Many of the market’s top tech stocks have created millionaires over the past decade. An investment of $50,000 in Nvidia would be worth almost $15 million today. The same investment in Advanced micro devices would be worth $2.6 million.
Nvidia and AMD might be considered high-growth outliers, but plenty of other promising tech companies could still generate profits for millionaires over the next decade. So if you’re looking for a good place to park a new $50,000 investment for the long haul, check out these three fast-growing stocks: Wolf speed(NYSE: WOLF), Reddit(NYSE:RDDT)And Uber Technologies (NYSE:UBER).
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Wolfspeed is a leading manufacturer of wide bandgap (WBG) semiconductors made from silicon carbide, which can operate at higher voltages, temperatures and frequencies than traditional silicon semiconductors. The resilience of silicon carbide chips makes them well suited for short LEDs, lasers, 5G base stations and military radar.
Wolfspeed expects silicon carbide chips to disrupt traditional silicon chips, and opened the world’s largest 200mm silicon carbide plant in New York State in 2022 to support that expansion. It also sells silicon carbide materials for the production of batteries and powertrains for electric vehicles.
Wolfspeed thrived when interest rates were low, the EV market was hot, and investors were more willing to invest in emerging technologies. But as interest rates rose and the EV market cooled, Wolfspeed’s sales plummeted and margins fell.
In fiscal 2024 (which ended in June), Wolfspeed’s revenues rose just 1%, while its net loss more than doubled. But from fiscal 2024 to fiscal 2027, analysts expect revenue to grow at a compound annual growth rate (CAGR) of 28%, while losses gradually narrow. Short-term growth remains limited by macroeconomic headwinds, the costs of expanding the new 200 mm factory and high interest rates.
But in the long term, its growth should accelerate as costs disappear and the macro environment warms back up. With an enterprise value of $6.9 billion, Wolfspeed seems fairly valued at eight times next year’s sales — and could rise even higher as the silicon carbide market finally warms up.
Reddit, which went public in March, has carved out a niche in the crowded social media market with its user-powered discussion forums. The number of daily active unique users rose 27% to 73.1 million in 2023, and that figure grew 47% year over year to 97.2 million by the end of the third quarter of 2024.
Reddit’s growth is often driven by certain events – such as the COVID-19 pandemic, the meme stock phenomenon, the military conflicts in Ukraine and Israel, the launch of popular video games or movies, and the US election – rather than sustained social connections. . Reddit also forwards its data to Alphabet‘s Google and OpenAI’s ChatGPT through data sharing partnerships.
In 2023, Reddit’s revenue grew 21%, its net loss narrowed, and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) turned positive. From 2023 to 2026, analysts expect revenue to grow at a CAGR of 36%, while adjusted EBITDA will rise at a CAGR of 109%. They also expect it to become profitable in 2025 and more than double its net revenues by 2026. We should take these rosy estimates with a grain of salt, but Reddit could continue to draw peer-searching Internet users from traditional search engines, news sites, and other sites. social media platforms.
With an enterprise value of $21.8 billion, Reddit trades at 14 times next year’s revenue and 49 times adjusted EBITDA. It’s not a bargain, but its rapid user growth, niche appeal and improving profitability could justify the premium valuations.
Uber owns one of the best mobility and delivery platforms in the world. The company suffered a severe slowdown during the pandemic as declining ridership offset a major growth spurt in its food delivery business. But once those headwinds passed, the pace of growth accelerated again as both businesses grew.
Uber maintained that momentum in 2022 and 2023, as inflation, high interest rates and other macroeconomic headwinds roiled the economy. In 2023, total trips grew by 24%, gross bookings by 19% and revenue by 17%. For 2024, it expects gross bookings to grow 17% to 18% – and analysts expect revenue to rise 17%.
Uber’s revenue growth was driven by the expansion of Uber One, which grew 70% year over year to more than 25 million members in the last quarter; and newer platforms such as Uber Teens, Uber for Business and Uber Health. Its take-up rates (the percentage of each booking it retains as revenue) also improved as it leveraged its scale to increase ride-sharing and delivery costs.
As bookings and revenue grew, the company continued to cut costs and divest its lower-margin operations. That’s how it became profitable in 2023, and why it expects to remain negative for the foreseeable future.
From 2023 to 2026, analysts expect Uber’s revenue to grow at a CAGR of 16%, while net income will rise at a CAGR of 53%. Those are great growth numbers for a stock that trades at 31 times forward earnings – and could still have plenty of room to run.
Consider the following before purchasing shares in Wolfspeed:
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Leo Sun has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Advanced Micro Devices, Alphabet, Nvidia, Uber Technologies, and Wolfspeed. The Motley Fool has a disclosure policy.
The Best Stocks to Invest $50,000 In Right Now was originally published by The Motley Fool
