The technology sector is set for significant growth owing to rising investments in Artificial Intelligence (AI), cloud computing, and cybersecurity. Moreover, as technology becomes integral to business, education, and healthcare, and with the shift towards hybrid work environments, the sector is positioned for sustained long-term expansion.

Given this landscape, it could be wise for investors to keep an eye on high-quality tech stocks Apple Inc. (AAPL), Amazon.com, Inc. (AMZN), and Meta Platforms, Inc. (META), which are well positioned for long-term growth.

The technology industry is experiencing an era of unprecedented growth and transformation. Rapid innovations are not only reshaping industries but also redefining consumer behavior and business practices. Tech companies are spearheading changes across various fields, including AI, cloud computing, digital payments, and cybersecurity.

That said, generative AI has seen a remarkable surge, with Google searches increasing by nearly 700% from 2022 to 2023. This rise, coupled with a notable jump in job postings and investments, highlights the growing influence of AI.

Moreover, in 2023 and 2024, the capacity of large language models (LLMs) to process context windows surged dramatically from 100,000 to two million tokens. This leap signifies a shift from processing a single research paper to handling the equivalent of about 20 novels in a model’s prompt.

The Biden-Harris administration’s $504 million investment in 12 Tech Hubs further boosts this momentum by funding projects, creating jobs, and fueling the nation’s competitiveness. The investment aligns with the growing need for high-quality hardware to meet complex processing demands, thereby driving increased hardware sales.

Looking ahead, AI is projected to add up to $15.70 trillion to the global economy by 2030, according to PwC. Concurrently, Gartner (IT) forecasts an 8% year-over-year increase in worldwide IT spending, reaching $5.06 trillion this year. The continued investment underscores the technology sector’s pivotal role in future economic growth.

Considering the positive trends in the industry, let us discuss the fundamentals of three high-quality tech stocks, starting with #3.

Stock #3: Apple Inc. (AAPL)

AAPL designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories. The company offers iPhones, Macs, iPads, AirPods, Apple Watch, and Apple TV. In addition, AAPL provides AppleCare support and cloud services.

On September 9, AAPL announced its breakthrough in sleep and hearing health features that will be added to its Apple Watch® and AirPods Pro® 2, which would help its customers support their sleep and hearing health for several medical conditions.

The innovation is expected to strengthen AAPL’s customer support, enhance user well-being, and establish the company as a leader in health-focused technology.

On the same day, AAPL announced a new lineup of AirPods®, the new AirPods 4 which contain an open-ear design, and are available in two distinct models: AirPods 4 and AirPods 4 with Active Noise Cancellation (ANC), making them the most advanced and comfortable headphones created by AAPL.

The cutting-edge headphones could attract tech-savvy consumers and solidify AAPL’s reputation for superior comfort and innovation, driving significant market share and growth opportunities for the company.

During the fiscal 2024 third quarter that ended June 29, AAPL’s total net sales rose 4.9% from the year-ago value to $85.78 billion. Its operating income increased 10.2% year-over-year to $25.35 billion.

In addition, the company’s net income and EPS came in at $21.45 billion and $1.40, reflecting a growth of 7.9% and 11.1% from the prior year’s quarter, respectively.

Street expects AAPL’s revenue and EPS for the fiscal 2024 fourth quarter ending in September to increase 5.2% and 9.5% year-over-year to $94.17 billion and $1.60, respectively. Furthermore, the company surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.

Shares of AAPL have surged 3% over the past three months and 24% over the past year to close the last trading session at $220.69.

AAPL’s growth prospects are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has an A grade for Quality. Within the B-rated Technology – Hardware industry, AAPL is ranked #18 out of 40 stocks.

Click here to access additional ratings of AAPL for Growth, Value, Sentiment, Stability, and Momentum.

Stock #2: Amazon.com, Inc. (AMZN)

AMZN specializes in retail sales, advertising, and subscription services through both online and physical stores. The company also manufactures and sells electronics like Kindle, Fire tablets, Fire TVs, Echo, Ring, Blink, and eero, and develops media content. Its segments include North America; International; and Amazon Web Services (AWS).

