The tech-laden Nasdaq Composite (IXIC) has been one of the top-performing indices in 2019, with more than 33% return as of Dec 19.

Tech’s outperformance has been the major driver despite uncertainties surrounding the U.S.-China trade tiff, concerns over slowing global economic growth, the Brexit impasse and other geopolitical concerns.

Markedly, the Select Sector SPDR Technology ETF (XLK) has gained 47.7% year to date compared with the S&P 500 composite’s rally of 26.1%.

We note that robust adoption of cloud computing solutions amid ongoing digital transformation of enterprises, driven by growing use of AI and ML technologies, has been driving technology stocks this year.

Tech Sector Looks Strong Heading Into 2020

Notably, the technology sector is expected to commence 2020 on an encouraging note, following a favorable trade deal and recovery in the chip market, among other factors.

Completion of the phase one deal between the United States and China should improve business sentiments. This is expected to serve as a fundamental catalyst for technology stocks moving into 2020. Equity markets are expected to move higher owing to the deal, which would better position the global economy for growth next year.

Moreover, the global chip and semiconductor market is expected to recover in 2020. The World Semiconductor Trade Statistics indicated that the global chip market is set to recover by 5.9% in 2020, after an estimated decline of 12.8% this year. Improved trade ties between the United States and China are likely to help meet the target more efficiently.

Moreover, continuous innovation in electronic devices and major breakthrough developments will continue to lead to solid adoption of wearables and smart-connectivity solutions, including smart speakers and virtual reality/augmented reality (VR/AR) devices.

Additionally, technical advancement in the telecommunication sector on accelerated deployment of 5G technology and strong efforts toward modification in Internet infrastructure should continue to act as tailwinds.

5 Top-Performing Picks

Here we pick five technology stocks that is set to outperform Nasdaq on a year-to-date basis in 2020.

These stocks either flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). 

To further narrow down the list, we have selected those that have a VGM Score of A or B.

Per the Zacks’ proprietary methodology, stocks with this favorable combination offer good investment opportunities.

Our Picks

Tempe, AZ-based Amkor Technology (AMKR - Free Report) is one of the largest providers of semiconductor packaging and test services.

Zacks Rank #1

VGM Score of B

Market cap of $3.07 billion

The Zacks Consensus Estimate for 2020 earnings has increased 33.3% to 80 cents per share over the past 60 days.

Neenah, WI-based Plexus (PLXS - Free Report) is a leading provider of electronic contract manufacturing services.

Zacks Rank #1

VGM Score of B

Market cap of $2.30 billion

The Zacks Consensus Estimate for 2020 earnings has increased 0.65% to $4.59 per share over the past 60 days.

VA, Arlington-based CACI International (CACI - Free Report) delivers information technology (IT) applications and infrastructure to improve communication, secures the integrity of information systems and networks, enhances data collection and analysis, as well as increases efficiency and mission effectiveness.

Zacks Rank #2

VGM Score of B

Market cap of $6.2 billion

The Zacks Consensus Estimate for fiscal 2020 earnings has increased 0.95% to $13.68 per share over the past 60 days.

CDW Corporation (CDW - Free Report) provides integrated IT solutions to small, medium and large businesses, and government, education, as well as healthcare customers in the United States, the United Kingdom, and Canada.

Zacks Rank #2

VGM Score of A

Market cap of $20 billion

The Zacks Consensus Estimate for fiscal 2020 earnings has increased 2.67% to $6.52 per share over the past 60 days.

Olathe, KS-based NIC (EGOV - Free Report) provides digital government services aimed at enabling governments to leverage the Internet in order to reduce costs and offer advanced services to businesses and citizens.

Zacks Rank #2

VGM Score of B

Market cap of $1.46 billion

The Zacks Consensus Estimate for fiscal 2020 earnings has increased 2.3% to 87 cents per share over the past 60 days.