3 Top Tech Stocks That Could Make You a Millionaire

Many investors dream of generating millionaire-making gains from their high-growth tech stocks. But assuming a stock's price-to-sales ratio holds steady, a company would need to grow its top line at a compound annual growth rate (CAGR) of 16% over the next 20 years to turn a $50,000 investment into $1 million.

It could be tough to maintain that momentum, but three tech companies -- Snowflake (NYSE: SNOW), Datadog (NASDAQ: DDOG), and Zscaler (NASDAQ: ZS) -- might generate those multibagger gains if they play their cards right.

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1. Snowflake

Many large companies store their data across a wide range of computing platforms, but those fragmented silos can make it difficult to make quick data-driven decisions. Snowflake addresses those challenges with its cloud-based data warehouses -- which aggregate that information, clean it all up, and organize it so it can be easily read by other applications.

Snowflake's warehouses run on top of popular cloud infrastructure platforms like Amazon Web Services (AWS) and Microsoft Azure, and they only charge customers fees for the storage they use instead of locking them into recurring subscriptions. That flexibility makes Snowflake a popular option for companies that use multiple cloud platform services.

Snowflake's revenue grew at a CAGR of 96% from fiscal 2019 to fiscal 2024 (which ended this January). Its growth is cooling off as its business matures, but analysts still expect its revenue to rise at a CAGR of 24% from fiscal 2024 to fiscal 2027. The company isn't profitable yet and its stock isn't a bargain at 9 times next year's sales, but it could still have plenty of room to grow as the artificial intelligence (AI) market's explosive growth drives more companies to crunch more data.

2. Datadog

The fragmentation of a company's software infrastructure can also make it challenging for IT professionals to spot and fix potential problems. To simplify that process, Datadog's platform pulls all of the diagnostic data from a company's infrastructure, applications, and logs onto unified real-time dashboards. It's also been rolling out new generative AI tools to make it even easier to track and diagnose those issues.

The market's demand for Datadog's services is booming. From 2018 to 2023, its revenue rose at a jaw-dropping CAGR of 66%. It also turned profitable for the first time in 2023 as it reined in its spending. From 2023 to 2026, analysts expect its revenue to increase at a CAGR of 24% as its earnings per share (EPS) grows at a CAGR of 77%.

Datadog isn't a bargain at 13 times next year's sales, but it could generate more multibagger gains over the next decade as more companies aggressively expand their IT infrastructure to support the secular growth of the cloud and AI markets.

3. Zscaler

Zscaler is a cybersecurity company that mainly develops "zero trust" services, which treat everyone as a potential threat. But unlike many of its industry peers, which install their services through on-site appliances, Zscaler only provides its services as cloud-native services, which are easier to scale as an organization expands.

From fiscal 2015 to fiscal 2024 (which ended this July), Zscaler's revenue grew at a CAGR of 51%. Its business is also maturing in a tougher market, but analysts still expect its revenue to rise at a CAGR of 21% from fiscal 2024 to fiscal 2027. They also expect it to gradually narrow its net losses and turn profitable by the final year.

Zscaler's stock isn't cheap at 9 times next year's sales, but it's a balanced way to profit from the expansion of the cloud and cybersecurity markets. It's also been capitalizing on its early-mover's advantage in the cloud-native zero trust market to launch additional cybersecurity services to boost its average revenue per customer. So over the long term, I believe this high-growth cybersecurity stock could still generate millionaire-making gains for patient investors.

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*Stock Advisor returns as of October 14, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Datadog, Microsoft, Snowflake, and Zscaler. 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.