One of the smartest investment strategies is to choose tech stocks active in high-growth markets and hold them indefinitely. Doing so can grant consistent, significant gains over the long term, thanks to the near-constant innovation of many of the sector’s leading companies.
For instance, despite market headwinds last year, the Nasdaq-100 Technology Sector index has soared 340% in the last 10 years. Comparatively, the Nasdaq Composite index rose 267% in the same period.
This growth is largely thanks to companies like Microsoft (MSFT), Nvidia (NVDA), and Amazon (AMZN), which have used their potent products to penetrate multiple areas of tech.
Want to get richer? These are three top stocks to buy now and hold forever.
1. Microsoft
As the home of brands such as Windows, Office, Xbox, Azure, and LinkedIn, Microsoft has become a behemoth in tech. The company holds the second-largest market cap in the world, at $2.3 trillion, providing investors with reliable stock growth over the years. Microsoft’s success has been largely driven by its priority on developing technologies of the future, including cloud computing and artificial intelligence (AI) markets.
The tech giant is leading the way in AI, thanks to its $1 billion investment in ChatGPT developer Open AI in 2019. The success of the advanced chatbot led Microsoft to invest a further $10 billion in the start-up this year and integrate AI technologies into several of its homegrown platforms, such as its Office suite, Bing, and Azure.
Microsoft shares began trending up on April 25 after the company posted its third quarter of 2023 results, driven by cloud computing and AI strength. The company’s intelligent cloud segment reported revenue growth of 16% year over year, hitting $22 billion. Meanwhile, Azure’s revenue on its own rose 27% for the quarter.
Microsoft likely has a bright future in AI and cloud computing, making its stock an excellent choice to buy now and hold indefinitely.
2. Nvidia
Another company expected to profit substantially from AI development is Nvidia. The chipmaker is the main supplier of graphics processing units (GPUs) to ChatGPT, which has sent Nvidia’s stock skyrocketing about 92% in 2023.
GPUs are crucial for running and developing AI software, and Nvidia chips currently have a massive leg up on competitors like Advanced Micro Devices and Intel in the market. With Nvidia’s GPUs the preferred hardware for AI developers, the company stands to gain a lot from the growing number of companies producing competing software to ChatGPT.
In addition to AI, Nvidia’s chips have a growing role in the cloud market, powering Amazon Web Services (AWS) through its data center business. AI and cloud growth led revenue in Nvidia’s data center segment to rise 41% to $15 billion in fiscal 2022.
Despite Nvidia’s meteoric stock rise this year, its forward price/earnings-to-growth (PEG) ratio remains low at 0.4. The metric suggests projected growth is not currently priced into Nvidia’s shares, making it a great stock to invest in now for the long term.
3. Amazon
Amazon has had a troubled couple of years, with 2022’s macroeconomic headwinds leading to pullback from consumers and businesses on both its e-commerce and cloud segments. However, easing inflation could soon right the ship, allowing Amazon’s leading market share in both industries to significantly pay off in the coming years.
The e-commerce market is valued at about $4 trillion, with online purchases only responsible for about 15% of all retail sales in 2022. The industry has stumbled alongside economic hurdles, but it’s nowhere near hitting its ceiling over the long term. Meanwhile, Amazon’s massive lead in the market could offer substantial gains once economic challenges subside.
Overall inflation eased for nine months in a row but remains high, with prices rising 5% in March and 6% the month before. As a result, companies like Amazon and its investors will need to be patient to start seeing the effects in the form of quarterly earnings. However, as the cost of living comes down, consumers should be able to spend more freely online, with businesses able to increase their cloud budgets.
Amazon’s potential is reflected in its average 12-month price target of $138. The figure projects stock growth of 35%, which aligns with the company’s long-term prospects. This means Amazon’s stock is a must-buy right now.
— Dani Cook
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Source: The Motley Fool