Microsoft stock price has risen roughly 330% over the last five years, and with the company’s dividend payments factored in, investors would have enjoyed a total return of roughly 372% across the stretch. That means that a $5,000 investment in the company just five years ago would be worth roughly $23,600 today. Meanwhile, a $5,000 investment made in e-commerce innovator Shopify five years ago would now be worth a whopping $203,000.
Don’t worry if you’ve missed out on these impressive stocks. Technology companies that sit at the top of influential, high-growth industries will likely continue to deliver very strong performance for shareholders who take a buy-and-hold approach. Read on for a look at two category-leading tech stocks that are on track to thrive over the long term.
1. Match Group
Online dating is already the single most popular way for people to form new romantic connections, according to a Globalwebindex.com survey of nearly 50,000 internet users, and it’s likely that a greater percentage of couples will continue to meet through online channels with each passing year. Match Group (NASDAQ:MTCH) is a world leader in the category, and its stock stands out as a top vehicle for benefiting from the industry’s growth.
Match’s Tinder app is the most-used dating service in the U.S., and it’s also the country’s top-grossing non-game-based application. The company’s catalog of supporting apps — including OkCupid, Plenty of Fish, Match.com, and Hinge — further strengthen its position in the space, and it looks like the company has plenty of room for expansion over the long term.
Each of Match’s main dating apps benefits from a network effect, meaning that the usefulness of each platform increases as more users join. If there are more members on a service like Tinder, it stands to reason that each individual user will have more chances to form romantic connections that the person deems valuable.
The company should also benefit from a cross-application network effect, as each new user in its broader software ecosystem will give the company more data and pave the way for improvements across applications that can, in turn, help attract new users. A person who stops using Tinder might also wind up on one of the company’s other offerings, keeping engagement, spending, and data within the Match ecosystem.
The market for online dating apps looks poised for big growth through the next decade and beyond, and the company’s category-leading services should help the business deliver strong returns for shareholders. With a market capitalization of around $39 billion, Match Group still has lots of room for growth over the long term — and its stock has serious multibagger potential.
Amazon (NASDAQ:AMZN) stands as one of history’s most innovative businesses. Under CEO Jeff Bezos, the company took the lead in shaping the global e-commerce industry, and it followed that success by pioneering the cloud computing industry with Amazon Web Services. Bezos will be stepping down as CEO and into the role of executive chairman at the beginning of July, but the tech giant is on track to continue being a leader in e-commerce and cloud services and making waves in other fields.
While the digital advertising market has been dominated by Alphabet and Facebook over the last decade, the category is currently on track to be one of Amazon’s biggest growth drivers over the next decade. The company has already become the U.S. market’s third-largest digital ads player by revenue, and it is leveraging its strong position in e-commerce and data expertise to build a platform that will likely continue to take market share from its rivals in the space. Analysts at Cowen anticipate that Amazon’s digital ad business alone will generate about $85.2 billion by 2026, roughly tripling over a five-year period.
The company’s market-leading e-commerce and cloud computing businesses are incredible assets in their own right, but they also create a very strong foundation for Amazon to branch into new product and service categories. “Synergy” sometimes gets tossed around like a buzzword, but huge value can be created when diverse projects and technologies augment one another, and no company demonstrates this better than Amazon. As just one example, the success of the company’s Echo smart speakers has helped it solidify a leading position for voice-based operating systems, thereby strengthening company initiatives in categories including online retail, digital advertising, and artificial intelligence.
With its core businesses looking stronger than ever and huge potential for expansion in a wide range of other product and service categories, Amazon has what it takes to be a portfolio-shaping winner.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.