Top 10 tech stocks on the ASX

2022 has seen world economies raise interest rates in response to the inflation caused by low rates and stimulus during the Covid-19 pandemic.

Inflation often drives demand for stocks down as interest rates elsewhere become more attractive. This may cause panicked investors to divest from listed technology companies, subsequently causing a drop in many tech stock prices.

For example, US tech giants listed on the NASDAQ 100 Technology Sector Index, such as Apple, Microsoft and Alphabet, experienced a decline in their value in the first three weeks of the year.

A tech stock refers to any company operating in the technology sector – a space encompassing everything from e-commerce, semiconductors, social media and even cloud computing.

Australia’s tech stocks, like its international peers, also experienced a share price tumble that continued into the beginning of 2022, reaching an eight-month-low on 24 January of this year.

However, tech stocks are known to be resilient and are likely to improve their performance when market sentiment improves as investors acclimatise to the higher inflation and increased interest rates.

Some may see the decline in tech stocks as a chance to buy while the share price is low with the hopes that they appreciate with time. Note that past performance does not guarantee future results. So, if you want to buy these shares, it’s wise to do thorough technical and fundamental analysis, and ensure your position aligns to your investment plan.

Here are ten of the top ASX tech stocks to consider for investors seeking exposure to the sector.

1. Block

2. Megaport

3. Computershare

4. Hansen Technologies

5. Altium

6. PEXA Group

7. Technology One

8. Novonix

9. Seek Limited

10. Dicker Data

1. Block (ASX: SQ2)

Block is a global fintech company that was launched in 2009 by Twitter co-founder and former CEO Jack Dorsey.

The company has several payment brands that target small businesses and consumers, including Square, Cash App and Australian BNPL platform Afterpay. Other key brands include decentralised finance platform TBD, music streamlining service Tidal and web hosting service Weebly.

In January 2022, the company completed its acquisition of Afterpay for $39 billion, giving it access to 3.6 million active customers in the US, 3.1 million in Australia and New Zealand and 600,000 in the UK.

2. Megaport (ASX: MP1)

Network-as-a-Service (NaaS) platform Megaport connects data centres with cloud service providers to speed up and enhance connectivity.

The company has a global reach, with operations in Europe, North America, the Asia-Pacific and Australasia. Megaport lays claim to more than 120 unique data centre operators and over 365 service providers.

Morgan Stanley maintains an overweight rating for Megaport, making a bull case based on adjustments to its sales channels to pursue the scale effects of established tech giants.

3. Computershare (ASX: CPU)

Melbourne-based Computershare is a share registry business that facilitates the transfer of securities ownership. It was founded in 1978 and is one of the longest-running IT companies in Australia.

In addition to share registry services, Computershare helps businesses with employee equity plans, stakeholder communications, fund services and corporate governance.

4. Hansen Technologies (ASX: HSN)

Hansen provides software solutions to utilities and telecommunications companies around the globe to upgrade their digital capabilities. The company says it has over 600 clients in more than 80 countries.

Morgan Stanley has assigned Hansen an overweight rating based on the unique nature of its software solutions. While Hansen's organic revenue growth is comparatively low at under 4% through the cycle, the company has posted strong EBITDA and FCF growth ahead of its domestic peers for the past seven years.

5. Altium (ASX: ALU)

According to Altium, it is currently the world’s leading provider of printed circuit board (PCB) software after 35 years of research and design work.

75% of the company’s revenues are subscription-based, while its earnings come from diverse regional sources, including the Americas (55%), Europe (31%), emerging markets (10%) and Asia (5%).

6. PEXA Group (ASX: PXA)

Proptech company Pexa claims to have developed a world-first digital settlement platform that facilitates property transactions on the Australian market.

The company says it helps more than 20,000 families in Australia settle their homes each week, granting them near real-time tracking of the settlement process and rapid access to the proceeds from sales.

Morgan is overweight Pexa based on the company's domestic monopoly and its potential growth in the UK market. Pexa could also be a bargain based on a 30% year-to-date price decline, compared to 11.5% for the ASX overall.

