Got $5,000? 3 Tech Stocks to Buy and Hold for the Long Term
May 16, 2025
Key Points
The median household income in the U.S. was just over $80,000 in 2023, according to the Census Bureau. It's probably still right around that level in 2025. Therefore, investing $5,000 is no small feat for many individuals, because it represents about 6% of a typical household's annual income. Since this is such a significant sum of money, it's not an investment decision to be taken lightly.
In other words, it's important to invest $5,000
well
. Failing to do so could set back your financial progress for years. But even the best stock-pickers are only right around 60% of the time. If even the best investors make many mistakes, then what should an average investor do to increase their odds of success?
In my opinion, it's more important to adopt a winning investment strategy than to identify the best stocks. A winning strategy that's sustainable and that can be repeated can outweigh the bad stock picks that will inevitably come. And it's clear that investing for the long term -- five years or more -- is one of the best characteristics of
a winning philosophy
.
Investing in good businesses is still important. I believe
AppLovin
(NASDAQ: APP)
,
Xometry
(NASDAQ: XMTR)
, and
Toast
(NYSE: TOST)
could fall in this category. But finding businesses that are poised for sustainable long-term returns is hugely important as well. Here's why each of these three seems to be more than just a flash in the pan.
1. AppLovin
AppLovin is an
advertising-technology (adtech) company
, and its shares are already up more than 300% over the past year. With a market capitalization well over $100 billion at this point, I won't argue that this stock is cheap. But over the long term, AppLovin still has big potential if it executes well, which is why I put it on this list.
Over 90% of AppLovin's revenue is generated from advertising for mobile gaming apps -- it's been the company's singular focus since its inception in 2012. Management claims that it's reinvigorating growth into this stagnating space virtually single-handedly. But it holds long-term promise because it's building on its past success by broadening its target market.
In short, AppLovin aims to expand its focus from gaming into other categories such as e-commerce. It aims to expand its reach from just mobile devices to connected TVs and the broader internet. Consider that it's generated over $5 billion in trailing 12-month revenue. If it could do this with a niche space that wasn't growing, how high can AppLovin fly if it succeeds in even better long-term opportunities?
Many investors want to thoroughly understand a business model before investing, and AppLovin's technology is hard for most to understand. Other investors want bargains, and AppLovin stock isn't that. So this isn't for everyone. But I believe AppLovin has a strong chance of sustaining torrid long-term, profitable growth. That's why it's worth considering as an investment today.
2. Xometry
Xometry is a truly undiscovered gem on the stock market. It's a digital marketplace that connects small manufacturing shops with clients with potentially deep pockets. In fact, in the first quarter of 2025, there were over 1,500 Xometry buyers spending $50,000 or more annually, which was a 12% jump from the prior-year period.
Xometry is enjoying growth on both sides of its marketplace, which is exactly what investors want to see. Q1 buyers were up 22% year over year to over 71,000, and suppliers were up 28% to nearly 4,400. With growth on both ends of the business, Q1 revenue was up a strong 23% to a record $151 million.
Xometry grew total revenue by 18% in 2024, which was good. But for 2025, management believes growth will be even better. Companies with an accelerating top line are worth taking a look at. Moreover, the company is improving its adjusted profitability with scale, which bodes well for its long-term growth.
The manufacturing space is enormous, and Xometry is growing fast. In 2024, the company only generated 18% of its revenue from international markets, which provides plenty of runway for long-term growth. With a market cap under $2 billion, there's a lot of upside potential here as it expands with new customers and new markets.
3. Toast
Toast provides technology for restaurant companies, and it's quickly becoming a go-to platform in the space. In the first quarter of 2025, the number of restaurant locations using its technology jumped 25% year over year to 140,000. That's a big number but still leaves room for long-term growth.
According to management, restaurants are more apt to adopt Toast's platform as more restaurants in the local area start using it. It would appear that the benefits of the platform that manages payments, menus, orders, and more are quickly apparent.
Toast grows as it adds new customers. However, existing customers can adopt more software solutions as they grow. This gives the company more top-line opportunity. This was on display in Q1, with subscription-service revenue up 38% year over year. This high-margin revenue helped it go from an $83 million net loss in Q1 2024 to a net income of $56 million in Q1 2025.
Toast has grown its business by primarily going after small restaurant companies. But the company is now landing major customers. These include Ascent Hospitality Management with its 500 restaurants and, more recently,
Dine Brands
' Applebees, which has more than 1,500 locations.
Toast is setting its sights on bigger customers and new international markets. Revenue is growing at a steady, fast clip and profits are improving. Overall, it has the makings of a company that can do well in the long run
To be sure, I haven't shared exhaustively about each of these companies -- there's plenty more to learn about AppLovin, Xometry, or Toast before making a major $5,000 investment. Hopefully, what I've shared is enough to help investors think about the long-term potential of each of these companies.
Investing for the long term is a philosophy that can dramatically improve individual investors' results. So whether it's when buying one of these three stocks or pursuing other ideas, investors should be sure to think at least five years down the road.
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