Some of the best investments over the past few years have been growth tech stocks. A growth tech stock is exactly what it sounds like -- the stock of a tech company enjoying rapid growth. Growth tech stocks tend to be comparatively expensive based on valuation metrics, and the companies aren't always profitable. A growth tech stock is highly valued for the company's ability to increase revenue quickly.

Growth stocks fell out of favor in 2022 as inflation, supply chain constraints, and worsening economic conditions collided with the sky-high valuations that many growth stocks achieved during the pandemic era. Growth stocks have come roaring back in 2023, although those headwinds are still present.

A line graph showing dramatically upward momentum.
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Top growth tech stocks in 2024

Top growth tech stocks in 2024

There are many growth tech stocks to consider, but the best of the bunch have long track records of robust growth, massive profit potential, and major competitive advantages. The top growth tech stocks include Amazon (AMZN -0.16%), Microsoft (MSFT 0.23%), Nvidia (NVDA 1.64%), Adobe (ADBE 1.3%), (CRM 1.65%), and Meta Platforms (META -0.09%).

1. Amazon

1. Amazon

E-commerce and cloud computing giant Amazon is the premier growth tech stock. The company is dominant in online retail, with more than 200 million paying Amazon Prime members and an unrivaled selection of products and shipping speeds. More than half of the items sold are from third-party sellers who pay Amazon lucrative fees for access to its massive customer base.

The cloud computing business is even more impressive. Amazon Web Services (AWS) is wildly profitable, and it's the leading provider of public cloud infrastructure. AWS has generated around $83 billion of revenue over the past year, and it's still growing at a double-digit pace.

Amazon's advertising segment has also maintained robust growth. The company generates more than $30 billion annually in high-margin ad revenue, and it's the fastest-growing segment of the company.

While Amazon has many strengths, the company is facing a broad slowdown as consumers and businesses pull back on spending. There's more competition than ever in the cloud computing business, and companies looking to save money are starting to take a hard look at their cloud computing bills. On the retail side, inflation is putting pressure on consumers and affecting their purchasing behavior.

Despite these challenges, Amazon has two dominant businesses that will likely remain dominant for the foreseeable future. While growth will be slower for now, things should pick back up once the economic environment improves.

2. Microsoft

2. Microsoft

Microsoft has a lot going on. The software giant has a lock on the PC market with its Windows OS; it dominates the productivity software market with Office; it sells devices and the Xbox gaming console; and its Azure cloud platform is the second-largest behind Amazon Web Services.

The PC market is in a slump as post-pandemic demand falters and excess inventories plague the industry, so Microsoft's PC-centric businesses are suffering. But overall, Microsoft is thriving. Total revenue jumped 7% year over year in the fiscal third quarter of 2023, which ended March 31. Azure expanded by 27%, and the company's other enterprise-facing products also performed well.

Cloud computing is one of Microsoft's key growth engines, but artificial intelligence (AI) may have even greater long-term potential. Microsoft is a major investor in OpenAI, the company behind ChatGPT, and it's working to integrate AI into its many products and services. AI has the potential to be the most disruptive technology since the internet.

With cloud computing and AI tailwinds driving its growth in the long run, Microsoft is one of the best growth tech stocks.

3. Nvidia

3. Nvidia

Nvidia designs graphics processing units (GPUs) which are in high demand for a variety of reasons. Computer gamers buy Nvidia GPUs to enjoy higher-quality graphics and improved console performance. Data center customers buy its GPUs to accelerate workloads, particularly artificial intelligence (AI) workloads. People mining certain cryptocurrencies buy Nvidia GPUs for their processing power.

While demand for Nvidia's gaming GPUs soared during the pandemic, that demand faded as the PC market slumped. It's a very different story for Nvidia's data center GPUs. The explosion in interest in AI, particularly generative AI, has turbocharged demand for its AI-focused chips. While Nvidia isn't the only game in town, the company has spent years building up an ecosystem of software that makes its AI solutions the de facto standard.

AI has the potential to be a revolutionary technology, and for now, that revolution is being enabled by ultra-powerful Nvidia GPUs.

4. Adobe

4. Adobe

Software giant Adobe's growth is slowing down, but the company is still putting up impressive numbers. Revenue rose 9% year over year in the first quarter of 2023 that ended March 3, and profits are sky-high. On $4.66 billion of revenue, Adobe produced net income of $1.25 billion.

Adobe's core business is creative software. The company makes Photoshop, Illustrator, Premiere Pro, and a wide variety of other creative software products. Adobe's products are often viewed as the industry standard. Although there is competition, none of it is particularly threatening given Adobe's entrenched status.

Adobe sells its products through subscriptions to its Creative Cloud. The subscription approach lowers the cost of entry into Adobe's ecosystem, removes the need to constantly sell customers on new versions of software, and generates reliable streams of recurring revenue.

