The market has been anything but predictable this year, and the wild share price swings that some investors have seen in their favored stocks over the past several months can create a wariness about buying stocks right now.
To be sure, the market is likely to experience more volatility as the U.S. grapples with high unemployment and the coronavirus pandemic. But that doesn't mean that there aren't great stocks in the technology sector right now.
If you're in the market for a few tech stocks to buy and hold for several years, then take a look at what these three -- Shopify (NYSE:SHOP), NVIDIA (NASDAQ:NVDA), and Amazon (NASDAQ:AMZN) -- have to offer.
1. Shopify: E-commerce is the future of retail
Shopify's stock has skyrocketed 167% since the beginning of this year as businesses of all sizes have been forced to adapt to lockdowns, social distancing, and reduced capacity inside of stores. Shopify's e-commerce platform has helped businesses set up online shops (or expand existing ones) so they can begin (or continue) to sell their products to customers.
The result has been astronomical growth for Shopify, in which sales grew 97% year over year in the second quarter and gross merchandise volume, the dollar amount of money spent on the company's platform, jumped 119% over the prior year.
Some investors may be concerned that they've already missed out on Shopify's opportunity, but they should consider one simple fact: Even with an influx of online shopping during the pandemic, e-commerce sales still account for just 16% of all U.S. retail sales. This means that Shopify still has plenty of room to continue helping businesses bring their stores online as the market expands.
2. NVIDIA: A chip leader with a winning hand
NVIDIA may not have the brand recognition in the consumer tech space that some companies have, but don't let that keep you from considering an investment in this dominant chip company. NVIDIA's graphics processing units (GPUs) help computers and servers deliver some of the best graphics around, and the company's tech dominance is evident from its 80% market share in the discrete graphics market.
It's not just hardcore gamers who love NVIDIA, though. The world's largest tech companies use NVIDIA's GPUs to power some of their artificial intelligence processes. In fact, using GPUs in computer servers has become so popular that NVIDIA's data center revenue soared 167% year over year in the most recent quarter and outpaced its gaming revenue for the first time.
NVIDIA is giving potential investors yet another reason to buy its stock right now as the company just agreed to buy Arm Holdings from SoftBank Group for $40 billion in cash and stock. Once the deal closes, which is expected to happen within the next 18 months, it will give NVIDIA ownership of the chip designs and licensing that Arm has, which is used in 90% of smartphones.
3. Amazon: A safe bet with more room to grow
Like Shopify, Amazon is benefiting from a surge in online shopping right now and will continue to benefit from the rise of this market for years to come. Amazon's sales spiked 40% year over year in the second quarter thanks to online shopping demand, and its earnings per share of $10.30 astounded Wall Street, blowing past analysts' consensus estimate of $1.50 per share.
Amazon continues to amass a huge swarm of loyal shoppers, with the company boasting more than 150 million Prime members now, an increase of 50 million from 2018. Amazon's ability to grow its Prime members shouldn't be overlooked by investors, considering that there's no shortage of places to buy products online these days. Prime members spend more than the average Amazon shopper and help lock in users to Amazon's ecosystem.
Of course, Amazon is more than just an e-commerce play. The company's cloud computing business, Amazon Web Services (AWS), is one of the company's best sources of profit and is helping Amazon tap into the $500 billion cloud computing services market. AWS is a leader in cloud computing infrastructure with 33% of the market, and its current position should help the company dominate this space for years to come.
Don't get off the market roller coaster too early
With a worldwide pandemic, a recession, the U.S. presidential election, and high unemployment, there's bound to be more market instability in the coming months. It can be tempting to buy and sell stocks based on the daily news, but investors should fight that urge. The best way to build wealth over time is to buy stocks in great companies and hold on to them for years, not for months or a few quarters.