1 Tech Stock to Buy Hand Over Fist and 1 to Avoid

Tech stocks are known for their growth. They can be good wealth generators, but not all tech stocks are worth buying.

Puja Tayal

Author Bio

Puja Tayal grew up in a small-business family where dinner conversations often centred on working capital and savings. Her early experiences with investing, particularly during the 2008 financial crisis, shaped her approach to understanding markets and evaluating investment opportunities. She began her career at a mutual fund company before moving into investor education and financial writing for asset and wealth management firms. Before joining The Motley Fool, Puja wrote for Market Realist, where she extensively covered the semiconductor industry. Her published work has also appeared in The Indian Express. Puja believes every stock has a story that can help investors understand its potential returns. She combines business analysis with different investing approaches to help investors make informed decisions and align their portfolios with their long-term financial goals. Outside of finance, Puja enjoys long drives, catching up with friends, watching superhero and science-fiction movies, and managing her family portfolio. She also has a keen interest in artificial intelligence and its potential to reshape the world.

Education

Bachelor's degree in Accounting and Finance, University of Mumbai (2007)
CFA Level I

Areas of Expertise

Qualitative company analysis, management strategy, risk assessment, long-term investing, portfolio diversification and rebalancing, dividend reinvestment, cyclical growth opportunities, compounding strategies, growth stocks, and dividend stocks.

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Favorite Investment Quote

"Risk comes from not knowing what you're doing." — Warren Buffett

Published June 25, 2025 9:45 pm EDT

The stock market undergoes various cycles of dips and rallies. In a given macroeconomic situation, some sectors perform and some don’t. In 2023 and 2024, the technology sector saw a sharp recovery after crashing in 2022. The 2022 crash was driven by accelerated interest rate hikes, which burst the bubble on all overvalued tech stocks. The 2023 recovery was driven by the artificial intelligence (AI) frenzy triggered by ChatGPT. These were the broad sector trends, but not all tech stocks performed according to the trend.

e-commerce shopping getting a package — Source: Getty Images

Not all tech stocks are worth buying

Some followed the 2021 growth trend of work-from-home, but not the 2023 AI trend. Thus, it is imperative to look at the individual company’s performance rather than just the sectoral trend before investing.

Let’s take the case of Shopify (TSX: SHOP) and Lightspeed Commerce (TSX: LSPD). They both soared during the pandemic when investors made money from the e-commerce wave. Between September 17, 2020 and their 2021 peak, Shopify and Lightspeed’s share price surged 80% and 308%, respectively. They even fell 80% in the 2022 tech meltdown. While Shopify recovered partially, Lightspeed didn’t. What happened?

Shopify vs. Lightspeed

Shopify recovered partially by selling its logistics business and keeping the growth cycle going. The company has sustained its revenue growth rate at a mid-20% rate. It has successfully reported positive operating income in all four quarters in 2024. This recovery turned around the 2022 dip into a 291% rally from October 2022 to June 2025.

However, Lightspeed failed to turn profitable as it made too many share-based acquisitions during the 2021 tech bubble, which significantly diluted its equity. Short-seller Spruce Point targeted the stock, accusing the company of a lack of transparency regarding margin decline. At a time when the company was in trouble, it underwent a management change as founder and CEO Dax Dasilva stepped down, and JP Chauvet took control in February 2022.

Chauvet was tasked to turn those acquisitions profitable in an environment where consumer spending was falling. Dasilva returned in February 2024 as interim CEO, and the cleanup began. The company impaired its goodwill twice in five years, US$748.7 million in fiscal 2023 and US$556.4 million in fiscal 2025. The impairment was triggered, as its share price had lost more than 80% in value, because of which its net assets exceeded its market capitalization. Although Lightspeed has reduced its losses, it has not yet turned profitable.

One tech stock to buy and one to avoid

Tariff uncertainty has once again dampened consumer discretionary spending. At such times, it is better to avoid Lightspeed Commerce, which could not perform even in a strong economy. While it can still be a good stock for active traders who wish to benefit from the holiday season rally between September and November, it may not be a good stock to buy and hold.

Lightspeed stock has been making new lows every time. Its share price fell 19% from its previous low in October 2023. Also, its 52-week highs are falling, with its 2024 high of $26.60 lower than the 2023 high of $27.82.

Shopify, on the other hand, is a stock to buy, as the company leverages economies of scale to make profits. The stock is in an uptrend as its 52-week highs and lows are greater than the previous ones.