Growth stocks have faced a challenging market, but these conditions provide an ideal opportunity for long-term investors to buy.
Inflation remains high, and the Federal Reserve’s interest rate hikes have put growth stocks under considerable strain over the past few years. The growth-centric Nasdaq Composite index is down nearly 25% from its peak, with even profitable companies experiencing sell-offs beyond that level.
While short-term market turbulence can be concerning, it also offers chances to purchase stocks at attractive valuations, paving the way for impressive long-term gains. If you’re searching for solid investments to hold indefinitely, consider these two innovative and robust tech companies primed to deliver outstanding returns.
CrowdStrike
As businesses increasingly rely on digital channels, cyberattacks are intensifying, driving demand for CrowdStrike’s (NASDAQ: CRWD) services. The company’s AI-driven Falcon platform continuously adapts to new threats, offering detection and protection for computers, mobile devices, servers, and other hardware to prevent network breaches.
Fueled by new customers and existing clients purchasing additional services, CrowdStrike’s revenue grew 48% YoY, reaching $637.4 million in Q4, while non-GAAP (adjusted) earnings per share rose 58.5% to $111.6 million. This growth led to annual revenues of $2.24 billion and adjusted earnings per share of $1.54, up 54% and 130% YoY, respectively. Free cash flow increased 53% to $676.8 million.
Management’s midpoint projections suggest Q1 YoY sales growth of approximately 39%. Full-year guidance indicates revenue growth of roughly 34% and adjusted per-share earnings growth of 49%. Despite macroeconomic headwinds, the cybersecurity leader is well-positioned for revenue and earnings growth, with its long-term story just beginning. Currently trading around 50% below its peak, CrowdStrike presents a compelling buy-and-hold opportunity.
Alphabet
Despite challenges in the digital advertising sector, Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) remains one of the most appealing big-tech stocks. The company is starting to reap significant benefits from artificial intelligence advancements, and its strengths in search, mobile OS, cloud computing, and other areas create a remarkable product and service ecosystem.
The stock is an attractive long-term investment at under 21 times expected forward earnings, even with recent slower sales growth and earnings declines.
Alphabet’s Q4 YoY sales grew modestly by about 1%, reaching nearly $76 billion. This growth occurred despite a roughly 1.6% decline in sales from its core Google Search-and-other segment compared to the previous year, totalling $42.6 billion. However, Alphabet experienced robust growth in the cloud infrastructure market, with Google Cloud sales surging 32% YoY to $7.3 billion in Q4.
With Alphabet’s diverse portfolio of products and services, the company is well-positioned to capitalize on emerging trends and technologies. Google’s Android operating system dominates the global smartphone market, while YouTube continues to grow in popularity and revenue generation. Moreover, the company’s investments in autonomous vehicles, healthcare technology, and other innovative sectors highlight its commitment to growth and adaptability.
Alphabet’s recent acquisition of Fitbit demonstrates its interest in the wearables market, which has substantial growth potential as consumers become increasingly health-conscious. Furthermore, Google’s advancements in artificial intelligence, machine learning, and data analytics have the potential to revolutionize various industries, ensuring long-term revenue growth.
As a result of its robust ecosystem, diverse product offerings, and commitment to innovation, Alphabet represents a solid long-term investment, despite short-term macroeconomic challenges. Its ongoing expansion in the cloud computing market and continued dominance in the digital advertising space will likely drive growth for years to come.
Both CrowdStrike and Alphabet offer promising long-term investment opportunities for investors seeking growth stocks with the potential to deliver substantial returns. By capitalizing on the current market turbulence, investors can acquire these innovative and resilient tech companies at attractive valuations, setting the stage for impressive long-term gains.
