Technology stocks have had a topsy-turvy ride over the past couple of months thanks to concerns about inflation and mixed jobs data, but the sector is showing signs of a turnaround in December. Savvy investors would do well to use this opportunity to buy shares of top tech stocks that are clocking impressive growth quarter after quarter and have bright futures ahead of them.

Bandwidth (BAND -14.59%), Ambarella (AMBA -0.42%), and Apple (AAPL -0.33%) are three such tech stocks that investors may want to look at in December to build a diversified portfolio.

Man in specs looking at a line chart on a laptop.

Image source: Getty Images

Apple, a mega-cap player that holds a dominant position in the smartphone market, now has new catalysts in the cards. Bandwidth is a small-cap company with large-cap potential, as it is operating in the fast-growing cloud communications market. Ambarella is a mid-cap company that has more than doubled in 2021 and looks set to fly higher in the long run.

Let's look at the reasons why these are three tech stocks that investors should consider buying in December.

1. Bandwidth

Bandwidth has been in fine form this year, delivering tremendous top- and bottom-line growth and a sizable expansion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). The company's total revenue for the first nine months of 2021 has increased 58% over the prior-year period, while non-GAAP earnings jumped to $0.87 per share, compared to $0.42 per share in the first nine months of 2020.

Bandwidth's adjusted EBITDA jumped to $41.3 million in the first nine months of 2021 from $17.9 million in the same period a year ago. The cloud communications specialist is set to close the year on a high, as it expects full-year revenue of $483 million and earnings of $0.76 per share at the midpoint of its guidance range. That would translate into 41% year-over-year revenue growth and a 38% increase in the company's earnings over 2020.

Analysts expect Bandwidth's top-line momentum to continue in 2022, as its revenue is expected to increase nearly 18% next year. Even better, its earnings are expected to clock an annual growth rate of over 20% for the next five years. Bandwidth looks capable of clocking such impressive growth in the coming years as it is quickly adding customers in the fast-growing market cloud communications market.

The company's active base of communications platform-as-a-service (CPaaS) customers increased 57% year over year to 3,173 in the third quarter. Additionally, Bandwidth's dollar-based net retention rate was 108% in the third quarter, which means that customers either increased or extended the usage of its offerings.

Given that the CPaaS market is anticipated to grow at an annual rate of 34% for the next five years, according to Mordor Intelligence, Bandwidth could continue to maintain its high growth levels for a long time to come.

2. Ambarella

Ambarella's growth has been supercharged in recent quarters by the explosive demand for its chips, which are used in cameras deployed in the automotive market and security applications. The chipmaker's revenue in the first nine months of fiscal 2022 shot up 50% over the prior-year period to $241.6 million. Ambarella's earnings have shot up to $1.15 per share in the first three quarters of the current fiscal year, compared to $0.19 per share in the year-ago period.

Ambarella's fiscal fourth-quarter guidance indicates that it is on track to close the year on a high, as revenue is slated to increase 45% year over year in the current quarter to $90 million. And Ambarella's top and bottom lines are expected to grow at a terrific pace both in the short and the long run.

Analysts estimate Ambarella will report a 20% increase in revenue in fiscal 2023 along with a 22% increase in earnings. What's more, the company is expected to report explosive earnings growth at a compound annual rate of 86% for the next five years. Ambarella should be able to maintain such a high rate of earnings growth, as it has substantially increased its design win pipeline.

Ambarella management pointed out on the December earnings conference call that it is sitting on an automotive design win opportunity of $1.8 billion for the next six years, which is triple what it had in the year-ago period. Ambarella secured 65% of its $600 million design win opportunity last year, which means that it was sitting on nearly $400 million in potential revenue as those design wins moved into the production phase. That potential revenue opportunity has now increased to $700 million.

Ambarella's design wins are now translating into actual revenue, as customers are launching more products powered by its cameras. So Ambarella's huge revenue pipeline suggests that it could remain an explosive growth stock for years to come, as it could win big from fast-growing end markets.

3. Apple

Apple stock has gotten off to a great start in December. Share prices of the tech giant have shot up over 6% so far this month thanks to news that the iPhone upgrade cycle is still underway, and the company now has new catalysts that could supercharge it in the long run.

For instance, Apple is reportedly working on an augmented reality (AR) headset that could hit the market as early as next year. According to noted Apple analyst Ming-Chi Kuo, the company could release the first generation of its headset in 2022 and could ship 2.5 million to 3.5 million units of the device in 2023. What's more, Apple already has a second-generation headset in the works that could eventually hit 10 million units in annual shipments after being launched in the second half of 2024.

With Apple's headsets expected to be priced at $1,000 and above (according to Kuo), the company could get a nice revenue shot in the arm from the AR/VR (virtual reality) headset market, which IDC anticipates could jump from 9 million units this year to 50 million units in 2025. On the other hand, Apple's strong position in the market for 5G phones and its massive installed base of users that are still without 5G devices should ensure strong growth in iPhone sales in the long run.

Taiwanese publication DigiTimes reports that Apple could increase iPhone production by 30% in the first half of 2022, and could end the year with 300 million in iPhone shipments. That would be a nice jump over this year's estimated shipments of 234 million units, according to Credit Suisse.

As such, Apple stock seems to be in a nice position to sustain its recent momentum and crush the market once again in 2022 after logging nearly 32% gains so far this year.