Are you in search of tech stocks with long-term investment potential? The year 2023 has witnessed a remarkable resurgence in the tech sector, following a sluggish performance in 2022. As of June 28, the Technology Select Sector SPDR ETF (NYSEARCA:XLK) is up 37.80%, handily outpacing the S&P 500, with its year-to-date returns of 14.04%. As a result, it is the perfect time to search for tech stocks for the next decade.
Long-term investment in tech stocks has proven fruitful for over a decade, with brief periods of underperformance consistently presenting attractive buying opportunities. This trend appears to repeat itself in 2023, emphasizing the importance of careful stock selection amidst persistent headwinds such as inflation and interest rates. Strategic consideration and analysis are crucial for investors seeking top tech stocks to position themselves for the next decade.
To stay informed about the top tech stocks and future tech investments, be sure to review this list. Don’t miss out on the latest updates and insights that can help shape your investment strategy.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) has seen its stock price rise by over 51% year to date, driven by the anticipation surrounding artificial intelligence advancements. However, two key factors may impact Amazon’s stock in the near future. Firstly, AI efforts have lagged behind competitors like Microsoft (NASDAQ:MSFT), reflected in smaller investments and skepticism from Morgan Stanley (NYSE:MS) regarding near-term prospects. Secondly, the high valuation, with a market cap of over 40 times the 2024 earnings per share figures, raises concerns about the stock’s potential for significant upside in the coming years.
Despite these challenges, Amazon’s core businesses, including e-commerce and Amazon Web Services (AWS), continue to fuel revenue and income growth. AWS, in particular, is expected to benefit from the ongoing trends of digitization and AI, driving businesses to migrate to the cloud. However, it’s worth noting that the Federal Trade Commission is reportedly preparing for a possible antitrust lawsuit against Amazon, adding to the company’s regulatory scrutiny.
Additionally, Amazon has encountered difficulties and ultimately abandoned its ventures into satellite internet (Project Kuiper) and healthcare (Amazon Care and Haven). Despite these diversification challenges, Amazon’s strong financial performance makes it an appealing investment.
In terms of AI, while Amazon aims to catch up with its competitors, there is recognition that specialized operators may excel in certain areas. Amazon’s AI potential lies in various applications, such as product recommendations, fraud detection, automation, and customer service. The company invests in large language models like ChatGPT and Bard for consumer engagement. For enterprise-oriented AI applications, the focus is on maximizing sales and monetization.
Considering the favorable long-term growth prospects, attractive valuation, and continued focus on AI development, investing in long-term tech stocks, including Amazon, is advised for smart investors seeking sustainable returns.
Virgin Galactic (SPCE)
Virgin Galactic (NYSE:SPCE), a top tech stock, is embarking on commercial spaceflights, a major milestone. Investors see this as a positive sign, reducing uncertainty and fueling commercial potential.
Tech stocks for the next decade hold great promise, and Virgin Galactic aims to capitalize on it. Growth opportunities are vast, with projections of a $12.6 billion tourism spaceflight market by 2031. The Delta Class ship, worth $50-60 million, can generate $2.7 million per full-capacity flight. Approximately 225-250 flights annually are needed for Virgin Galactic to break even.
Additionally, Virgin Galactic plans to raise another $400 million to expand its spaceship fleet and operations. The unexpected loss of the Board Chair is unfortunate, but the future remains optimistic. A 43% surge followed the announcement of a commercial operations timeline. Challenges persist as the stock struggles despite a successful crewed spaceflight.
Virgin Galactic’s Q1 2023 earnings and SEC report highlighted its financial performance. Risks include potential launch delays, competition from Blue Origin, and launch failures. Investors face uncertainty as the space tourism industry is unproven, though Virgin Galactic is progressing.
While negative cash flow is anticipated to persist, there are optimistic expectations for revenue growth in the next four years.
The commencement of revenue-generating activities is eagerly awaited by investors. Despite setbacks, Virgin Galactic’s initiation of commercial spaceline operations is a significant milestone.
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Alibaba (BABA)
Despite geopolitical risks, Alibaba (NYSE:BABA), a top long-term tech stock, shows promising potential and impressive fundamentals. With significant growth, profitability, and resources for expansion, it is an attractive choice for investors.
Alibaba has demonstrated positive progress, including a remarkable 60% year-on-year surge in adjusted EBITA. This indicates further upside potential in the first half of 2024, encouraging investors to take advantage of the recent pullback.
Although revenue increased modestly by 2% to $30.32 billion in the first three months of 2023, Alibaba surpassed earnings expectations. While there was a sequential decline from the previous quarter, the delayed rebound in Chinese demand is seen as temporary. Alibaba’s reliance on China commerce, which contributes 65% of total revenues, exposes it to a slower-than-expected recovery.
Alibaba’s growth prospects extend beyond the Chinese retail e-commerce market. Investments in subsidiaries and planned IPOs offer catalysts for future expansion. Splitting key holdings into focused subsidiaries has already led to a 14% stock price increase.
While there are risks, such as geopolitical challenges and competition from other e-commerce companies, Alibaba remains a successful global giant. Long-term tech investors view the current difficulties as temporary setbacks and consider the undervaluation an opportune moment to consider Alibaba.
Explore the world of Chinese AI investments beyond Alibaba with these top 3 stock picks. Uncover the most promising opportunities in the Chinese AI market and seize the chance to diversify your portfolio with these cutting-edge companies.
On the publication date, Faizan Farooque did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