Adobe also participates in the growing digital advertising and e-commerce segments through its Digital Experience and Publishing and Advertising segments. It offers analytics for marketers and other professionals to manage customers and potential customers.

AI could be a game changer for Adobe's creative software business. The company has already integrated generative AI into various products, making it easier for customers to get things done. In Photoshop, users can now use text prompts to instruct AI to edit an image. That opens up the software to new customers who can do significant editing without learning the intricate ins and outs of the decades-old software.

With solid growth, extreme profitability, and a dominant set of products, Adobe is certainly a top growth tech stock.

5. Salesforce

5. Salesforce is the leader in cloud-based customer relationship applications for sales, marketing, and more. As more businesses shift to digital and omnichannel customer relationships, Salesforce's software-as-a-service (SaaS) plays an important role in helping businesses of all sizes.

Sales continue to grow at a double-digit rate. Salesforce grew revenue by 11% year over year in the first quarter of fiscal 2024 that ended April 30, and it expects revenue to grow by 10% for the full year. The company generates plenty of cash flow, which allows it to buy back billions of dollars worth of its own shares.

Salesforce's lead in customer relationship management (CRM) software is supported by very high switching costs. Few managers will risk changing from a market-leading software solution that works fine for an unproven product requiring setup and training expenses.

Salesforce operates four software suites (clouds) that it can cross-sell to existing customers. That has fueled revenue growth -- and, more importantly, its margin expansion -- in recent years. With this scenario, the company ought to continue producing strong growth for years to come.

6. Meta Platforms

6. Meta Platforms

Facebook changed its name to Meta Platforms at the end of 2021 to signify its shifting focus toward the metaverse. While the metaverse presents a significant growth opportunity for the leader in virtual reality (VR) hardware, digital advertising is still its core business.

Meta's growth has slowed dramatically as the digital advertising market has cooled. Revenue grew by just 3% year over year in the first quarter of 2023 that ended March 31, while expenses rose by 10%. This led to a steep drop in profits for the social media giant.

Still, Meta's massive user base of almost 3 billion people across its family of apps -- Facebook, Instagram, Messenger, and WhatsApp -- makes its ad platform appealing to small and large businesses. The company is also pushing social commerce solutions to enable better ad measurement and performance on its platforms amid privacy restrictions.

Meanwhile, Meta's efforts in the metaverse are expanding very quickly. Its Reality Labs revenue more than doubled in the first quarter, fueled by the success of the Oculus Quest 2. The company has shipped almost 20 million units of the VR headset. It's investing heavily in the future of VR, which is currently generating greater losses for the company than in previous years.

Meta is also investing in AI. It's using the technology to better serve content to users, and it's offering advertisers AI tools to develop ad campaigns. All of this can lead to better monetization and, ultimately, higher revenue and profit.

With a strong core advertising business and an eye toward the future, Meta Platforms is setting itself up for continued growth.

Cloud Computing

Cloud computing is a network of interconnected servers and data centers working together to deliver a service through the Internet.

How to find tech stocks poised for growth

How to find tech stocks poised for growth

The two most important factors to help you identify tech stocks poised for growth are the company's industry sector and its rate of sales growth:

  • Industry sector: Tech companies in some sectors are growing more rapidly than others. Focus on those companies in industries likely to be much larger in the future, such as e-commerce, cloud computing, and AI.
  • Rate of sales growth: This metric is an important one to consider when judging the attractiveness of a growth stock. The ability to consistently expand revenues at double-digit rates is critical, especially as a company gets bigger. It's much easier to increase sales of $10 million by 30% than it is to expand $1 billion in sales by the same percentage. The best growth tech stocks maintain rapid growth rates as they scale.

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The role of profitability

The role of profitability

Profitability isn't all that important if you're looking for the next big tech stock. Many tech companies aggressively focus on growing as fast as possible, sacrificing profit for increasing scale. That's not a bad idea if the customer base is likely to stick around for the long haul. It makes sense for a subscription software company, for example, to spend heavily to win a customer who may generate revenue for many years to come.

When it comes to profitability, it's important that the company's performance is at least improving. Gross margin should be rising, and the company's path to turning a profit should be clear and viable.

Some growth-focused companies never turn a profit and ultimately turn out to be poor investments. And, even if you do identify the next top tech stock, remember that pricey growth stocks often have much higher volatility than the S&P 500 (SNPINDEX:^GSPC). Massive, painful declines in stock price are common with fast-growing tech stocks, and it can take an iron constitution to endure those declines without panicking.

Growth tech stocks can provide outsized returns over the long term, and the best growth tech stocks can yield life-changing returns. But choose wisely to avoid the pitfalls that are inherent to growth investing.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe, Amazon, Meta Platforms, Microsoft, Nvidia, and Salesforce. The Motley Fool recommends the following options: long January 2024 $420 calls on Adobe and short January 2024 $430 calls on Adobe. The Motley Fool has a disclosure policy.