Being patient has worked well for stock investors during the previous decade, as the S&P 500 has increased over 262% and it’s close to setting a fresh record yet again. But these mammoth gains would not be possible without tech stocks. Many people do not realize that although the benchmark is filled with 500 large stocks, over 27% of these companies are tech stocks, the largest part of the index.
In fact, the Nasdaq 100 Technology Sector index has outperformed the S&P 500 over the past 10 years, by more than two to one. To make real money from Wall Street, investors should put time on their side. If creating serious wealth is among your financial goals, it is perfectly achievable by using a buying-and-holding strategy. A perfect place to start would be these two high-growth tech stocks.
Video games are at the heart of Nvidia, with GPUs for gaming bringing in 47% of their $6.5 billion revenue for Q2. With the gaming market predicted to expand at a compound annual rate of 14% through 2026, as reported by Mordor Intelligence, Nvidia could be bringing in $20 billion per year in this sector alone if its sales hold steady.
Data center revenue also went up 35% y/y last quarter and could grow to really become Nvidia’s largest sector by 2025. Its $7 billion buyout of Mellanox finished in 2020, helped position Nvidia to be the top supplier of networking hardware. And we have not even started to scratch the surface on its Drive AV platform for autonomous vehicles, or the Omniverse, the first real-time 3D collaboration and simulation platform. These components have led to the almost 300% stock growth over the previous three years, and it does not seem like it will stop anytime soon.
Wall Street forecasts Nvidia will have revenue growth of around 25% per year for the upcoming five years, reaching $51 billion in 2026 with earnings thought to grow even faster, at 26% every year, to $7.73 a share.
2. The Trade Desk
At-home entertainment is moving from traditional cable networks to internet-based tv. This opens the path for The Trade Desk to further increase its dominant ad buying system. Through the use of bid factor tech to value ad impressions, The Trade Desk’s system allows companies to collect better data on possible buyers in real-time. This guarantees their ads are positioned appropriately depending on the data and its clients are loving it.
Revenue went up 101% in Q2, bringing in $280 million. And during the initial six months of 2021 revenue was 78% higher than this same time in 2019. Over the past four years, revenue has gone up almost 300%. Adjusted EBITDA margin also went up in Q2, reaching 42%, even better than the pre-pandemic number of 36% it got in Q2 of 2019. Looking ahead, The Trade Desk sees itself keeping this breathless growth, with Q3 revenue and adjusted EBITDA going up around 31% and 30%, respectively, over the year-ago period.
Author: Blake Ambrose