Want to find stocks capable of life-changing investment returns? Start by looking at those that have already done it. Past success doesn't guarantee future results, but winners often keep winning.
Millionaire-making tech stocks like Advanced Micro Devices (AMD +2.96%), Broadcom (AVGO +1.43%), and The Trade Desk (TTD 0.26%) have turned modest investments into tremendous wealth over their times as public companies.
More importantly, they can continue doing it. Here is what you need to know about these three tech-focused stocks.
1. Advanced Micro Devices
Semiconductors are red hot on Wall Street right now, and for good reason. Artificial intelligence (AI) is poised to become a multitrillion-dollar business over the next decade.
Semiconductors are the building blocks of this technology because they power the intense computing used to train AI models. Nvidia gets most of the hype as the market leader, which leaves room for AMD to shine over the coming years.
NASDAQ: AMD
Key Data Points
AMD unveiled its MI300 AI chip at the end of last year, and the company hopes it will carve out market share. CEO Lisa Su said she believes the industry will grow to $400 billion within a few years. For reference, market leader Nvidia's total revenue over the past year is $61 billion.
That's a big pie, and AMD doesn't need a huge slice to generate tremendous growth for investors. Its data center revenue was $6.5 billion in all of 2023.
Even a 10% share of a $400 billion AI chip market would grow AMD's data center unit severalfold. Meanwhile, the stock trades at just under 50 times earnings, which isn't a bad valuation for a company that analysts believe will grow earnings by 44% annually over the next three to five years. Consider AMD an underdog AI investment that doesn't need a lot of market share to reward investors.
2. Broadcom
Just about anything that talks to a network, whether a phone, computer, or other machine, has a Broadcom chip. The company is the king of connectivity.
Broadcom isn't going to put up the monster growth that AI chip companies are seeing right now, but this semiconductor company did notch 8% revenue growth in 2023. It is more diversified, with a full suite of IT infrastructure and software services it sells to enterprises.
NASDAQ: AVGO
Key Data Points
Specifically, management is excited about the shot in the arm VMware provides. Broadcom acquired it for $69 billion in a deal that closed in November.
Broadcom's annual revenue was almost $36 billion in 2023, but management is guiding for a big jump to $50 billion this year, due mainly to VMware's presence. The world is becoming increasingly connected, which bodes well for long-term demand for Broadcom's chips. Successful sales of its IT solutions could mean investors are in for years of steady growth.
Today, the stock trades at a forward price-to-earnings ratio of 28, and analysts are looking for long-term annualized earnings growth of 14%. That makes shares a touch expensive at a price/earnings-to-growth (PEG) ratio of 2, but investors also get the bonus of a dividend that management has aggressively raised over the years. Broadcom's payout has increased for 14 consecutive years, and the average raise has been 41% over the past five years.
3. The Trade Desk
Despite being the youngest company on this list, The Trade Desk is no slouch. It plays in digital advertising, an industry that is slowly and steadily taking ad dollars away from legacy media formats like print and broadcast television.
Everything is moving online, to apps, and to streaming, where the Trade Desk shines. It's a demand-side ad exchange where brands can autonomously purchase advertisement inventory.
NASDAQ: TTD
Key Data Points
The Trade Desk is exceptional because it competes with huge companies like Meta Platforms and Alphabet. However, these tech leaders don't share information with advertisers and tell brands what they think they need to know. The Trade Desk is an open book with advertisers, which appeals to them because they know they're getting full transparency.
The company's steady, profitable growth has earned the stock quite a premium. Shares trade for more than 57 times this year's earnings, and analysts project 20% annualized earnings growth over the coming years. That's a steep PEG ratio of nearly 3, so investors should consider dollar-cost averaging into shares or wait until some market volatility drops the stock to a more attractive entry point.
