For investors looking to build wealth for retirement, buying and holding shares of top growth stocks can help you get there. The technology sector has historically been a ripe field to look for rewarding investments.
While the market has grown more volatile of late on worries about the impact of tariffs on the economy, leading tech companies that enable the adoption of artificial intelligence (AI) are well-positioned to see growing demand for years to come. If you have extra money (say $5,000) you don't need for reducing debt or for other life priorities, here are two tech stocks that should deliver handsome gains over the next decade.
1. Alphabet (Google)
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) owns some of the most widely used services online. Its technology leadership has delivered strong growth and returns for shareholders over the last 10 years, and it's still going strong. The company's recent financial results demonstrated resiliency as Google faces increasing competition and a weak outlook for the digital ad market in 2025.
The tariff situation could pressure demand for advertising this year, but Alphabet's first-quarter earnings report showed strong growth in digital advertising, which is the company's primary revenue source. Google services revenue grew 10% year over year to $77 billion, driven by search ads, Google subscriptions, devices, and YouTube ads.
The rise of OpenAI's ChatGPT and other large language models could pose a threat to Google's search dominance, as these chat generators can function like highly intelligent online search tools. However, the growth in search revenue last quarter shows Google maintaining its dominance. The new AI Overviews feature, which is powered by Google Gemini, has been used by over 1.5 billion monthly users.
Alphabet's technology leadership is also supported by the growing demand for AI services in its cloud computing business. Google Cloud continues to gain share of the $300 billion cloud market, with revenue up 28% year over year last quarter. It is not seeing a slowdown in demand, with management planning to spend $75 billion in capital expenditures in 2025. This spending will support the growth of Google services, Google Cloud, and Google DeepMind, which oversees the company's AI research efforts.
Analysts expect the company's earnings to grow 16% on an annualized basis over the long term. Yet investors can buy the shares for just 17 times 2025 earnings estimates. Investors should expect the stock to grow in line with future earnings, which should translate to excellent returns.
2. ServiceNow
ServiceNow (NYSE: NOW) is on the front lines of meeting demand for AI software in the enterprise market. It is a leader in workflow automation, and its new AI offerings are driving strong momentum for the business that points to a bright future.
Subscription revenue grew 19% year over year in Q1, and management sees full-year revenue maintaining this pace. It now has 508 customers with over $5 million in annual contract value, representing growth of 20% over the year-ago quarter. Most of the Fortune 500 rely on ServiceNow to streamline business processes.
The company continues to bolster its advantage by investing in the future of automation software, such as the growing use of AI agents. These are highly intelligent assistants that can complete tasks without specific instructions from a human. ServiceNow is working with AI chip leader Nvidia and Alphabet's Google Cloud to advance this technology for businesses.
ServiceNow announced two deals to build on its lead. It announced an agreement to acquire Moveworks for $2.85 billion and Logik.ai for an undisclosed amount. These deals will enhance the company's AI capabilities in its customer relationship management offering, which is its fastest-growing business.
The company has grown from just $1 billion in annual revenue in 2015 to over $11 billion on a trailing-12-month basis. It is poised to deliver more growth and market-beating returns for shareholders, with analysts projecting the company's earnings to grow at an average annual rate of 30%.
Should you invest $1,000 in Alphabet right now?
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Nvidia, and ServiceNow. The Motley Fool has a disclosure policy.
