The tech sector is filled with fresh technologies that are disrupting and reshaping older markets. The cloud, cybersecurity, fintech, and semiconductor markets host many of those top stocks.
All four markets will expand as companies and consumers move more data online: Cloud services will host that data, cybersecurity services will protect it, fintech services will leverage it to replace traditional banking services, and all that computing power will spark fresh demand for more powerful chips.
Let’s take a look at four of my favorite stocks from those four industries — Amazon (NASDAQ:AMZN), Palo Alto Networks (NYSE:PANW), Square (NYSE:SQ), and ASML Holding (NASDAQ:ASML) — and why they’re still excellent long-term investments.
1. Amazon: The cloud king
Amazon Web Services (AWS) controlled 31% of the global cloud infrastructure market in the second quarter of 2021, according to Canalys, making it the world’s largest cloud platform. It established an early mover’s advantage in that market, and its scale enables it to generate consistent profits, while most of its smaller rivals remain unprofitable.
Amazon’s AWS revenue rose 35% year over year to $28.3 billion in the first half of 2021 and accounted for 12% of its top line. However, the segment’s operating profit increased 30% to $8.4 billion and accounted for 50% of Amazon’s total operating income — so AWS’ higher-margin revenue is supporting the expansion of Amazon’s lower-margin retail marketplaces.
2. Palo Alto Networks: A balanced cybersecurity leader
Palo Alto Networks is a market leader in on-site firewall appliances. Over the past several years, it’s expanded its ecosystem with cloud-based services and AI-powered platforms to counter new threats.
More than three-quarters of the Fortune 100 companies use Palo Alto’s cloud-based cybersecurity services, and it generated 28% of its revenue from its NGS (next-generation security) cloud and AI platforms last year.
Palo Alto’s revenue, billings, and adjusted earnings growth all accelerated in fiscal 2021, and it expects its revenue to rise another 24%-25% this year, with 16%-18% earnings growth.
Palo Alto isn’t…
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