"Over time, it takes just a few winners to work wonders."
-- Warren Buffett, from the 2022 Berkshire Hathaway letter to shareholders
One big winner can make a fortune. No one knows this better than the Oracle of Omaha.
Take Apple, one of Buffett's most famous investments. A $50,000 investment, made in 2007 -- the same year the iPhone debuted -- would have grown to a cool $3.5 million today, a mere 17 years later.
Are there any stocks out there today with that type of potential? Of course. Here are three that might have what it takes.
Image source: Getty Images.
1. Microsoft
Topping the list is Microsoft (MSFT 1.82%). The company that made former CEOs Bill Gates and Steve Ballmer some of the richest men in the world is once again the largest company on the face of the Earth with a market cap topping $3 trillion. And thanks to its many artificial intelligence (AI)-related ventures, Microsoft stands an excellent chance of creating many more fortunes.
Let's start with the company's cloud services business. It's already a massive moneymaker for Microsoft, generating $25.9 billion in its most recent quarter (the three months ended Dec. 31, 2023). That makes it the second-largest cloud services vendor globally, trailing only Amazon Web Services.
As AI usage ramps up, Microsoft stands to benefit from increased cloud services. Indeed, after decelerating some in 2022, cloud spending appears to be reaccelerating as organizations explore how AI can improve their processes and generate efficiencies.
In addition, Microsoft's longstanding partnership with OpenAI, the company behind ChatGPT, makes Microsoft a major player in the race to develop the next AI breakthrough.
Finally, Microsoft's often underrated search, news, and advertising segment is gaining market share and growing at close to double-digits, thanks in part to its ChatGPT-powered features, which were added last year.
Microsoft has multiple pathways to riches on the AI front. Given its outstanding track record and excellent management, Microsoft could be one AI stock that makes many fortunes going forward.
2. CrowdStrike
Next is CrowdStrike (CRWD 2.03%). While nowhere near the size of Microsoft, CrowdStrike is still likely to make a number of fortunes in the coming years, thanks to its cutting-edge AI-powered cybersecurity offerings.
The company runs perhaps the premier cybersecurity platform available today, which protects networks, endpoints, and data through add-on modules that are tailored to its customers' needs. Its modules are scalable and designed to increase in effectiveness as their data inputs grow larger. In other words, CrowdStrike's product becomes better the longer a customer uses and feeds more data to its AI.
What's more, this network effect isn't limited to just one customer. As more organizations adopt CrowdStrike's platform, its AI is able to draw on more scenarios and interactions that help the system detect and prevent unwanted activity across its entire protection umbrella -- similar to the way local law enforcement agencies can rely on the FBI's Ten Most Wanted list to be on the lookout for specific individuals they themselves may have never encountered.
Financially, CrowdStrike is rocking and rolling. In its most recent quarter (the three months ended Oct. 31, 2023), the company reported $786 million in revenue, up 35% from a year earlier. Moreover, annual recurring revenue (ARR) -- a closely watched metric for companies selling subscription-based products -- increased to $3.15 billion, with $223 million of net new ARR added in the quarter.
In short, this means CrowdStrike is growing its subscription base, through bringing in new customers and by upselling additional security modules to existing customers.
At any rate, the company's solid growth points to big things ahead, as the number of cyber threats continues to grow -- meaning CrowdStrike's growth curve could extend for many years to come.
3. Nvidia
Last, but by no means least, is Nvidia (NVDA 6.18%). Let's face it: No company or stock has ridden the AI wave better or to greater heights than Nvidia. The company is now America's third-largest public company with a market cap hovering near $2 trillion -- up from $279 billion fewer than 18 months ago.
Improbable as it may seem, it's entirely possible that Nvidia could continue its ascent -- even passing Apple and Microsoft to become the largest company globally.
That's because its rate of growth is truly eye-popping. Revenue grew 265% as of its most recent quarter (the three months ended Jan. 28). Moreover, estimates of future growth are sky-high.
NVDA Revenue (TTM) data by YCharts
Ultimately, no one really knows how large the AI chip market could get. Advanced Micro Devices CEO Lisa Su recently said it could grow to $400 billion. Perhaps it could be even more.
At any rate, it's clear Nvidia has a massive head start over its competitors, and thanks to competitive advantages like its CUDA software, it might maintain those advantages for some time to come. That makes Nvidia, a company that has already made many fortunes, a prime candidate to make countless more in the years to come.
