It's not terribly difficult to identify the sizzling growth stocks of the moment, drawing heaps of enthusiasm on Wall Street. It can be a bit of a challenge, however, to spot those companies that have long-term staying power and are going to still be thriving many years into the future. It requires a product or service in perpetual demand as well as the capacity to adapt as the marketplace evolves.
With that as the backdrop, here's a rundown of three growth stocks that could be massive long-term winners.
1. Nvidia
You probably know the name Nvidia (NVDA 6.18%) as a manufacturer of computer hardware -- specifically, a maker of high-performance graphics processors that hardcore video gamers need. The company still makes great graphic cards. As it turns out, though, the same technology is perfectly suited to handle all the calculations needed in artificial intelligence (AI) applications.
That's how Nvidia's data center business (which largely serves the AI market) became its single-biggest profit center, accounting for over half of the company's revenue. Superior technology is also how Nvidia became the leader of the world's AI hardware market; some estimates put its market share reach in the ballpark of 90%.
And that's what makes this stock such a great long-term prospect -- the AI movement has still only scratched the surface of its potential. Market research outfit Technavio forecasts annualized AI chip market growth of more than 60% through 2027. Nvidia is prepared to capture more than its fair share of this growth by virtue of its software's ability to provide off-the-shelf, turnkey AI solutions. Precedence Research believes the software sliver of the AI market is on pace to grow by an average pace of 23% through 2032.
Nvidia shares are seemingly priced at somewhat frothy levels right now -- up more than 300% just since last October's low. Just don't be too stingy or short-sighted if you want in. The analyst community's current consensus target stands at $647.20, which is still 38% above the stock's present price. Nvidia shares' current price is also only a relatively modest 28 times next year's expected per-share earnings. This recent rally is pretty well justified.
2. Icon PLC
While Nvidia may be a household name, Icon PLC (ICLR 2.74%) isn't. There's a very good chance you or someone in your household has benefited from Icon's service, however, without realizing it.
In simplest terms, Icon PLC helps more familiar pharmaceutical names develop their drugs. It's a clinical research organization, or CRO, meaning that it handles clinical testing for drug companies that don't want to deal with the distraction or cost of handling such duties on their own. The Ireland-based company solidifies its relationships with add-on services like consulting, any labwork required for a particular trial, and patient recruitment and retention.
It's a true win-win, too. That's because the logistics of clinical drug trials are complicated and expensive, particularly for smaller developers that may only be working on a few projects -- or maybe even just one drug. They're also risky. A University of Michigan study in the journal Science Direct points out that 90% of drugs fail to win approval. Of those, roughly half fail because of clinical inefficiency.
It's often cheaper, easier, faster, and ultimately safer to punt this work to experts in this sliver of the pharmaceutical market. And Icon's a go-to name in the business. It's already done it all and is good at what it does. More than a decade's worth of mostly uninterrupted revenue growth says so, as do its income and earnings before interest, taxes, depreciation, and amortization (EBITDA) growth histories.
ICLR Revenue (Quarterly) data by YCharts.
Investors have good reason to expect more of this reliable growth going forward, too. That's because there's never apt to be a time when the world will stop looking for newer and better drugs. The increasing cost and complexity of drug development also work to Icon's advantage.
3. Novo Nordisk
Last but not least (and speaking of pharmaceuticals), shares of Novo Nordisk (NVO 0.84%) offer lots of long-term growth potential. If it seems like you've heard this name being discussed more than usual of late, you're not imagining things. Credit its drugs Ozempic and Wegovy, mostly.
Although it was approved back in the middle of 2021, production delays didn't allow weight-loss drug Wegovy to reach the market until late last year. Sales are, unsurprisingly, picking up steam, stoking interest in the stock. Ozempic is a diabetes treatment that's been on the market since 2016, but it's increasingly being prescribed off-label as an obesity drug as well.
Eli Lilly's diabetes treatment Mounjaro was also just approved for weight loss, thrusting all of these options into the comparative spotlight and pushing investors into a bit of a frenzy as a result.
The thing is, there's arguably enough room in the market for Novo Nordisk and any current or prospective competitors. Goldman Sachs estimates the anti-obesity drug market will swell from around $6 billion this year to a whopping $100 billion as soon as 2030, once more overweight consumers learn about them and their efficacy.
Then there's the other reason to step into a Novo Nordisk position for the long haul -- the rest of its portfolio and pipeline. The company is a major player in the diabetes/insulin arena, with its products accounting for around half of the global GLP-1 insulin markets. Much of this business will likely remain intact, too, even if the world starts losing weight thanks to the mainstreaming of weight-loss pills and injections.
A research study recently published in The Lancet indicates the number of people living with type 2 diabetes could sell from 529 million now to a worldwide total of more than 1.3 billion by 2050. Novo Nordisk should be able to leverage its existing reach to win more than its fair share of whatever growth awaits.
