Despite recent challenges in inflation, there are positive indicators for the future of the U.S. economy. The unexpected resilience of consumer adaptation to higher prices, suggests a growing ability to adjust to the new normal. Additionally, while the path to reaching the Federal Reserve’s inflation target may be slow, solid economic growth is anticipated. As the economy continues its upward swing, these are the best tech stocks to buy to see high returns.
Netflix (NFLX)
Netflix (NASDAQ:NFLX) is an entertainment company providing a subscription video-on-demand streaming service. In Q4 2023, Netflix crushed analyst expectations, reporting 12% YOY revenue growth and strong operating margin expansion. Furthermore, the company boasted 260.8 million paid subscribers, blowing past Wall Street forecasts and setting a new record for the service. Profitability is also not a concern for Netflix. Its levered FCF margin of 57.48% is much higher than the sector median of 7.81%. Looking forward, the company projects EPS of $4.49 for Q1 2024, higher than the $4.10 analysts had expected.
As competition in the streaming space ramps up, Netflix is implementing some strategic changes to obtain a competitive edge. Specifically, the service recently announced it would start streaming WWE’s flagship program “RAW” next year. This 10-year $5 billion deal is a major foray into live programming. Management hopes that by expanding its entertainment offerings, Netflix will grow its subscriber base.
Another major catalyst for the company is its new advertising-based plan. While this isn’t expected to be a primary revenue driver in 2024, this tremendous opportunity has incredible scalability and will provide a boost to subscription growth. All of these factors make NFLX one of the best tech stocks to buy.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is a software company that develops and supports software, devices and services. Valued at $9.48 trillion in 2022, the global information technology market is expected to reach $17.74 trillion by 2028, exhibiting a CAGR of 11%. A primary catalyst for this growth is increasing demand for digital solutions and technology in both consumer and business markets.
In Q2 2024, Microsoft reported revenue of $62 billion and net income of $21.9 billion, up 18% and 33% YOY, respectively. The company also boasts a levered FCF margin of 25.78%, above the sector median of 9.1%. More notably, last quarter, revenue at Azure and other cloud services jumped 30% YOY. Largely attributed to scaling artificial intelligence deployments, this growth signifies continued momentum surrounding AI excitement and Microsoft’s lead in the market due to its partnership with OpenAI.
Looking forward, Microsoft will likely receive a huge profit boost from high demand for Copilot, the company’s recently launched AI-powered assistant. In fact, in Microsoft’s latest earnings call, CEO Satya Nadella disclosed Copilot had already garnered 1 million users just 3 months after its launch. Indeed, the company holds a major monetization opportunity stemming from increasing demand for AI products. If Microsoft capitalizes on this opportunity, growth will accelerate on the tailwinds of meaningful AI initiatives.
GoDaddy (GDDY)
GoDaddy (NYSE:GDDY) is an American internet domain web trader and website platform host. Q3 2023 marked a strong push by GoDaddy to impress its investors. Bringing in a revenue of $1.07 billion or a YOY increase of 3.53%, GoDaddy was able to expand in major metrics. Net income saw a YOY growth of 30.96% after bringing in $130.7 million, as well as diluted EPS climbing 41.27%. Financially, GoDaddy’s successes have been reflected in the stock valuation, with a notable climb since November 2023.
From a consumer standpoint, GoDaddy is a great option on 2 key levels. Their pricing is fair for standard customers, especially in a competitive market. With other domain name services giving high upcharges for custom domains, GoDaddy has focused its business on providing more affordable options. Second, GoDaddy has been acclaimed for its customer support services, with 24/7 support. With a combination of both factors, it is obvious why GoDaddy appeals to the continuously growing consumer base of small businesses or private customers. In the near-term GDDY is one of the best tech stocks to buy.
On the date of publication, Michael Que did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
