Three Blue Chip Tech Stocks for Long-Term Investors

The tech sector has successfully rewarded long-term investors historically. Companies like Apple, Microsoft, and Amazon have delivered significant returns for those who remained patient amid market fluctuations.

Now, let’s look at three other enduring tech stocks with potential for strong gains: Nvidia (NASDAQ: NVDA), Meta Platforms (NASDAQ: META), and Palo Alto Networks (NASDAQ: PANW). These companies may continue to outperform the market for investors who adopt a buy-and-hold strategy over the next decade.

Nvidia: Market Leader in AI Chips

Nvidia is the leading producer of discrete GPUs for PCs, workstations, and servers. While initially known for gaming GPUs, a majority of its revenue now comes from data center GPUs, which excel in AI processing.

Wells Fargo reports that Nvidia commands approximately 98% of the data center GPU market. Its data center revenue rose 76% year over year, comprising 89% of total revenue. As AI technology expands, Nvidia is set to grow alongside increasing corporate investment in AI.

While competition exists, particularly from AMD and potential export restrictions from China could impact sales, Nvidia is expected to maintain its leadership in AI chips.

Analysts project Nvidia’s revenue and earnings per share (EPS) will grow at compound annual rates of 30% and 29%, respectively, from fiscal 2025 to fiscal 2028. Despite a nearly 1,500% gain over five years, Nvidia remains reasonably valued at 33 times forward earnings.

Meta Platforms: Social Media Dominance

Meta Platforms owns Facebook, Instagram, Messenger, and WhatsApp, reaching 3.43 billion daily active users across its platforms. This large user base continues to attract advertisers.

Meta leverages user data to create effective targeted ads, positioning itself advantageously against competitors.

Growth faced challenges in 2022 due to Apple’s privacy changes and stiff competition from TikTok. However, 2023 and 2024 have seen a resurgence in growth, partially driven by AI advancements and the development of its Reels feature to compete more effectively with TikTok.

From 2024 to 2027, analysts foresee revenue growth of 13% and EPS growth of 11%. Despite signs of maturing in its business model, Meta trades at 25 times forward earnings.

Palo Alto Networks: Growth in Cybersecurity

Palo Alto Networks is well-positioned in the cybersecurity market, serving over 80,000 enterprise customers. The increasing frequency of cyber attacks ensures ongoing demand for its services.

The company has three main security ecosystems: Strata, Prisma, and Cortex, with Prisma and Cortex contributing to most recent growth. Its bundling strategy enhances customer retention and competitiveness.

Analysts predict a 14% revenue growth CAGR from fiscal 2024 to fiscal 2027. EPS is expected to dip in fiscal 2025 but could grow at 21% over the following two years. The stock trades at 51 times forward adjusted earnings, indicating strong potential for long-term growth.

Final Notes on Investment Considerations

Before investing in Palo Alto Networks or any of these stocks, it’s advisable to conduct thorough research. Consider recent market trends and individual company performance.

The views expressed here reflect the author’s opinions and do not necessarily represent those of Nasdaq, Inc.