Every investment contains an element of risk. Yet although there aren't any sure things in the stock market, the following businesses offer their shareholders a high probability of success in the coming years.
Walmart
People like bargains. That's particularly true today, as consumers battle stubbornly high inflation. Walmart's (WMT 1.74%) low prices are attracting increasingly cost-conscious shoppers during these challenging economic times -- and the discount retailer's profits are swelling.
NASDAQ: WMT
Key Data Points
The retail giant's massive scale -- Walmart's more than 10,500 stores generated a whopping $648 billion in revenue over the trailing 12 months -- enables it to negotiate the best deals with suppliers. The company's large selection of value-priced groceries and other household essentials entices customers to return often to its stores.
Moreover, Walmart's profits are likely to grow faster than its sales. Smart investments in automation technology are making its sprawling fulfillment network more efficient. During a conference call with analysts, CFO John Rainey said the company's cost of fulfillment improved by 20% over the last year. New investments in artificial intelligence (AI) and drone delivery technology should lead to further profitability gains.
Walmart has another powerful profit driver in its booming advertising business. In February, it struck a deal to acquire smart-TV maker Vizio for $2.3 billion. Walmart intends to integrate Vizio's popular SmartCast operating system into its digital ad network. The deal is expected to boost the retail titan's data-collection and ad-targeting abilities. Walmart's high-margin ad sales are already growing rapidly, including a 28% jump to $3.4 billion in 2023.
Nvidia
We've entered the age of AI. The cutting-edge technology promises to bring enormous productivity gains to businesses of all sizes. Unsurprisingly, demand for the tools that enable AI is soaring.
These trends are a boon for Nvidia (NVDA +0.29%). The semiconductor colossus designs the chips that power the most advanced AI models and applications.
NASDAQ: NVDA
Key Data Points
Tech leaders like Microsoft, Alphabet, Meta Platforms, and Tesla rely on Nvidia's chips to deliver their AI services. The chipmaker's sales and profits, in turn, are skyrocketing. Nvidia's revenue leaped 126% to $61 billion in its fiscal year ended Jan. 28. Its adjusted net income, meanwhile, soared 286% to $32 billion. These are astounding rates of growth for a $2.2 trillion business.
CEO Jensen Huang expects sales of AI chips to remain strong in the coming years. Data center operators are projected to shift more of their spending to graphics processing units (GPUs) that excel at running AI workloads. To capture this demand, Nvidia unveiled a new line of powerful GPUs and AI chipsets during its eagerly awaited tech conference on March 18. The company's Blackwell processors are expected to provide a notable performance boost and significant cost savings compared to its enormously popular Hopper chips.
Additionally, Nvidia debuted software designed to make it easier for its customers to run AI models across both cloud and on-premise data centers, as well as AI-enabled personal computers (PCs). These new software services could encourage companies to view the tech juggernaut more as a trusted AI platform rather than simply a hardware supplier and help to further differentiate Nvidia's AI offerings from the competition.
