The burgeoning technology sector promises significant rewards for investors. The pandemic set off a wave of digitalization that resulted in a strong surge in demand for everything from cloud solutions to cybersecurity. These are the reasons why you should invest in solid growth stocks in the technology sector. Armed with sustainable catalysts, such businesses will naturally have a long growth runway coupled with a large total addressable market (TAM).
The three stocks featured below have all the hallmarks of a great investment. They possess a strong financial track record and enjoy catalysts that can take their business to the next level. They also cover diverse sub-sectors such as e-commerce, cybersecurity, and cloud computing -- sectors which enjoy sustainable tailwinds that promise many more years of steady growth.
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MercadoLibre
MercadoLibre (MELI 0.64%) is a leading e-commerce and payments platform operating in Latin America. It offers delivery and logistics solutions and financial services. The company has demonstrated strong growth for its top and bottom lines over the years, as shown in the table below.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue (in billions) | $10.780 | $15.107 | $20.777 |
| Operating income (in billions) | $1.069 | $2.207 | $2.631 |
| Net income (in millions) | $482 | $987 | $1,911 |
Data source: MercadoLibre. Fiscal years end Dec. 31.
Free cash flow also increased significantly over the years, starting from $2.5 billion in 2022 and more than doubling to $7.1 billion by 2024. MercadoLibre also announced solid operating metrics to complement its strong financials. Unique active buyers on its platform climbed 17.6% year over year to 100 million while the number of items sold leapt 27% to 1.8 billion. Gross merchandise value (GMV) increased by 15% to $51.5 billion. The total payment value passing through the company's platform shot up 34% to $196.7 billion.
The company is not sitting still but continues to invest in user experience to acquire more customers. MercadoLibre has a team of more than 18,000 engineers, allowing the business to quickly respond to market opportunities and stay ahead of its competition. Innovation will continue to be the company's focus this year as it comes up with new ways to engage its customers and keep them loyal.
NASDAQ: MELI
Key Data Points
Another focus will be to build relationships with brands and agencies, and get more advertisers on board to build up its advertising platform, which is still in its infancy now. MercadoLibre has committed to investing $3.4 billion in Mexico this year as the country is now its second-largest market in Latin America. This number is a 34% jump over the amount that was invested last year and will be geared toward its technology products and financial services.
With the low level of e-commerce penetration in many parts of the continent, MercadoLibre can enjoy a long runway for further growth in the years ahead.
Okta
Okta (OKTA +3.47%) helps organizations manage their employees' identity and access privileges, and provides cloud software to manage and secure user authentication.
The company saw its revenue increase in tandem with an increase in demand for its services as organizations grow in complexity. The table below shows how Okta managed to increase not just its revenue but also its gross margin. Free cash flow also soared more than 11-fold over this period.
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue (in billions) | $1.858 | $2.263 | $2.610 |
| Gross profit (in billions) | $1.312 | $1.682 | $1.992 |
| Gross margin | 70.6% | 74.3% | 76.3% |
| Free cash flow (in millions) | $65 | $489 | $730 |
Data source: Okta. Fiscal years end Jan. 31.
Okta's total customer count has also steadily increased, going from 17,600 in fiscal 2023 to 19,650 by fiscal 2025. Importantly, customers are also spending more. Those with more than $100,000 in annual contract value went from 3,930 to 4,800 over the same period. The company's dollar-based net retention rate stayed strong, hovering at 107% for the latest quarter. Remaining performance obligations, a measure of future subscription revenue, climbed 25% year over year to $4.2 billion for fiscal 2025, signaling better days to come.
NASDAQ: OKTA
Key Data Points
Management believes that its success is just the beginning, as the company has a massive TAM of $80 billion that it can tap into. There are multiple growth opportunities for Okta as it continues to innovate its platform and boost its network. The company will utilize its "land and expand" strategy to target existing customers with more use cases, thereby increasing the spend per customer to improve its annual contract value.
Okta is also eyeing international expansion as another growth catalyst as many organizations require its identity management and user authentication services.
Fastly
Fastly (FSLY +4.41%) operates an edge cloud platform that allows developers to run and deliver websites in a quick, expedient, and secure manner. The company also provides load-balancing services and offers cloud security services to protect against threats and denial-of-service attacks.
Fastly saw its revenue and gross profit increase steadily over the years, and the table below also displays the improvement in gross margin over this period.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue (in millions) | $432.725 | $505.988 | $543.676 |
| Gross profit (in millions) | $209.781 | $266.328 | $295.938 |
| Gross margin | 48.5% | 52.6% | 54.4% |
| Free cash flow (in millions) | ($149.950) | ($31.906) | ($20.808) |
Data source: Fastly. Fiscal years end Dec. 31.
Although free cash flow remained negative across all three years, Fastly saw its operating cash flow go from negative in 2022 to strongly positive by 2024. Should this momentum continue, the company can conceivably begin to generate positive free cash flow from this year on.
Fastly saw its enterprise customer count increase from 578 at the end of 2023 to 596 for 2024. Remaining performance obligations inched up 3.7% year over year to $244.4 million. The latest research from the company identified critical gaps in web app and application programming interface (API) security as organizations grow larger and more complex. With API usage expected to surge, more businesses will require Fastly's services to ensure security and reduce complexity.
NASDAQ: FSLY
Key Data Points
Fastly is pushing on with new product innovations and developments to attract new customers and keep existing ones loyal. The company launched a DDoS Protection service to automatically detect attacks against applications and APIs. Users can also unlock better insights within log data with the new Log Explorer and Insights function. Management identified a TAM of $33 billion growing at a compound annual growth rate of 15%, which should present ample opportunities for the business to continue growing.
