Tech is one of the top sectors for investors who want to outperform the stock market. It’s filled with innovative corporations with plenty of scaling power. Many tech firms report high revenue growth. But some of them are unprofitable and need several years before they report a quarter with positive GAAP net income.
These hot tech stocks still have growth numbers that can charm investors, yet they’re also profitable. Also, the three stocks to buy have strengthened their net profit margins.
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Cybersecurity is a pivotal industry for many businesses. A single cyber hack can cost a small business millions of dollars. Cyber attacks could drain large corporations even more as hackers can temporarily shut down their operations. There’s also the reputation damage associated with a hack and the winding road of regaining the trust of their customers.
Crowdstrike (NASDAQ:CRWD) helps keep hackers away from your data and sensitive files. The company’s Falcon Platform can detect threats before they become serious. And, it offers the necessary tools and resources to fortify your digital defenses.
The company has a valuable place in the cybersecurity industry. Many businesses use it to keep themselves protected. But what about investors? It turns out that Crowdstrike has delivered solid long-term returns for its investors. The stock is up by 40% year-to-date (YTD) and has rallied by 439% over the past five years.
The firm generated $53.7 million in GAAP income compared to a net loss last year. Impressively, Q4 of 2024 revenue grew by 33% year-over-year (YOY) and the company’s annual recurring revenue came to $3.44 billion.
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is winning over more investors as it cuts down on costs while delivering good revenue growth. The tech conglomerate reported 15% YOY revenue growth in Q1 of 2024 along with 57% YOY net income growth. Alphabet stock is up by 27% YTD and has more than tripled over the past five years. Currently, it trades at a 28 P/E ratio.
Advertising is the company’s main revenue growth engine. But the corporation is also making steady gains in cloud computing. Google Cloud revenue jumped from $7.45 billion to $9.57 billion YOY. Cloud computing now represents more than 105 of the company’s total revenue. Also, operating income is soaring for this segment, rising from $191 million to $900 million in a single year.
Furthermore, the company’s ability to cut costs and grow its financials prompted a dividend. Alphabet’s quarterly dividend starts at $0.20 per share, but investors should expect a double-digit compounded annual growth rate for several years.
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In addition, Amazon (NASDAQ:AMZN) has been performing well. The stock is up by 23% YTD and has more than doubled over the past five years. The corporate giant has been cutting costs and delivering high-growth opportunities in numerous industries.
Most of Amazon’s revenue comes from its online marketplace. Millions of consumers buy products on Amazon. Reasons for this include its wide selection, fast shipping and the convenience of buying products without leaving your home.
The recent Q1 of 2024 earnings results demonstrate the business model is still working well. Net sales increased by 13% YOY with double-digit growth rates in domestic and international markets. Amazon Web Services (AWS) accelerated in the quarter with 17% YOY revenue growth. Artificial intelligence (AI) can help cloud sales accelerate for several quarters. And, net income came to $10.4 billion in the quarter compared to $3.2 billion in the same period last year.
Amazon has exposure to advertising, groceries, streaming and other high-potential business models that should continue to grow for several years.
On this date of publication, Marc Guberti held long positions in GOOG and AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
