Even if an investor starts from a relatively large base, achieving a net worth of $1 million in the stock market is a challenging feat. If one finds that a stock is on track to make massive gains in a shorter period, such as a year, forecasting such growth and sustaining it over a long period of time is another matter.
Fortunately, the market offers innovative stocks that will benefit from these trends. It is true that the market offers no guarantees, but given its pace of innovation and the pace of growth it is expected to follow, there is a reasonable chance of achieving such returns in these three stocks.
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tesla(NASDAQ:TSLA) has impressed investors with massive growth, as the launch of the Model 3 and Model Y showed that a mass-market electric vehicle could not only become popular with consumers, but could also help Tesla achieve growth. and considerable profitability.
Fortunately for investors, Tesla isn’t done innovating and its artificial intelligence (AI)-powered self-driving technology could spark the next wave of stock price growth. It has just launched its Cybercab, its next autonomous vehicle, and estimates that it can increase production to 2 million units a year by 2026.
Additionally, Tesla hopes to offer this technology as a sort of autonomous driving platform-as-a-service offering. Cathie Wood’s Ark Invest thinks that could take its stock to $2,600 a share, a roughly eightfold gain over five years, as self-driving technology eventually drives most of Tesla’s revenue growth.
As of now, Tesla stock is on the road to recovery, having more than tripled from a multi-year low of just over $100 per share in early 2023. In fact, the recent P/E ratio of 88 may seem high. However, if Ark Invest is right that self-driving technology becomes the company’s main revenue driver, that premium may be a small price to pay for Tesla’s growth potential.
When it comes to the AI chip market, a semiconductor stock like Qualcomm (NASDAQ:QCOM) It may seem like an afterthought. After all, the company’s revenue had been declining in recent quarters, and once the 5G upgrade cycle was over, it seemed primed for a pullback.
However, AI has given consumers a new reason to buy a smartphone and Qualcomm is ready to deliver AI capabilities with its Snapdragon 8 Gen 3 and Elite Mobile Platform. Plus, it continues to outperform the competition, as companies like Apple You try to develop a superior product, only to re-sign with the company.
Additionally, Qualcomm is preparing for the day when smartphones become less critical. To that end, it has expanded into PCs, industrial/IoT applications, and automobiles, and its automotive segment is growing at a particularly rapid pace.
Additionally, investors should remember that Grand View Research forecasts that the global AI chip market will grow at a compound annual growth rate of 29% through 2030. Therefore, even if its share of the AI market is not that large Like Nvidia’s, the technology could substantially increase the company’s growth.
Finally, its P/E ratio of just 19 may indicate that investors may have ignored this company until now. As the AI capabilities of smartphones and other applications become more evident, the low valuation could be the catalyst Qualcomm needs to rise from here on out.
Those who don’t believe that an exchange-traded fund (ETF) can generate outsized returns should take a closer look at the VanEck Semiconductor ETF (NASDAQ: SMH). The fund has mastered the art of owning numerous stocks to diversify while consistently outperforming S&P 500(SNPINDEX: ^GSPC).
The VanEck fund consists of 26 semiconductor stocks and its holdings are well known to technology investors. NVIDIA represents around 23% of the fund, followed by a 13% allocation in Taiwan Semiconductors and 8% in Broadcom.
Each of its other holdings represents less than 5% of the fund. However, other holdings include amd, Texas Instrumentsand ASML.
Amid that relative lack of diversification, the fund returned an average of 27% annually over the past 10 years. That includes boom years like 2024, with the fund up 49% so far this year and down 34% during the 2022 bear market.
Finally, portfolio management and profitability cost shareholders an ETF expense ratio of just 0.35%. In comparison, morning star estimated the average expense ratio was 0.48%, meaning investors benefit from this fund at a low cost.
Given those low management costs and the ETF’s returns, investors may have good reasons to buy the VanEck Semiconductor ETF rather than relying on an individual stock.
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Will Healy has positions at Advanced Micro Devices and Qualcomm. The Motley Fool positions and recommends ASML, Advanced Micro Devices, Apple, Nvidia, Qualcomm, Taiwan Semiconductor Manufacturing, Tesla, and Texas Instruments. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
Do you want $1 million in retirement? Invest $100,000 In These 3 Stocks and Wait a Decade Originally Posted by The Motley Fool
