Profitability remains one of the most sought-after traits in the technology sector, yet it is also one of the most complex. It is shaped by a delicate balance of investment cycles, competition, and market perception. While topline growth often takes center stage—driving valuations and attracting top talent—sustained profitability becomes crucial as industries mature, competition peaks, and new investments become necessary for survival. In this ever-evolving landscape, technology companies have mastered the art of balancing revenue expansion with profit growth by diversifying their businesses, building vast customer ecosystems, and continuously enhancing product experiences.
Looking ahead, earnings growth will take on an even greater role in determining valuations, particularly as the breakneck pace of growth begins to slow. Investors will increasingly focus on sustainable profitability rather than just rapid growth. In a January 2024 article, Rob Haworth, Senior Investment Strategy Director at U.S. Bank Asset Management, emphasized that technology companies possess strong earnings growth potential, largely independent of traditional business cycles. He explained:
“What is not clear yet is how companies investing in AI as a way to increase efficiencies or monetize services for end users will benefit from these advancements. We’re in a consolidation phase to figure out what revenue growth will be going forward. If AI helps boost productivity, that will support not only current rising stock valuations but individual prosperity as well.”
Franklin Templeton’s 2025 Technology Outlook echoes this sentiment, predicting another year of strong growth in the sector. The report notes that the “Magnificent Seven”—a group of leading tech giants—delivered exceptional earnings in 2024, outpacing both the broader market and the tech industry itself. While these companies are expected to maintain strong momentum, The firm anticipates that the rest of the sector may start catching up in 2025.
Tech investments are projected to grow exponentially in the coming years, reshaping the profitability landscape. Emerging technologies such as artificial intelligence, quantum computing, and autonomous systems present both immense opportunities and significant challenges. Some companies will achieve sustainable profit margins through strategic pricing and ecosystem advantages, while others will struggle under the weight of fierce competition and heavy reinvestment costs. For investors and stakeholders, understanding these shifting dynamics is key to navigating the ever-changing tech sector.
With that in mind, let’s dive into the 10 most profitable tech stocks to buy now.
Source: pixabay
Our Methodology
To identify the 10 most profitable stocks, we conducted extensive research on U.S.-listed technology and tech-adjacent companies with a market capitalization of at least $2 billion. Rather than relying solely on absolute net income, we refined our selection criteria by focusing on companies with both an operating margin and net profit margin exceeding 20%. This approach ensures that high-margin firms are not overshadowed by larger corporations with higher overall earnings. After applying these filters, we ranked the stocks in ascending order based on their trailing twelve-month net income, with the company reporting the highest net income securing the top position.
Note: All pricing data is as of market close on February 14.
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10 Most Profitable Tech Stocks to Buy Now
10. Netflix Inc. (NASDAQ:NFLX)
TTM Net Income: $8.7 billion
Number of hedge funds: 121
With around $9.0 billion in annual net profits, Netflix Inc. (NASDAQ:NFLX) secures the 10th position on this list. The advent of Netflix Inc. (NASDAQ:NFLX) revolutionized digital streaming and disrupted traditional TV and movie consumption. As a global streaming entertainment service, Netflix offers a diverse array of movies, TV shows, games, and more, with unlimited viewing on internet-connected devices. With over 300 million paid memberships in more than 190 countries, Netflix Inc. (NASDAQ:NFLX) has solidified its position as a dominant player in the entertainment industry, continually innovating its content offerings and user experience. The company commands an operating margin of 27% and net profit margin of 22%.
Netflix Inc. (NASDAQ:NFLX) has been intensifying efforts to expand its content library, including original content, and enhance user engagement through original programming and strategic partnerships. The company has invested substantially in creating exclusive content, significantly contributing to subscriber growth. Moreover, Netflix Inc. (NASDAQ:NFLX) is exploring new revenue streams, such as ad-supported subscription tiers and gaming, aiming to attract a broader audience and increase overall revenue. According to company management, there are over 750 million broadband households (excluding China and Russia) and more than $650 billion of entertainment revenue globally, of which the company captured only about 6% in 2024, leaving a vast addressable opportunity.
