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Both tech stocks are rising rapidly in significant markets

Top 2 tech stocks to buy over the long term

2022 has been a rough year for tech stocks. After a boom during the pandemic, rising interest rates and concerns about a recession have cooled the tech sector this year, especially high-value growth stocks.

Although a bear market can be demoralizing for investors, it is no excuse to avoid the sector. Bear markets often present tremendous opportunities to buy battered growth stocks, as many of them are undervalued due to temporary headwinds. Many growth stocks generated multiple returns from the Great Recession, and this sell-off could offer another chance to get some of the best stocks on the cheap. Read on for two tech stocks that can do just that.

1. Okta

Okta shares (OKTA -5.64%) closed lower after its most recent earnings report. The company said it faced challenges integrating Auth0, a customer identification software company it acquired last year. It also backed off its long-term guidance of $4 billion annual revenue for January 2026.

Despite those setbacks, Okta remains a leader in cloud identity software, providing tools that enable employees and customers to log in and stay connected seamlessly and securely. Okta values ​​the market in which it competes at $80 billion; its annual revenue is less than $2 billion.

Both tech stocks are rising rapidly in significant markets

The company has delivered remarkably consistent revenue growth during the pandemic, increasing revenue by 37% or more each quarter since its initial public offering (IPO) in 2017. Despite the stock falling in the second quarter, revenue increased by 43 percent. % and the company raised its guidance for the year.

Okta shares were now down about 80% from their peak last year, and the shares traded at a price-to-sales ratio of more than six, making them the cheapest ever by that metric. The company must be recovering from the recent setback as it has hired new salespeople to replace those it lost after the merger. Additionally, it has adjusted its go-to-market strategy to make it easier for customers and their sales force to understand which customer identification product, Okta or Auth0, is best for them. Okta’s actions will pick up if those changes have the desired effect.

2. Axon Company

Axon Enterprise (AXON -1.52%) does not fit the traditional definition of a technology company. The company makes technical equipment and software for law enforcement agencies, including TASER electric stun guns, body cameras, and cloud-based software to help agencies manage records and evidence.

Its products reinforce each other, making it a unique company with no direct competition in its hardware and software products. TASER, a brand name synonymous with stun guns, continues to dominate that market. And Axon is the market leader in body and dash cameras, a growing category when evidence of police misconduct has increased, thanks to smartphone cameras.

Both tech stocks are rising rapidly in significant markets

As a result of that market leadership, Axon has achieved consistent strong growth and solid earnings. In its most recent quarter, revenue jumped 31% to $286 million, led by TASER and body and dash cameras. In contrast, its revenue from new software-as-a-service products nearly tripled, showing investments in software are closed. Adjusted net income rose 16% to $31.8 million in the quarter, and the company raised its full-year revenue guidance by 27% to $1.07-1.12 billion.

Axon’s stock should continue its long-term outperformance with a leading market position, a history of innovation, and new products such as drone software, virtual reality training equipment, and license plate recognition technology.

Should you invest $1,000 in Okta now?

Before you even consider the Okta, you might want to hear this.

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