The tech sector has delivered sizable returns for long-term investors. Many stocks in this sector have even outperformed the S&P 500. A few tech stocks do the heavy lifting for the index and can still bring portfolios to new heights.
Investors can find small companies and hope that those firms will achieve incredible returns. However, it’s also possible to outperform the stock market by sticking with familiar corporations. All of the tech stocks included in this list are household names, and they will remain that way for a long time.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is an underrated big tech stock. It’s received some bad press for AI mishaps and leadership issues, but the stock has promising components. It only trades at a 27 P/E ratio while delivering higher profit margins for investors. Shares are up by 15% year-to-date and have gained 153% over the past five years.
Revenue increased by 13% year-over-year (YoY) in Q4 2023, as advertising revenue continues to rebound. Google Cloud revenue also soared and now makes up about 10% of the company’s total revenue. Alphabet’s expanding cloud segment can accelerate revenue growth and result in higher profit margins. The corporation grew its net income by 52% YoY in the quarter.
There seems to be an effort to change the culture, but the impact of this effort remains to be seen. Focusing on business instead of politics can lead to fewer mistakes and reignite innovation. The company is trimming its workforce, setting new expectations, and expanding overseas as well.
Alphabet’s financials are already robust. Advertising and cloud computing will continue to propel the company. However, it can achieve elevated gains if it fully capitalizes on the AI boom.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) turned the ship around in 2023, recovered from a miserable 2022, and looks ready to deliver more gains in 2024. The tech giant ended 2023 on a strong note with 25% YoY revenue growth and 201% YoY net income growth in Q4 2023.
The heightened net income prompted Meta Platforms to issue its first quarterly dividend of $0.50 per share. Daily active users across the company’s social networks reached 3.19 billion, an 8% YoY improvement. Monthly active users totaled 3.98 billion, a 6% YoY improvement.
Meta Platforms has achieved high revenue growth while decreasing its headcount by 22% YoY. The company currently employs 67,317 workers. It also boasts strong financials, as its $65.40 billion cash position is enough to cover its $18.39 billion in long-term debt.
Advertising is still the company’s main revenue engine. However, investors should monitor the company’s artificial reality technology. This tech can accelerate the company’s growth if it becomes mainstream, but advertising should continue to generate additional profits.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) has a big lead in e-commerce and cloud computing. The company’s market dominance has attracted many analysts who have rated the stock as a Strong Buy. The average price target suggests a 20% upside from current levels.
Net sales rose 14% YoY to reach a record $170.0 billion in Q4 2023. Net income came in at $10.62 billion and brought the company’s profit margin to 6.25%. Domestic and international sales both achieved double-digit growth rates.
Amazon recently made another push to expand its grocery segment. The company’s unlimited grocery delivery subscription can take market share from competitors. The subscription costs $9.99/mo for Amazon Prime members. The initiative applies for orders above $35. Customers can receive groceries from Amazon Fresh, Whole Foods and other local grocers within the Amazon umbrella.
The membership pays for itself after a few orders because of the money you’ll save on gas. Individuals in the federal SNAP program only have to pay a $4.99 monthly fee.
— Marc Guberti
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Source: Investor Place