Three Tech Stocks Poised for Long-Term Growth: Meta, ASML, and CrowdStrike
The stock market presents significant opportunities for wealth creation, yet many Americans, particularly Gen Xers, are underinvested. This article highlights three tech stocks – Meta Platforms (NASDAQ: META), ASML (NASDAQ: ASML), and CrowdStrike (NASDAQ: CRWD) – that offer strong growth potential and are well-suited for long-term investment strategies.
The Investment Landscape for Gen Xers
Recent data suggests that Gen Xers hold a disproportionately smaller share of stocks compared to older generations like baby boomers. Given that Gen Xers are approaching retirement age, investing in high-growth companies with robust business models is crucial. The presented stocks were chosen based on their wide moats, consistent growth, and strategic vision for the future.
Meta Platforms: Leveraging AI for Ad Dominance
Meta Platforms, the parent company of Facebook, Instagram, Messenger, and WhatsApp, dominates the social media landscape with 3.48 billion monthly active users. The company's primary revenue stream stems from targeted advertising, where it competes closely with Alphabet's Google.
Meta is enhancing its AI algorithms to improve ad targeting using first-party data, thereby reducing reliance on third-party sources. The company is also investing in Reels to compete with TikTok and subsidizing its Reality Labs segment, which focuses on virtual reality (VR) and augmented reality (AR) technologies, with advertising revenue.
Analysts project Meta's revenue to grow at a CAGR of 16% and its earnings per share (EPS) at 13% from 2024 to 2027. These projections are fueled by user base expansion, AI-driven ad efficiency, and the growth of its AR/VR ventures. The stock is attractively valued at 25 times next year's earnings, suggesting substantial upside potential.
ASML: The Linchpin of Semiconductor Manufacturing
ASML is the world's leading manufacturer of lithography systems, essential for etching circuit patterns onto silicon wafers. Major chip foundries like TSMC, Samsung, and Intel rely on ASML's technology for chip production. Notably, ASML is the sole producer of extreme ultraviolet (EUV) systems, vital for creating the smallest, densest, and most energy-efficient chips.
ASML's monopoly in EUV technology grants it significant pricing power and makes it a critical player in the semiconductor industry. Its advanced "high-NA" EUV systems, costing approximately $400 million each, will enable foundries to produce chips beyond the 2nm node. Analysts estimate ASML's revenue to grow at a CAGR of 10% and its EPS at 17% from 2024 to 2027. This growth will be driven by the deployment of high-NA EUV systems, consistent EUV system sales, and stable sales of older deep ultraviolet (DUV) systems. Despite a premium valuation of 33 times next year's earnings, ASML's market dominance justifies the higher multiple.
CrowdStrike: Cloud-Native Cybersecurity for the Modern Enterprise
CrowdStrike is a leading cybersecurity company that differentiates itself by offering its Falcon endpoint security platform exclusively as a cloud-based service. This approach enhances scalability, eliminates on-site maintenance, and fosters customer loyalty through subscription models.
CrowdStrike serves 300 of the Fortune 500 companies, showcasing the effectiveness of its disruptive strategy. Customers initially gain access to four cloud-based modules, with opportunities to cross-sell additional modules, increasing revenue per customer and ecosystem stickiness. Approximately 48% of CrowdStrike's customers use at least six of these modules.
Analysts forecast CrowdStrike's revenue to grow at a CAGR of 22% and adjusted EBITDA at 28% from fiscal 2025 to fiscal 2028. The company is projected to achieve GAAP profitability in fiscal 2027 and significantly increase its net income in fiscal 2028. Although the stock trades at a premium of 70 times next year's adjusted EBITDA, CrowdStrike's resilience to economic downturns due to the essential nature of cybersecurity makes it a compelling investment.
