When you think of tech stocks, your brain probably goes straight to US companies such as Alphabet (parent company of Google), Amazon, Apple, Facebook (now known as “Meta”), Tesla, and the other usual suspects.
Yet the UK is still home to some of the best tech stocks available on the entire stock market. So, read about 10 UK tech stocks you could consider adding to your portfolio, and find out why UK company investments could be beneficial to you.
Also consider: Best stocks and shares to buy now
Avast provides antivirus software for both Windows and Mac computers, as well as mobile phones running iOS and Android.
The company operates a “freemium” model, providing a free version of its software with purchasable upgrades, such as a virtual private network (VPN) and a cloud backup service. As of April 2020, this had allowed the company to build a customer base of more than 435 million active monthly users.
2022 has been a good year for the company, with shares reaching 641 pence in March.
However, the announcement that a proposed merger between the company and antivirus giant Norton was under investigation by the Competition and Markets Authority (CMA) did see the share price fall significantly.
Even so, this UK tech stock could be a good option to help you secure your portfolio.
Source: The Motley Fool
Darktrace has been on analyst radars multiple times over the past year, even making it onto our monthly list of the best stocks and shares in both November and June.
The simple reason for this is that Darktrace is one of the most well-known companies in the entire tech sector.
Crucially, the business’s focus on artificial intelligence (AI) and machine learning allows the software to adapt and detect cyber threats and attacks, and prevent them in real time.
Darktrace had made its way onto the FTSE 100 in November 2021 and now sits on the FTSE 250, making it one of the largest companies in the UK, let alone the tech sector.
Shares opened at 339 pence on 14 July 2022.
Source: CMC Markets
Even 10 years ago, the idea of e-commerce food delivery might have seemed impossible. But now, companies like Deliveroo are household names, well-known for their ability to bring whatever takeaway you want straight to your door.
A London-based business that started out in 2013, the company now operates in more than 200 locations, spanning as far as Singapore, Hong Kong, and Australia.
Tech has obviously been central to Deliveroo’s success, creating an attractive, easy-to-use interface that connects businesses and consumers.
Shares currently trade at a significant discount from when they came to market in 2021, down from 282 pence to just 91 pence as of 14 July 2022. No doubt the rising cost of food has harmed sales for many restaurants, with a knock-on effect to Deliveroo’s bottom line.
Even so, placing an order of Deliveroo shares at this price could be a tasty addition to your portfolio.
4. Kainos Group
A constituent of the FTSE 250 with a market cap of £1.42 billion as of 14 July 2022, Kainos Group develops solutions that help businesses transition into the digital age.
Using AI and cloud computing, Kainos seeks to help companies streamline operations and become more efficient using technology.
The business, headquartered in Belfast, Northern Ireland, traded for £11.44 when the market opened on 14 July.
So, want to streamline your portfolio? An investment in Kainos could be the solution.
Source: The Motley Fool
5. Keyword Studios
Once providing localisation services for businesses, Keyword Studios is now known for providing support services to companies in the video games industry.
Unlike the majority of the companies on this list, Keyword Studios is listed on the AIM (Alternative Investment Market), the “junior market” of the London Stock Exchange.
In fact, we even included Keyword Studios on our list of the 10 best AIM stocks to watch in 2022.
Companies on this smaller market tend to be more volatile than those listed on major exchanges. So, be prepared for potentially greater volatility in your investment.
Regardless, an investment in Keyword Studios could still be a winner for you. Shares opened at £21.60 on 14 July 2022.
Ocado, the online grocery delivery business, has gone from strength to strength over the past few years, in great part thanks to its embracing of new technology.
Indeed, the company uses robots to pick goods ordered online in automated warehouses, eliminating the need for individuals to do this.
Additionally, the Ocado Smart Platform, the company’s proprietary suite for grocery businesses, is an in-house project designed to make its customers more efficient and flexible, improving margins as a result.
There have been two significant peaks in share prices over the past couple of years, hitting £28.19 on 25 September 2020 and £28.08 on 5 February 2021, as Covid-19 lockdowns drove shoppers online.
However, prices have since softened and, as of market open on 14 July 2022, you can pick up shares in Ocado for 808 pence.
Another alumnus of our monthly best stocks and shares list, Rightmove has used technology to add a greater level of efficiency to the homebuying process.
