in the app. Snap introduced “Snap Originals,” a lineup of exclusive shows on the platform, expanding its reach to a broader audience. Notably, one of Snap’s shows, “Endless Summer,” garnered more views than the finale of “Game of Thrones.” In a compelling year-end earnings report, Snap exceeded expectations with a four-cent-per-share loss versus an anticipated five-cent-per-share loss. Revenue surged by nearly 50 percent to $446 million, surpassing expectations. One of the pivotal indicators of success was the 13 percent increase in daily active users on the platform.

Shopify – Empowering E-Commerce

Shopify, a Canadian-based company, began 2019 trading below $150 per share and concluded the year near $400, making it a standout tech stock. Shopify provides software and applications that empower small e-commerce businesses to compete effectively with industry giants like Amazon.

While Shopify had already gained recognition due to high-profile clients like Kylie Jenner’s cosmetics company, it needed to demonstrate further progress in 2019. The company achieved this through an ambitious project called the “Shopify Fulfilment Network.” Backed by a $1 billion investment, this initiative established a network of fulfilment centers for clients, enabling two-day delivery across most of the continental U.S. Shopify’s strategic focus on direct relationships with end consumers, in contrast to Amazon’s intermediary role, also contributed to its success. The company raised its revenue guidance from $1.46-$1.48 billion to $1.545-$1.555 billion, showcasing its confidence in its performance. Investors’ confidence in Shopify was further reinforced when the company declined acquisition offers from tech giants worth nearly twice its market value. Shopify’s commitment to independent growth emphasized its position as a top tech stock.

Conclusion

Predicting the trajectory of tech stocks in 2020 remains challenging due to the rapid pace of technological advancements. While some expect a potential slowdown after the remarkable performance of tech stocks in 2019, it’s essential to remember that each year in the tech sector brings new innovations and opportunities. While Apple’s ascent to a $2 trillion valuation may be uncertain, it retains the unique advantage of its substantial cash reserves. Snapchat’s turnaround story demonstrates the potential for progress and innovation, while Shopify’s ability to empower e-commerce businesses further solidifies its position in the tech stock market.  

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