The tech industry is booming, with advances in segments such as artificial intelligence (AI) and virtual/augmented reality (VR/AR) creating bullish investors. As a result, the Nasdaq-100 Technology Sector index has climbed about 34% since Jan. 1 despite suffering a sell-off in 2022.
Economic challenges caused a pullback in consumer spending on tech last year. However, the market's swift recovery in 2023 has proved its resilience. The innovative nature of the sector keeps tech companies moving forward and often pays off in the form of stock growth. Therefore, it's not a bad idea to dedicate a large part of your portfolio to the high-growth industry.
Here are two tech stocks you can buy and hold for the next decade.
1. Apple: A reputation for reliable long-term growth
Since 2018, Apple (AAPL -0.08%) shares have increased by 225%. The rise is more than any of the top five biggest tech companies, including Microsoft, Alphabet, and Amazon.
Apple's success is thanks to its leading market shares across most of its product categories, including smartphones, tablets, smartwatches, and headphones. The company strategically created an interconnected ecosystem for its devices, promoting ease of use and making consumers less likely to use competing products. Apple's dominance in tech has helped its annual revenue rise 48% over the last five years, with operating income up 68%.
The tech giant's stock has fallen 10% since the start of August after it posted weak third-quarter of 2023 earnings. Apple reported sales declines in multiple product segments as macroeconomic headwinds curbed consumer spending. However, the company demonstrated its resilience by continuing to outperform competitors like Samsung and Lenovo in both the smartphone and PC markets despite challenging conditions.
Based upon its solid growth history, Apple's expanding ventures in AI and VR/AR bode well for its future. Both industries are projected to develop rapidly in the coming years.
Meanwhile, Apple's brand loyalty has the power to attract millions of consumers to its offerings and potentially leapfrog the competition. The stock is an excellent option for those looking for an investment to hold for the next 10 years and beyond.
2. Advanced Micro Devices: Profiting from multiple areas of tech
Technological advances over the last year have highlighted the potential of investing in chip stocks, with demand rising across the industry. Companies like Advanced Micro Devices (AMD -1.96%) are well-positioned to profit significantly as countless tech companies increasingly require high-powered hardware to move their businesses forward.
AMD has already begun cashing in on rising demand, forming partnerships with many of the biggest names in the industry. The company's chips power game consoles such as Sony's PlayStation 5 and Microsoft's Xbox Series X|S, cloud platforms Azure and Google Cloud, and millions of PCs worldwide.
AMD's custom chip business saw its gaming revenue rise 21% year over year in fiscal 2022 and data center revenue climb 64%.
Moreover, AMD is investing heavily in developing chips suitable for AI workloads. According to TrendForce, OpenAI's ChatGPT utilized 20,000 graphics processing units (GPUs) in 2020. That figure is projected to hit 30,000 as the platform expands for commercial use. Meanwhile, a current boom in the market has led to the launch of countless AI services, which are sending chip demand soaring.
If AMD's hardware can match the power of industry leader Nvidia at competitive pricing, the company's stock could skyrocket over the next decade.
AMD shares have risen 442% in the last five years as the company significantly expanded its position in tech. In the same period, its annual revenue has soared 264% and operating income 180%. With the power of AI and other tech sectors, there's no telling how far its shares could soar over the next decade. And with that, AMD is a no-brainer stock to buy now and hold indefinitely.
