Buying and holding strong tech stocks for a long time is a proven way to make money in the stock market. This strategy allows investors to capitalize on disruptive innovation in this sector and benefit from the power of capitalization.
For example, an investment of $1,000 made in the Technology sector Nasdaq-100 The index a decade ago is now worth more than $5,000. Of course, the index has been up and down over these 10 years, but investors who were smart enough to put their money into potential long-term winners have seen their investments grow significantly.
An investment of $5,000 in NVIDIA a decade ago is now worth nearly $1.35 billion, suggesting that tech stocks have the ability to turn investors into long-term millionaires. Of course, not every tech stock is Nvidia, and investors shouldn’t get the impression that investing their money in a single company could help them become millionaires.
However, buying strong tech stocks as part of a diversified portfolio could help you build a million-dollar portfolio over the long term. Tech Stocks super microcomputer (NASDAQ:SMCI) and SoundHound AI (NASDAQ: SOUND) Both are taking advantage of huge growth opportunities that could make their stocks soar and even help investors become millionaires.
1. Super microcomputer
Super Micro Computer, also known as Supermicro, has been one of the market’s top stocks this past year. A $1,000 investment in this stock a year ago is now worth $4,000 and remains a solid buy thanks to its attractive valuation.
Supermicro’s price-to-sales ratio of 4.4 and forward earnings multiple of 23 make buying the stock a no-brainer, especially considering its excellent growth. The company, which makes servers, is on track to end the current fiscal year with $14.9 billion in revenue, which would be more than double the revenue it generated in the previous fiscal year.
More importantly, Supermicro is taking steps to ensure it can remain a fast-growing company for a long time to come. Supermicro recently announced that it will add three new manufacturing facilities to enhance production of liquid-cooled server racks. More specifically, the company is looking to more than double the total production of its liquid-cooled server racks from the current capacity of 1,000 per month in order to meet the growing demand related to artificial intelligence (AI).
This is a smart move. Demand for liquid-cooled data centers is expected to grow at an annual rate of more than 24% over the next decade, generating nearly $40 billion in revenue by 2033. Meanwhile, sales of liquid-cooled data centers are expected to AI increases from the $30 billion estimated last year. year to $150 billion in 2027. Supermicro is benefiting greatly from the growing adoption of AI servers and is one of the key players in this space.
The company has a tremendous growth opportunity ahead that could allow it to maintain its healthy growth levels for a long time. Not surprisingly, analysts expect Supermicro’s earnings to grow at an annual rate of more than 62% over the next five years. The market could reward such impressive growth with more upside, and Supermicro could become a great buy for anyone looking to build a million-dollar portfolio.
2. SoundHound AI
SoundHound AI is another company trying to make the most of a disruptive trend in the form of voice AI solutions. Customers can use SoundHound’s voice AI platform to design custom wake words, convert text to speech, and create conversational voice assistants, among other solutions.
SoundHound’s voice AI platform is already seeing high demand. Its revenue in the first quarter of 2024 increased 73% year over year to $11.6 million. More importantly, the company’s full-year revenue guidance of $71 million points toward accelerating growth as the year progresses, and would translate into a 55% jump from last year.
SoundHound is achieving such outstanding growth because it has been able to build a strong customer base in major industries such as restaurants and automotive. In its May quarterly earnings press release, SoundHound said it had reached agreements with multiple quick service restaurants (QSRs) to implement its voice AI solutions.
Meanwhile, automotive companies such as stellantis have partnered with SoundHound to implement generative AI assistants in cars. More importantly, SoundHound says its solutions will also be adopted by electric car makers in Asia and the United States.
The company’s cumulative subscription and reservation portfolio increased 80% year over year in the previous quarter to a healthy $682 million. This metric is a combination of the contracts committed to SoundHound’s customers and the potential revenue it could earn from existing customers, where it is a key provider of voice AI solutions. This healthy order book is why analysts predict SoundHound’s revenue will rise another 47% in 2025 to $103.6 million.
However, the size of the company’s order book suggests it could continue to grow at a high rate for a longer period. Additionally, the conversational AI market served by SoundHound is projected to record an annual growth rate of nearly 25% through the end of the decade, generating nearly $50 billion in revenue by 2030.
SoundHound’s growth so far indicates that it is outperforming the market. Investors who want to buy AI stocks that can boost their portfolios over the long term would do well to take a closer look at SoundHound AI. It has the potential to become a key member of a million-dollar portfolio.
Should you invest $1000 in SoundHound AI right now?
Before you buy SoundHound AI stock, consider this:
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Nvidia. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.
2 Tech Stocks From Millionaire Creators was originally published by The Motley Fool