The technology sector offers many opportunities to multiply money. Artificial Intelligence (AI), e-commerce and online advertising are some of the technology areas that have driven companies and indices to historic highs.

However, there are black sheep in every sector that can harm shareholders and leave them behind. S&P500Some technology stocks look promising and experience a significant upswing, only to fizzle out as revenue growth slows.

Many successful technology companies risk this fate. While these companies’ revenues seem to be rising inexorably, they often incur significant losses to achieve high revenue growth. Investors think that revenue growth will be strong over the next 5 to 10 years, but once there are cracks in the growth story, investors turn their focus to the substantial valuation of these companies.

Wondering which tech stocks pose risks for long-term investors? These are some overvalued tech stocks you should sell.

Etsy (ETSY)

Source: Sergei Elagin / Shutterstock

Several e-commerce companies are reporting slowing sales growth, and the trend has spread to other sectors. Etsy (NASDAQ:ETSY) already did so when the companies reported strong results for 2023 and 2024.

In fact, Etsy reported another quarter of declining year-over-year growth in consolidated gross merchandise sales. This time, the decline was 2.1%. While total revenue increased 3.0% year-over-year, that’s only due to higher fees and advertising. That’s not a recipe for success in the long run. Net profit fell 14% year-over-year, showing that Etsy’s growth phase is over.

Some investors are clinging to hope, believing the stock can rise again like it did during the pandemic. However, Etsy has not rewarded those investors. Shares are down 32% year-to-date and have crashed more than 80% since their peak. It’s only a matter of time before Etsy reports year-over-year declines in revenue in addition to year-over-year declines in gross merchandise sales.

Zoom (ZM)

Source: Girts Ragelis / Shutterstock.com

zoom (NASDAQ:CM) is another pandemic darling that lost its luster as the world returned to normal. Shares have fallen about 90% since their peak and are down 20% year-to-date. The company doesn’t have much of a competitive advantage, as other tech companies also offer video conferencing software. If competitors continue to innovate, Zoom could lose market share and struggle to regain ground.

First quarter fiscal 2025 results showed that Zoom isn’t getting much of a boost. Revenue grew just 3.2% year over year. Company management rushed to mention how Zoom is using AI in the first quarter fiscal 2025 press release. AI is innovative and many companies are eagerly talking about it. This decision to focus on AI in the press release comes at a time when Zoom no longer wants to be known as just a video conferencing company.

It’s hard to say what that shift will look like, if it happens at all. However, several technology stocks offer more attractive growth catalysts with larger margins of safety.

DocuSign (DOCU)

Source: Tada Images / Shutterstock.com

DocuSign (NASDAQ:DOCUMENTARY) also saw a rebound during the pandemic as more people signed documents digitally. The stock was a top performer in 2020 and 2021, but has since fallen more than 80% from its all-time high. Losses continue to mount, based on DocuSign’s 9% year-to-date decline.

Revenue growth has slowed significantly in recent years. The company reported only 7% year-over-year revenue growth in the first quarter. At the same time, revenues only grew 5%, suggesting that this is not changing. Earnings per share increased from $0.00 to $0.16 in a year, but the gains in net income will not last if revenue growth remains low.

The low growth puts DocuSign’s P/E ratio in focus, which is currently above 100. The company offers no significant long-term growth opportunities, and a high valuation suggests the stock can fall further. DocuSign recently approved a $1 billion share buyback, which is not the smartest move for long-term growth. Yes, it will help the stock price in the short term if the company buys back shares, but that money does nothing for DocuSign’s long-term prospects.

At the time of publication, Marc Guberti had no position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing guidelines.

At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.