If you're looking for a few ways to benefit from some of the largest tech trends right now, there's no shortage of stocks out there. But sifting through all the available investment ideas and finding a few with the potential to go the distance in your portfolio is much harder.
To help you with that process, the three top stocks listed below are leading companies in their respective markets and are well positioned for the future. Let's take a closer look at why Roku (ROKU -10.29%), Etsy (ETSY 0.34%), and Nvidia (NVDA 6.18%) deserve your consideration.
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1. Roku
Consumers' transition from traditional TV providers continues to accelerate -- and Roku is benefiting. Pay-TV subscribers fell to just under 60% of U.S. households this year, its lowest in over 30 years. And many of those cord-cutters are moving to streaming platforms.
That's boosted Roku's accounts, which increased 16% in the most recent quarter to nearly 74 million. And all those people spend a lot of time on Roku's platform, with viewing hours increasing 21% to 25 billion.
Roku benefits from all of this in two ways.
First, Roku receives a cut of each subscription users sign up for on its platform. So, the more accounts created, the more money it makes from subscriptions. Platform revenue (including subscription sales and advertising) rose 11% to $744 million in the second quarter of 2023.
Second, the company also sells advertising on its platform, so the eye-popping 25 billion hours streamed is worth a lot to advertisers. The digital ad market will grow from $264 billion this year to an estimated $395 billion in 2027.
Roku's stock has stumbled a bit this year, but investors shouldn't worry too much. The company's platform has 43% of the U.S. TV operating system market, tens of millions of accounts, and billions of hours viewed each quarter. With more people leaving traditional pay TV daily, Roku is sure to grow as it welcomes them into the cord-cutting fold.
2. Etsy
Some investors have been worried about Etsy recently after the company's growth slowed following a boom in sales during the pandemic. But a closer look at the company shows it's still in good shape and likely poised for more growth.
Consider that over the past four quarters, the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) was $711 million, making Etsy very profitable. And while other companies have tried to figure out how to get mobile users to open their wallets, Etsy's app has constantly been a huge hit, with mobile sales bringing in 67% of the company's gross merchandise volume last year.
The potential long-term benefit for investors comes from not only Etsy's current strength as a leading e-commerce platform but also the ability of the e-commerce market to continue growing for years to come. The latest U.S. Census Bureau data shows e-commerce sales made up about 15% of all retail sales in the U.S. in the first quarter of this year.
This leaves lots of potential upside for Etsy to benefit as e-commerce matures and encompasses a larger portion of the U.S. retail market. With a recent pullback in Etsy's share price, now could be a good time to jump on this leading e-commerce stock as it continues to ride the e-commerce wave.
3. Nvidia
When OpenAI's ChatGPT bot burst onto the tech scene last year, it started an artificial intelligence (AI) race that will likely continue for years. And while all the major tech companies are busy trying to figure out how to beat the AI competition, Nvidia may be the biggest winner. The company's graphics processors are some of the best on the market for AI processing, meaning tech companies are scooping them up to power their AI data centers.
Nvidia's management said on its second-quarter earnings call that it had "tremendous" demand for its AI chips, which may even be an understatement. The company's revenue jumped 101% year over year in the most recent quarter, and adjusted earnings per share (EPS) spiked 429%.
And the shift to AI is only just beginning. Amazon recently announced a slew of new AI services, Meta could use AI to build its metaverse, and Microsoft has already poured more than $13 billion into its investments in OpenAI. This focus on AI software trickles down a big demand for graphics processors.
The AI chip market is currently worth about $28 billion, but it will grow to an estimated $165 billion by 2030.
Nvidia already has AI chips in high demand, and more are on the way. With the company already the go-to supplier for AI processing power, this tech giant likely has many years ahead of benefiting from AI demand.
