Well-chosen growth stocks can create fortunes for their shareholders. The key is to identify huge and rapidly expanding industries -- and the businesses that are competing and winning within them.
The following companies are primed to capture bigger portions of massive growth markets. Investors who buy their shares today are likely to be well rewarded.
The Trade Desk
Advertising dollars follow eyeballs. And with more eyes viewing online content every year, ad spending is migrating from legacy media to digital channels.
The Trade Desk (TTD -6.23%) provides a platform for marketers to buy and manage their digital ad campaigns across a variety of online media. Its transparent pricing and advanced analytics are helping it rapidly gain share in the massive, $800 billion global advertising market.
The connected-TV segment of the ad market is expanding at a particularly brisk pace. Partnerships with the likes of Walt Disney enable The Trade Desk to offer its customers the opportunity to place their ads on popular streaming services, including Disney+, Hulu, and ESPN+.
These factors have allowed The Trade Desk to grow quickly since its initial public offering (IPO), with its revenue expanding from $203 million in 2016 to nearly $1.5 billion over the trailing 12 months. And with the digital ad industry projected to surpass $1 trillion by 2027, according to Statista, this adtech star has a long runway for growth still ahead.
Microsoft
In the world of technology, few businesses are as diversified as Microsoft (MSFT -1.96%). The tech titan commands a leading share of several enormous markets, such as commuter operating systems, productivity solutions, cloud computing, and gaming.
These varied revenue streams allow Microsoft to survive and even thrive during nearly all manner of market environments, thereby reducing the risks for investors. They also enable the software colossus to profit from the rising adoption of a wide range of new technologies. In 2023 and the years that follow, much of this growth will take place in the cloud.
Microsoft's Azure cloud computing platform is growing rapidly within a market that's projected to exceed $1.5 trillion in annual revenue by 2030, up from $484 billion in 2022, according to Grand View Research. The company's booming cloud profits should drive strong returns for shareholders in the coming years.
Snowflake
As more companies shift their operations to the cloud, data -- and the ability to harvest actionable insights from it -- is becoming only more valuable. Snowflake (SNOW -4.15%) helps organizations aggregate and analyze information from a wide range of otherwise siloed sources. The data warehousing platform, in turn, is quickly becoming an indispensable technology partner for businesses of all sizes.
Strong customer gains, combined with higher sales to existing clients, are fueling Snowflake's growth. The cloud data specialist's revenue soared 67% year over year to $557 million in the quarter ended Oct. 31.
Management sees much more growth ahead. The company projects that its total market opportunity will expand to a staggering $248 billion by 2026, leaving plenty of room for further gains.
Nvidia
Cloud computing is just one of the powerful trends fueling sales of high-performance semiconductors. Robotics, autonomous vehicles, augmented and virtual reality, and an array of other emerging markets are also boosting demand for high-tech chips. Nvidia (NVDA -2.48%) makes some of the best chips on the market -- and it's poised to benefit from these trends more than perhaps any other company.
All told, the semiconductor leader estimates its long-term addressable market at $1 trillion. Despite its already impressive $28 billion in annual revenue, an opportunity that large leaves space for tremendous growth, even for a giant like Nvidia.
In the near term, the rumored launch of a new Switch console by Nintendo could provide a significant boost to Nvidia's gaming business in 2023.
PayPal
By eliminating the need to enter your credit card information every time you make a purchase, PayPal (PYPL -1.67%) makes it easier, faster, and more secure to shop online. These benefits have made PayPal a favorite payment option for shoppers. Merchants also love it because PayPal tends to boost their sales conversion rates and, by extension, profits.
After rising sharply during the early stages of the pandemic, e-commerce sales have slowed as more people have returned to brick-and-mortar stores. But online retail sales will grow to nearly $7.4 trillion by 2025, up from $5.5 trillion in 2022, according to eMarketer. As a leading digital-payments platform, PayPal is well-positioned to profit from this global megatrend.
Moreover, a partnership with Apple will bring the iPhone's popular tap-to-pay functionality to PayPal's U.S.-based users in 2023. This growth catalyst, combined with PayPal's cost-cutting initiatives, could help to drive the payment-leader's profits sharply higher in the year ahead.
