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What to Know Before Investing in Tech Stocks

It is important to determine if a stock is a good business and how much it is worth.

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You've probably heard of tech stocks in the news like Apple, Microsoft, or Zoom. And there's a lot to like about them. They're fast-growing, poised to benefit from a more technological world, and offer cutting-edge products and services. 

But they have drawbacks, too. Tech stocks often trade at prices above their fair value because investors are willing to pay more for their potentially promising future. These high valuations come with high expectations, though. Good news or financial results could push these stocks higher, while the opposite could cause the stocks to fall. 

Sachin Nagarajan does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.