Growth investors have experienced significant volatility since the beginning of 2020. The dramatic recovery from pandemic lows gave way to painful declines in the 2022 bear market.

While the slump affected almost every growth tech stock, the stocks with true long-term growth potential became a bit more obvious after last year's trial by fire. That's when investors saw companies like Snowflake (SNOW -5.26%) and The Trade Desk (TTD -11.48%) prove their value by continuing to perform well. These two stocks could help their investors make a fortune over the next several years and both stocks currently sell at significant discounts from their 2021 highs.

1. Snowflake

Data is critical to companies operating in the cloud. The ability to safely store and manage data from one centralized location is invaluable as it helps protect data integrity and ensures that only designated people or groups have access to an enterprise's valuable information. Large cloud companies, including Amazon and Microsoft, offer data cloud products on their proprietary servers and many companies turn to multiple cloud providers to handle their various data storage needs. But that creates issues when you want to combine various data together to fully analyze it.

Snowflake's ecosystem provides the advantage of working with all major cloud providers, free of the potential biases created by these proprietary servers. That factor has allowed Snowflake to compete with some of the largest and best-funded cloud companies.

That value proposition on display with Snowflake attracted a pre-IPO investment from Warren Buffett's company Berkshire Hathaway, showing that top investors have watched this company from the beginning. Moreover, Snowflake estimates a $248 billion total addressable market by 2026, and so far it has only reached a tiny fraction of that market.

In fiscal 2023 (which ended Jan. 31), Snowflake reported almost $2.1 billion in revenue, a 69% increase versus fiscal 2022. A 31% customer growth rate (which included a 79% increase in customers with over $1 million in annual product revenue) contributed heavily to that increase. Also, the 58% rise in spending for Snowflake's average long-term customer also added a boost.

Still, Snowflake stock faces some challenges. Fiscal 2023 net losses came in at $798 million, up from the $680 million in fiscal 2022. This could hamper Snowflake stock at a time when investors want to see net profits. Also, at a price-to-sales (P/S) ratio of 21, the stock appears expensive by just about any measure.

Still, that valuation is well below the 175 P/S ratio the stock sported soon after its IPO. Furthermore, its stock price is just above record lows. Given the rapid growth and massive total addressable market, that stock price may induce some investors to ignore the high valuation and start buying.

2. The Trade Desk

The Trade Desk operates a demand-side platform in the burgeoning digital ad industry. It uses an ecosystem designed to bring advertisers, publishers, and consumers together.

The Trade Desk succeeded by harnessing first-party data, allowing its ecosystem to give detailed reports regarding an ad's performance in reaching its target audience. The launch of its Galileo software in January enables advertisers to utilize data in a "privacy-conscious manner." It also leads the way in customer identification through Unified ID 2.0, a critical asset in a world transitioning away from third-party cookies.

Admittedly, the industry is suffering a bit right now under a sluggish economy that has led to cuts in ad spending. Ad agency Dentsu forecasts a 4% yearly growth rate for global advertising in 2023, down from 8% in the prior year.

However, that slowdown has not yet been seen in The Trade Desk's performance. Its 2022 revenue of nearly $1.6 billion grew 32% compared with 2021 levels. The company credited an improved relationship with agencies and brands in achieving that growth.

Still, while it remains a consistently profitable company, a 34% yearly rise in operating expenses and higher income taxes took a toll on the bottom line. The 2022 net income of $53 million fell from $138 million in 2021. Also, with the bear market in tech stocks in 2022, the company's performance slightly lagged behind the S&P 500 over the last year.

The profit lag also took its toll on valuation, with the P/E ratio now approaching 600. While the P/S ratio of 18 is coming off post-pandemic lows for this stock, The Trade Desk's stock remains pricey.

Nonetheless, the fact that this outstanding growth stock can maintain high revenue growth in a challenging ad market is a testament to this company's strength. As the transition to digital advertising continues, that success increases the chances that investors can succeed with The Trade Desk stock despite its higher cost.