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2 Leading Tech Stocks to Buy in 2024 and Beyond
There's no question that tech shares have been among the hottest investments of the past couple of decades. Innovations and rapid advancements have made them some of the most sought-after stocks, and the explosions in their valuations reflect this phenomenon. As of the end of August, seven of the world's 10 most valuable companies are tech companies.
Regardless of how popular tech stocks are across the board, they're not all created equal. Some companies' long-term successes will rely heavily on a particular industry, while others are built for sustained success. The two companies below are great options for investors interested in companies that fall into the latter category. They shouldn't come as a surprise, either.
1. Microsoft
Microsoft (NASDAQ: MSFT) has been on a roll in the past five years. The stock was up over 200% during that time. That growth is no small feat, considering the company's market cap was around $1 trillion five years ago and now sits at over $3 trillion.
In the tech world, Microsoft is like a Swiss army knife -- there's not much it doesn't do. It sells hardware (PCs and tablets), enterprise and consumer software (Office and Windows), the world's second-largest cloud computing platform (Azure), video games (Xbox), and a social media platform (LinkedIn).
Having a hand in many different industries has done wonders for Microsoft's financials. In its fiscal 2024 (ended June 30), it generated $245.1 billion in revenue, up 16% year over year. Arguably more impressive, though, is its $109.4 billion in operating income (profit from its core operations). For perspective, that's more than Target 's revenue for the past four quarters.
Much of Microsoft's impressive operating income growth can be attributed to the growth of its cloud platform, Azure. Although it still trails Amazon Web Services (AWS) in market share, it has been gaining ground, with artificial intelligence ( AI ) giving it a boost over the past year.
Microsoft finished its latest quarter with over 60,000 Azure AI customers, up considerably from the roughly 37,500 it had at the same time last year. These customers are also spending more, on average, adding to the platform's impressive revenue growth.
The tech giant already has a stronghold on a lot of enterprise and consumer software products, but the growth of Azure -- and the cloud industry, in general -- gives it a high-growth opportunity that should continue for the foreseeable future.
2. Apple
Apple (NASDAQ: AAPL) has been the world's most valuable public company for much of the last decade, but its growth has lagged behind most "Magnificent Seven" stocks over the past 12 months. That said, it remains one of the best tech-stock investments you can make.
Apple is known for its hardware, which will continue to be its bread and butter for the foreseeable future, but has been making large strides in its services division. Three years ago, services were only 27% of the company's revenue. In its latest quarter, they accounted for 39%. That's why I'm confident in Apple's ability to continue its dominance for quite some time.
Relying too much on hardware (and the iPhone, in particular) has left Apple vulnerable to cyclical consumer spending habits, as we've seen in the past few years with a drop in smartphone sales. However, services often come with subscriptions, giving the company more reliable income streams.
Now that Apple's devices are in billions of hands, the company has prioritized building out a service ecosystem that will make it much harder for people to exit. The convenience and seamless integration between Apple devices and software is a major selling point, even with the premium pricing.
Whether it's ApplePay and the Apple Card with the iPhone, or Health and Fitness+ with the Apple Watch, Apple is showing us how its hardware-service ecosystem can be integrated into our daily lives. That adds to Apple's longevity potential by deepening customer loyalty and opening new income streams.
Apple is a company I feel comfortable buying consistently and trusting its long-term vision.
Before you buy stock in Microsoft, consider this: