Technology not only helps to improve our lives but also provides us with easier access to our loved ones. The digitization wave has prompted individuals and corporations to embrace cloud computing, while the emergence of generative artificial intelligence (AI) has seen an explosion in new uses.
With technology permeating nearly every aspect of our lives, it makes sense to look for tech stocks to invest in because they can provide steady long-term capital appreciation. But it also pays to be discerning. Companies should ideally be leaders in their respective fields and demonstrate a strong track record of growing revenue and free cash flow. They should also possess sustainable catalysts allowing their businesses to continue growing.
With these characteristics in mind, here are three technology stocks you can consider buying and holding for the long term.
Image source: Getty images.
Zscaler
Zscaler (ZS +3.68%) is a cybersecurity company whose Zero Trust Exchange platform protects its customers from cyberattacks and data loss. With more organizations shifting their operations to the cloud, Zscaler's services are more in demand than ever.
The company saw its revenue nearly double from $1.1 billion in fiscal 2022 (ended July 31) to $2.2 billion in fiscal 2024. Free cash flow (FCF) did even better, more than doubling from $231.3 million to $585 million over the same period. These increases are indicative of strong demand for cybersecurity services, and Zscaler is the right business to benefit from this trend.
NASDAQ: ZS
Key Data Points
Revenue continued to climb in the first quarter of fiscal 2025, rising by 26.4% year over year to $628 million. Bookings also grew by 30% year over year and accelerated from the previous quarter, and the business generated 30% higher FCF during the quarter than the prior quarter, coming in at $291.9 million.
Customers are also spending more. Clients with annual recurring revenue of $100,000 or higher jumped 17% year over year to 3,165, while customers that spend $1 million or more grew 25% to 585.
The company is harnessing AI to bolster its cyber and data protection and to promote the secure use of public and private AI apps. AI is also being used to enhance breach prediction and hunt for potential threats as the software combs through more than 500 billion transactions and 500 trillion signals daily.
Management estimates that Zscaler has an addressable market of $96 billion. The market opportunity, however, could be much larger as the business targets incremental markets with 1.2 billion Internet of Things (IoT) devices used by 267 million people.
Potential future markets may have more than 600 million business-to-business users along with more than 7 billion IoT devices. Zscaler is just skimming the surface when it comes to growth, and investors could see many more years of double-digit increases as the company captures more business.
Veeva Systems
Veeva Systems (VEEV +4.17%) is a vertical software-as-a-service company that provides cloud-based services to businesses in the life sciences industry. Veeva has more than 1,000 customers ranging from large pharmaceutical companies to biotechnology firms.
The company has been growing its top and bottom lines steadily over the years as demand for its services increased. Total revenue went from $1.85 billion in fiscal 2022 (ended Jan. 31) to $2.36 billion in fiscal 2024. Net income shot up from $427.4 million to $525.7 million over the same period.
The business also generated healthy and increasing FCF during these three fiscal years, going from $750.2 million in fiscal 2022 to $885.1 million for fiscal 2024.
NYSE: VEEV
Key Data Points
Veeva's growth continued unabated for the first nine months of fiscal 2025. Revenue rose nearly 17% year over year to $2 billion, while net income climbed 37.1% year over year to $518.5 million. The company also churned out positive FCF of $1 billion, up 20% from a year ago.
It continued to introduce new features for its platform, with two generative AI capabilities launched for its Vault CRM (customer relationship management) software. The Vault CRM Bot embeds a large language model of the customer's choice to enable a wide range of context-driven tasks to be accomplished. Voice control will leverage Apple Intelligence for a hands-free use of CRM via spoken commands. These enhancements will enable customers to build their own AI applications and help customer representatives to be more productive.
During Veeva's recent Investor Day, held in November, management pointed out that the life sciences industry (comprising biopharmaceutical companies and medical technology businesses) is a $2 trillion market with a 6% compound annual growth rate.
The company's life sciences total addressable market stood at $20 billion, which offers significant growth potential. A recent survey of medical technology companies found that 70% of them still rely on manual processes to manage commercial content and claims. This statistic represents a solid opportunity for the company to offer its content management platform to help streamline processes and increase efficiency.
With a large addressable market and healthy growth tailwinds, Veeva Systems looks ready to continue doing well.
Roblox
Roblox (RBLX 2.02%) provides an immersive platform for users to design and play games that allow them to interact with other users in a virtual universe. In turn, these users can also play games created by others, thereby building a multiverse where digital experiences can be shared and enjoyed.
Revenue has been trending upward from $1.9 billion in 2021 to $2.8 billion in 2023, and FCF for 2023 came in at $124 million.
NYSE: RBLX
Key Data Points
The company reported continued growth in the third quarter of this year as its platform remained popular with users. Revenue climbed 29% year over year to $919 million; bookings jumped 34% year over year to $1.1 billion. Free cash flow for the quarter more than tripled year over year from $59.5 million to $218 million.
Daily active users (DAUs) on Roblox's platform continued to climb and were up 27% year over year to 88.9 million. Hours engaged climbed 29% year over year to 20.7 billion, which was also a sharp increase from the second quarter's 17.4 billion.
With the company continuing to build immersive worlds to engage its audience, it looks poised to continue growing as it draws more users onto its platform. It is also working with the British advertising and public relations agency WPP to introduce brands into the virtual world and to set new standards for 3D environments and immersive media.
Both companies will also pilot the first-ever Roblox certification program for marketers from creative and media agencies. By doing so, the two companies hope to attract more big-name clients such as consumer goods companies Church & Dwight and Danone onto Roblox's platform.
It's still early days as Roblox works to build a community of gamers and game designers, but prospects look bright as more DAUs increase their hours engaged over time to bring in more revenue.
