The idea of a market crash makes many investors nervous, but downturns are probably more common than you realize. Over the last 50 years, the S&P 500 has fallen at least 10% on 26 different occasions, including the current market correction. That's about once every two years. Unfortunately, it's impossible to predict the onset or duration of those events, which means you will eventually get burned if you try to time the market.
However, despite frequent corrections, the S&P 500 has still generated an annualized return of 7.6% over the last five decades. That's why investors should put money into the market on a regular basis, whether stock prices are going up or down. Building on that idea, Nvidia (NVDA -2.68%) and Airbnb (ABNB -0.98%) look like smart stocks to buy and hold through any market crash.
Nvidia is often branded as a semiconductor company, but that description only tells part of the story. Yes, its product portfolio is built around the graphics processing unit (GPU), a chip designed for visual effects and data-intensive applications. But Nvidia also provides data center networking solutions and a growing number of subscription software products for artificial intelligence (AI) and 3D design.
That comprehensive approach has made the Nvidia brand synonymous with ultra-realistic graphics and accelerated computing. In fact, the company holds over 90% market share in both industries, and it has consistently set the bar at the MLPerf Benchmarks, a series of standardized tests meant to measure the performance of AI technologies.
Not surprisingly, Nvidia's strong competitive position has fueled tremendous financial results. Over the past year, revenue soared 61% to $26.9 billion, driven by particularly strong growth in the gaming and data center segments, and free cash flow skyrocketed 72% to $8 billion. But this innovative company still has plenty of room to run.
Going forward, Nvidia should benefit from the continued evolution of the gaming and data center industries, the proliferation of AI, and the advent of the metaverse. In fact, management puts its market opportunity at $1 trillion, a figure that includes $100 billion for gaming, $300 billion for chips and systems, $300 billion for enterprise software, and $300 billion for autonomous vehicles. On that note, Nvidia's status as the gold standard in graphics and accelerated computing should help it capture a significant portion of those figures, and no market crash will alter the long-term trajectory of those markets. That's why this growth stock is a smart buy.
Hotels struggled in the wake of the pandemic, but Airbnb rebounded quickly thanks to its asset-light business model. By crowdsourcing properties from hosts, the company doesn't have to deal with the cost or time commitment of building and maintaining hotels. That means Airbnb is more agile, as it can onboard new hosts in minutes and with very little expense.
Airbnb can also pivot more quickly to meet consumer demand. Its platform lists a wider variety of lodging options, both in terms of type and location. Guests can book stays at rural farmhouses, urban apartments, and everywhere in between. Airbnb even lists thousands of unique lodgings, including the Mongolian Yurt pictured above. How many hotels could give you an immersive experience like that?
Financially, Airbnb delivered a solid performance last year. Revenue climbed 77% to $6 billion, and the company generated $2.2 billion in free cash flow, up from a loss of $667 million in 2020. Better yet, gross booking value soared 96% to $47 billion. As a leading indicator of revenue, that bodes well for 2022.
Airbnb is continuously tweaking its platform in an effort to capitalize on its $3.4 trillion market opportunity. Last year, the company simplified the host onboarding process and launched AirCover, a service that provides free liability insurance and damage protection to all hosts. Those efforts have already paid off. Airbnb's host community is larger than ever, and its platform features 6 million active listings, which should accelerate the network effect that powers its business: More hosts (and listings) brings more guests and vice versa.
Going forward, Airbnb's brand authority and flexible business model should keep it at the forefront of the travel and tourism industry. That's why this growth stock is worth buying. If the market crashes and the price drops, consider adding to your position.