Digital transformation (DX) is a somewhat nebulous term that refers to the ongoing need to keep pace with technology. Organizations are constantly under pressure to operate more efficiently, work more productively, and provide a better customer experience. That often means replacing outdated infrastructure and systems, and those changes are expensive. Global DX spending will reach $2.8 trillion per year by 2025, up from $1.8 trillion in 2022, according to Statista.

Companies like Snowflake (SNOW 0.32%) and Zscaler (ZS 3.10%) are well-positioned to benefit from that DX tailwind, and both stocks could make you richer by retirement, whether that's in five years or a few decades. Here's why.

A man examines a complex network of data points on a digital screen.

Image source: Getty Images.

1. Snowflake: Big data analytics

DX has made the corporate IT ecosystem more complex. Businesses generate a tremendous amount of data each day, but in many cases, the proliferation of software and connected devices has resulted in a tangled mess of information. Data is frequently stored across disparate systems, both on-premise and in the cloud, making it difficult to use that data productively. That's where Snowflake can make a difference.

The Snowflake Data Cloud helps clients manage and make sense of siloed data sets. Businesses have traditionally relied on a variety of point solutions, such as data engineering tools for ingestion, data lakes for storage, and data warehouses for analytics, but Snowflake provides all of that functionality from a single platform. The Data Cloud also supports the secure sharing of data and simplifies the development of data-driven applications. Better yet, Snowflake is infrastructure-neutral, meaning it's designed to work across all three major public clouds, giving it an edge over Amazon Web Services, Microsoft Azure, and Alphabet's Google Cloud.

That competitive edge has the company growing like wildfire. Over the past year, Snowflake grew its clientele by 44% to 5,944 customers and the average customer spent 78% more, demonstrating the stickiness of its platform. In turn, revenue skyrocketed 106% to $1.2 billion, and the company generated $57 million in free cash flow, up from a loss of $94 million in the prior year.

Going forward, management puts its addressable market at $90 billion, and Snowflake is rolling out new products and features to capitalize on that opportunity. That includes the recently launched Retail Data Cloud, which comprises a suite of industry-specific tools that help retailers like Lowe's and PepsiCo manage and share data, allowing them to make important marketing decisions, optimize supply chains, and personalize the customer experience. The Retail Data Cloud is part of a growing number of industry-specific products, which also include solutions for healthcare and life sciences, advertising and media, and financial services.

Put simply, Snowflake simplifies big data, and that value proposition should only become more relevant as enterprises invest more money into DX. That's why Snowflake looks like a smart growth stock to buy and hold until you retire.

2. Zscaler: Cybersecurity

Cyberattacks are occurring more frequently. A recent study from Zscaler indicates that corporate and cloud infrastructures are more vulnerable than ever, and DX is the culprit. The rise of the mobile workforce, the adoption of cloud computing, and the sheer number of connected devices have made corporate networks more susceptible to hackers. Fortunately, Zscaler can help.

Its cloud platform (the Zero Trust Exchange) accelerates and protects corporate networks and applications, whether those resources exist on-site or in the cloud. Zscaler also provides tools for digital experience monitoring, helping IT teams keep their infrastructure in working order. Better yet, with over 150 global data centers, the Zero Trust Exchange is the world's largest security cloud, which theoretically means better performance and more effective threat detection for clients. On that note, research company Gartner has recognized Zscaler as an industry leader for the last 11 years.

That competitive edge has translated into strong demand. In the most recent quarter, Zscaler posted a net retention rate greater than 125%, meaning the average customer spent over 25% more in the past year. In turn, revenue rocketed 60% higher to $860 million, and the company generated $193 million in free cash flow, up 145% from the prior year.

Looking ahead, shareholders have good reason to be excited. Zscaler puts its market opportunity at $72 billion -- more than 83 times its trailing-12-month revenue -- and the company has clearly established a strong rapport with customers, as evidenced by its high net promoter score (NPS), which exceeds 70. For context, NPS is a metric designed to measure customer satisfaction, and the average software-as-a-service company has an NPS of 30.

In short, Zscaler is a leader in a massive industry, and its platform should become increasingly relevant as enterprises spend more money on digital transformation projects. That's why this growth stock could make you richer by retirement.

The fine print

Given the tailwinds and market opportunities, I think Snowflake and Zscaler could generate 10x returns over the next decade or two. But no investment thesis is unbreakable. Big data analytics and cybersecurity are highly competitive industries, so investors need to keep tabs on both businesses.

More importantly, no matter how much conviction you have in a given stock, it's smart to build and maintain a diversified portfolio. That way your ability to retire isn't tied to the success of a small number of businesses.