Microsoft’s subscription-based model continues to drive impressive growth for investors.
Netflix is a highly profitable entertainment company with great long-term prospects.
10 stocks we like better than Microsoft ›
The tech-heavy Nasdaq Composite(NASDAQINDEX: ^IXIC) has significantly outperformed the other major indices over the last decade. That streak has continued in 2025, with the Nasdaq up 19% year to date, beating the S&P 500(SNPINDEX: ^GSPC) and Dow Jones Industrial Average(DJINDICES: ^DJI) returns of 14% and 9%, respectively.
The tech sector is full of innovative, fast-growing companies that can help you crush the market’s average return. If you are fortunate to have extra cash you don’t need for near-term living expenses, here are two tech stocks that can multiply your savings over the long term.
Image source: Getty Images.
Microsoft(NASDAQ: MSFT) is about as rock-solid as they come. It powers services that people use every day, from Windows and Office to Xbox gaming. But it’s also impacting the future of computing with its fast-growing enterprise cloud service, Microsoft Azure.
The stock has delivered market-beating returns over the last decade, as Microsoft shifted from its PC dependency to a subscription-based model. That strategic shift not only boosted its revenue growth, but its profitability, too.
Microsoft posted impressive revenue growth of 18% year over year in the company’s June-ending fiscal fourth quarter. Analysts expect the company to maintain 14% annual growth over the next few years. For fiscal 2025, revenue from cloud grew 23% year over year, reaching $168 billion over the last year. This reflects tremendous demand for Microsoft’s software and enterprise cloud services.
The growth in these services has swelled Microsoft’s bottom line. Its profit margin is stellar at 36%. The company produced $71 billion in free cash flow on $281 billion of total revenue over the last year.
This soaring profitability will continue to fund investments in artificial intelligence (AI). Its Copilot assistant has gained wide adoption, with 100 million monthly users across consumer and enterprise.
Microsoft is also investing in quantum computing, which promises to be the next leg of growth beyond AI. This is one of the most dominant tech companies in the world, and it’s not short of growth opportunities.
All this means Microsoft is a quality growth stock to park a few thousand dollars for the long term.
Image source: Netflix.
Netflix(NASDAQ: NFLX) is a highly profitable entertainment powerhouse. Its new releases can hit impressive viewership numbers that drive media buzz. But what ultimately makes Netflix a great investment is stellar financials. Netflix turns recurring revenues from subscriptions into Microsoft-like margins.
Recent releases have garnered impressive viewership numbers. The recent launch of Happy Gilmore 2 broke viewership records with 2.9 billion minutes watched during opening weekend. It also had a massive hit with K-Pop Demon Hunters reaching 266 million views within 11 weeks.
Despite generating $41 billion in trailing-12-month revenue with more than 300 million paid households, Netflix continues to grow the top line at double-digit rates. Company guidance calls for revenue to be up 17% year over year in Q3.
Its margins don’t resemble a typical entertainment business. The company generated $10 billion in net profit over the last year, representing a margin of nearly 25%. Growing profits is a key driver of shareholder returns over time, and management is continuing to invest in ways that will make the company more profitable and valuable down the road.
One example of where it’s investing is advertising. This relatively new revenue stream is set to double this year, which reflects strong demand for the more affordable ad-supported plans. Netflix is offering incredible value that should sustain strong growth. There are tremendous opportunities for Netflix to drive growth across international markets and stretch its addressable market with interactive content and documentaries.
Despite the stock’s monster run, analysts are projecting 24% annualized earnings growth in the coming years. This should lead to excellent returns for investors.
Before you buy stock in Microsoft, consider this:
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*Stock Advisor returns as of October 20, 2025
John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft and Netflix. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Got $5,000? 2 Tech Stocks to Buy and Hold for the Long Term was originally published by The Motley Fool