In January 2025, Netflix Inc. (NASDAQ:NFLX) reported strong Q4 2024 earnings that exceeded analyst expectations. For the quarter, the company added 18.9 million paid streaming customers, more than double what analysts had projected. Management also raised its revenue growth guidance to 12%-14% year-on-year and increased its operating margin guidance to 29% from the previous 28%.
Analysts’ views on Netflix Inc. (NASDAQ:NFLX) have largely turned positive following these results. On January 24, a Bernstein analyst upgraded the stock from Market Perform to Outperform, raising the price target from $975 to $1,200. The analyst believes that international growth could drive double-digit subscriber increases in 2025 and pointed out that many markets remain underpenetrated. Netflix Inc. (NASDAQ:NFLX)’s growth initiatives, including the ad-supported tier, are expected to support substantial user expansion. As per his February 12 report, the analyst has maintained his Buy rating and price target. On February 13, JP Morgan reiterated their Overweight rating and $1,150 price target despite the strong share price rally after the results. They anticipate Netflix’s 2025 revenue growth will be propelled by strong engagement, organic subscriber growth, and higher average revenue per membership through recent price increases.
9. QUALCOMM Inc. (NASDAQ:QCOM)
TTM Net Income: $10.6 billion
Number of hedge funds: 74
QUALCOMM Inc. (NASDAQ:QCOM) is a top fabless semiconductor firm that specializes in wireless technology and mobile communications. It is well-known for its extensive array of patents critical to 5G, 4G, and other mobile communication standards, which significantly boost its licensing revenue. With around 160,000 granted and pending patents in over 100 countries, QUALCOMM holds a formidable intellectual property position. It has an operating margin of around 27% and net profit margin of 26%.
During its November 2024 Investor Day presentation, QUALCOMM Inc. (NASDAQ:QCOM) projected a $900 billion addressable market and aims to be integrated into over 50 billion devices by 2030. The company is well-positioned to capitalize on the increasing demand for 5G technology and its applications in various sectors such as automotive, IoT, and mobile devices. With a strong financial footing, including over $13 billion in cash and equivalents, the company is well-prepared to pursue strategic acquisitions and investments to enhance its growth trajectory.
On February 5, QUALCOMM Inc. (NASDAQ:QCOM) delivered stronger-than-expected results for Q1 2025 (fiscal year ending in September), reporting a 17% increase in total revenue to $11.7 billion. Net income reached $3.8 billion, reflecting a solid net margin of 27.3%. The company’s semiconductor division, Qualcomm CDMA Technologies (QCT), experienced a 20% year-over-year (YoY) revenue growth, with a robust pre-tax income margin of 32%. All three of its key semiconductor end markets demonstrated strong performance during the quarter. Meanwhile, its high-margin Qualcomm Technology Licensing (QTL) segment saw a 20% YoY revenue increase, with a 100-basis-point improvement in pre-tax margin, reaching an impressive 75%. Looking ahead, QUALCOMM Inc. (NASDAQ:QCOM) provided guidance for the next quarter that exceeded expectations. However, ongoing licensing renegotiations with Chinese companies have not been factored into the full-year QTL outlook.
Following the strong earnings report, TD Cowen analyst raised his price target for QUALCOMM Inc. (NASDAQ:QCOM) from $180 to $195 while maintaining a Buy rating. The analyst noted that the company delivered another solid quarter, driven by record handset revenue. Despite this, investor attention remains on the flat YoY outlook for FY 2025 QTL revenue, which excludes royalty payments from Huawei. Benchmark Co. analyst also reiterated a Buy rating on the shares on February 11 with a price target of $240.
8. Oracle Corp. (NYSE:ORCL)
TTM Net Income: $11.6 billion
Number of hedge funds: 91
Oracle Corporation (NYSE:ORCL) offers an extensive suite of cloud applications, platform services, and engineered hardware systems. The company commands a substantial market share in database management systems and provides a variety of enterprise solutions, including Oracle Cloud Infrastructure (OCI), data management, enterprise resource planning (ERP) software, and hardware products such as servers and storage. The cloud and license business includes key infrastructure technologies like Oracle Database, MySQL Database, and Java, which are widely used globally. Oracle Corporation (NYSE:ORCL) supports deployment models that include on-premises, cloud-based, and hybrid solutions. Its operating margin stands at around 32% and net profit margin is around 21%.
