The technology sector is a constant flux, with new entrants and innovations emerging on the regular. While Microsoft (NASDAQ:MSFT) remains a stalwart in the industry, there exists an array of players with the potential to deliver higher returns.
This is why investors are constantly on the prowl for tech stocks outperforming Microsoft in 2024. There are only a few to do so this year and the true test is if these companies can do so over long periods. Having one incredible year of performance is not enough to beat out a giant like Microsoft over five years.
Additionally, these companies don’t necessarily need artificial intelligence as a driving factor. They can hail from diverse sectors, each with its own unique strengths and value proposition. By examining the company’s business model, financial performance, and market positioning, investors can set their tech-focused portfolio holdings up for long-term success.
Now, let’s discover the potential of tech stocks outperforming Microsoft in 2024 and the years to follow!
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, GOOGL) is the first on the list of tech stocks outperforming Microsoft over the next five years. The company’s cheaper valuation coupled with its investments in artificial intelligence and cloud computing make it a strong contender.
Alphabet, the parent company of Google, is well-positioned for domination in the coming years. Its dominance in online search, advertising, cloud computing, and artificial intelligence, offers multiple avenues for expansion. Google Cloud, in particular, has seen substantial revenue growth in the past year. This growth is accelerating in 2024, and the company is poised to capture a larger market share as businesses increasingly migrate to the cloud.
After reporting record revenue and free cash flow in FY23, CEO Sundar Pichai remains eager to capitalize on the next wave of AI innovation. In the first quarter of 2024, cloud revenue increased 28% year over year to $9.6 billion. Google Search and YouTube also reported notable gains in the quarter. The company’s recent issuance of its first-ever dividend of 20 cents per share is also a show of confidence in its business moving forward.
Amazon (AMZN)
Amazon (NASDAQ:AMZN), the global behemoth in e-commerce and cloud computing will certainly give Microsoft a run for its money. While the company dominates these two industries, it will also benefit from generative AI tailwinds in the coming years.
Amazon is much more than an online retail giant. On the surface, the company might be more recognized for its innovations in e-commerce and its Amazon Prime membership. However, Amazon remains the undisputed king in cloud computing, holding nearly a third of the cloud infrastructure market. Jeff Bezos capitulated the company to worldwide dominance in some of the world’s most important technology today. Luckily, he passed over the rains to former Amazon Web Services CEO Andy Jassy, who is the right man for the job.
The company’s complete overhaul in 2023, led by cost-cutting measures, is paying significant dividends. It delivered record revenue and free cash flow in FY23, and the outlook for 2024 remains strong. With its cloud business at a $100 billion annual run rate, AMZN stock is a poster child for tech stocks outperforming Microsoft in 2024 and beyond.
Super Micro Computer (SMCI)
Super Micro Computer (NASDAQ:SMCI), a lesser-known but rapidly growing tech company, specializes in high-performance server solutions for data centers. With the rapid growth of cloud computing and artificial intelligence, Super Micro is uniquely positioned to benefit from increased data center demand.
Super Micro Computer is having an incredible year thus far in 2024. The stock has skyrocketed more than 200% year to date, as demand for its proprietary rack scale liquid cooling solutions drives growth. Not only has its revenue and earnings catapulted in the past year, but it joined the S&P 500 index. This has driven unprecedented demand for the company, with institutions forced to gobble up shares.
However, what gives the company a competitive edge is its previously discussed rack-scale liquid cooling solutions. Hyperscalers like Amazon and Microsoft will have no choice but to adopt its products, saving them both money and energy in the long haul. This backdrop coupled with manufacturing capacity expansions supports its ability to continue outperforming Microsoft through 2029.
On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.