2 Top Tech Stocks to Buy for the Long Haul

The tech-heavy Nasdaq Composite is up 22% year to date, but it has pulled back over the last few months. Where the market goes in 2024 is anyone’s guess, but there are good opportunities to put your money to work in businesses that should grow in value for years to come.

Two such companies are social media leader Pinterest (PINS 0.13%) and cloud computing provider Snowflake (SNOW -0.60%). The two stocks trade well off their highs, but the companies continue to report strong revenue growth that should keep them building wealth for their shareholders.

1. Pinterest

Pinterest stock is down 73% off its all-time high, but this leading social media platform has a lot of untapped value potential in its 482 million monthly active users. These are users who come to Pinterest looking for ideas while shopping online or planning for a purchase down the road. Management’s efforts to bring more shoppable content to the platform are already starting to pay dividends.

Revenue growth has been trending in a good direction since the beginning of the year. In the third quarter, the top line increased by 11% year over year, the third consecutive quarter of accelerating growth. But Pinterest is just getting started on efforts to generate more advertising revenue.

A recent partnership with Amazon Ads is the first step towards opening up the app to third-party brands to boost advertising growth. As Pinterest grows the ad load on the platform, it has seen more users coming back more frequently and spending more time on the app. 

Pinterest is also getting good returns on its investments in artificial intelligence technology, which is putting personalized content in front of users and contributing to better user growth. Pinterest is achieving this while also showing improvement on the bottom line.

Analysts expect Pinterest to grow earnings per share by 26% annually over the next five years. That is more than enough to potentially double the stock price.

2. Snowflake

Snowflake offers a platform for companies to better organize and analyze their data in the cloud. The stock is down 67% from its high, but it would make a great addition to a portfolio that needs more exposure to the burgeoning cloud computing market.

Snowflake’s quarterly revenue is up more than 400% compared to three years ago. This rate of growth indicates the cloud market still has a lot of growth ahead as more organizations migrate from on-premise hardware to the cloud to store data. Snowflake is one of the better cloud stocks to consider because it benefits from a key competitive advantage.

Snowflake’s Data Cloud platform allows organizations to share and exchange data with other customers, so the more data that migrates to the company’s platform, the more valuable it becomes. This is a key driver of the company’s growth since Snowflake makes money by charging customers based on their consumption of computing, storage, and data transfers.

Many high-growth stocks have fallen over the last few years on weak profitability, but this is why investors should love Snowflake. This business is starting to generate a healthy amount of cash as it scales. Over the last four quarters, Snowflake generated $594 million of free cash flow on $2.4 billion of revenue. 

There is still a massive amount of money flowing into the cloud services market, so Snowflake should be able to grow at high rates for many more years. Gartner estimates the market will grow from $490 billion in 2022 to $724 billion by next year. Snowflake should continue to grow consistent with that rate of increase, if not faster. It has a competitive advantage, profitability, and growth prospects to fuel market-beating returns for shareholders.