If you have money you don’t need to pay bills or reduce debt, there are excellent opportunities in the technology sector. Artificial intelligence (AI) and cloud computing are generational investment opportunities that can deliver big returns for investors who invest in the right stocks. Here are two that could double your money within the next five years.
Nvidia is the leader in the graphics processing unit (GPU) market by a wide margin, but cannot control the market 100%. Its biggest GPU rival is Advanced micro devices (NASDAQ: AMD)that sells chips in different markets. The stock has returned 237% over the past five years and could double again by 2030.
AMD’s revenue grew 18% year over year in the third quarter, driven by strong demand for the company’s data center GPUs and central processing units (CPUs). It was a strong quarter, given that two business segments continued to experience weak revenue figures.
The company’s gaming and embedded segments, including sales of chips used for industrial markets, posted sharp sales declines this year. However, the headwinds hitting these segments will turn into tailwinds.
AMD is preparing to launch new Radeon gaming GPUs in early 2025, which could boost the gaming segment. The embedded segment grew revenue by 8% from the previous quarter, indicating a recovery is underway. Management sees design wins gaining momentum, indicating long-term growth potential.
For now, the data center business is driving enough growth to be a major catalyst for the stock heading into 2025. By the time AMD’s entire business is firing on all cylinders, the stock could be trading much higher than it is now.
The growing demand for advanced data center chips used for artificial intelligence ensures very high margins. This is why the current Wall Street consensus has AMD’s earnings per share growing 42% year over year. The stock is currently trading at a high price-to-earnings (P/E) ratio of 40, so even if the price-to-earnings ratio falls, the stock could double by 2030, if not sooner.
Alphabet‘S (NASDAQ: GOOGL) (NASDAQ: GOOG) Google is one of the strongest brands in the world. The company has seven online services with more than 2 billion users, which is a major advantage in the $740 billion digital advertising market. Alphabet’s shares have more than doubled in the past five years, and its AI and cloud computing capabilities could provide enough earnings growth to double again by 2030.
Alphabet is experiencing strong momentum across the business, including search, where new AI features improve the usability of this everyday utility for users. Management says it sees AI features improving user engagement and satisfaction, which bodes well for long-term ad revenue growth. Alphabet posted a 15% increase in revenue in the third quarter, while advertising revenue rose 10%.
Meanwhile, Google Cloud benefits from Alphabet’s massive investments in AI infrastructure, including its Gemini AI models and data centers. Google is the third cloud service provider behind it Amazon Web services and Microsoft Azure, according to Synergy Research, is gaining share in a growing $313 billion cloud market. Reflecting that opportunity, Google’s cloud revenue grew 35% year over year last quarter.
Most importantly, management’s focus on operational efficiency and improving profitability in Google Cloud has driven profits up 36% from the prior year quarter. This is a lot of growth for a stock that recently traded at a price-to-earnings ratio of just 22.
The stock’s conservative valuation reflects uncertainty surrounding an antitrust ruling against Google in August. As a remedy, the Justice Department wants Google to divest its Chrome web browser, among other measures to prevent Google from gaining an unfair advantage over competitors in online search.
Regardless of the outcome, Alphabet still has a broad competitive position based on the millions, if not billions, of people who use products like Gmail, Search, and YouTube every day. It’s this large user base that provides the means to generate billions in ad revenue and positions Google well for long-term growth.
Consider the following before buying shares in Advanced Micro Devices:
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Ballard has positions in Advanced Micro Devices and Nvidia. The Motley Fool holds positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
Do you have $5000? 2 Best Growth Stocks to Buy That Can Double Your Money was originally published by The Motley Fool
