Tech stocks have been outperforming the stock market for several years. Many of the S&P 500’s top companies operate in this industry and have been a boon for the index.
Cooling inflation can strengthen the demand for tech stocks as the prospect of lower interest rates looks more realistic. The Fed’s preferred inflation metric only increased by 0.2% in April which was its smallest gain of the year.
Some tech stocks are in better positions to generate sizable long-term returns. These firms have double-digit revenue growth and are expanding their profit margins. Investors may want to take a closer look at these top tech stocks.
HubSpot (HUBS)
Wall Street analysts are enthusiastic about this stock and have rated it as a Strong Buy. The average price target implies a 4% upside while the highest price target of $770 per share suggests a potential 19% upside.
While the consensus is that HubSpot (NYSE:HUBS) continues to climb higher, a potential acquisition by Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) can cause shares to rocket higher in the short-term. Alphabet is continuing to diversify its revenue beyond advertising, and it’s looking to buy all of HubSpot’s shares.
While this started as a rumor, it’s been getting a lot louder in recent weeks. While no specifics have been leaked, it’s likely that Alphabet will have to pay a considerable premium compared to the current stock price.
HubSpot investors have done just fine before Alphabet rumors started to swirl. The stock is up by 18% year-to-date and has gained 274% over the past five years.
Nvidia (NVDA)
Even if you don’t have individual shares, you still probably have exposure to Nvidia (NASDAQ:NVDA) through your mutual funds and ETFs. Funds that track popular indices like the S&P 500 and the Nasdaq 100 are loaded with Nvidia stock.
The tech giant is approaching a $3 trillion market cap and has a chance at surpassing Microsoft (NASDAQ:MSFT) as the world’s most valuable publicly traded company. It’s been for the best that Nvidia has a large presence in many funds. Revenue increased by 262% year-over-year in the first quarter of fiscal 2025. Diluted earnings per share were up by 629% year-over-year, indicating higher profit margins.
A push into cloud computing can help Nvidia accelerate its sales even more. While Nvidia faces stiffer competition in that industry, any amount of penetration can greatly benefit long-term investors. The stock is up by 138% year-to-date and has gained more than 3,000% over the past five years.
Alphabet (GOOG, GOOGL)
Small businesses and large corporations often rely on advertising to get in front of their potential customers. Once these companies have profitable ads, they have to continue spending money on those ads to generate more sales.
Advertising leaders like Alphabet benefit from this trend. The tech conglomerate has established itself as a top choice for advertisers thanks to advanced targeting capabilities and ad placements on Google, YouTube, and websites that use AdSense. Alphabet has a vast lead in the online advertising industry, and the company is still growing.
Revenue was 15% higher in the first quarter than it was in the same period last year. Net income rose by 57% year-over-year as the company continues to reduce costs. Those results prompted Alphabet to issue its first quarterly dividend which came to $0.20 per share. Investors should expect a high double-digit growth rate for several years since Alphabet is just getting started with its dividend payouts. Shares are up by 27% year-to-date.
On this date of publication, Marc Guberti held long positions in NVDA and GOOG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.