Patience: It's more than just a Guns N' Roses song.
Patience takes time to develop, just like great investing. Let's be honest: Stock purchases rarely reap immediate benefits. It takes time for promising stocks to reach their potential and make their investors rich.
So let's have a look at three stocks worth buying and holding for the long term: Airbnb (ABNB 0.10%), Datadog (DDOG -1.43%), and Amazon (AMZN -1.65%).
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Airbnb
When I think of tech stocks worth buying and holding for the long term, Airbnb is consistently one of the first companies on my list.
The company went public in December 2020, which was horrible timing. The COVID pandemic and the associated travel restrictions put the company behind the eight ball from the start. However, with travel restrictions now mostly a thing of the past, Airbnb has fully hit its stride.
Its recent fourth-quarter earnings report is an almost perfect example of a company executing its business model.
- The company beat profit and revenue expectations.
- Fourth-quarter revenue jumped 24% year over-year.
- Airbnb guided above analyst expectations for the first quarter of 2023.
What's more, analysts expect the company to continue delivering double-digit revenue growth over the next two years. Meanwhile, as the company's cash position grows, it's increasingly likely that management will return more cash to investors in the form of stock buybacks, like the $2 billion plan Airbnb announced in August 2022.
In summary, Airbnb is a company firing on all cylinders. And that's the sort of stock worth owning for the long term.
DataDog
The second tech stock on my list is Datadog.
What makes the company so appealing is its product offering. As a provider of cloud-based application performance management (APM) software, Datadog sits at a highly lucrative crossroads. It serves enterprise customers that have migrated their essential applications from internal data centers to cloud-based providers.
These organizations require tools to observe, secure, investigate, and troubleshoot high-priority applications running on the cloud. For that reason, Datadog's suite of APM tools has become indispensable to many companies. Meanwhile, its customer growth shows that demand for its products is skyrocketing. As of the end of last year, Datadog had 317 customers with annual recurring revenue of more than $1 million -- up 47% from a year earlier. Overall revenue increased 63% year-over-year to $1.7 billion.
The rise of artificial intelligence, such as ChatGPT, might be dominating the headlines right now, but cloud services remain a secular growth story worth remembering. Datadog is a stock worth owning for the long term.
Amazon
My third and final tech stock to buy and hold for the long term is Amazon.
Granted, after years of outperformance, Amazon's stock has fallen on hard times. Over the last 12 months, shares are down 36%, and they're more than 48% off their all-time high.
However, that presents an opportunity for those who still believe in Amazon's prospects. Indeed, the current pullback in the stock price offers great value for investors that understand Amazon's long-term advantages don't disappear just because the share price takes a dip.
Simply put, Amazon's massive distribution network gives the company enormous advantages, allowing it to deliver its products quicker -- and cheaper -- than the competition. Moreover, its huge Prime network, with over 200 million members, gives the company a gigantic recurring revenue stream.
By the same token, Amazon Web Services (AWS) is the market leader in the rapidly expanding cloud services sub-sector, while Amazon advertising continues to take market share from ad-giants Alphabet and Meta Platforms.
And while it's true that CEO Andy Jassy hasn't set the world on fire since taking over for Jeff Bezos, I still have faith in him. Moreover, Jassy has been faced with tough headwinds ranging from inflation to supply chain disruptions. Eventually those headwinds will abate, and when they do, I expect Amazon shares to move significantly higher.
