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Here are the best tech stocks I’d buy if I had £2,000 to invest

·3-min read
Financial technology concept. Stock market crash.

Technology is an area that has grown exponentially over the past decade. The incredible thing is that most analysts are forecasting continued growth into the next decade. As an investor looking to find the best tech stocks to buy now, this is a positive. Even though some have seen strong share price rallies, further growth should still allow me to profit from buying now.

Should I invest in tech?

Technology is a very broad category for stocks. It can cover artificial intelligence, digital assets, and use of data, along with many other elements. The wide range of the industry is shown by looking at one of the tech giants, Amazon. It generates revenue from its online marketplace, which is what it’s best known for. Yet it also has several other revenue streams. These range from web services to video streaming, from physical store sales to co-branded credit card agreements.

So when I’m trying to find the best tech stocks to buy now, I need to acknowledge that the industry is vast. Even with one company, it might have fingers in many different pies. The benefit of investing in tech is that my exposure is likely to be more diversified than I initially think. Another benefit is that the pace of growth is high, which should help me achieve higher than average investment returns.

The risk of investing in tech is that when companies move beyond their operations, they can take their eyes off the ball. These operations might become unneeded distractions regarding both time and money. Further, some of the biggest tech stocks are the largest companies in the world. This might concern me, as I could be better off targeting smaller companies that have better scope to grow.

The best tech stocks I’d buy

With £2,000, I’d look to split this up between four to six different tech stocks. I’d invest in some tech stocks that are established, and then focus on some newer names.

For established firms, I’d invest in Tesla, Amazon and Facebook. These companies have been around for quite a few years (in tech stock terms), and are all profitable. With the exception of Tesla, the others have been generating sizeable profits for many years. I personally feel that this needs to be a criteria when considering which tech stocks to allocate my money to.

After all, tech stocks do carry high risk. This is usually because the companies need high levels of capital before reaching mass take-up. For these years, the companies are likely to be loss-making (Tesla is a good example here). As an investor, it’s very risky to put my money into a stock that could lose money for a long time before potentially becoming sustainable.

With that considered, I’d look for relative safety by investing in the above tech names that are established. For the remaining amount of my £2,000, I’m happy to take more risk. For example, I could consider buying Darktrace shares. This new cyber security company could be the next big thing. It’s too early to say right now, but I could allocate a small proportion to it.

Ultimately, there are plenty of shares that could classify as the best tech stocks to buy now, I just need to be sensible in the ones I pick.

The post Here are the best tech stocks I’d buy if I had £2,000 to invest appeared first on The Motley Fool UK.

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jonathansmith1 does not hold shares in any company mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Facebook, and Tesla. The Motley Fool UK has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2021

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