Investing in Tech: Why Alphabet and Meta Are Strong Choices

In the past few decades, the economic landscape has transformed significantly. Even casual observers recognize that technology plays a central role in our daily lives, which has clear implications for investors.

When planning your portfolio for the future, it appears prudent to invest in technology and internet-related companies.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Considering this perspective, if you have $5,000 to invest, think about purchasing these two tech stocks for long-term gains.

Billions of Users

Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) and Meta Platforms (NASDAQ: META) are both critical companies for investors today, thanks to their vast user bases.

In July 2023, Alphabet CEO Sundar Pichai noted that the company has “15 products that each serve half a billion people, and six that serve over 2 billion each.” This highlights Alphabet’s importance in daily life.

Meta also boasts impressive numbers. Its social media suite, encompassing Facebook, Instagram, WhatsApp, Messenger, and Threads, amassed 3.35 billion daily active users by December 31, making it one of the largest digital platforms globally.

The enormous user bases of these companies indicate their market power. Moreover, it offers a significant advantage in artificial intelligence (AI) development. Both Alphabet and Meta can swiftly roll out new AI features and updates tailored for users and advertisers alike.

This ability enables rapid strategic adjustments—an advantage many companies lack.

Network Effects

Investors should prioritize companies with sustainable competitive advantages, commonly referred to as an economic moat. This aspect minimizes the likelihood of a company becoming obsolete soon. Both Alphabet and Meta exhibit strong network effects, which stand as powerful forms of competitive advantage.

As the internet grows, more searches occur, enhancing Google’s algorithm and ultimately offering better service and increased advertising opportunities.

YouTube, owned by Alphabet, also benefits from network effects. With more content, viewers enjoy a richer experience, which in turn encourages even more content creation.

Similarly, Meta’s social media platforms thrive with increased user participation. More connections lead to greater content generation, boosting engagement which is also attractive for advertisers.

Buy-the-Dip Candidates

The recent market downturn has created an opportune moment to buy. As of March 17, shares of Alphabet and Meta have fallen 20% and 19%, respectively, from their all-time highs in February. Alphabet currently trades at a price-to-earnings ratio of 20.4, while Meta’s is at 25.1, making them among the most undervalued stocks in the “Magnificent Seven.”

This valuation is compelling. Both firms are expected to achieve double-digit earnings-per-share growth over the next three years, which is a conservative estimate compared to their past performance.

Additionally, Alphabet and Meta maintain solid financial health. They generate substantial free cash flow and hold strong balance sheets, equipping them to handle industry challenges while investing significantly in AI to enhance their user and advertiser offerings.

Investors should act decisively: acquiring Alphabet and Meta shares with $5,000 and holding long-term is a prudent strategy.

Don’t Miss This Second Chance at a Potentially Lucrative Opportunity

If you think you missed out on investing in leading stocks, now is the time to reconsider.

Occasionally, our expert analysts provide a “Double Down” Stock recommendation for companies they believe are poised for growth. If you’re concerned about having missed your opportunity, now is an excellent moment to invest before conditions change. The returns speak for themselves:

• Nvidia: if you invested $1,000 in 2009, it would now be worth $299,339!*
• Apple: if you invested $1,000 in 2008, it would now be worth $40,324!*
• Netflix: if you invested $1,000 in 2004, it would now be worth $501,530!*

Currently, we are issuing “Double Down” alerts for three outstanding companies—opportunities like this may not present themselves again soon.

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*Stock Advisor returns as of March 18, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former market development director for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is also a board member. Neil Patel and his clients have no positions in the mentioned stocks. The Motley Fool has positions in and recommends Alphabet and Meta Platforms. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.