The Best Tech Stocks to Buy in 2017

To find the best tech stocks to buy in 2017, we picked from the four tech trends ready to take off this year.

Sales growth in these industries is expected to rise as much as three times, 12 times – in one case 30 times – by 2020. And the top stock picks in each sector have share-price targets as much as 40% to 100% higher than where they trade today.

You’ve likely been told before these trends are “hot” investments. Thing is, in years past, these particular technologies were not yet mature. Anyone who tried investing in these areas years ago and didn’t see the gains they expected was just too early.

But these industries have changed.

“My big tech sector prediction for 2017 is that these four ‘disappointers’ will achieve breakout status,” Money Morning Director of Tech & Venture Capital Research Michael A. Robinson said.

Robinson has a knack for identifying trends on the verge of going big and the stocks to buy to profit from them.

Time and again he’s delivered outsized gains to subscribers to his Nova-X research service, such as 396% on cybersecurity firm NQ Mobile Inc. (NYSE ADR: NQ), 352% on chipmaker Micron Technology Inc. (Nasdaq: MU), and 818% on biotech firm Pharmacyclics Inc. (now a subsidiary of AbbVie Inc. [NYSE: ABBV]).

Here Robinson takes you on the inside of these industries to show why they’re finally ready for breakout growth – and gives you the best stocks to buy now to make the most money from them…

Best Tech Stocks to Buy in 2017: Virtual Reality

We’ve been hearing about virtual reality/augmented reality (VR/AR) for almost two decades now.

Here’s a quick primer: Virtual reality is completely immersive – you only can see what a headset shows you. In augmented reality, holographic images are superimposed on real world surroundings, often using a tablet or smartphone (example: Pokèmon Go).

Robinson said he first encountered VR in 1991 with the Sega VR add-on to the Genesis console. But in the past few years, the technology finally caught up with the vision.

Last year, VR/AR tech began to reach “critical mass” with consumers, Robinson said, setting it up for a big year in 2017.

tech stocks to buyResearch firm IDC estimated that consumers bought 9 million virtual reality headsets in 2016, a 2,470% increase over VR headset sales the previous year.

And this market is just getting warmed up.

IDC has forecast the global VR/AR market will explode from sales of $5.2 billion in 2016 to sales of $162 billion in 2020.

"AR likely will be a much larger tech sector because its smart glasses, which overlay digital data like blueprints and technical specs, are already ripe for business users," Robinson said. "And we also could see most smartphone functions migrate to AR."

CitiGroup's Global Perspectives Group has forecast that the combined AR/VR market will balloon to $2.16 trillion in sales by 2035.

But Robinson is most excited about a third variation - mixed reality. Mixed reality combines elements of AR and VR.

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Mixed reality is a much more sophisticated augmented reality. In MR, sensors and advanced optics combine realistic holographic images that interact with the surrounding environment (creating a phantom hole in a wall that appears real, for instance).

"I believe 2017 will mark the first year in which MR begins to get attention from Wall Street and the financial media," Robinson said.

One of the best tech stocks to buy for mixed reality is Microsoft Corp. (Nasdaq: MSFT). The HoloLens is among the most advanced versions of MR right now, and Microsoft is positioning it to succeed both as a gaming platform and a business tool.

A tech stock to buy for VR is Facebook Inc. (Nasdaq: FB), which owns the Oculus Rift. The combination of Facebook's massive social media reach and a virtual reality platform opens up a lot of profitable possibilities.

CEO Mark Zuckerberg has called it "a new communication platform" and believes it will allow people to share experiences the way they share photos now.

Another tech stock to buy to profit from the VR/AR/MR trend is Intel Corp. (Nasdaq: INTC).

"This Silicon Valley chip leader is investing heavily in the field and could reap billions from VR and AR in the next few years," Robinson said.

Best Tech Stocks to Buy in 2017: Artificial Intelligence (AI)

Artificial intelligence is a tech trend that has had its share of hype over the years, but wasn't quite ready for prime time.

But according to Robinson, 2017 is when AI will shine.

"Thanks to breakthroughs made over the past decade, AI is now capable of 'cognitive computing,'" Robinson said. "That means the machines take key data relationships into account so the system can move swiftly onto the next set of data to crunch."

tech stocks to buyThe more capable hardware means AI finally can fulfill its long-promised potential. We're already seeing progress in AI-driven Big Data analysis, online chatbots that help customers resolve common issues, and devices talking to each other -- the Internet of Everything.

This is another market on the brink of explosive growth.

