Don't call it a comeback, but after suffering through a terrible 2022, growth stocks are leading the market higher. Consider the year-to-date performance between the Vanguard Value ETF and the Vanguard Growth ETF to see how growth has outperformed.
VTV Total Return Level data by YCharts
Of course, it's not enough to notice that growth stocks have got their mojo back -- you need to know which ones to target for your portfolio. So let's examine three breakout growth stocks I think are worth owning for the next decade -- or longer.
1. Advanced Micro Devices
The first breakout growth stock worth buying and holding for the next decade is Advanced Micro Devices (AMD 0.69%).
Why AMD? Well, for starters, the company sits at the nexus of opportunity and execution. Few would argue that one of the key emerging technological innovations of our age is artificial intelligence (AI).
For instance, consider what AI has done to chess. In the 1980s, human grandmasters regularly beat computers designed to play chess. By the 1990s, computers and top human grandmasters were roughly equal. Today, it's not even close. The best chess computers -- engines as they're called -- wipe the floor with human grandmasters.
This same process will play out over countless fields in the coming decades. Whether it's driving our cars, curing diseases, or creating silly cat art, computers will likely surpass natural human ability.
In light of this reality, the companies that design and make the semiconductors that "bring AI to life" stand to make enormous profits -- and one of those companies is AMD. The company is already a leader in the field and produces everything from gaming console chips to those used in automotive and aerospace technology.
Indeed, AMD is benefiting from trends beyond the rise of AI. The company's data center business is helping to power the cloud revolution, while its acquisition of Xilinx has made it a major player in the field of embedded semiconductors. Analysts expect AMD's revenue to rise to $23.6 billion in 2023 and $27.6 billion in 2024, as the world's appetite for chips continues to grow. And with that sort of growth coming, AMD is a name worth considering.
2. Pinterest
The social media sector is a wild place right now. Politicians want to ban TikTok. Mark Zuckerberg seems fixated on building the metaverse. And Elon Musk is hard at work ruining or saving Twitter -- depending on your point of view. Meanwhile, like the little engine that could, Pinterest (PINS 0.43%) keeps chugging away, almost unnoticed.
The company has a unique and innovative model that links its users not to each other -- but to images, videos, and products. Given the rise of new standards for digital privacy, Pinterest's business model suddenly seems more lucrative.
Rather than having to intuit what their users' interests are based on digital trackers (i.e., cookies), Pinterest users simply inform the company based on their Pins, with the result that it may be far easier -- and more effective -- for advertisers to place ads on Pinterest than on Facebook, Instagram, or Twitter.
At any rate, the company continues to show that its model can be effective. In the fourth quarter of 2022, Pinterest's average revenue per user (ARPU) for its American and Canadian users increased to $7.60, up from $7.17 a year earlier. That's important, because Pinterest's North American user base is its most profitable audience.
With analysts expecting Pinterest to grow revenue 8% in 2023 and 14% in 2024, growth stock investors should keep Pinterest in mind.
3. Amazon
My third and final growth stock worth owning for the next decade is Amazon (AMZN -1.14%).
It may come as a surprise, but Amazon's stock has jumped 13% year to date. And it's no wonder. After falling almost 50% in 2022, the market has noticed something -- Amazon is still a behemoth that isn't going anywhere.
With trailing-12-month revenue of $513 billion, Amazon is second only to Walmart in terms of total revenue by American companies. What's more, it's closing the gap.
AMZN Revenue (TTM) data by YCharts
Of course, Amazon is more than an online retailer. Its high-margin cloud business is massive and holds a higher market share than its chief competitors, Microsoft and Alphabet. Moreover, the company continues to gain market share with its advertising business.
Still, Amazon needs a strong economy if it is to truly thrive. Obviously, last year was tough, as historic inflation and high energy costs took a toll on the company's margins. However, I believe that inflation will eventually ease and that energy prices will stabilize. Combined with Amazon's previously announced workforce reductions, I think Amazon's stock is well positioned to soar for another decade or more.
