Despite the sector's struggles to start the new year, technology is still one of the best places to invest over the long run. The sector has helped power the market higher in recent years, which has led to eight of the largest companies in the S&P 500 being either technology companies or companies with strong technology ties.
With that in mind, let's look at three great stocks to invest in today for the long term.
Meta Platforms
Meta Platforms (META -2.31%) is one of the leading digital advertising platforms is the world through its portfolio of social media and messaging apps that include Facebook, Instagram, WhatsApp, Messenger, and Threads. The company has nearly 3.3 billion users that visit one its apps on a daily basis.
In addition to having a large, active user base, Meta has been one of the best companies at monetizing its user base through advertising. Last quarter, its family average revenue per person (ARPP) climbed 12% to $12.29. That far surpasses the ARPU (average revenue per user) of other social media platforms. For example, Snap's global ARPU per daily user was $3.10 last quarter, while Pinterest's ARPU for global monthly users was $1.70. Meta does a particularly good job outside the U.S. where its competitors have found monetization more difficult.
Currently the company is pouring money into artificial intelligence (AI), where it it has developed its own large language model (LLM) called Llama. The company uses AI to increase user engagement in order to have them spend more time on its platforms, which can boost ad revenue. Meanwhile, it is also using AI to help advertisers improve their ads and increase conversions. These efforts are helping with both ad impressions and price, which were up 7% and 11% last quarter, respectively.
Meta is looking to turn Threads into its next big platform. At the end of last quarter, the company said the platform had 275 million users and that it was adding about 1 million users a day. Meanwhile, the company also continues to invest in the metaverse, which it still sees as big opportunity down the road.
Alphabet
Like Meta, Alphabet (GOOGL -0.71%) (GOOG -0.65%) is one of the world's largest digital advertising companies where it serves ads through its Google search platform, YouTube streaming service, and other owned (such as Gmail and Google Maps) and third-party properties. Google remains the dominant player in search with an approximately 90% market share, while YouTube is the most-viewed video platform in the world.
In addition, Alphabet owns the third-largest and fast-growing cloud computing company. The unit grew its revenue by 35% last quarter, while the segment's operating profits soared from $266 million a year ago to $1.95 billion. The growth is coming as more customers build out their own AI models and apps using its services. The company has said its custom tensor processing unit (TPU) chips have been a differentiator, helping lead to lower costs and quicker processing times for AI inference.
Alphabet is investing heavily in AI as well, both in its cloud computing unit as well with its own AI model Gemini and AI applications, such as it text-to-video solution Veo 2. It is also using AI to help improve its search results and well as give AI Overviews, which it should be able to later monetize through new ad forms.
In addition, the company is also leading the way in autonomous driving, where its Waymo unit is currently the only robotaxi company offering paid rides in the U.S. It also recently heralded a big breakthrough in quantum computing with its Willow chip.
All in all, Alphabet is a nice mix of leading and emerging businesses.
Image source: Getty Images
Microsoft
Microsoft (MSFT -0.36%) was one of the first large tech companies to really embrace AI after forging a partnership with OpenAI, the maker of ChatGPT, and making a large investment in the AI company. Today, it has adopted the use of AI throughout much of its businesses.
The biggest beneficiary of the company's AI push has been it cloud computing unit Azure, which saw revenue jump 33% last quarter. Azure is the number-two cloud computing company behind Amazon's AWS and has recently been taking market share. Similar to Alphabet's Google Cloud, growth is being driven by customers building out their own AI assistants and applications.
Demand for its AI cloud computing services has been outpacing its capacity, capping its growth. However, it expects growth to accelerate later this year as more capacity comes online. Meanwhile, it has said it plans to spend a whopping $80 billion on AI data centers this year.
In addition to cloud computing, Microsoft is the software leader in worker productivity tools through its Microsoft 365 platform - which includes programs such as Word, Excel, and Powerpoint - while it also has the leading PC operating system in Windows. The company has a nice opportunity in front of with its AI copilot add-ons, which are AI assistants that can greatly help work efficiency.
All three of these companies have proven over time to be market leaders and innovators, and all are at the forefront of AI. This is why all three are great stocks to own over the long term.