On September 16, AWS announced a strategic collaboration with Intel Corporation (INTC) to co-invest in custom chip designs under a multi-year, multi-billion-dollar framework. INTC will produce an AI fabric chip for AWS using its most advanced process node, Intel 18A.

By leveraging INTC’s state-of-the-art technology, AWS would enhance its performance and efficiency, positioning AMZN at the forefront of innovation.

On September 9, AWS announced a strategic partnership with Oracle Corporation (ORCL) to launch Oracle Database@AWS, a new service that allows customers to access Oracle Autonomous Database on dedicated infrastructure and Oracle Exadata Database Service within AWS.

By integrating ORCL’s services, AWS can enhance its cloud infrastructure, attracting more customers seeking robust database solutions. This strengthens AMZN’s position in the cloud market, driving growth and broadening its service capabilities.

For the fiscal 2024 second quarter, which ended on June 30, AMZN’s total net sales increased 10.1% year-over-year to $147.98 billion. Its operating income rose 91% from the year-ago value to $14.67 billion.

Additionally, the company’s net income amounted to $13.48 billion, representing a year-over-year increase of 99.8%. Meanwhile, AMZN’s EPS for the quarter grew 93.8% from the previous year’s quarter to $1.26.

Analysts expect AMZN’s revenue and EPS for the fiscal third quarter (ending in September 2024) to increase 9.9% and 20.6% year-over-year to $157.18 billion and $1.13, respectively. In addition, the company topped the consensus EPS estimates in each of the trailing four quarters.

Shares of AMZN have surged 6.9% over the past six months and 33.2% over the past year to close the last trading session at $186.43.

AMZN’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

AMZN has a B grade for Momentum, Sentiment, and Quality. Within the B-rated Internet industry, it is ranked #15 out of 53 stocks.

Click here to see AMZN’s ratings for Growth, Value, and Stability.

Stock #1: Meta Platforms, Inc. (META)

META develops products that connect and enable sharing among people through mobile devices, personal computers, virtual reality headsets, and wearables globally. The company operates in two segments: Family of Apps and Reality Labs.

On July 29, META introduced the Segment Anything Model 2 (SAM 2), the first unified model that identifies which pixels belong to a target object in an image or video. It can segment any object and consistently follow it across all video frames in real-time, unlocking new possibilities for video editing and mixed-reality experiences.

This leap in technology is expected to strengthen META’s market position and drive growth through innovative, immersive experiences.

On the same day, META announced the release of AI Studio, a program where people are able to create their own AIs that can serve a vast array of purposes, from chat-bots to travel guides to cooking and so many more.

With the use of Llama 3.1, META's own GenAI, the company is in the forefront of the incoming AI revolution. This launch cements META at the vanguard of the AI revolution, enhancing customer satisfaction and bolstering its reputation in the tech sphere.

For the second quarter of fiscal 2024, which ended on June 30, META’s revenue increased 22.1% year-over-year to $39.07 billion. Its income from operations rose 58.1% from the year-ago value to $14.85 billion. Moreover, the company’s net income and EPS grew 72.9% and 73.2% year-over-year to $13.47 billion and $5.16, respectively.

The consensus revenue estimate of $40.13 billion for the fiscal third quarter (ending September 2024) represents a 17.5% year-over-year increase. The consensus EPS estimate of $5.25 for the ongoing quarter indicates a 19.6% year-over-year improvement. Furthermore, META surpassed the consensus revenue and EPS estimates in all four trailing quarters, which is impressive.

Shares of META have surged 7.7% over the past three months and 77.8% over the past year to close the last trading session at $537.95.

META’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.

META has an A grade for Sentiment and Quality. It is ranked #16 out of 53 stocks in the Internet industry.

Click here to see the additional ratings for META (Growth, Value, Momentum, and Stability).

What To Do Next?

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AAPL shares rose $4.12 (+1.87%) in premarket trading Thursday. Year-to-date, AAPL has gained 15.06%, versus a 18.86% rise in the benchmark S&P 500 index during the same period.

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.

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