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2 Innovative Growth Stocks to Buy Hand Over Fist for the Next 10 Years

By Anthony Di Pizio – Nov 4, 2021 at 7:55AM

Key Points

  • Facebook, shortly to be known as Meta, is shifting its focus to the next generation of social technology.
  • Advanced Micro Devices already produces the advanced computer chips necessary to power this new virtual reality.
  • Together, these two companies can help future-proof your portfolio.

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The metaverse is coming, and these two stocks are a great way to get your portfolio involved.

Most investors want exposure to the technology sector. It's a great way to bet on the future, and winning tech stocks are renowned for their high-growth returns. But there's a challenge for the casual observer of the industry: It moves fast, and can be incredibly difficult to keep up with. 

It likely won't get any easier with the next generations of revolutionary tech, including artificial intelligence, machine learning, and what Mark Zuckerberg is calling the metaverse -- a virtual-reality world that he hopes will be the next big thing. 

But even if there's no easy way to predict how it will all shake out, there are some technology companies that have proven their staying power and are likely to remain great investments for at least the next decade. Here are two that should top your shopping list. 

A person using a virtual reality headset while sitting in a cafe.

IMAGE SOURCE: GETTY IMAGES

1. The case for Facebook

While it's still Facebook (META -1.19%) right now, come Dec. 1 it will officially be called Meta -- short for metaverse. The company opted to change its name to align with its shifting focus toward the evolving sphere of virtual reality. Facebook believes the metaverse is the next logical step in digital-based social interactions, but unlike existing social networks, this one is designed to rival the real world.

CEO Zuckerberg acknowledges that his company can't build the metaverse alone: This will be a collaborative effort between many technology companies, including manufacturers of advanced semiconductors that power related devices. But Facebook's specialty is connecting people, so it's reasonable to assume it might own significant pieces of the underlying framework -- or architecture, if you will.

That would open the door to major opportunities, as the metaverse might even have its own economy, where user-avatars can maintain an inventory and teleport to different experiences within the virtual realm. For Facebook, this could result in financial growth that trounces its historical performance.

Metric

2011

2021 (Estimate)

Overall Growth

Revenue

$3.7 billion

$118.0 billion

3,089%

Earnings Per Share

$0.46

$13.99

2,941%

DATA SOURCE: FACEBOOK, YAHOO! FINANCE 

Facebook has been a transformative part of many investors' portfolios -- its shares are up 746% from the price at which it went public in 2012. But some of its best growth could still be ahead. 

It faces challenges and controversy -- as disruptive technology companies often do. Facebook was most recently under fire for its approach to safety, as a whistleblower revealed significant failures in protecting its users from harmful content.

It's not the first time and likely won't be the last, but with 2.9 billion monthly active users, the company should overcome these difficulties and emerge with a safer platform, and renewed strength that it can apply to its metaverse project.

An advanced robot arm holding a computer processing chip.

IMAGE SOURCE: GETTY IMAGES

2. The case for Advanced Micro Devices

Advanced Micro Devices (AMD -2.51%) is a semiconductor giant, producing advanced computer chips that power some of the most popular devices on the market. Consumers are demanding more intelligent goods with functions beyond their formerly typical use-cases (internet connectivity inside cars, for example), and AMD will play a critical role as these trends progress.

The company's chips can be found in a number of products you've likely interacted with recently, including Sony's PlayStation 5, and Microsoft's Xbox Series X and Surface line of devices. But it struck an even more exciting deal earlier this year that will see AMD chips powering Tesla's Model S and Model X infotainment systems. 

Like Facebook, AMD is already planning for next-generation technologies. It currently produces a line of virtual reality-ready graphics cards, and even makes plug-and-play solutions for the Oculus line of VR headsets -- which are owned by Facebook, and will be key tools for experiencing the metaverse.

Metric

2018

2021 (Estimate)

CAGR

Revenue

$6.48 billion

$16.0 billion

35%

Earnings Per Share

$0.32

$2.61

101%

DATA SOURCE: ADVANCED MICRO DEVICES, YAHOO! FINANCE. CAGR = COMPOUND ANNUAL GROWTH RATE

If AMD meets analysts' consensus expectations for the remainder of 2021, it will, on an annualized basis, have doubled its earnings per share each year since 2018. Its gains are undergirded by a 48% gross margin, the company's highest in at least two years. That high margin is the result of the global chip shortage, which is allowing AMD to charge higher prices. From an investment standpoint, this company is already a huge winner.

But as the digital revolution enters its next phase, innovations like the metaverse will no doubt result in surging demand for hardware with advanced computing power, and therefore AMD's best-in-class products. As the company goes from strength to strength, it's definitely a stock to buy for the next decade.

Anthony Di Pizio has no position in any of the stocks mentioned. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool owns shares of and recommends Advanced Micro Devices, Meta Platforms, Inc., Microsoft, and Tesla. The Motley Fool has a disclosure policy.

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