Oracle Corporation (NYSE:ORCL) has been aggressively expanding its cloud offerings, establishing itself as a formidable player in the cloud infrastructure market. Recent quarters have shown significant increases in cloud revenue, driven by the rising demand for cloud services and applications. The integration of AI and machine learning into Oracle Corporation (NYSE:ORCL)’s cloud solutions is expected to enhance its offerings, making it an attractive choice for businesses modernizing their IT infrastructure. The company is also expanding its global data center footprint to meet growing customer demands and is expected to benefit greatly from the $500 billion ‘Project Stargate’, positioning itself as a leading player in AI compute.
In January 2025, Oracle Corporation (NYSE:ORCL) announced plans to enhance its global cloud infrastructure by adding eight new cloud regions in North America and Asia over the next 12 months. They will also introduce powerful new capabilities for ‘Oracle Database@Google Cloud’ to increase customer value. Additionally, data center capacity will be doubled in regions like London, Frankfurt, and Ashburn to meet increasing demand.
On January 17, Cantor Fitzgerald initiated coverage on Oracle Corporation (NYSE:ORCL) with an Overweight rating and a $214 price target. The analyst believes that the company will benefit both in the short term and long term from AI, as well as long-term growth in its cloud business (mainly from CDBS), thus he rates the stock as Overweight.
7. PDD Holdings (NASDAQ:PDD)
TTM Net Income: $15.0 billion
Number of hedge funds: 78
PDD Holdings (NASDAQ:PDD) is a multinational commerce group that owns and operates a portfolio of businesses. Its major e-commerce offerings are Pinduoduo platform and the Temu platform. The company commands operating and net profit margin of around 28%.
In their Q4 2024 investor letter, the investment management company GreenWood Investors highlighted PDD Holdings as their key investment, emphasizing its significant growth potential. They note that PDD Holdings has effectively leveraged its unique business model to capture a substantial share of the Chinese e-commerce market. GreenWood Investors are optimistic about PDD Holdings’ prospects, citing its innovative approach and strong market position as drivers for continued success. They mention:
“As PDD Holdings looks set to create a second Amazon with its international site Temu, we are highly attracted to the opportunity. Sales are growing 4x faster than Amazon’s, yet shares are priced at less than a quarter of the Amazon earnings multiple. PDD is a perfect example of why we want to look outside of the “Big Ten” companies that are nearly a third of global market indices.”
Tiger Global Management in its latest 13-F filings disclosed a new $254 million position in PDD Holdings (NASDAQ:PDD) as of December 31, 2024.
Despite growing competition, PDD Holdings (NASDAQ:PDD) reported impressive financial results for Q3 2024, with revenue surging 44% year-over-year to $14.2 billion. The company also demonstrated strong cost management, as its net profit margin expanded by 290 basis points to 27%. To drive long-term growth, PDD Holdings is ramping up investments in its platform and supply chain ecosystem. These strategic efforts aim to enhance its market position, lower transaction costs for merchants, and support various regions, ultimately contributing to sustained earnings growth.
6. Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM)
TTM Net Income: $36.5 billion
Number of hedge funds: 158
Taiwan Semiconductor Manufacturing Company (NYSE:TSM) is the world’s largest and most advanced semiconductor foundry. As opposed to the integrated device manufacturers (IDMs) such as Intel, TSMC operates exclusively as a pure-play foundry, and does not design its own chips but focuses on high-performance semiconductor fabrication. It plays a crucial role in the global technology supply chain by manufacturing chips for major companies, including Apple, NVIDIA, AMD, and Qualcomm. The company’s margin profile is second best among the companies covered in this list with an operating margin of 46% and net profit margin of around 41%.
