Time and again, the most disruptive tech companies prove to be knockouts in terms of long-term gains.
High-performing stocks like Amazon, Netflixand Nvidia (the list goes on), continue to knock ROI out of the park for patient investors.
Disruptive tech companies take time to grow and scale, but statistically, the technology sector has outperformed every other sector in the S&P 500 since October 2022.
Investing in tech stocks can be good if you’re looking for something long-term.
But as in any market, investors new to the game must intimately know what to look for.
The key is to identify disruptive tech stocks backed by sound technology, stable leadership and a scalable business model.
There’s a methodological way to help investors identify these potentially life-changing tech stocks before they go long in a big way.
Savvy tech investors that ‘beat the market’ know what to look for, and equally as important, what to look out for in a potentially rising star. Here’s how to begin following in their footsteps by recognizing the same characteristics in breakout tech stock as the experts.
Look for scalability that’s already worked out
Consider this: What do the Magnificent Seven have in common? Besides being the best-performing stocks over the past decade, they share some common threads.
For one, underpinning each company’s business model (think Alphabet and Meta), is that the technology they sell is ingeniously scalable. These are tech stocks with a wide-ranging future.
Historically, technology companies that figured out how to scale efficiently proved more impervious to bubble bursts. Just think about how many years Jeff Bezos spent working out scalability.
Technology companies raise millions, often billions, of dollars in revenue because the technology they possess is supposedly disruptive. But if it’s not scalable, it eventually becomes obsolete or co-opted.
Scalability is inherently what makes a technology stock disruptive in the first place.
Enlist a proven expert in identifying disruptive tech stocks early
Once the market deems a tech stock overvalued, it can harshly punish investors, decimating prices and cutting funding for the very technology that made it famous.
This is enough to strike fear into the hearts of beginners and experienced investors alike. It’s why many talking heads in the tech space tell long-term investors to get a guide with a robust track record for selecting the best tech stocks.
A “Gandalf” who knows the lay of the land, whose vast knowledge and experience can guide you towards potential triumph and warn you of danger.
After all, it’s difficult for any human to navigate all the current information and historical trends that impact tech stock market movements.
That’s why savvy investors usually choose at least one financial subscription like Stock Advisor to take the guesswork out of choosing which tech stocks meet tried-and-true metrics for scalability, sound company financials, etc.
Just make sure the “Gandalf” you’re choosing can prove their competence at identifying disruptive companies. For example, Stock Advisor has demonstrated better returns than the S&P 500 since 2002.*
Remember, the scalability of the business model should already be solved or on its way there. Always see what the experts are saying, and only trust those with a proven history of identifying disruptive tech stocks early.
*Returns as of 10/4/24. Past performance is no guarantee of future results. Individual investment results may vary. All investing involves the risk of loss.
VentureBeat newsroom and editorial staff were not involved in the creation of this content.