Two tech companies with potential to provide you long-term financial success.
Investing in tech giants that ride the wave of disruptive growth trends is a time-tested strategy for making significant gains in the stock market, and it's not hard to see why. The Nasdaq-100 Technology Sector index has soared by a whopping 366% in the past decade, outpacing the S&P 500's 196% growth during the same period. However, dedicating your entire portfolio to tech stocks may not be the wisest choice, as any setbacks in this sector could result in substantial losses for investors.
But there are certain tech titans that deserve a closer look due to their potential to capitalize on massive end-market opportunities. Companies like Nvidia and Meta Platforms are dominating their respective industries and could provide investors with remarkable returns over the long haul.
Nvidia
Ten years ago, investing in Nvidia stock would have been a life-changing move for any savvy investor who had the foresight and patience to hold onto it until now. An initial investment of $1,000 in 2012 would have ballooned to an impressive $275,000 by 2022.
However, some investors may question whether Nvidia's stock market rally can continue in light of recent concerns, such as a slowdown in artificial intelligence chip spending, increased competition, and potential foreign sales restrictions. While these factors should not be overlooked, Nvidia's enormous addressable market beyond AI offers plenty of potential for further growth.
Although AI currently serves as Nvidia's primary growth driver due to its leading position in data center GPUs, there are even more substantial opportunities in accelerated computing. Nvidia's CEO, Jensen Huang, predicts that the transition of data centers to accelerated computing could open up a $1 trillion revenue opportunity, regardless of AI adoption.
This transition will improve energy efficiency, raise performance, and reduce operating costs for data centers. Accelerated computing also has the potential to help manage rising electricity consumption, which is a significant concern for many companies. Furthermore, there are additional multibillion-dollar opportunities for Nvidia in cloud gaming.
And let's not forget that the global AI chip market is projected to grow by a staggering annual rate of nearly 35% through 2035, reaching an astounding $847 billion in revenue. As a leading player in the AI infrastructure market, Nvidia has plenty of room to grow, having generated $96 billion in revenue in the last 12 months.
As a result, investing in Nvidia stock may still be a shrewd choice for investors, given its attractively low forward P/E ratio of 33 and its potential to deliver strong earnings growth over the long term.
Meta Platforms
The digital advertising market is rapidly expanding, generating an estimated $667 billion in revenue last year, and is projected to surpass $1.5 trillion by 2030. Meta Platforms is an excellent way for investors to capitalize on this lucrative opportunity, as the social media giant is expected to generate $163 billion in revenue by 2024.
Even more impressive, Meta has been growing at a faster pace than the digital advertising market, with estimates showing a 21% year-over-year increase in revenue by 2024. This growth not only indicates a larger share of the digital ad market for Meta but could also lead to increased revenue over the next six years.
Meta's success in the digital advertising market can largely be attributed to its massive user base and the integration of AI tools for advertisers, which increases their return on ad dollars spent. By 2024, Meta will boast an impressive daily active user count of 3.29 billion across its family of apps.
As the digital ad market continues to expand, Meta is well-positioned to capitalize on this opportunity and become even more dominant. And with an attractive forward P/E ratio of 29, Meta Platforms could be an excellent investment choice for investors seeking to grow their portfolios.
Given Nvidia's impressive growth in the past decade and its vast addressable market beyond AI, some investors might consider investing in Nvidia's stock again, even with recent concerns. The potential for further growth in accelerated computing, energy efficiency, and cloud gaming, among other areas, could make Nvidia a shrewd investment choice with its low forward P/E ratio and strong earnings growth potential.
Meta Platforms, with its growing dominance in the digital advertising market and anticipated revenue of $163 billion by 2024, is also an attractive investment option for those looking to capitalize on the market's expansion. Meta's integration of AI tools for advertisers and its large user base make it well-positioned to maintain its market dominance and offer attractive returns for investors with a forward P/E ratio of 29.
