Do you have $ 5,000? 3 tech stocks to buy and hold for the long term

Technology is helping to shape almost every industry under the sun, and the influential role it plays in business is only going to increase. The massive impact of technology helps explain why the industry has played the most important role in the overall growth of the market over the past two decades.

Successful long-term investments in high-impact tech companies could be life-changing, too. Read on to find out why to buy shares of Amazon (NASDAQ: AMZN), Semiconductor manufacturing in Taiwan (NYSE: TSM), and Impinj (NASDAQ: PI) looks like a smart move.

1. Amazon

Considering everything Amazon has accomplished since its IPO in 1997 (along with its current market cap of around $ 1.5 trillion), it might be easy to forget that the e-commerce giant and cloud computing is still relatively young in terms of its development. The company is one of the most innovative and successful companies in history, and its history of growth has only just begun.

Image source: Getty Images.

Importantly, Amazon has not avoided the possibility of failure. The company’s push into the mobile space with the Amazon Fire phone in 2013 was a major failure, but that didn’t stop founder and CEO Jeff Bezos and his management team from making more big bets in the industry. material space.

If Bezos and Amazon had been easily dissuaded, the company may never have launched its Echo smart speaker hardware and associated Alexa voice assistant software. Due to its willingness to take risks, the company now enjoys a leadership position in voice operating systems that strengthen its e-commerce business and drive growth initiatives in revolutionary technology trends such as intelligence. artificial.

This same desire to diversify and innovate allowed the company to quickly jump into cloud computing after acquiring a dominant position in online commerce. Amazon’s online retail and cloud computing businesses still have huge avenues for long-term expansion, and it is likely that the company’s wealth of resources, fantastic management team, and bent for innovation will enable it to position itself in a solid way in new growing industries. Few businesses seem better positioned to prosper over the long term.

2. Taiwan Semiconductor Manufacturing Company

Between semiconductor companies that only design chips and those that manufacture some of their own designs but lack the capacity to meet all of their production needs, there is a huge demand for chip manufacturing by manufacturers. third. When most of the big chip companies need semiconductor foundry services, they turn to Taiwan Semiconductor Manufacturing Company (TSMC).

Technology analyst Steve Milunovich estimates that TSMC makes about 80% of the semiconductors used in the United States JP Morgan found that the company produces around 50% of the world’s chips and captures around 80% of manufacturing profits.

Taiwan Semiconductor’s leadership position in manufacturing high-performance chips has only grown stronger in recent years, and it will be difficult for competitors to disrupt. Manufacturing is resource intensive, creating a barrier to entry for new competitors, and no current player enjoys economies of scale or superior technological advantages.

With technologies such as 5G, artificial intelligence, Internet of Things, and cloud computing driving increased demand for semiconductors, TSMC is likely to enjoy strong demand over the next decade. Many of these new tech trends are still in the early days of the sleeves.

TSMC also pays a dividend, with stocks returning around 1.6% at current prices. The manufacturing leader’s inventory has climbed about 46.5% year-to-date on growing demand for semiconductors and signs that competitors including Intel, are falling behind. However, stocks still stand out as a profitable investment, trading at around 26 times expected earnings this year.

3. Impinj

This year has been difficult for Impinj. The small-cap semiconductor specialist develops radio frequency identification (RFID) tags, sensors and software to use electromagnetic fields to automatically identify and track tags attached to objects. These beacons store and transmit useful data. RFID is an emerging tech market that could continue to show explosive growth, but the coronavirus pandemic has crushed the company’s sales and complicated its outlook.

While activity increased year-over-year by 24.9% in the last fiscal year and 44.6% in the first quarter of 2020, year-over-year revenue fell sharply. ‘about 31% in the second and third trimesters. The retail sector is by far the largest end-market for Impinj’s technologies, and store closures in response to the pandemic, combined with reduced consumer traffic after stores reopened, have held back sales. RFID business performance. The automotive and airline sectors represent significant additional sales flows and potential long-term growth engines, and these areas have also faced negative viral pressures.

It is reasonable to expect Impinj to continue to face significant headwinds in demand in the near term, but the long-term outlook for the RFID technology market remains favorable and risk-tolerant investors have the opportunity to build a potentially revolutionary business position at a discount.

In the retail industry, the company has long-term growth opportunities by providing RFID tags and readers that help reduce theft and enable streamlined checkout. RFID technologies also have the potential to pave the way for dramatic improvements in the efficiency of supply chains, enabling inventory and tracking of goods with greater speed and accuracy. Adoption of these two applications is still in its early stages, and there is a good chance that a range of new use cases for the company’s RFID solutions will emerge over the next decade.

For patient investors keen to look past substantial short-term challenges in search of yield potential overwhelming the market, Impinj stock could become a huge winner.