The massive growth of Nvidia undoubtedly caught many investors by surprise last year. As ChatGPT redefined the benefits of artificial intelligence (AI), the lead designer of AI chips jumped to the forefront of investor portfolios, generating growth and returns rarely matched in the market.
While such returns are uncommon, Nvidia will likely not be the only success story, meaning other tech stocks could also produce "once-in-a-generation" growth as they stage recoveries.
Asking different investors can also increase the odds of finding such stocks, and three Motley Fool contributors suggest that Palantir Technologies (PLTR 1.38%), Axon (AXON 1.65%), and Sea Limited (SE 2.64%) could become such investment opportunities.
Palantir looks to have many years of growth ahead
Jake Lerch (Palantir Technologies): What makes for a once-in-a-generation stock buying opportunity? For me, the most important factor is a secular growth story. And today, nothing fits that bill better than the rise of artificial intelligence. So it should come as no surprise that my pick is an AI stock: Palantir Technologies.
Palantir specializes in AI-driven data analysis and pattern recognition. Through its software platforms, Palantir can help various organizations achieve very different ends. On the one hand, it could help law enforcement track and apprehend cybercriminals. On the other, it might assist healthcare organizations deliver better outcomes to patients.
In short, almost every organization today could benefit from its products in some capacity. Moreover, AI is only getting better. As it improves, the results it can deliver will also scale -- making Palantir's products even more appealing to organizations looking to increase revenue, cut costs, or improve customer satisfaction.
Best of all for potential investors, Palantir remains in the early stages of its life cycle. The company got its start partnering with governmental organizations -- law enforcement, national security agencies, and military branches. Recently, however, Palantir's commercial customer base has expanded.
In its most recent quarter (the three months ending on Dec. 31, 2023), Palantir reported commercial revenue of $284 million -- up 32% from a year earlier and representing 47% of its overall sales. American-based commercial revenue grew even faster -- 70% year over year.
To sum up, American companies are flocking to Palantir. Yet, the company still has ample room to grow -- a fantastic combination for investors.
Axon is using technology to benefit society
Justin Pope (Axon Enterprise): Years from now, investors may look back at Axon as a generational company that hid in plain sight. The company started with Tasers but has evolved into a full-fledged technology business offering cloud-based solutions for law enforcement.
In addition to non-lethal weapons, Axon sells body cameras and cloud-based software for evidence management and law enforcement operations. These products help protect law enforcement and citizens, ensuring accountability from all parties.
Axon's revenue has grown virtually uninterrupted for years, benefiting from dependable government budgets:
AXON Revenue (TTM) data by YCharts
Today, Axon has over 17,000 customers, and the business boasts a 122% net revenue retention rate, meaning that solid growth is baked into the business even without it acquiring new customers.
The stock has already been a big winner. Shares have returned a staggering 54,000% over their lifetime. Axon could continue to deliver. The business still does "just" $1.5 billion in annual revenue.
Management estimates that its current addressable market is $63 billion, leaving a clear opportunity for growth over the coming decade and beyond.
E-commerce conglomerate Sea Limited appears to be headed for smoother waters
Will Healy (Sea Limited): Considering the successes of Amazon and MercadoLibre, e-commerce conglomerates have become a source of outsize investor returns. As these e-commerce companies branched out into tech-based businesses, they leveraged their names and frequently-visited websites into multiple sources of revenue.
Fortunately, investors who missed out on these companies may have an opportunity in Sea Limited. Sea Limited started as gaming company Garena but since branched out into Shopee e-commerce and a fintech arm, SeaMoney.
Sea operates in the often-forgotten Southeast Asian market. Its core markets in that region constitute an addressable market of more than 630 million people, nearly double the population of the U.S.
Also, the stock is down by around 85% from its 2021 high. Garena's loss of Free Fire in the Indian market and Shopee's missteps in Europe and Latin America led to a massive sell-off in the stock.
However, Shopee has refocused on Southeast Asia, announcing on the fourth-quarter 2023 earnings call that it is investing heavily in logistics in its home region to bolster its competitive advantage. Also, Garena has addressed security concerns and appears close to regaining approval to operate in India.
Recovery in gaming could be game-changing for Sea Limited. In 2023, its revenue of $13 billion grew 5%. Nonetheless, Shopee's revenue rose 24% during that time, while SeaMoney experienced a 44% increase. Thus, reversing the 44% revenue decline in Garena would likely bring back massive growth on a companywide basis.
Moreover, Sea earned $163 million in net income in 2023, its first yearly profit and a milestone that increases its appeal as an investment. Analysts expect Sea to build on that growth, forecasting an earnings increase of 116% this year and a 159% profit surge in 2025.
Assuming those forecasts come to pass, such improvements could bring about a dramatic recovery in Sea Limited stock, bringing investors to the forefront of the massive and potentially lucrative Southeast Asian market.
