Technology powers the world and makes our lives easier. But did you know that investing in technology can help drive your portfolio's value higher over time to better prepare you for retirement?
Tech stocks range widely, covering every aspect of the tech cycle, from the manufacture of semiconductors and graphics processing units (GPUs) to the creation of the metaverse and exploration of artificial intelligence (AI). These growth stocks are riding on the tailwind of digitalization amid a technology revolution that will enable them to post steady growth over many years.
Investors should focus on businesses that are leaders in their respective fields and enjoy long-term catalysts that allow them to grow their businesses. Here are three to consider now.
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Meta Platforms
Social media giant Meta Platforms (META 0.24%) Facebook, picture-sharing app Instagram, and chat program WhatsApp. The company has bounced back spectacularly after posting a downbeat set of earnings for 2022 as CEO Mark Zuckerberg declared 2023 to be a "year of efficiency."
For the first nine months of 2023, Meta saw revenue rise 12.3% year over year to $94.8 billion. Operating income jumped nearly 35% to $30.4 billion, while net income shot up 35.2% to $25.1 billion. Free cash flow more than doubled to $32.1 billion.
Meta's daily and monthly active users continue to climb, assuring the company can still grow. Daily active users for the third quarter of 2023 rose 5.1% year over year to 2.1 billion, while monthly active users inched up 3.1% year over year to three billion.
Looking ahead, Meta appears to have streamlined its operations by eliminating thousands of jobs and bringing its personnel numbers down to mid-2021 levels. The company is also spending billions of dollars on Nvidia's computer chips to power research on AI projects.
Meta is investing in these GPUs as it pursues its new goal of developing artificial general intelligence, all while still spending significant sums building up its vision of the metaverse, a virtual world where people can interact with one another through digital avatars.
It is still early days in the quest for AI dominance, but Meta is committing its resources to build up this nascent industry where there is a long growth runway for the company to continue shining. The metaverse also represents the future of how people will interact digitally and presents compelling opportunities for the company to monetize over time.
Exciting days are ahead for investors as Meta's share price hits a new record high, signaling investor optimism over the company's prospects.
Nvidia
Nvidia (NVDA -0.95%) is a GPU designer and manufacturer pioneering the accelerated computing era. The company's platform powers nearly three-quarters of the world's supercomputers and boasts 4.5 million developers. The company is riding on the generative AI wave that is seeing orders surge to new records.
For the first nine months of fiscal 2024, Nvidia saw revenue surge 85% year over year to $38.8 billion. Its operating income catapulted more than sixfold to $19.4 billion, while net income leaped fivefold to $17.5 billion. Unsurprisingly, free cash flow also exploded, going from $2.1 billion to $15.8 billion.
Nvidia has provided an upbeat outlook for its fourth quarter, with revenue expected to come in around $20 billion. If it achieves this forecast, it would represent a more than tripling of its fourth quarter 2023 sales of $6.1 billion.
There could be much more to come for the GPU producer. Nvidia is working with Foxconn to develop AI factories, a new category of data centers. These can power an increasing number of applications, such as AI-powered robotics platforms and language-based generative AI services.
Nvidia also partnered with Indian technology giants Infosys, Reliance Industries, and Tata to build India's foundation large language model (LLM) and provide infrastructure-as-a-service for AI services within the country. The GPU specialist is working with Microsoft to run custom generative AI enterprise applications on the latter's Microsoft Azure platform to allow intelligent search, summarization, and content generation.
These are just some of the collaborations Nvidia inked recently, but there is much more potential for the company to work with other players to build LLMs and spur the further evolution of generative AI. Nvidia is even working in medicine, collaborating with Genentech to develop new therapeutics by harnessing the power of generative AI.
The possibilities are limitless and should translate to many more opportunities for Nvidia to scale its business and capture more top- and bottom-line growth.