Rightmove’s user-friendly website has seen prospective movers flock to it, offering access to a range of properties from different estate agents under one roof.
Shares surged to an all-time high of 795 pence on 31 December 2021, as pent-up market demand and the so-called “race for space” saw record sales in the wake of pandemic lockdowns.
But, with these short-term boosts out the way, the price has now softened to 590 pence, as of market open on 14 July 2022.
Source: The Motley Fool
8. Sage Group
You may well have personal experience with Sage Group’s products, either as a business owner relying on them for accounting and payroll, or as an employee viewing your payslip online.
A software as a service (SaaS) business, Sage’s model to sell subscription-based software means the company has recurring revenue, especially as customers become dependent on the software company to be able to continue functioning as normal.
The Newcastle-based business’s shares opened at 664 pence on 14 July 2022, a significant discount from the all-time high of 852 pence on 31 December 2021.
9. Shearwater Group Plc
Shearwater is another stock to have made it onto our July list of the best shares to buy now thanks to its impressive credentials, and is an unmissable inclusion on a list of the best UK tech stocks.
Another cybersecurity firm, Shearwater provides crucial security measures for corporate clients, helping to protect them against the dangers that large businesses face in an increasingly digital work environment.
Perhaps the biggest benefit of an investment in Shearwater is its relatively cheaper share price compared to other cybersecurity firms in the market, opening at 131 pence on 14 July 2022.
This may mean Shearwater offers a lower barrier to entry into cybersecurity investing, while also having plenty of room for strong growth.
Source: Investors’ Chronicle
Formally trading as “TransferWise”, Wise allows customers to convert their money into different currencies and send it around the world.
The service is incredibly popular, boasting around 10 million customers. In fact, I found Wise to be one of the best money transfer apps when I reviewed the different options available across the market.
The company only had its initial public offering (IPO) in the summer of 2021, debuting on the London Stock Exchange at 965 pence. However, prices have since fallen to just 329 pence since writing this guide.
Despite this drop in value, Wise continues to be popular with its customer base thanks to low fees and fast transfer times. As a result, it may be positioned for growth down the line, making it a suitable investment for you now at a reasonable price.
Source: CMC Markets
- Open an account that allows you to buy UK tech stocks that you’re interested in. See my full list of the best trading platforms for UK investors.
- Deposit money into your account.
- Decide how you’re going to invest.
- Place your trades.
Find out more about these steps below.
Choosing the right account for your needs
To invest in these UK tech stocks, you’ll first need to select a provider that suits your needs and open an account with them.
There are a few different factors to consider when choosing an investment platform, including:
- Account fees
- Trading or commission fees
- The range of investments on offer
- The quality of the trading tools on offer
- Withdrawal or exit fees.
Read my list of the best investment apps to help you choose a broker with the right balance of the above criteria for you.
Once you’ve signed up, you’ll need to open an account. You’ll likely have a variety of choices here but some common options tend to be:
- General Investment Account (GIA) – invest as much as you like without limits.
- Stocks and Shares ISA – invest up to the ISA allowance (£20,000 in 2022/23) with any returns generated entirely free from Income Tax, Capital Gains Tax (CGT), and Dividend Tax.
- Self-invested personal pension (SIPP) – invest for your future in a SIPP, receiving tax relief on contributions to your account while also potentially generating returns. Money in a SIPP is also protected from Income Tax, CGT, and Dividend Tax. However, you typically can’t withdraw the funds until age 55 (rising to 57 in 2028).
Check with each provider to find out individual details of the accounts they have on offer.
Depositing money into your account
Once you’ve opened an account, you need to deposit money into it to trade with. You’ll usually be able to do this online, typically using one of the following methods:
- Bank transfer
- Debit or credit card
- Apple Pay
- Google Pay.
It can be sensible to only deposit as much as you want to invest so that you don’t use money you need to live your lifestyle.
Decide how you’re going to invest
From directly buying individual shares or units in funds, to spread betting and CFDs, you can gain exposure to these stocks and shares in various different ways.
You can generate a return when buying individual shares in companies by waiting for them to rise and value and selling after this point. Alternatively, you can choose to hold your shares for the long term, receiving dividend payments if the company pays these out to investors.
