There are some stocks that you can buy with almost unwavering confidence that they will offer significant and reliable gains over the long term. The tech market is a great place to find these types of investments, which are innovative companies with consistent financial growth.
As two of the world's most valuable companies, Alphabet (GOOG 9.96%) (GOOGL 10.22%) and Microsoft (MSFT 1.82%) have rewarded long-term investors with decades of growth. These companies are responsible for some of the most widely recognizable brands, with their services attracting billions of users daily. Alphabet's annual revenue has soared 107% over the last five years, and Microsoft's is up 68%.
Here's why these hypergrowth tech stocks are screaming buys in 2023 and beyond.
1. Alphabet
Shares in Alphabet have soared 150% over the last five years, delivering returns more than double the Nasdaq Composite index. The company has a potent position in tech as the biggest name in digital advertising, bolstered by brands such as YouTube, Android, and the many platforms associated with Google.
It's become challenging for most consumers to go a single day without using at least one Alphabet product, presenting countless advertising opportunities. As a result, the company holds a leading 25% market share in digital ads, a sector projected to hit $680 billion this year. Alphabet experienced some roadblocks amid last year's economic downturn as businesses slashed budgets and ad spending. However, solid growth in 2023 indicates the company remains an attractive long-term investment.
In the second quarter of 2023, Alphabet's total ad revenue rose 5.5% year over year to $66 billion. YouTube has become a particularly lucrative area for the company, with its worldwide user base projected to hit 868 million this year and over 1 billion by 2028.
Moreover, like many tech companies, Alphabet is heavily investing in artificial intelligence (AI). The technology could boost several areas of its business, from improved cloud services to AI upgrades for its Google productivity software and more efficient advertising practices through Search and YouTube.
Alongside significant revenue growth, Alphabet's annual revenue has climbed 130% over the last five years. The company is on a promising growth trajectory with a lead in digital advertising and a venture into AI, making its stock worth considering at almost any time, but especially in 2023.
2. Microsoft
Like Alphabet, Microsoft's stock is a compelling option thanks to the potency of homegrown brands such as Windows, Office, Xbox, and Azure. The company's various services have granted it solid positions in multiple markets, including computer operating systems, productivity software, video games, and cloud computing. The success of these ventures has seen Microsoft shares rise 106% since 2019.
Meanwhile, recent developments suggest the tech giant could have much to offer investors over the long term. This year, Microsoft has emerged as one of the biggest names in AI, gaining a 49% stake in ChatGPT developer OpenAI. The partnership has allowed Microsoft to integrate AI into many of its services, increasing its earning potential in the high-growth market.
Office platforms Word and Excel now offer AI features, with Microsoft 365 gearing up to launch an AI assistant called Copilot. The new tool will debut at $30 a month as an add-on to a current 365 subscription. Copilot is likely just the start of Microsoft's efforts to monetize its AI offerings. In addition to productivity software, the company has significant opportunities in the cloud market with Azure as it attracts new customers to its expanding library of AI cloud tools.
Microsoft isn't stopping at AI. Its acquisition of Activision Blizzard this month is expected to offer a substantial boost to its Xbox brand. Activision is home to many valuable game franchises, such as Call of Duty, World of Warcraft, Candy Crush, Diablo, and more. The popularity of these series could be an asset in growing Microsoft's Xbox Game Pass service, which offers an extensive library of games for a monthly fee. If the company can use these titles to attract new subscribers, it could benefit from increased revenue and console sales.
It's been nearly 50 years since Microsoft was founded. And yet, it's continuing to expand and innovate at a rapid pace, tightening its grip on the tech market. Microsoft has proven its value as a hypergrowth stock, and you won't want to miss out on its promising future.
