Given the tech industry's growth over the last few decades, it's difficult to dispute its role in building the future. Apple, Microsoft, and Amazon are three of the world's largest companies because they pioneered new industries and significantly changed the lives of billions of people.
Still, investors tend to find the highest returns by discovering the next company that will help build the future. To that end, investors could profit by taking an interest in Tesla (TSLA -1.11%), Roku (ROKU -10.29%), and Airbnb (ABNB 0.75%).
1. Tesla
Investors know Tesla best for its electric-vehicle (EV) and battery technology. Indeed, the company made dramatic strides in making EVs a viable technology. Its batteries are also instrumental in turning household roofs into a series of solar panels that can power a home.
However, its next great advancement will probably come from artificial intelligence (AI). The company has developed its own AI chips, robots, and software to develop fully autonomous vehicles. Also, Tesla holds a considerable competitive advantage over automakers and tech companies since it specializes in vehicle production and autonomous-driving platforms.
Its massive growth continues. Revenue in the first half of 2023 of $48 billion surged 35% over the last year.
That increase didn't negate the fact that price cuts, rising costs of sales, and higher operating expenses took their toll. Net income fell 7% during that time to $5.2 billion. Consequently, lower profits may have led to its price-to-earnings ratio (P/E) rising to about 70.
Nonetheless, that valuation is historically low. With increasing revenue and its AI-driven vehicles, Tesla is becoming a more essential automotive and AI company.
2. Roku
The rise of streaming companies pioneered a transition from traditional TV to streaming, and the company likely to encapsulate this trend is Roku. Its players and TV OS bring content providers, viewers, and advertisers into the same ecosystem.
Despite competing with the likes of Samsung, Google-parent Alphabet, and Amazon, Roku has managed to become the leading TV OS in North America, with a 50% market share, according to Pixelate. Also, the number of active accounts grew 16% yearly in the second quarter of 2023, while streaming hours rose 21%.
That increase occurred despite an ad slump, which admittedly affected revenue growth. The company's revenue in the first half of 2023 of $1.6 billion is up 6% over the same period last year. That rate will likely not inspire investors, but the fact that its revenue grew by 55% in 2021 shows that Roku could deliver considerable returns in a more robust ad market.
Moreover, Roku is losing money, and that trend will probably continue for the foreseeable future. But with a price-to-sales ratio (P/S) of 3 and user growth moving higher at a rapid pace, Roku is positioned for massive gains once the ad market recovers.
3. Airbnb
Airbnb has started to transform the market for short-term and vacation rentals. It has successfully leveraged technology to compete with hotels and succeeds partially because its name recognition and easy-to-use platform attract customers and landlords eager to rent spaces.
Additionally, it uses AI for purposes such as profiling customers and setting rates for properties based on factors such as location and seasonality. The site also includes links for possible activities for both vacationers and workers and facilitates communications between landlords and tenants to provide a high level of service.
Such service and growth meant customers booked more than 236 million nights and experiences in the first half of 2023. That resulted in $4.3 billion in revenue for the first two quarters, a 19% rise from the same period in 2022.
Moreover, Airbnb earned $337 million in interest income. Consequently, its net income of $767 million during that period resulted in a 113% yearly increase.
Furthermore, its P/E ratio of 39 hovers modestly above record lows. Given the company's profit growth, that valuation for the internet and direct marketing retail stock could profit investors as Airbnb continues to transform the short-term rental experience.
