Investing is a long-term game. You win by finding great companies and then buying and holding them. Your investment will grow in value as the underlying businesses grow.
So, how do you apply that mindset to technology stocks, where it’s often a matter of disrupting your competition or being disrupted? It can be tricky, but there are bonafide winners with the size and fundamentals to continue thriving for years.
Here are five of the very best companies in the tech sector. Consider adding these to a diversified portfolio, and you’ll get richer while sleeping well at night.
Artificial intelligence (AI) is a hot trend on Wall Street. Still, AI will likely grow and develop over the coming decades. Chip company Nvidia (NASDAQ: NVDA) has quickly established itself as the chip kingpin of this new era. Its graphics processing chips specialize in demanding applications, and that natural fit catapulted the company to an estimated AI chip market share between 80% and 95%.
It’s hard to see Nvidia completely losing that market share, even if competitors chip away at it over time. The companies investing in AI are spending billions of dollars, which could make it harder to get them to switch from what’s already working. AI unlocked a new level of growth at Nvidia last year, but AI’s long-term potential means that the stock should enjoy years of growth.
Modern technology is built on the cloud — centralized servers and data centers that shift computing power off organizations’ premises. Amazon (NASDAQ: AMZN) might have built its reputation on e-commerce, but its cloud platform, Amazon Web Services, is the world’s leader. That makes the stock a no-brainer long-term buy and hold.
Today, Amazon holds nearly a third of the global cloud platform market, meaning that most of your online web activity at least touches AWS at one point or another. According to Fortune Business Insights, the global cloud computing market is expected to grow by 20% annually through the decade’s end, which will almost certainly trickle to AWS. Add in Amazon’s other business units, and the future looks bright.
Data has arguably become the critical resource companies and governments crave in this modern world. Data helps companies know their customers, themselves, and their competitors. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) has arguably the most data of any company on Earth thanks to its decades of dominance in Google Search and YouTube. These are the world’s two most heavily trafficked sites.
For investors, Alphabet’s massive audience gives it many billions of dollars in high-margin advertising revenue, which helped the company bring in over $77 billion in free cash flow over the past 12 months alone. The company’s data, deep pockets, and AI potential mean that Alphabet will likely leverage itself into years of growth ahead.
4. Meta Platforms
Social media has become a regular part of daily life for people worldwide, and nobody does it better than Meta Platforms (NASDAQ: META). The company owns Facebook, Instagram, and WhatsApp, making money by showing ads to the 3.96 billion people using its apps monthly. The company’s a cash cow, generating $37 billion in cash flow over the past year, and invests heavily into new opportunities, like AI and the metaverse via Reality Labs.
Studies have shown that social media is addictive, which, admittedly, probably isn’t great for its users’ mental health but makes Meta Platforms’ core business very sticky. While many of the world’s largest companies are led by outsiders, Meta is still headed by its co-founder, Mark Zuckerberg, who is only 39. He’s built the company into the tech giant it is today, so long-term investors should feel great about Meta’s future.
5. CrowdStrike Holdings
Cybersecurity has become one of the most critical pieces of any corporate budget. Getting hacked or suffering a data breach can cost a company millions in financial and reputational damage. CrowdStrike Holdings (NASDAQ: CRWD) is part of a new generation of security companies, leaning on AI and cloud technology to provide security that learns in real-time, something legacy solutions like antivirus software can’t match.
CrowdStrike is by far the youngest company on this list, but it’s established itself as a leader in its field. Notably, the business is already quite profitable despite still chasing revenue growth. More than 23,000 organizations use CrowdStrike, which sells its products in modules. Customers buy access to more modules as CrowdStrike expands its offerings, leading to durable growth from adding new customers and cross-selling to existing ones. Cybersecurity isn’t going anywhere, making CrowdStrike a security leader to hold onto.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, CrowdStrike, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
Want to Get Richer? 5 Top Stocks to Buy Now and Hold Forever was originally published by The Motley Fool