Many of the market's top tech stocks minted millionaires over the past 10 years. A $50,000 investment in Nvidia would be worth nearly $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 millionaire-making gains over the next decade. So if you want a good place to park a fresh $50,000 investment for a long time, you should check out these three high-growth stocks: Wolfspeed(NYSE: WOLF), Reddit(NYSE: RDDT), and Uber Technologies (NYSE: UBER).
Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free ?
Image source: Getty Images.
1. Wolfspeed
Wolfspeed is a leading producer 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-length LEDs, lasers, 5G base stations, and military radar.
Wolfspeed expects silicon carbide chips to disrupt traditional silicon chips, and it opened the world's largest 200mm silicon carbide plant in upstate New York in 2022 to support that expansion. It also sells silicon carbide materials to produce batteries and powertrains for EVs.
Wolfspeed thrived when interest rates were low, the EV market was hot, and investors were more willing to invest in up-and-coming technologies. But as interest rates rose and the EV market cooled off, Wolfspeed's sales plunged, and its margins withered.
In fiscal 2024 (which ended this June), Wolfspeed's revenue only rose 1% as its net loss more than doubled. But from fiscal 2024 to fiscal 2027, analysts expect its revenue to grow at a compound annual growth rate (CAGR) of 28% as it gradually narrows those losses. Its near-term growth remains constrained by the macro headwinds, the costs of expanding its new 200mm plant, and elevated interest rates.
But over the long term, its growth should accelerate as it laps those costs and the macro environment warms up again. With an enterprise value of $6.9 billion, Wolfspeed looks reasonably valued at 8 times next year's sales -- and it could climb higher as the silicon carbide market finally heats up.
2. Reddit
Reddit, which went public this March, carved out a niche in the crowded social media market with its user-powered discussion forums. Its 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 -- like the COVID-19 pandemic, the meme stock phenomenon, the military conflicts in Ukraine and Israel, the launches of hit video games or movies, and the U.S. elections -- instead of persistent social connections. Reddit also feeds its data to Alphabet's Google and OpenAI's ChatGPT through data-sharing partnerships.
In 2023, Reddit's revenue grew 21%, it narrowed its net loss, and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) turned positive. From 2023 to 2026, analysts expect its revenue to grow at a CAGR of 36% as its adjusted EBITDA increases at a CAGR of 109%. They also expect it to turn profitable in 2025 and more than double its net income in 2026. We should take those rosy estimates with a grain of salt, but Reddit could keep pulling peer-seeking internet users from traditional search engines, news sites, and social media platforms.
With an enterprise value of $21.8 billion, Reddit trades at 14 times next year's sales and 49 times its adjusted EBITDA. It's not a bargain, but its rapid user growth, niche appeal, and improving profitability could justify its premium valuations.
3. Uber Technologies
Uber owns one of the world's top mobility and delivery platforms. It suffered a severe slowdown during the pandemic as declining ridership offset a big growth spurt in its food delivery business. But as those headwinds passed, its growth rates accelerated again as both businesses expanded.
Uber maintained that momentum in 2022 and 2023 as inflation, high interest rates, and other macro headwinds rattled the economy. In 2023, its total number of trips grew 24%, its gross bookings rose 19%, and its revenue climbed 17%. For 2024, it expects its gross bookings to grow 17%-18% -- and analysts expect its revenue to increase 17%.
Uber's top-line growth was driven by the expansion of Uber One, which grew 70% year over year to over 25 million members in its latest quarter; and newer platforms like Uber Teens, Uber for Business, and Uber Health. Its take rates (the percentage of each booking it retains as revenue) also improved as it leveraged its scale to raise its ride-sharing and delivery fees.
As its bookings and revenue grew, it continued to cut costs and divest its lower-margin businesses. That's how it turned profitable in 2023, and why it expects to stay in the black for the foreseeable future.
From 2023 to 2026, analysts expect Uber's revenue to grow at a CAGR of 16% as its net income rises at a CAGR of 53%. Those are stellar growth rates for a stock that trades at 31 times forward earnings -- and it could still have plenty of room to run.
Should you invest $1,000 in Wolfspeed right now?
Before you buy stock in Wolfspeed, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Wolfspeed wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $870,068!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
Suzanne Frey, an executive 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 has positions in and recommends Advanced Micro Devices, Alphabet, Nvidia, Uber Technologies, and Wolfspeed. The Motley Fool has a disclosure policy.
