Once again in 2020 the information technology sector is outperforming the S&P/ASX 200 Index (ASX: XJO).
Since the start of the year, the S&P/ASX 200 information technology index has fallen just 1.8%. This compares to a decline of over 19% by the benchmark ASX 200.
Due to the quality and growth potential of many companies in the tech sector, I expect this outperformance to continue throughout the 2020s.
In light of this, I think having exposure to the tech sector would be a very good thing for a portfolio.
But which tech shares should you buy? Three top tech shares I would buy right now are listed below:
Appen Ltd (ASX: APX)
Appen is the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence. It creates the data that goes into the machine learning models of many of the biggest tech companies in the world. Demand for its services has been growing strongly in recent years due to the increasing importance of artificial intelligence for businesses. This certainly was the case in FY 2019, with Appen smashing expectations with a 42% increase in underlying EBITDA to $101 million. Similarly strong growth is expected again this year and, thanks to the expected increase in spending on machine learning and artificial intelligence over the next decade, I feel it is well-placed to continue its strong form for many years to come.
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is a fast-growing donor management system provider. The New Zealand-based company's system includes donor tools, finance tools, and a custom community app which are being used widely in the faith sector in the United States, Canada, Australia, and New Zealand. Demand for its solutions has been growing strongly, even during the coronavirus pandemic. This led to Pushpay delivering a 1,506% increase in EBITDAF to US$25.1 million. The good news is that more strong growth is expected in FY 2021, with management providing guidance for a 91.2% to 107% year on year EBITDAF increase. But it won't stop there. Pushpay is targeting a 50% share of the medium and large church market in the future. This represents a US$1 billion opportunity and is many times more than the US$127.5 million revenue it posted in FY 2020.
Xero Limited (ASX: XRO)
Another top tech share to consider buying with a long term view is Xero. It is a leading business and accounting software provider which has been growing its market share at a rapid rate over the last few years. This has been driven by the increasing popularity of its high quality software and its expansion globally. The good news is that with less than 20% of the global (English-speaking) addressable market estimated to be using cloud accounting software, it still has a significant runway for growth.
