If you're looking for two companies currently putting up some significant gains, look no further than Airbnb (ABNB -2.50%) and Nvidia (NVDA -6.21%).
The stock prices of these two have been on a roll lately, but more importantly, the companies are also experiencing steady growth in their businesses. Here's what they're doing and why investors should consider buying their shares right now.
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1. Airbnb: Up 35% in 2023
Airbnb's stock has been on a tear since the beginning of this year, easily outpacing the S&P 500's gains over the past several months as investors process some of the company's recent growth.
Sales spiked 40% in 2022 to $8.4 billion, and the company continued to expand the amount of global listings it has on its platform to 6.6 million, an increase of roughly 900,000 from the previous year.
On a quarterly basis, things are looking good at the company as well. Airbnb's earnings per share in the quarter were $0.48, beating analysts' consensus estimate of $0.25. And sales of $1.9 billion in the quarter were its highest ever.
And just in case you're wondering if the company has bounced back from the near-devastating blow it experienced during the COVID-19 travel shutdown, consider that the number of gross nights booked for more than a week is up 40% from the same period in 2019.
Of course, it's not all sunshine and rainbows; the company could face a slowdown (along with all other growth companies) if a recession materializes. But it has already been through one of its toughest trials with the pandemic, and any pullback in demand would look like a walk in the park in comparison.
2. Nvidia: Up 85% in 2023
Cloud computing and artificial intelligence (AI) are two of the hottest trends in tech, and will likely remain so for a while. And Nvidia is already successfully tapping into both of them with its graphics processing units (GPUs).
Tech companies of all sizes rely on high-powered GPUs for some of the most complex cloud-computing processing, and many of them choose Nvidia's chips. The company's data center business has expanded as a result and now accounts for about 60% of the company's total sales. In the most recent quarter, data center revenue rose 11% to $3.6 billion, nearly doubling the segment's sales from two years ago.
Just as data center sales slowly became the largest narrative in Nvidia's growth story, AI is now beginning to play a larger part as well. When OpenAI's ChatGPT burst onto the tech scene months ago, it showed not just how far along AI large-language models are, but it also shined a light on the fact that tech companies will soon need massive processing power for AI-focused services.
The good thing is that Nvidia has already been working with tech businesses, including Amazon, Alphabet's Google, and Microsoft, to use its hardware for AI purposes. And that focus will build on its long-term prospects.
The company believes it has a total addressable market of $150 billion in the AI space, and the popularity of ChatGPT -- which amassed 100 million monthly active users in just two months -- helped show that AI isn't just a theoretical market anymore.
The thing about growth stocks is...
Growth stocks currently are a tad volatile. No big surprise there, considering that many investors are trying to figure out what's happening with the economy. But if you're buying Nvidia or Airbnb, it means that you should remember to keep a five-year outlook (or longer!) on your investment, and not be caught up by the shifting sands of daily trading news.