Palantir
Palantir Technologies (PLTR -0.67%) is a software company that harnesses the power of AI to create platforms for clients to perform data analyses. Its software is used by a wide range of clients, including government agencies, manufacturing companies, financial firms, and healthcare institutions.
Palantir reported a strong set of earnings for the first nine months of 2023 as revenue increased by 15.7% year over year to $1.6 billion. The business also churned out operating income and net income of $54.2 million and $120.5 million, respectively, reversing the operating and net losses in the prior year.
The current quarter also represents the software company's fourth consecutive quarter of profitability. Free cash flow for the first nine month more than tripled year over year to $400.8 million, a strong sign that shows the business can be both profitable and free-cash-flow generative.
Palantir also chalked up a higher customer count, with the total jumping 34% year over year to 453. Of this group, 330 were commercial customers, representing a 45% climb. In a sign that its top 20 customers are spending more, the average trailing-12-month revenue for this group rose 13% year over year to $54 million. Billings increased by 8% to $550 million, and Palantir secured 80 deals of at least $1 million during the quarter, of which 12 were at least $10 million in value.
In January, the company signed a multi-year commercial partnership with Option Care Health for its software to be used to improve both patient outcomes and efficiency. The company's momentum in securing new business and its turnaround to profitability point to better days ahead as investors better appreciate its business.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Royston Yang has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
As a seasoned technology enthusiast with a wealth of knowledge in the tech industry, I've closely followed the developments and trends shaping the digital landscape. My expertise spans a wide range of topics, from semiconductor manufacturing and graphics processing units (GPUs) to the metaverse and artificial intelligence (AI). Over the years, I've kept a pulse on the market, staying abreast of the latest advancements and industry leaders.
Now, let's delve into the key concepts mentioned in the provided article:
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Meta Platforms (META):
- Meta Platforms is a social media giant that owns well-known platforms such as Facebook, Instagram, and WhatsApp.
- The company rebounded significantly after a downbeat set of earnings in 2022, with CEO Mark Zuckerberg declaring 2023 as a "year of efficiency."
- For the first nine months of 2023, Meta saw impressive financial results, including a 12.3% YoY increase in revenue to $94.8 billion.
- Meta is streamlining operations by reducing personnel numbers, investing in Nvidia's computer chips for AI projects, and pursuing the development of artificial general intelligence.
- The company is heavily involved in building the metaverse, a virtual world with vast opportunities for digital interaction and monetization.
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Nvidia (NVDA):
- Nvidia is a GPU designer and manufacturer, playing a pivotal role in the accelerated computing era.
- The company powers nearly three-quarters of the world's supercomputers and has a platform with 4.5 million developers.
- Financially, Nvidia experienced substantial growth in the first nine months of fiscal 2024, with an 85% YoY increase in revenue to $38.8 billion.
- Nvidia collaborates with various partners, including Foxconn, Infosys, Reliance Industries, Tata, and Microsoft, to advance AI applications in areas such as robotics, language-based generative AI, and medicine.
- The company's outlook is optimistic, with expected revenue of around $20 billion in the fourth quarter of fiscal 2024.
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Palantir Technologies (PLTR):
- Palantir Technologies is a software company leveraging AI to create platforms for data analysis, serving diverse clients such as government agencies, manufacturing companies, financial firms, and healthcare institutions.
- The company reported strong financial results for the first nine months of 2023, with a 15.7% YoY increase in revenue to $1.6 billion.
- Palantir achieved profitability for the fourth consecutive quarter, with operating income and net income of $54.2 million and $120.5 million, respectively.
- The company's customer count increased by 34% YoY to 453, with a notable rise in commercial customers.
- Palantir secured significant deals, with 80 valued at least $1 million during the quarter, contributing to a positive outlook for future growth.
In conclusion, these tech giants - Meta Platforms, Nvidia, and Palantir Technologies - showcase the diverse and dynamic nature of the technology sector. Investors looking to capitalize on the technology revolution and ensure long-term portfolio growth should consider companies at the forefront of digitalization and innovation.
