“Investing $5,000: 2 Tech Stocks to Buy and Hold for Long-Term Gains”

Published On: May 29, 2025 4:34 am

Top Tech Stocks for Investment: Microsoft and Alphabet Lead

Introduction

The technology sector has a history of outperforming the broader market. If you’re looking to invest $5,000, consider splitting it between Microsoft and Alphabet as these companies offer strong growth prospects.

1. Microsoft (NASDAQ: MSFT)

Microsoft is a long-term investment option due to its strong presence in cloud computing and AI. The company has generated $96 billion in net income from $270 billion in revenue over the past year.

Its integration of cloud and AI services in products like Microsoft 365 has enhanced profitability. Microsoft pays a small quarterly dividend while reinvesting profits into growth initiatives.

Revenue from Microsoft Cloud grew 22% year-over-year, reaching over $42 billion, which constitutes 15% of total revenue. The Azure service is key, as businesses shift data from on-premise servers to the cloud, providing significant growth opportunities.

Despite potential risks from an economic slowdown in 2025, Microsoft is well-positioned for long-term growth, with analysts forecasting annual earnings growth of 12%.

2. Alphabet (Google) (NASDAQ: GOOG, GOOGL)

Alphabet offers widely-used services like YouTube and Gmail, generating significant revenue from digital advertising and cloud computing. The company made $360 billion in trailing revenue last year.

With 2 billion users across various platforms, Alphabet’s digital ads are a major revenue source, fueling investments in AI technologies like Gemini.

Google Cloud revenue grew by 28% year-over-year in Q1, attracting enterprises with app-building tools and proprietary AI chips. Last year, Alphabet reported $111 billion in net profit and holds $95 billion in cash reserves.

However, regulatory scrutiny over its dominant market position poses risks. Currently, shares trade at 18 times the estimated 2025 earnings, which seems undervalued given its growth prospects, with expected earnings growth of 15% annually.

Investment Considerations

Before investing in Microsoft, evaluate insights from analysts recommending ten other stocks that could offer high returns. Historical performances, such as Netflix and Nvidia, illustrate the potential for significant gains in carefully-chosen investments.

Important Note: The Motley Fool has investment positions in Microsoft, Alphabet, and Nvidia. This information does not reflect the views of Nasdaq, Inc.