Research firm MarketsandMarkets has forecast that artificial intelligence sales will grow 12-fold from $420 million in 2014 to $5.05 billion in 2020.

Among the best tech stocks to buy for AI is Facebook Inc. (Nasdaq: FB), which already has deployed AI via chatbots on its Messenger platform and has big plans to use AI more widely.

Robinson said that Facebook has made more progress in AI technology than the other tech titans like Apple Inc. (Nasdaq: AAPL) and Alphabet Inc. (Nasdaq; GOOGL, GOOG), particularly in areas like face recognition.

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"With AI making Facebook an even more ruthlessly effective social network, the firm will remain in the lead for years to come," Robinson said.

He believes Facebook stock will climb over the next several years, reaching $250 a share by 2020 - nearly double the current price of $129.

Robinson is even more enthused about the tech stocks to buy for his last two 2017 tech trends...

Best Tech Stocks to Buy in 2017: Cybersecurity

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Cybersecurity is an area that should have gotten more attention years ago, but didn't because too many leaders in business and government ignored the threat for too long.

But as reports of hacks into both corporate and government systems become commonplace, the threat can no longer be ignored. And that means spending on cybersecurity will start to ramp up.

"Donald Trump's incoming administration - committed to defense and security - will trigger higher cybersecurity outlays," Robinson said. "And the U.S. government already has a cybersecurity budget of $89 billion for 2017."

Corporations, too, have gotten the message. The recent news of Yahoo Inc.'s (Nasdaq: YHOO) two huge data breaches nearly derailed Verizon Inc.'s (NYSE: VZ) plans to purchase the struggling Internet company.

Overall, the cybersecurity market is expected to surge from $122.45 billion this year to $202.36 billion by 2021.

The best tech stock to buy for big gains from this trend, Robinson says, is defense contractor Raytheon Co. (NYSE: RTN). That's because Raytheon stands to benefit from increased defense spending as well as its lesser-known cybersecurity business.

"Over the last few years, Raytheon has quietly beefed up its cyber division to protect government agencies and other large organizations," Robinson said. And given its size, it has a leg up on smaller cybersecurity players bidding on the same contracts.

"Raytheon has the resources and expertise to run successful legacy systems," Robinson said. "And it has the type of security clearance needed for this work, which its smaller competitors may not."

According to FactSet, Raytheon's earnings per share (EPS) are forecast to rise to $10.70 by 2020. At the current price/earnings ratio of 19.6, that puts the RTN target price at just under $210 a share - a gain of 40.5% from the current price of $146.30.

Best Tech Stocks to Buy in 2017: 3D Printing

Of these four technologies, 3D printing may have been the most bruised in the past few years.

"The 3D printing space got hammered back in 2014 because of the usual Wall Street hype," Robinson said. "Analysts and the other 'usual suspects' convinced themselves - and hordes of investors to boot - that you'd soon see a 3D printer in every school, home, and small business."

The drubbing was bad enough - 3D Systems Corp. (NYSE: DDD) fell more than 90% from its peak - some may have sworn off investing in 3D printing forever. But a rebound is at hand in 2017, and it will be led by manufacturing.

"Industry is gearing up to use 3D printing for rapid prototyping and additive manufacturing," Robinson said, citing such influential companies as Boeing Co. (NYSE: BA), General Electric Co. (NYSE: GE), and Ford Motor Co. (NYSE: F).

"Using 3D printing technology, Ford says it can cut the cost of designing an intake manifold from $300,000 to $3,000," Robinson said.

And while 3D printing stocks were hit hard in 2014 and 2015, the market kept growing.

Revenue in the 3D-printing industry more than doubled from $3 billion in 2013 to $7 billion in 2016, according to Wohlers Associates estimates. Wohlers sees the 3D-printing market tripling to $21 billion by 2020.

While Robinson believes pure play 3D stocks like 3D Systems and Stratasys Ltd. (Nasdaq: SYSS) will likely go higher, he says these stocks are "choppy and better suited for swing traders with lots of time on their hands."

Instead, Robinson believes the best tech stock to buy for 3D printing is a company he calls a long-term backdoor play: AutoDesk Inc. (Nasdaq: ADSK). AutoDesk creates 3D-printing computer-aided design (CAD) software, a segment in which ADSK is a major player.

Although AutoDesk is up 59% over the past 12 months, Robinson believes it still has room to run from the current price of about $81.

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About the Author

David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.

Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.

Dave has a BA in English and Mass Communications from Loyola University Maryland.

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