With its deep technological prowess, Taiwan Semiconductor Manufacturing Company (NYSE:TSM) generally finds itself at the center of the news flow related to semiconductor manufacturing. On February 15, Bloomberg reported that the company is considering acquiring Intel Corp. (NASDAQ:INTC)’s U.S. manufacturing facilities. This development comes after officials from the Trump administration proposed the idea to Taiwan Semiconductor Manufacturing Company (NYSE:TSM) to bolster American manufacturing capabilities. However, another report from Reuters suggests that some officials suggest that the administration has expressed reservations about a foreign entity operating Intel Corp. (NASDAQ:INTC)’s U.S. factory. These discussions are in preliminary stages, and no formal agreements have been reached. Similar speculation of Intel’s breakup into parts and spin-offs has also been doing the rounds amid which Intel’s share price has rallied 24% in one week.
Taiwan Semiconductor Manufacturing Company (NYSE:TSM) leads in process technology, being the first to mass-produce 3nm chips and investing heavily in 2nm and beyond. As demand for AI, high-performance computing (HPC), and advanced mobile processors grows, TSMC is well-positioned to capitalize on the industry’s shift to smaller, more efficient, and more powerful chips. The company is a consensus buy with an upside potential of around 26%. On January 17, Barclays raised their price target to $255 from $240 and reiterated their Overweight rating on the shares basing their positive view on expected growth from AI.
5. Meta Platforms Inc. (NASDAQ:META)
TTM Net Income: $62.4 billion
Number of hedge funds: 235
Meta Platforms Inc. (NASDAQ:META) focuses on providing social media platforms and virtual reality services. The company operates platforms such as Facebook, Instagram, WhatsApp, Messenger, and Threads, and also sells wearables like Oculus headsets, aiming to connect people and build communities through its services. It generates nearly all its revenue from selling advertising placements on its family of apps (FoA) to marketers. It boasts a substantial user base, with an average Family daily active people (DAP) of around 3.35 billion. Meta Platforms Inc. (NASDAQ:META) commands an operating margin of around 47% and net profit margin of 38%.
In late January 2025, Meta Platforms Inc. (NASDAQ:META) reported robust Q4 2024 results, with sales surging 21% year-over-year (YoY) to $48.4 billion, driven by a 6% increase in ad volumes and a 14% rise in ad pricing. Net income surged by an impressive 50% YoY due to better operating leverage. The company plans to invest $60-65 billion in its generative AI efforts and improving core businesses, which should further position it for long-term growth.
In recent years, Meta Platforms Inc. (NASDAQ:META) has been investing heavily in the development of the metaverse, a virtual environment where users can interact, work, and entertain themselves. The company is aggressively using AI to create new experiences that make its platforms more social, useful, and immersive, while also improving monetization. One of the company’s key focuses has been its pivot towards augmented reality (AR) and virtual reality (VR) technologies, which are greatly enhancing user experiences and are expected to drive future growth. With a strong user base and innovative advertising solutions, Meta Platforms Inc. (NASDAQ:META) is well-positioned to capitalize on the growing demand for digital advertising and immersive experiences.
On January 31, UBS raised Meta Platforms Inc. (NASDAQ:META) price target to $786 from $736 while reiterating a Buy rating. The analyst’s updated outlook highlights the company’s strong operational expenditure and first-quarter 2025 revenue guidance, positioning the tech giant to surpass top and bottom-line estimates throughout the year. His analysis suggests that the market may currently underestimate the company’s potential for accelerated ad revenue growth. This optimistic outlook is partly attributed to Meta Platforms Inc. (NASDAQ:META) overcoming compute capacity constraints that previously hindered growth in 2024. He anticipates that new sources of revenue, including additional advertising revenue from Meta AI and the development of business AI-based chatbots, have yet to be fully factored into projections, positioning Meta Platforms Inc. (NASDAQ:META) for a robust financial performance in the coming year.