You might like: Best Stocks Paying Dividends
Similarly, you could invest in a fund that contains the company you want to invest in among its constituents. This gives you exposure to that company as well as others, offering instant diversification.
You can then derive income by holding your units and receiving dividend payments, or selling them for profit if they rise in value.
Alternatively, you could consider derivative trading instead, such as placing spread bets or buying CFDs.
This type of leveraged trading involves speculating on the future performance of companies, with you receiving returns if your bet is correct.
Of course, if your bet is wrong, you stand to lose money.
This type of trading also doesn’t require you to own the stock or share you want to invest in. That means you don’t have to worry about paying the upfront costs of a stock if a company’s share price is particularly high.
Please note that derivative trading with spread bets or CFDs is high risk. These are complex instruments, and more than half of all retail investor accounts lose money when trading CFDs.
Place your trades
You’re ready to trade! Remember to keep an eye on your investments and adjust your portfolio as necessary to ensure that it continues to function as you want it to.
Why invest in UK tech stocks?
With so many tech stocks based in the US, you may be wondering why you’d consider UK companies instead.
Indeed, there are three key reasons:
- Ease of access
- Future growth potential.
Firstly, these stocks tend to be far more affordable.
As of market open at the time of researching and writing this guide, look at the current cost of Alphabet (Google), Amazon, Apple, Facebook (Meta), and Tesla:
- Alphabet: $2,204.21
- Amazon: $110.24 – Read: How to buy Amazon shares
- Apple: $144.08 – Read: How to buy Apple shares
- Facebook (Meta): $161.22
- Tesla: $704.69 – Read: How to buy Tesla shares
Meanwhile, none of the 10 UK stocks that I’ve included in this guide cost more than £25 per share, with the most expensive (Keyword Studios) coming in at £21.60.
That means you can buy more of them, increasing your exposure and, potentially, your returns if they increase in value over time.
Ease of access
Secondly, UK stocks are typically going to be easier for you to access as a UK resident.
Most providers will allow you to invest in US stocks, provided that you fill out the W-8 BEN tax form with your broker or platform.
But even so, there are extra considerations with overseas investments. You might be subject to US Dividend Tax, for example, and there’s also the risk that you’ll lose part of your investment nest egg when converting your money from British sterling (GBP) to US dollars (USD).
With UK companies, you don’t have these concerns. You’ll be able to invest in GBP and, if you invest in an ISA or SIPP, you’ll be entirely free from Income Tax, Capital Gains Tax (CGT), and Dividend Tax.
Future growth potential
Finally, another benefit of choosing these companies is that you’re more likely to come across growth stocks – that is, businesses that are yet to achieve their full potential, but could do so in the coming months and years.
Imagine that you had invested on the ground floor of any of the big US tech stocks. You’d probably have made a pretty tidy return on your investment if you had held it all the way from the start to now, even accounting for inflation.
By investing in smaller companies, such as up-and-coming UK tech shares now, you may benefit from their future growth if one of them becomes a market leader down the road.
Doing your own research
Of course, when you’re considering adding new investments to your portfolio, it’s crucial to do your own research.
Try to keep up with breaking news about the companies you’re invested in. Consider setting up Google alerts or regularly searching for the company to read about:
- The latest developments in their products and services
- Press releases featuring company news
- Releases of key data, such as earnings reports and pre-tax profits.
Never rely on one source when choosing stocks and shares, and only ever invest in companies that suit your investment goals and your tolerance for risk.
Taking financial advice
If you’re unsure whether a certain investment or company is right for you, then you may want to consider seeking financial advice from a professional advisor.
A financial advisor or planner can give you personalised investment advice and help you decide whether certain investments are suitable for you.
We have a tool you can use to search for a local advisor near you on our website.
UK tech stocks FAQs
What is the UK’s biggest tech company on this list?
Remember: just because this is the biggest tech company, it doesn’t mean it’s the best or most suitable investment for you.
Should I invest in UK tech stocks?
The decision of whether to invest in UK tech companies comes down to your personal financial situation: can you afford them and do they fit your investment strategy?
Seek independent financial advice if you’re unsure whether UK tech stocks are appropriate for you.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Any share prices shown are subject to change.
CFDs are complex financial instruments and more than half of retail investor accounts lose money when trading CFDs. Please make sure that you know these risks before you start trading and that you’re aware there’s a high chance of losing money rapidly on your investment.