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Tech Sector Outperforming This Year: Best ETFs, Stocks
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The technology sector is roaring higher and outperforming amid the coronavirus pandemic. This is especially true as the S&P 500 Information Technology index is up 4.4% year to date versus loss of 8.6% for the S&P 500 index. Notably, technology is the only sector with positive year-to-date returns.
The COVID-19 pandemic has driven the e-commerce boom and changed the consumer landscape to a purely digital one. Staying indoors has propelled the demand for cloud computing, gaming, e-sports and streaming services. This has led to soaring stock prices of companies in many corners of the sector. Additionally, investors have largely piled into software shares which are apparently as more insulated from the impacts of the virus (read: ETFs to Tap on Soaring E-Commerce Sales Amid Coronavirus).
Better-than-expected earnings have added to the strength, leading to a spike in stocks. Total Q1 earnings from 87.5% of the sector’s market capitalization in the S&P 500 index are up 6.2% on 5.4% higher revenues, with 79.6% beating EPS estimates and 66.7% beating revenue estimates.
If these aren’t enough, technology has a solid Zacks Sector Rank, being in the top 19%, suggesting continued growth in the coming months. The long-term outlook for the sector remains strong given the rapid emergence of cutting-edge technology, including cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, artificial intelligence (AI), machine learning and 5G technology.
Given this, investors might want to tap the space with the best-performing technology ETFs and stocks of this year. For them, we have highlighted some that could be excellent picks for investors seeking to benefit from the current trends:
Best ETFs
WisdomTree Cloud Computing Fund (WCLD - Free Report) – Up 27.1%
This ETF offers exposure to emerging, fast-growing U.S.-listed companies (including ADRs) are primarily focused on cloud software and services, and follows the BVP Nasdaq Emerging Cloud Index. It holds 52 stocks in its basket and charges investors 45 bps in fees per year. The product has amassed $107.9 million in its asset base and trades in average daily volume of 56,000 shares (read: Cloud Computing ETFs to Gain on the New Normal Trends).
ARK Next Generation Internet ETF (ARKW - Free Report) – Up 24.7%
This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to cloud, enabling mobile, new and local services. The fund holds 44 stocks in its basket with AUM of $812.6 million. It trades in average daily volume of 223,000 shares and charges 76 bps in annual fees from investors.
O’Shares Global Internet Giants ETF (OGIG - Free Report) – Up 24.1%
The fund invests in some of the largest global companies that derive most of their revenues from the Internet and e-commerce sectors that exhibit quality and growth potential by tracking the O’Shares Global Internet Giants Index. It holds a basket of 74 stocks and charges 48 bps in annual fees. OGIG has been able to attract $128.4 million in its asset base and trades in average daily volume of 71,000 shares.
This is an actively managed fund seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the areas of DNA technologies (Genomic Revolution). It also invests in firms that seek to gain from Industrial Iinnovation in energy, automation and manufacturing, increased use of shared technology, infrastructure and services (Next Generation Internet), and technologies that make financial services more efficient. In total, the fund holds 34 securities in its basket and charges 75 bps in annual fees. The product has gathered $3.2 billion in its asset base and trades in average daily volume of 564,000 shares.
Wedbush ETFMG Video Game Tech ETF (GAMR - Free Report) – Up 15.2%
This ETF offers exposure to the companies involved in the video game technology industry, including game developers, console and chip manufacturers, and game retailers by tracking the EEFund Video Game Tech Index. It holds 86 stocks in its basket and charges 75 bps in annual fees. The fund has amassed $85.7 million in its asset base and trades in volume of about 18,000 shares a day on average (read: Video Game ETF Hits New 52-Week High).
It develops, manufactures and sells single-wafer wet cleaning equipment to enhance the manufacturing process and yield for integrated chips worldwide. The stock has witnessed solid earnings estimate revision of 9 cents over the past 30 days for this year. It has a Zacks Rank #2.
LightPath Technologies Inc. (LPTH - Free Report) – Up 193.8%
This company provides optics and photonics solutions for the industrial, defense, telecommunications, testing and measurement, and medical industries. The stock has seen positive earnings estimate revision of a couple of cents over the past 30 days for fiscal year (ending June 2020) and has an estimated earnings growth rate of 128.6%. It has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
It creates and operates online marketplaces that connect marketers and content creators. The stock has witnessed no earnings revision activity over the past 30 days for this year and has an estimated earnings growth rate of 51.7%. It has a Zacks Rank #3.
Zoom Video Communications Inc. (ZM - Free Report) – Up 156.9%
The company provides a video-first communications platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The stock has witnessed positive earnings estimate revision of a penny over the past 30 days for the fiscal year ending January 2021 and has an estimated earnings growth rate of 22.9%. It has a Zacks Rank #3 (read: Nasdaq ETF Joins $100 Billion Club: 10 Stock Winners).
This company primarily focuses on the development and deployment of AI-based solutions for businesses and software developers. The stock saw no earnings estimate revision over the past 30 days for this year and has a Zacks Rank #3 (see: all the Technology ETFs here).