4. NVIDIA Corporation (NASDAQ:NVDA)
TTM Net Income: $63.0 billion
Number of hedge funds: 193
NVIDIA Corp. (NASDAQ:NVDA) designs and manufactures graphics processing units (GPUs), system on a chip units (SoCs), and AI hardware and software. Over the years, the company has expanded its offerings from gaming GPUs to include data center solutions, AI computing, and deep learning technologies. The company’s GPUs are widely used in data centers for high-performance computing, AI training, and inference, making it a critical player in the data center ecosystem. Its products are essential for powering advanced applications in AI, machine learning, and data analytics. NVIDIA Corp. (NASDAQ:NVDA) boasts the best margin profile among the companies in this list. It commands an operating margin of around 63% and net profit margin of 56%.
NVIDIA Corp. (NASDAQ:NVDA) has transitioned from a PC gaming GPU company to a dominant player in the accelerated computing space, offering full-stack computing infrastructure with data-center-scale solutions. The company’s strength is evident in its commanding over 80% market share in GPUs. NVIDIA has greatly benefited from the growing adoption of AI and machine learning technologies, driving strong demand for its chips. The company’s revenue, profitability, and market capitalization have surged since the introduction of GenAI models like ChatGPT.
Despite recent concerns surrounding DeepSeek, analysts continue to view the stock as a consensus Buy, predicting an upside of approximately 26%. On January 28, Tigress Financial Partners upgraded the stock’s rating from Buy to Strong Buy and increased the price target from $170 to $220. According to Tigress Financial’s analysts, total capital investment in AI-driven and data center development is expected to surpass $330 billion in 2025, up from just under $250 billion in 2024. They also project that investments could potentially reach $400 billion by 2026. Given its robust positioning, NVIDIA Corp. (NASDAQ:NVDA) is poised to be a significant beneficiary of these investments and will continue to influence the future of AI and data center technology.
3. Microsoft Corp. (NASDAQ:MSFT)
TTM Net Income: $92.8 billion
Number of hedge funds: 279
Microsoft Corp. (NASDAQ:MSFT) is a giant in the tech industry, offering a broad array of software, services, devices, and solutions designed to empower individuals and organizations to achieve productivity and computing prowess. Its cloud computing platform, Azure, is a major player in the cloud services market, providing scalable and flexible solutions for businesses of all sizes. Additionally, Microsoft Corp. (NASDAQ:MSFT) offers products such as Microsoft 365, Windows, LinkedIn, Dynamics business solutions, server products, and gaming. Its operating margin stands at around 45% and net profit margin is at 35%.
The company is currently focusing on integrating AI across its products to enhance data processing capabilities and operational efficiency, which should increase demand for its offerings. It has been aggressively expanding its cloud services, with Azure experiencing substantial growth driven by the rising demand for cloud computing and AI solutions. In its Q2 FY 2025 (FY ending June 2025) report on January 29, Microsoft Corp. (NASDAQ:MSFT) reported a total revenue growth of 12% year-over-year (YoY), with cloud revenue growing 21% and achieving a gross margin of 70%. Company CFO Amy Hood remains optimistic about AI-driven cloud services growth, stating:
“Revenue will continue to be driven by Azure, which, as a reminder, can have quarterly variability primarily from in-period revenue recognition depending on the mix of contracts. In Azure, we expect Q3 revenue growth to be between 31% and 32% in constant currency driven by strong demand for our portfolio of services. As we shared in October, the contribution from our AI services will grow from increased AI capacity coming online. In non-AI services, healthy growth continues, although we expect ongoing impact through H2 as we work to address the execution challenges noted earlier.”
On January 30, RBC Capital Markets reiterated their Outperform rating on the shares with an unchanged $500 price target. The firm has recently released its software sector outlook 2025 where it favoured Microsoft Corp. (NASDAQ:MSFT) for its diverse market exposure, large installed base, its position to capitalize on generative AI (GenAI) and its increased spending on technology development.
2. Apple Inc. (NASDAQ:AAPL)
TTM Net Income: $96.2 billion
Number of hedge funds: 158
Apple Inc. (NASDAQ:AAPL) designs, manufactures, and markets innovative products, including the iPhone, iPad, Mac computers, Apple Watch, and Apple TV. The company also offers a range of software and services, such as the iOS and macOS operating systems, iCloud, advertising, payment services, Apple Music, and the App Store. Apple Inc. (NASDAQ:AAPL) has an operating margin of 32% and a net profit margin of 24%.
