The stock market’s overall performance across the last year has been shaped by tech stocks, with top players in the space powering big gains for the S&P 500 and Nasdaq indexes despite challenges from the coronavirus pandemic. It’s impossible to know exactly how things will shake out in 2021, but it’s likely that the tech sector will continue powering the market’s gains for decades to come.

To get a survey of stocks that could post great performance in 2021 and beyond, we asked three Motley Fool contributors to profile their top tech picks. Read on to see why they think Upwork (NASDAQ:UPWK), PayPal Holdings (NASDAQ:PYPL), and Zoom Video Communications (NASDAQ:ZM) have what it takes to be huge winners.

A chart line with a '2021' logo at the top.

Image source: Getty Images.

Get a piece of the fast-growing gig economy

Keith Noonan (Upwork): The gig economy is reshaping the market for jobs big and small, and Upwork is in good position to facilitate and benefit from this revolutionary trend. More people than ever are already working from home due to the pandemic, and the general transition to at-home employment is still just getting started. It’s going to reshape how the world works and the relationship between companies and employees. 

Upwork’s platform connects clients and workers from all over the world, while also offering the ability to localize your search options and narrow your hunt along a variety of other perimeters. More than 30% of Fortune 100 companies have used Upwork, and there’s a very good chance that more large enterprises will turn to the company’s services for some of their needs and increasingly rely on gig labor over time.

Having full-time employees comes with a range of additional costs including health insurance, office space, and taxes. By hiring on a freelance contractor basis, companies can mitigate these expenses while also gaining new levels of flexibility. Upwork’s platform allows clients to quickly and easily find suitable candidates for desired jobs, and businesses can hire talent on a short-term basis without the need to go through the process of creating a permanent position that might have limited usefulness. 

The gig-economy specialist has the potential to deliver great returns for shareholders as it attracts more clients, helps them expand their businesses, and takes a cut of total payments conducted through its platform. With a market capitalization of roughly $4.5 billion, Upwork is still a relatively small company that has huge room for growth.

The (fintech) empire strikes back

Will Healy (PayPal): The ascendancy of Square (NYSE:SQ) and its ecosystem has garnered much attention this year. This is especially true in one area where PayPal and Square are direct competitors — digital wallets.

This battle has heated up as an RBC Capital analyst told clients that Square’s Cash App generated more profits than PayPal’s Venmo despite a smaller user base. PayPal plans to counter by adding cryptocurrency trading and other features to its platform.

PayPal and Square have become prominent beneficiaries in a growing industry. Research firm Valuates estimates a compound annual growth rate (CAGR) for the fintech industry at almost 24% through 2025.

Not surprisingly, both stocks have surged in 2020. PayPal stock increased by almost 120%. While that is hardly small, it pales in comparison to Square, which rose by nearly 260%.

PYPL Chart

PYPL data by YCharts

Nonetheless, PayPal has outperformed Square in many respects. For this reason, both investors and consumers could see a counterpunch from PayPal in 2021.

In the latest quarter, PayPal’s total payment volume increased by 38% compared with the same quarter last year. This is well above the 12% increase in gross payment volume for Square over the same period.

Moreover, PayPal’s adjusted diluted earnings per share surged by 41% in the latest quarter. This was far ahead of Square’s 17% net income growth.

Despite this outperformance, investors will pay less for PayPal. It trades for just over 50 times forward earnings, compared with more than 190 times for Square.

The battle between these two titans will probably continue for the foreseeable future. However, going into 2021, PayPal’s stock appears better positioned to fatten wallets in 2021, digital or otherwise.

The cloud communications leader

Joe Tenebruso (Zoom Video Communications): Winners tend to keep on winning. That’s a central tenet of my investment approach — one that’s helped me crush the market. And it can help you do the same.

So, when I look for companies that are poised to deliver fortune-building returns to investors in the coming years, I look first at the ones that are already doing so. And few stocks have performed as well as Zoom.

Zoom burst onto the scene in 2020 as the world sought ways to adapt to COVID-19. With countless businesses and schools forced to close during the pandemic, hundreds of millions of people turned to Zoom’s cloud-based video, voice, and chat tools.

Zoom’s revenue and profits, in turn, skyrocketed. Its revenue soared 367% year over year to $777 million in the third quarter. Its adjusted net income, meanwhile, rose more than 11-fold to $297 million. 

Investors cheered Zoom’s results. They also bid its stock price up more than 400% so far in 2020. Yet Zoom’s shares have actually pulled back about 40% from their highs back in October. Some investors appear to be concerned about the potential for Moderna‘s and Pfizer‘s promising coronavirus vaccines to bring about the end of the pandemic and, by extension, a reduction in demand for Zoom’s services.

However, it’s unlikely that demand for Zoom’s cloud communications solutions will plunge. It’s more likely that businesses, which are increasingly embracing work-from-home arrangements and distributed workforces, will continue to deploy Zoom’s tools in even greater numbers. Thus, it’s possible — and perhaps even probable — that Zoom’s stock will rally back to new all-time highs in 2021.