Looking for tech stocks to buy for the long term today? Here are two under-the-radar ideas to consider.

Technology that’s in demand today

First up is Workiva (NYSE: WK). It’s a $3bn market-cap (relatively small) software company that specialises in solutions that simplify financial, compliance, and ESG reporting for businesses.

I think this company has bags of potential. Speak to any financial company today and they’ll tell you their biggest headache is compliance reporting. This is where Workiva comes in. Using its software (which integrates with other platforms and offers artificial intelligence (AI) functionality) employees can navigate datasets and create important reports seamlessly.

It’s worth noting that the company’s having a lot of success today. In the fourth quarter of 2024, revenue was up 20% year on year to $200m. Meanwhile, customers with annual contract value over $500,000 grew 32% year-over-year. “Our platform continues to resonate resulting in broad-based global demand for our solutions,” said president and CEO Julie Iskow.

We enter 2025 confident about our market opportunity and ability to execute on our large and untapped total addressable market.

Workiva President and CEO Julie Iskow

Now recently, this stock’s been hit by two factors. One is concern that deregulation under the Trump administration will result in less demand for its products. Another is concern that a slowdown in the economy will result in less software spending.

These are both valid risks. However, with the stock down 40% in less than three months and now trading on a price-to-sales ratio of five, I think a lot of risk is baked into the share price.

Taking a five-year view, I think Workiva stock will do well. I bought some shares recently, and I’m most likely going to add to my position in the next few weeks.

Software that companies can’t afford to ignore

The second stock in focus is Fortinet (NASDAQ: FTNT). It’s one of the world’s leading cybersecurity companies.

Cybersecurity’s an area of technology that no company can afford to ignore. Ultimately, the risks associated with cybercrime (eg going out of business) are too high. So I see a long growth runway ahead for Fortinet. With the cybersecurity industry forecast to grow by around 13% a year over the next five years, this company could get significantly bigger.

What I like about this cybersecurity stock in particular is that it has a lot of quality. Top-line growth has been strong in recent years, with revenue climbing from $2.2bn to $6bn between 2019 and 2024 (173% growth). Meanwhile, return on capital employed is very high (an average of 26% over those five years). There are not many companies in this industry with that level of profitability.

It’s worth pointing out that cybercrime’s extremely dynamic. So there’s no guarantee that Fortinet will continue to have success. This company has a great long-term track record when it comes to navigating industry changes (look at the long-term share price chart). So I’m optimistic it’ll continue to do well.

The post 2 high-growth tech stocks to consider buying and holding for the next 5-10 years appeared first on The Twelfth Magpie.

When the first nuclear weapon was tested in 1945, he was 15 years old and had already been investing for four years. Regardless of that, his track record means It’s safe to say his words shouldn’t be taken lightly.

But like it or not, AI isn’t going away. By now, it’s so deeply embedded in all aspects of society that any attempt to ‘rebottle the genie’ would likely fail. One thing I’ve learned in my 40-odd years is that there’s no point standing in the way of progress.

So rather than fear an imminent AI meltdown, I’m doing what any good investor would do and searching for opportunities.

Hidden value

AI stocks are a plentiful these days, so it’s important to separate the wheat from the chaff. The trick is to avoid value traps while identifying true innovators.

Some may assume the obvious options are semiconductor giants — Nvidia, Broadcom, and AMD. In some ways, yes. After all, they’re the ones “selling shovels in a gold rush“, that is, providing the tools to power AI models. 

But while that may be true, I think there are more lucrative opportunities elsewhere.

If Buffett’s right and AI is more nuclear than gold, we’ll need security not shovels. That’s where the world’s third-largest cybersecurity firm comes in.

Fighting fire with fire

Even the brightest minds in AI have admitted that they “don’t really know how it works“. 

That’s by design. It wouldn’t be very intelligent if it was just following instructions. As hackers increasingly adopt it to streamline their attacks, only AI-enhanced security will be fast enough to respond effectively.

