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.
Image source: Getty Images.
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 and industry expert, I bring a wealth of firsthand knowledge to the discussion of investing in technology. Over the years, I've closely followed the evolution of technology stocks, from semiconductor manufacturing to the cutting-edge realms of the metaverse and artificial intelligence (AI). My expertise is grounded in a deep understanding of the underlying technologies, market trends, and the financial performance of key players in the tech industry.
Now, let's delve into the concepts mentioned in the provided article:
-
Technology Stocks and Portfolio Growth: The article highlights the significance of investing in technology to enhance portfolio value over time, particularly for retirement planning. It emphasizes the broad spectrum of tech stocks covering everything from semiconductors to the metaverse and AI.
-
Meta Platforms (META 0.24%):
- Overview: Formerly known as Facebook, Meta Platforms is a social media giant that owns Facebook, Instagram, and WhatsApp.
- Financial Performance: Meta Platforms experienced a remarkable rebound in 2023, with substantial year-over-year growth in revenue, operating income, net income, and free cash flow.
- Strategic Initiatives: Meta is streamlining operations, investing in Nvidia's GPUs for AI projects, and heavily focusing on building the metaverse, indicating a commitment to long-term growth.
-
Nvidia (NVDA -0.95%):
- Overview: Nvidia is a GPU designer and manufacturer, playing a pivotal role in the accelerated computing era.
- Financial Performance: Nvidia witnessed an impressive surge in revenue, operating income, net income, and free cash flow in the first nine months of fiscal 2024.
- Strategic Collaborations: Nvidia's collaborations include working with Foxconn on AI factories, partnering with Indian tech giants for language models, and teaming up with Microsoft for custom generative AI enterprise applications. These initiatives showcase the company's diversification and expansion into various tech domains.
-
Palantir Technologies (PLTR -0.67%):
- Overview: Palantir is a software company leveraging AI for creating data analysis platforms, catering to government agencies, manufacturing companies, financial firms, and healthcare institutions.
- Financial Performance: Palantir reported strong earnings for the first nine months of 2023, with year-over-year increases in revenue, operating income, and net income. The company demonstrated profitability for the fourth consecutive quarter.
- Business Metrics: Palantir's customer count increased, with a notable rise in commercial customers. The company's financial indicators, such as billings and deals over $1 million, point towards a positive trajectory.
-
Industry Collaboration:
- The article mentions various collaborations and partnerships involving these companies. Meta Platforms is investing in Nvidia's GPUs, Nvidia is collaborating with Foxconn, Indian tech giants, and Microsoft, while Palantir has signed a commercial partnership with Option Care Health. These collaborations showcase the interconnected nature of the tech industry and its efforts to drive innovation across different sectors.
In conclusion, the article paints a compelling picture of the transformative power of technology stocks, emphasizing the growth potential of industry leaders like Meta Platforms, Nvidia, and Palantir Technologies. These companies showcase not only robust financial performance but also strategic initiatives and collaborations that position them at the forefront of technological advancements. As investors navigate the ever-evolving landscape of technology, these insights serve as valuable considerations for building a resilient and growth-oriented portfolio.
