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11 Tech Stocks to Buy for Super-Sized Software Profits

Software and its close cousin, services, are en vogue once more.

For some time, Apple (AAPL), Samsung and other tech stocks sucked up most of the air in the room with their smartphone rivalries and hardware "reveals." But over the past few years, the momentum has clearly swung back toward companies offering software and services.

Software isn't new, but how it's being delivered and monetized is. Tech stocks are increasingly borrowing a concept from the services model: subscriptions. Consumers like the lower cost of entry compared to paying big upfront for a software package. Enterprise customers have bought in too. And investors love the resulting financial benefit.

"Manufacturers benefit from the subscription model," says John Conlon, Chief Investment Officer at People's United Bank. "It provides them with a very steady stream of revenue. It's a lot easier to get a handle on what a company's revenue stream will be using a subscription model. It lowers the entry point for potential customers, which encourages more customers to pay for the service offered. It's an easier business model."

Here, we examine 11 tech stocks to buy that have the potential to deliver super-sized software profits.

Microsoft

Getty Images

Market value: $1.14 trillion

Microsoft (MSFT, $149.55) has always focused on software and services. While it does have hardware such as Xbox game consoles and Surface tablets and PCs, those are a relative blip on the company's bottom line.

Microsoft has been one of the best blue-chip tech stocks of the past three years, with a nearly 150% gain fueled largely by software and service revenue. The push to subscriptions instead of outright sales has helped boost Office revenue at a time when it faces competition from Google's G-Suite.

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