7. Technology One (ASX: TNE)

Software-as-a-Service (SaaS) platform Technology One focuses on the financial software needs of businesses and government departments. Key customers include regional governments, universities and museums situated throughout Australia and the UK.

The company claims to be one of Australia’s first tech start-ups and released its debut software product FinanceOne, back in 1991. It operates one of the largest software R&D centres in Australia, with a team of more than 400 developers.

8. Novonix (ASX: NVX)

Battery-maker Novonix had its origins in the research laboratory of Dr Jeff Dahn at Canada's Dalhouse University. Since its establishment in 2013, it has focused on the development of testing solutions to ensure the performance of batteries over long lifetime usage cycles. 

Given the increasing adoption of clean energy vehicles around the globe, Novonix's share price could benefit from enhanced demand for lithium batteries. 

Novonix's share price posted a 50% leap in October, while in February of this year it launched a NASDAQ listing that used American Depository Receipts to grant stateside investors convenient access to its ASX shares. 

9. Seek Limited (ASX: SEK)

Seek Limited is one of Australia's pioneering Internet companies and was first established in Melbourne in 1997.

The company has since emerged as a leading provider of online recruitment services in the Asia-Pacific and Latin America, enhancing its product offerings with investments in artificial intelligence and technology.

In addition to operations in Australasia, Latin America and Southeast Asia, Seek has a foothold in China and Korea via minority investments in the Zhaopin and JobKorea recruitment platforms.

Seek has seen considerable price volatility in 2022, potentially bringing strong opportunities to bargin hunting investors.

10. Dicker Data (ASX: DDR)

Established in 1978, Dicker Data bills itself as a long-standing veteran of the Australian information technology sector with over four decades of experience.

The company is a distributor of hardware, software and cloud services and has an exclusive partner base of more than 6,000 resellers. Dicker’s portfolio of products encompasses a wide variety of Tier 1 global brands, including Cisco, Citrix, Dell Technologies, Hewlett and Packard Enterprise, HP, Lenovo and Microsoft.

Here’s how to buy, sell and trade these promising top 10 tech companies listed on the ASX:

How to buy and invest in tech stocks

With us, traders and investors can buy any of the top 10 tech stocks, using our share trading platform by following four steps:

• Open a share trading account or log in

• Fund your share trading account

• Open the platform on the share trading account, go to the 'finder' panel and type in and search for your preferred tech stock

• Click on the deal ticket, where the ‘on exchange’ option will appear. ‘On exchange’ means interacting directly with the relevant exchange

How to trade tech stocks with CFDs

For those who would rather use leverage derivatives like CFDs, you can use our market-leading platform to capitalise on the long (‘buy’) and short (‘sell’) price movements.

Trading tech stocks with CFDs with us can be done in these few steps:

• Open a CFD trading account or log in

• Look for the tech stock you would like to take a short or long position on

• Click ‘sell’ or ‘buy’ in the deal ticket

• Choose your position size

• Confirm the trade

Features of trading tech stocks with CFDs

• Leverage: these derivative products enable investors to get exposure to a relatively large position in a particular asset – with a reduced initial capital outlay. Use of leverage however may prove a doubled-edge sword for those not implementing appropriate risk management strategies because while it maximises potential gains reaped by a trade, it can also magnify losses

• Flexibility: this differs from buying an asset outright. CFD trading gives you the flexibility to speculate on the rising or falling price movements of an underlying asset. This means when trading you can easily enter short positions if you believe an asset is overpriced and will decline in value

• Hedging: a hedge is an investment or trade designed to mitigate your existing exposure to risk. This potentially offsets one or more other positions you currently have open. You can implement hedging strategies when trading with us

While trading CFDs has its advantages, you should also be aware that trading CFDs carries significant risk, as leverage amplifies any profits or losses. You don’t own or have any interest in the underlying asset. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Please consider the margin trading product disclosure statement (PDS), risk disclosure notice and target market determination before entering into any CFD transaction with us.