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Tech Sector Outperforming This Year: Best ETFs, Stocks
The technology sector is roaring higher and outperforming amid the coronavirus pandemic. This is especially true as the S&P 500 Information Technology index is up 4.4% year to date versus loss of 8.6% for the S&P 500 index. Notably, technology is the only sector with positive year-to-date returns.
The COVID-19 pandemic has driven the e-commerce boom and changed the consumer landscape to a purely digital one. Staying indoors has propelled the demand for cloud computing, gaming, e-sports and streaming services. This has led to soaring stock prices of companies in many corners of the sector. Additionally, investors have largely piled into software shares which are apparently as more insulated from the impacts of the virus (read: ETFs to Tap on Soaring E-Commerce Sales Amid Coronavirus).
Better-than-expected earnings have added to the strength, leading to a spike in stocks. Total Q1 earnings from 87.5% of the sector’s market capitalization in the S&P 500 index are up 6.2% on 5.4% higher revenues, with 79.6% beating EPS estimates and 66.7% beating revenue estimates.
If these aren’t enough, technology has a solid Zacks Sector Rank, being in the top 19%, suggesting continued growth in the coming months. The long-term outlook for the sector remains strong given the rapid emergence of cutting-edge technology, including cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, artificial intelligence (AI), machine learning and 5G technology.
Given this, investors might want to tap the space with the best-performing technology ETFs and stocks of this year. For them, we have highlighted some that could be excellent picks for investors seeking to benefit from the current trends:
Best ETFs
WisdomTree Cloud Computing Fund (WCLD - Free Report) – Up 27.1%
This ETF offers exposure to emerging, fast-growing U.S.-listed companies (including ADRs) are primarily focused on cloud software and services, and follows the BVP Nasdaq Emerging Cloud Index. It holds 52 stocks in its basket and charges investors 45 bps in fees per year. The product has amassed $107.9 million in its asset base and trades in average daily volume of 56,000 shares (read: Cloud Computing ETFs to Gain on the New Normal Trends).
ARK Next Generation Internet ETF (ARKW - Free Report) – Up 24.7%
This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to cloud, enabling mobile, new and local services. The fund holds 44 stocks in its basket with AUM of $812.6 million. It trades in average daily volume of 223,000 shares and charges 76 bps in annual fees from investors.
O’Shares Global Internet Giants ETF (OGIG - Free Report) – Up 24.1%
The fund invests in some of the largest global companies that derive most of their revenues from the Internet and e-commerce sectors that exhibit quality and growth potential by tracking the O’Shares Global Internet Giants Index. It holds a basket of 74 stocks and charges 48 bps in annual fees. OGIG has been able to attract $128.4 million in its asset base and trades in average daily volume of 71,000 shares.
ARK Innovation ETF (ARKK - Free Report) – Up 19.6%
This is an actively managed fund seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the areas of DNA technologies (Genomic Revolution). It also invests in firms that seek to gain from Industrial Iinnovation in energy, automation and manufacturing, increased use of shared technology, infrastructure and services (Next Generation Internet), and technologies that make financial services more efficient. In total, the fund holds 34 securities in its basket and charges 75 bps in annual fees. The product has gathered $3.2 billion in its asset base and trades in average daily volume of 564,000 shares.
Wedbush ETFMG Video Game Tech ETF (GAMR - Free Report) – Up 15.2%
This ETF offers exposure to the companies involved in the video game technology industry, including game developers, console and chip manufacturers, and game retailers by tracking the EEFund Video Game Tech Index. It holds 86 stocks in its basket and charges 75 bps in annual fees. The fund has amassed $85.7 million in its asset base and trades in volume of about 18,000 shares a day on average (read: Video Game ETF Hits New 52-Week High).
Best Stocks
ACM Research Inc. (ACMR - Free Report) – Up 218.2%
It develops, manufactures and sells single-wafer wet cleaning equipment to enhance the manufacturing process and yield for integrated chips worldwide. The stock has witnessed solid earnings estimate revision of 9 cents over the past 30 days for this year. It has a Zacks Rank #2.
LightPath Technologies Inc. (LPTH - Free Report) – Up 193.8%
This company provides optics and photonics solutions for the industrial, defense, telecommunications, testing and measurement, and medical industries. The stock has seen positive earnings estimate revision of a couple of cents over the past 30 days for fiscal year (ending June 2020) and has an estimated earnings growth rate of 128.6%. It has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
IZEA Worldwide Inc. (IZEA - Free Report) – Up 165%
It creates and operates online marketplaces that connect marketers and content creators. The stock has witnessed no earnings revision activity over the past 30 days for this year and has an estimated earnings growth rate of 51.7%. It has a Zacks Rank #3.
Zoom Video Communications Inc. (ZM - Free Report) – Up 156.9%
The company provides a video-first communications platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The stock has witnessed positive earnings estimate revision of a penny over the past 30 days for the fiscal year ending January 2021 and has an estimated earnings growth rate of 22.9%. It has a Zacks Rank #3 (read: Nasdaq ETF Joins $100 Billion Club: 10 Stock Winners).
Remark Holdings Inc. (MARK - Free Report) – Up 152.4%
This company primarily focuses on the development and deployment of AI-based solutions for businesses and software developers. The stock saw no earnings estimate revision over the past 30 days for this year and has a Zacks Rank #3 (see: all the Technology ETFs here).
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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>