The buying of tech stocks for long-term growth has essentially spearheaded the stock market over the past 20 years. In the past year or so, we’ve seen the AI-driven boom send the stock market soaring to unprecedented heights. However, the excitement isn’t just about the AI revolution but the tech industry’s broader, enduring strengths.
For instance, the Technology Select Sector SPDR Fund (NYSEARCA:XLK), which tracks the influence of the S&P 500’s top tech stocks, has blown past broader market gains in the past decade. XLK stock has delivered a total return of 565%, trouncing the S&P 500’s 234% gain. In the past year alone, XLK stock was up 32%, beating the broader market by a comfortable margin.
That said, here are three enduring tech stocks for long-term growth offering sustained upside potential. Their innovative prowess, backed by solid fundamentals and expansive global operations, positions them as standout picks for the long haul.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is actively shaping the future of the tech industry. With core products like Windows, Office, and Azure deeply entrenched in global business ecosystems, Microsoft is perhaps the most enduring growth stock. In recent years, it has established an authoritative position in mission-critical areas such as cloud computing and AI. This integration and leadership has led to over a 220% gain in the past five years, with a gusher of free cash flows. Moreover, with visionary leadership behind it, expect its tech leadership to continue evolving over the next several years.
In recent quarters, Microsoft Cloud has been the tech giant’s biggest growth driver. It accounts for over 50% of its revenue base and consistently outperforms other segments by healthy margins. Microsoft’s collaboration with OpenAI is supercharging its cloud strategy, paving the way for sustained growth ahead and diversification in its tech offerings. Hence, with multiple growth catalysts in motion, ignoring MSFT stock is tough.
Mastercard (MA)
With a stunning 100% gross margin, Mastercard (NYSE:MA) is a no-brainer investment in the fintech space. The firm has been a giant in the payment processing realm, bolstered by its expansive network and brand equity.
Moreover, its forward-thinking approach is evident in its sizeable investments in blockchain and artificial intelligence (AI), which could potentially revolutionize its processing capabilities. On top of that, its robust financial health, marked by consistent top-and-bottom-line growth, is a testament to its shareholder commitment. This is further underscored by its 12-year streak of solid dividend growth, which highlights its shareholder-friendly policies.
Furthermore, its most recent earnings report shows an impressive shift to digital payments, with contactless and tokenized transactions driving momentum. Worldwide gross dollar volume surged 10% to $2.3 trillion, highlighted by a significant 18% uptick in global cross-border volumes. Further, Mastercard aims for full eCommerce tokenization in Europe by 2030, promising greater transaction safety and accessibility.
Netflix (NFLX)
Netflix (NASDAQ:NFLX) has solidified its position as a forerunner in the streaming world, consistently paving the way with its innovations. Its first-mover advantage, massive investments in original content, effective use of data analytics, and relentless push into new international markets make it a streaming juggernaut.
Netflix has pounced on the cord-cutting trend, growing its subscriber base from 46.1 million in the first quarter (Q1) of 2014 to a whopping 269.6 million, as per its latest quarterly results. Moreover, that trend continues to grow, with Netflix adding 9.33 million global streaming subscribers in Q1, ahead of analyst estimates of 4.84 million. This represents a superb 16% jump in subscriber additions year-over-year (YOY) compared to 4.9% in the prior-year period.
However, in the upcoming quarters, the streaming behemoth will likely focus more on its bottom line, targeting viewer engagement growth instead of subscriber counts. On top of that, its foray into live sports and entertainment comes alongside its massive $5 billion deal with World Wrestling Entertainment. This move promises many exciting developments, adding new layers to Netflix’s growth story.
On the date of publication, Muslim Farooque did not have (either 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