Apple Inc. (NASDAQ:AAPL)’s dedication to design, quality, and user experience has established it as a dominant player in the consumer electronics market. The company is increasingly focusing on services and software, which significantly contribute to its revenue. With a large, loyal customer base and an expanding ecosystem, Apple exhibits strong business momentum. The company’s services segment, which includes subscriptions and digital content, is expected to grow significantly, providing a steady revenue stream. As of December 2024, Apple’s installed base of active devices stood at an impressive 2.35 billion.
Apple Inc. (NASDAQ:AAPL) reported steady Q1 2025 results (FY ending September 2025), with sales growth of 4% year-over-year (YoY) which came in line with street expectations, and EPS coming in slightly ahead of expectations. Sales growth was primarily driven by the ‘Services’ segment, where sales rose 14% YoY, while the ‘Product’ segment sales grew 2%. Among products, Mac and iPad sales increased by around 15% each, but iPhone and Wearables sales were down 1%-2%. The company returned over $30 billion to shareholders in the quarter, including $3.9 billion in dividends and $23.3 billion through repurchases of 100 million shares. Additionally, it plans to expand Apple Intelligence to new markets and languages in April 2025, which is expected to drive further adoption and enhance the user experience.
On January 31, a Morgan Stanley analyst reaffirmed his Overweight rating and maintained a $275 price target for the shares. He predicts a strong launch for the iPhone SE 4, with an estimated 3 million units built in the first quarter of 2025 and a total of 15 million shipments throughout FY 2025. He attributes the anticipated success to the iPhone SE 4’s improved hardware, including a 6.1-inch AMOLED display and A18 Bionic chip, which he believes will support a starting price of $499.
1. Alphabet Inc. (NASDAQ:GOOGL)
TTM Net Income: $100 billion
Number of hedge funds: 160
Alphabet Inc. (NASDAQ:GOOGL), with $100 billion in profits tops this list. It is the parent company of Google and a pioneer in internet-related services and products, including online advertising technologies, search engines, cloud computing, software, and hardware. The company is also a leading investor in data centers and fiber networks, operating a vast global network of data centers that support its cloud services and other digital offerings. Alphabet Inc. (NASDAQ:GOOGL) has an operating margin of 32% and a net profit margin of 29%.
Alphabet Inc. (NASDAQ:GOOGL) continues to strengthen its position in the cloud computing market, which has experienced rapid growth in recent years and is expected to expand significantly in the coming years. The company has been heavily investing in expanding its data center infrastructure to meet the increasing demand for its Google Cloud services. With a focus on AI and machine learning, Alphabet Inc. (NASDAQ:GOOGL) is well-positioned to capitalize on the growing need for data processing and storage solutions. The company continues to report strong operating performance with strong growth in cloud revenue, driven by the integration of AI, which is attracting new customers and larger deals. YouTube revenue also continues to show healthy growth. However, Alphabet’s dominance is also subject to regulatory challenges, such as anti-trust lawsuits, which remain a risk.
Alphabet Inc. (NASDAQ:GOOGL) delivered solid Q4 2024 results, although the growth trajectory has decelerated, raising some concerns. The company’s total revenue increased by around 12% YoY, compared to over 13% growth in Q4 2023. Additionally, growth in the search, YouTube ads, and cloud businesses was slower compared to the same quarter last year. Notably, the company announced its plans to invest $75 billion in 2025 to enhance its AI strategy and infrastructure, which was much higher than street expectations of around $60 billion.
Dan Flax, a senior analyst at Neuberger Berman, commented on the results, noting short-term market concerns about the capital expenditure. However, he views the capex as a wise long-term strategic move due to capacity constraints that are hindering the cloud business. Flax stated that Alphabet’s various businesses are still performing well, and AI is enhancing the value proposition for customers. He believes Alphabet Inc. (NASDAQ:GOOGL) remains well-positioned and finds the stock attractive at current levels.
While we acknowledge the potential of GOOGL to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GOOGL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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