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The tech industry is filled with innovative companies that can outperform the market and generate long-term gains for investors. Some tech stocks in this industry have become generational winners and have minted millionaires.
Your ability to become a millionaire in the stock market largely depends on how much capital you put into your portfolio. While it’s possible to turn $100,000 into $1 million, it’s even easier to turn $500,000 into $1 million. The amount of capital you put into your portfolio over several years is only one piece of the puzzle. You must also pick promising investment opportunities that can deliver long-term returns. These are some of the top tech stocks to consider.
Microsoft (MSFT)
Despite producing impressive gains over several decades and being the most valuable publicly traded corporation, Microsoft (NASDAQ:MSFT) still has more room to run. The company has a commanding lead in the artificial intelligence industry thanks to Copilot. Microsoft’s ability to apply AI at scale also helps the company gain market share in the new industry.
The tech giant’s efforts have translated into meaningful financial growth. Revenue increased by 18% year-over-year while net income was up by 33% year-over-year in the second quarter of fiscal 2024. Microsoft Cloud was a big growth driver that generated $33.7 billion of the company’s $62.0 billion in revenue. The cloud segment is up by 24% year-over-year.
Microsoft has already produced enticing gains. The stock is up by 53% over the past year and has gained 264% over the past five years. The company has enough catalysts and exposure to several industries that can support a higher stock price.
ServiceNow (NOW)
ServiceNow (NYSE:NOW) is a smaller cloud computing company than Microsoft but still comes in with an impressive $158 billion market cap. The company is on the verge of becoming a mega-cap stock and has the financial strength to achieve that milestone.
The stock is up by 79% over the past year and has gained 214% over the past five years. The company works with more than 8,100 enterprises and has a great growth opportunity with its federal business segment.
The company regularly posts high revenue growth and even did so in 2022 amid interest rate hikes and high inflation. ServiceNow continued its momentum by exceeding guidance in revenue and profitability metrics in Q4 2023. The company reported 26% year-over-year revenue growth and nearly doubled its net income compared to the same period last year.
ServiceNow helps businesses increase their productivity and create better workflows. A 99% renewal rate indicates many clients have come to rely on the Now Platform. This dependence gives ServiceNow ample opportunities to raise prices over time. Even if ServiceNow doesn’t raise its prices, many customers upgrade their plans. For instance, the number of clients exceeding $1 million in annual contract values increased by 33% year-over-year.
Arista Networks (ANET)
Arista Networks (NYSE:ANET) is a client-to-cloud networking firm that offers the bedrock for cloud computing and artificial intelligence. The company’s switches and routers are essential to enabling scale and efficiency.
The firm has many large customers including Microsoft and other cloud providers. Arista Networks offers enticing profit margins for investors. The Q4 2023 net profit margin reached 39.8%. Revenue reached $1.54 billion which was a 20.8% year-over-year improvement. Net income jumped by 43.7% year-over-year to reach $613.6 million in the fourth quarter.
Analysts have noticed the company’s strong financial growth and its long-term opportunity. The stock recently received an upgrade from Goldman Sachs (NYSE:GS) from $313 to $356 per share. This new price target presents a potential 16.3% upside. The stock has enjoyed plenty of upside and has comfortably outperformed the market. Shares are up by 81% over the past year and have gained 290% over the past five years. The stock currently trades at a 47 P/E ratio.
On this date of publication, Marc Guberti held long positions in MSFT, NOW, and ANET. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.