There are tons of high-quality businesses in the tech industry, and plenty of fantastic growth stocks as well. But some stars shine brighter than the rest.
What follows is the absolute cream of the crop -- three tech stocks our Motley Fool contributors are downright excited about.
Ashraf Eassa: I've been bullish on chip maker Broadcom (NASDAQ: BRCM) for quite a while now. Although some investors might be disappointed that the company wasn't able to become the mobile processor powerhouse that the company itself had hoped, the remaining business continues to be incredibly compelling.
For example, despite fears of share loss in the connectivity combo chip market, Broadcom continues to hold its position there quite nicely. In fact, Broadcom's CEO Scott McGregor pointed out on the company's late-October earnings call that "most" high end smartphones use Broadcom connectivity chips and that he "[doesn't] see that changing going forward."
Further, Broadcom's infrastructure and networking business seems to remain very healthy, even though the company reported a "pause in data center and service provider spending" during the most recent quarter "following six consecutive quarters of sequential growth."
Over the long term, Broadcom expects that increased data traffic, data center expansion, and "continued ASIC conversions to merchant solutions" should serve as long-term growth drivers for its high-margin infrastructure and networking business.
Finally, Broadcom reported strength in set-top box and broadband access products. Although this market doesn't quite offer the robust growth prospects that other chip businesses might, Broadcom commands a very strong competitive positioning here, which allows it to gain share on top of any broader market growth that goes on in those businesses.
All told, Broadcom may not be the fastest-growing tech company, but it's a leader in its core markets. Given the well-known phenomenon of rising R&D intensity of the chip market as a whole, I think that market leaders like Broadcom will continue to thrive.
Anders Bylund: I've been excited about Google (GOOG 0.74%) (GOOGL 0.55%) for a long time. I bought my first Google shares in 2007, and have seen them rise 135% since then, through market crashes and skeptical analysts and everything else. Meanwhile, the S&P 500 (^GSPC 0.02%) gained just 35%.
And if you thought that Google's soaring share price was impressive, you haven't seen the company's sales and cash flows yet. Let's get some perspective on Google's financial health:
So, while Big G's shares more than doubled, sales and operating cash flows increased fivefold.
That's all in the rear view mirror, though. The really exciting bit about Google is this: The $380 billion giant is still acting like a hungry little start-up.
Google throws a thousand crazy ideas against the wall and then doubles down on the ones that stick. From self-driving cars to finding the end of human aging, from cloud-based productivity software to balloon-based wireless networks, and from translation tools to mobile operating systems, some of these ideas will surely fail -- but others will be big winners. Some of these crazy side projects are Google's future, and I can't wait to see which ones end up making the grade.
Oh, and Google's insane experiments haven't distracted the company from dominating its core search and advertising operations. Google still owns two-thirds of the American market for desktop search, and 83% of the exploding mobile market.
So you get avant-garde growth prospects, a superior core operation, and bargain basement share prices.
What investor wouldn't get excited about that combination?
LinkedIn is made from people. Source: LinkedIn
Andres Cardenal: Social networks such as Facebook (META -0.52%) and Twitter (TWTR) make most of their revenues via online advertising. While this is a promising industry with considerable potential for growth, these companies are also competing against dominant industry juggernaut Google, which is a major source of risk for investors.
LinkedIn (LNKD.DL), on the other hand, is the top dog in online professional contacts and recruiting services, and the company is consolidating its leadership position in that industry at an amazing speed. LinkedIn's user base has grown 28% in the past 12 months, reaching a massive 332 million members in the third quarter of 2014.
Importantly, this growing user base is increasingly engaged with LinkedIn. Unique visiting members grew 16% to an average of 90 million per month during the quarter, while member page views grew 28%, well ahead of unique member growth. This means that page views per unique visiting member are moving in the right direction.
The company is truly firing on all cylinders when it comes to growth, LinkedIn's three business segments delivered year-over-year revenue growth of more than 40% during the last quarter. Talent solutions represents 61% of total sales, premium subscriptions accounts for 20% and marketing solutions brings in the remaining 19% of sales. Growth was 45%, 43% and 45% respectively for these segments in the third quarter, so LinkedIn's growth engines are as hot as it gets.
LinkedIn is still losing money on a net income level due to aggressive spending and investing for growth. However, the user base is rapidly growing, engagement is increasing and revenues are booming across the three business segments. It should be only a matter of time until LinkedIn starts translating its impressive top line growth into expanding profit margins.
