In Q2 2023, U.S. household wealth hit an all-time high at $154.3 trillion, marking a crucial milestone for the stock market. This achievement signals the full rebound of consumer wealth after facing challenges linked to inflation-driven fluctuations in real estate and stock prices.
Positive U.S. economic data in September, including retail sales and producer prices, may deter Fed rate hikes. Low jobless claims also indicate a robust labor market. Indeed, these trends could benefit undervalued stocks, particularly various high-growth Nasdaq stocks that continue to dominate many index funds.
As the wealth of the average investor grows, the market-cap-weighted nature of many ETFs suggests investors may have no choice but to continue adding to these top stocks. As it happens, the three Nasdaq stocks to buy and hold that I’ve listed below are also among the most profitable big-cap tech companies with the best margins and competitive advantages.
Let’s dive into why these three companies are worth buying and holding for the next decade.
Alphabet (GOOG/GOOGL)
Alphabet (NASDAQ:GOOG)/(NASDAQ:GOOGL), a leader in internet services and products, is best known for its key Google Services and Google Cloud segments. The search company boasts strong financial metrics, with a high net income margin, impressive free cash flow and return on capital employed (ROCE) metrics, outperforming industry averages.
Alphabet boasts a massive user base through YouTube, Google products and Android. It serves over half a billion users across 15 Google platforms, with 6 currently seeing over 2 billion active users. Additionally, the company has intensified AI development this year, spurred by heightened interest. Alphabet introduced Bard, its version of ChatGPT, in March, though it faced challenges during its initial launch.
Alphabet and peers show Q2 2023 recovery in digital ad business. Continued growth may boost the company’s stock, but October earnings will confirm. Alphabet’s cost-cutting measures and efficiency decisions could contribute to ongoing earnings beats. In my view, this is a steady “rock of Gibraltar” kind of stock investors can own in good times and bad, and I’m considering buying some on potential dips moving forward.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) experienced 145% year-to-date growth, rebounding from $124 to roughly $300 per share. That followed an 11% year-over-year revenue boost and a 16% net income rise in Q2. Notably, these results came despite ongoing metaverse investments, something that’s hampered the stock in the past. Now, it seems most investors are looking past the company’s long-term investments and are focusing on the cash flow-producing core businesses that drive the company’s value instead.
Indeed, Meta is among the most attractive mega-cap tech stocks given the AI boom, and a solid choice for your portfolio among the so-called “Magnificent 7” stocks. The company’s generative AI relies on the cloud’s computational power, with major investments flowing into cloud infrastructure. Meta alone invested $7.1 billion in Q1 2023. Owning market share in the fast-growing world of cloud computing is akin to controlling a valuable resource, much like an oilfield or a large factory complex in previous generations.
In recent META news, Mark Zuckerberg launched Meta’s Connect developer conference, introducing AI products like smart glasses, image-generating bots and an updated VR headset. If any one (or all) of these products are hits, perhaps this company’s growth rate could reaccelerate, something that could take this stock on a nice run over the next decade.
Apple (AAPL)
Despite a market decline, Apple (NASDAQ:AAPL) shares stood out, closing at $174.79, up 0.49%, as the iPhone 15 launched. Apple has outperformed, rising 39% year-to-date, while tech peers grapple with interest rate concerns amid a Fed battle against inflation.
However, the recent market selloff has made Apple’s shares more affordable, with a lower price-earnings ratio compared to many tech companies. That presents a potential buying opportunity for long-term investors, particularly those who think economic conditions will improve over the course of the next decade.
Apple is not only offering an appealing stock price but also diversifying its business. It plans to release the Vision Pro, its first VR/AR headset, next year. Moreover, Apple is significantly investing in India to expand its manufacturing operations, reducing its reliance on China and mitigating supply chain risks. Apple’s strategic diversification makes it a compelling investment for the month and possibly the year, especially if its stock continues to decline.
On the date of publication, Chris MacDonald has a long position in AAPL and META. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