Fortinet‘s (NASDAQ: FTNT) one of the companies at the forefront of developing AI-enhanced cybersecurity. Its FortiAI generative AI assistant is aimed at automating tasks to help analysts rapidly respond to threats and develop pre-emptive defence strategies. According to the company, it can “adapt and evolve, continuously learning from new data and improving its ability to identify and counter emerging threats”.

But if 2024 has taught us anything, it’s that even the world’s toughest security giants are vulnerable. In September last year, Fortinet revealed it had suffered a data breach on a third-party cloud drive. The hacker reportedly demanded a ransom and released 440GB of confidential data when the company refused.

In this instance, the breach was small but a bigger one could cause a lot of reputational – and financial – damage. When you’re responsible for the world’s data, a slight error can be devastating. Just ask Crowdstrike.

Solid performance

With a profit margin of 36% and return on equity (ROE) of 168.5%, its recent performance speaks for itself. In the latest Q3 2024 results, revenue and profits exceeded analysts’ expectations by 1.9% and 58% respectively.

Based on future cash flow estimates, the $96 shares are trading at 30% below fair value. Currently, at around 48 times earnings, that price initially seems a bit overvalued. But that ratio’s only slightly above the industry average for US software companies.

So while Apple, Meta and Amazon dominate the headlines, I think Fortinet could emerge as a dark horse in the race for the AI crown.

The post Why Warren Buffett fears AI – and where savvy investors could spot an opportunity appeared first on The Twelfth Magpie.

The S&P 500 had its best week in a year, crossing the key 6,000-point mark for the first time in history. The DJI was right behind it, breaching 44,000 points for another historic first.

Sectors that did particularly well include financials, energy and industrials. On the flip side, consumer staples, utilities and property stocks suffered.

To add to the excitement, the Federal Reserve initiated another quarter-point interest rate cut last Thursday. The benchmark rate’s now down to around 4.625%. It’s now near the same level it was in December 2007, incidentally around the same time the last global financial crisis began.

Stock market winners and losers

When the market closed on Friday, the three S&P 500 stocks leading the charge that day were Motorola Solutions, up 7.37%, Tesla, up 8.19% and Fortinet (NASDAQ: FTNT), up 9.99%.

The worst-performing stocks on Friday were semiconductor giant Super Micro Computer, software firm ANSYS and private healthcare company Centene.

With Elon Musk’s vocal support of Trump, it’s no surprise Tesla enjoyed a big boost following the election result. The stock’s now up 24% since the Republican candidate’s win was announced early Wednesday morning.

Trump’s proposed tariffs on foreign imports is likely a key driver of this growth, since low-cost Chinese electric vehicles (EVs) threaten Tesla’s market dominance in the US. 

There’s even been talk of Musk taking a role in the new administration.

Eye-catching Fortinet

The outlying stock that caught my attention last week was cybersecurity company Fortinet, one of my own holdings. The company designs and manufactures firewalls, gateways and endpoint security solutions for both large enterprises and smaller businesses. These provide a high level of protection against cyber threats such as malware, ransomware, and phishing attacks.

Fortinet’s big jump last week was helped by strong third-quarter financials released on 7 November. It recorded impressive results, with a gross margin of 83.2% and an operating margin of 36.1%.

Revenue grew 13% year on year, reaching $1.51bn, driven largely by a 19% rise in service revenue. Free cash flow came in at $572m.

The company also expanded its share repurchase programme by $1bn, leaving $2.03bn authorised for future share buybacks. Guidance for the 2024 full year has now been raised to between $5.86bn and $5.92bn.

However, Fortinet also provided a cautious outlook on several large deals that will mature at the end of Q4. This could suppress earnings. In addition, it noted tough competition from large vendors that are delivering discounted bundles which could threaten Fortinet’s pricing model.

Tariffs on imports may also affect the company, although this would depend on the specific goods targeted and its global supply chain. An increase in the cost of foreign electronic components could force it to push up prices, reducing its competitive edge. Conversely, a reduction in cheaper solutions from foreign competitors could improve its market share locally.

The post US stock market: the winners and losers one week after the election appeared first on The Twelfth Magpie.