After a brutal stretch of trading last year, growth stocks have generally seen strong recovery momentum in 2023. But many promising tech companies still trade at huge discounts compared to previous highs, and some appear to be in the early stages of shaping and benefiting from massively influential business trends.
While it's impossible to say what twists and turns the stock market might take in the near term, investors who take long-term approaches to the best of today's beaten-down growth stocks will likely generate incredible returns over time. If you're searching for tech companies that can crush the market, here's a look at two category-leading innovators that could help make you a fortune.
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1. Roblox
In many respects, Roblox (RBLX 1.35%) is already succeeding with the type of metaverse vision that Meta Platforms is sinking billions of dollars into pursuing each quarter. Having a successful metaverse platform potentially allows the platform owner to collect huge amounts of valuable data, play host to a wide variety of additional applications and services, take a cut of every transaction conducted through its channels, generate revenue from advertisements, and take advantage of other avenues for monetization.
Think of what Apple and Alphabet have accomplished with their respective mobile operating systems and App Store and Google Play platforms. A thriving metaverse can provide similar competitive advantages and sources of revenue, and it looks like Roblox is in the early stages of capitalizing on a massive opportunity.
After some uneven performance over the previous 18 months due to pandemic-related engagement shifts, Roblox's fourth-quarter results were quite encouraging. While daily active users (DAUs) were flat on a sequential basis at 58.8 million in Q4, the platform's DAU count was up 19% compared to the prior-year period. Average bookings per user declined slightly, but the increase in active users was enough to push total bookings for the period up 17% year over year to hit $899.4 million.
The metaverse leader is back to posting solid bookings increases and engagement growth, and its long-term growth potential is tantalizing. With business performance coming in strong and the stock still trading down roughly 74% from its high, Roblox offers big upside potential.
2. Snowflake
Snowflake (SNOW 3.69%) is a software company that's helping its customers make sense of the world's exploding data generation. Through its data-warehousing platform, users can combine and analyze information that comes from otherwise walled-off cloud infrastructures. With the stock trading down roughly 64% from its high, long-term investors could score big wins by taking a buy-and-hold approach with Snowflake at today's prices.
At a time when data analytics is central to shaping business strategies and powering individual applications, Snowflake's technologies are making it easier to utilize and act on a much wider spectrum of information. Data is also at the heart of the artificial-intelligence revolution, essentially serving as the fuel for algorithms to generate valuable results and power new leaps forward.
Snowflake is still in the early stages of benefiting from AI-related tailwinds, but the company's data-warehousing tech is poised to play a key role in a growing range of AI applications. In addition, the overall business has already been growing at an impressive clip.
Snowflake managed to grow its product revenue 70% last year, and anticipates growing product revenue 40% to roughly $2.7 billion this year, even as macroeconomic challenges are depressing spending from small and midsized enterprises. For its fiscal year ending in January 2029, the company expects to have recorded approximately $10 billion in product revenue and more than $2.5 billion in non-GAAP (generally accepted accounting principles) adjusted free cash flow.
With the stock down big from its high and the business's long-term growth story likely still in its very early chapters, Snowflake could deliver big wins for patient shareholders.
