Investors have been eager for a new bull market, and when multiple indexes high new all-time highs in early 2024, they got final confirmations that new bull markets were well underway. While not all stocks are fully contributing to the growth of today's bull market at the moment, companies with wide moats and demonstrable financial strength are steadily making their way to the top.
If you're looking for two superb growth stocks to scoop up in the wake of this current bull market, here are two names you won't want to overlook.
1. Alphabet
Alphabet (GOOGL -3.37%) (GOOG -3.33%) is a veteran player in the tech space, but that doesn't mean its growth opportunity is anywhere close to ending. The company's flagship search engine, Google, accounts for roughly 40% of all digital advertising revenue generated in the entire world. However, the digital advertising market is still growing at an elevated pace and it's on track to reach a global valuation of $1.2 trillion by the year 2030. That means it's expected to generate a compound annual growth rate of approximately 16% from its current valuation.
In the full year 2023, Alphabet brought in total revenue of about $307 billion while net income came to approximately $74 billion. Those two figures represented increases of 9% and 23%, respectively, from 2022. Digital advertising through Google Search still accounts for the lion's share of the company's revenue. Case in point: Alphabet brought in fourth-quarter revenue of $86 billion, about $48 billion of which came from the Google search engine.
While search brings in the majority of revenue, other segments account for more and more of Alphabet's revenue growth. One example is YouTube, which brought in advertising revenue of $9.2 billion in the final three months of 2023, a healthy 16% bump from what it reported in the same quarter in 2022. Subscriptions are also a growing piece of the pie for Alphabet. The company's subscriptions, platform, and devices business brought in revenue just shy of $11 billion in the fourth quarter of 2023, up 23% year over year.
The company is also making its own impressive strides in the world of artificial intelligence (AI). Gemini is Alphabet's large language model (LLM) chatbot and it is designed to work in mediums ranging from mobile devices to data centers. Gemini is available in different versions and tiers so organizations of various sizes can choose what works for their unique needs. Alphabet launched the latest iteration of its AI model Gemini 1.5 in February, just a few months after the initial version launched. There is a wide variety of use cases for these models, and Gmail and Google Docs already have Gemini incorporated in some capacity.
According to a Financial Times report on April 3, Alphabet may even be contemplating an AI-powered search engine that would feature a subscription-based paywall. The expansive footprint Alphabet has maintained in the search engine market through the decades continues to drive its business forward. The company's focus on widening its subscription-based offerings is a wise move as it seeks to diversify in a competitive space that is rapidly evolving as the AI boom continues. For long-term investors, Alphabet still looks like a no-brainer stock to buy and hold for the long haul.
2. Pinterest
Pinterest (PINS -0.53%) has had a turbulent few years following a significant uptick in growth during the early months of the pandemic. In the difficult macro period that has followed the height of the pandemic, a deceleration in advertising spend -- Pinterest's bread and butter -- has posed challenges.
A combination of unfavorable comparisons in revenue and user growth to the heightened pandemic period, along with a general slowdown in these areas, also dampened investor enthusiasm about the business. And, the challenging economic landscape has caused companies to be more cautious with where they put advertising dollars, a trend that Pinterest can't control but which will recover slowly as macro conditions improve.
Pinterest's free-to-use website and mobile app provide millions of users all over the world with inspiration on everything from recipes to travel to home decor, but these platforms are also a prime source of advertising space for brands. The company makes money by selling ad space to merchants across a range of industries and placing those ads in the forms of videos and images among the rest of the "pins" that users peruse to look for inspiration on any given topic.
As of the end of 2023, Pinterest had 498 million monthly active users around the globe, a solid increase of 11% compared to the end of 2022. Revenue for the year totaled $3 billion, up 9% from 2022. Globally, average revenue per user (ARPU) rose just 1% in the 12-month period. However, broken down by region, ARPU rose 5% in the U.S. and Canada, 15% in Europe, and 17% in the rest of the world last year.
While the company reported a net loss for the year on the basis of generally accepted accounting principles (GAAP), it reported positive net income in both the third and fourth quarters of 2023: $7 million and $201 million, respectively. The company seems to be inching back to a healthy level of growth after a series of bumpy financial reports, and investors have taken notice. Pinterest is trading up about 30% from one year ago at the time of this writing. Now could be a good time to scoop up a few shares of the social media stock.
