The technology sector has been among the top-performing sectors during the past month, behind only consumer discretionary stocks. Admittedly, despite the fact that the Nasdaq 100 index is still down 19% in 2022, when compared to a 13% drop in the Dow Jones Industrial Average, but nevertheless shows signs of life.
Tech stocks led the nearly a decade-and-a-half bull run prior to being frozen out at the end of last year as traders turned to what appeared to be more recession-proof names. But investors should put such short-term fluctuations aside and focus on the long term, because tech is so entrenched in today’s economy that it will ultimately win out.
Use these severe pullbacks to acquire stocks that were formerly out of reach, taking them up at a bargain and then holding on for ten years or more. The following pair of tech firms are examples of stocks you may own for decades to profit from having bought them early.
PayPal Holdings (PYPL) is a payments company that could easily supplement your long-term tech holdings category. Its growth is accelerating, while the fintech sector is still in the early innings of its own ascent.
PayPal has been around for a long time (its IPO was in 2002), but the payments industry is still just getting started. Consumers are using the service more than ever before, according to PayPal. Payment volume increased 13 percent during the third quarter, reaching $340 billion, with Venmo accounting for $61.4 billion in payment volume. PayPal handled 5.5 billion payment transactions during the year, up from 5.4 billion transactions at the end of 2020.
PayPal is a de facto leader in digital payments and peer-to-peer money transfers, with a well-known brand that will remain an important player in the fintech market.
There’s a lot to pick on Google (GOOG -0.69%) (GOOGL -0.72%) for. But it’s difficult to make the case that there are few firms more important to the tech industry, or that it is so deeply woven into society’s social fabric. That alone establishes long-term investing as a reasonable course of action.
Google, of course, has a monopoly in internet search, with 91.5 percent market share. Google’s second-quarter search advertising revenue increased 13.5% to $40.6 billion, demonstrating that advertisers will continue to go where the consumers are.
Google isn’t the only source of income for Alphabet. With almost three times as many monthly visits as Wikipedia, YouTube is the world’s most popular website and generates $7.3 billion in revenue.
Google Cloud might be where Alphabet sees the most development in the future. It is the third largest cloud operation behind Amazon’s AWS and Microsoft Azure, with revenue increasing 36% to $6.3 billion during the second quarter.
Alphabet’s value has tumbled more than 20% this year, creating an attractive buying opportunity.