Over the past year, many tech stocks rallied on the prospects of interest rate cuts. But with the Nasdaq now hovering near its all-time highs, it might seem like the right time to take profits in some of those stocks before the bears come back.
That's a prudent strategy, but I believe investors should still be adding more high-quality blue-chip tech stocks to their portfolios instead of hastily liquidating them. For me, these three stocks are still no-brainer buys in May: Nvidia (NVDA 2.94%), Meta Platforms (META 2.33%), and CrowdStrike (CRWD +0.66%).
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1. Nvidia
Nvidia, the world's leading producer of discrete GPUs, has been one of the market's hottest growth stocks. Its shares have soared more than 560% over the past three years as the explosive growth of the artificial intelligence (AI) market has driven more companies to buy its high-end data center chips to process AI tasks.
NASDAQ: NVDA
Key Data Points
That growth spurt initially surprised the bears. Back in fiscal 2023 (which ended in Jan. 2023), its revenue growth flatlined as its adjusted EPS dropped 25%. That deceleration was caused by the PC market's post-pandemic decline and macro headwinds for the data center market. But in fiscal 2024, its revenue and adjusted EPS soared 126% and 288%, respectively, as the popularity of ChatGPT lit a raging fire under the generative AI market.
For fiscal 2025, analysts expect Nvidia's revenue and adjusted EPS to grow another 84% and 93%, respectively, as the demand for new AI chips continues to outstrip available supply. Those are incredible growth rates for a stock that trades at 39 times forward earnings.
Nvidia's long-term growth could eventually be throttled by competition from AMD's cheaper data center GPUs, first-party chips at hyperscale cloud providers, and the tightening export curbs on its chip sales to China. But for now, it arguably remains the easiest way to profit from the secular expansion of the global AI market.
2. Meta Platforms
Meta Platforms -- the world's top social media company, which owns Facebook, Messenger, Instagram, and WhatsApp -- saw its shares rally more than 50% over the past three years even as it weathered some tough challenges.
NASDAQ: META
Key Data Points
In 2022, Meta's revenue and EPS declined 1% and 38%, respectively. That slowdown was caused by Apple's privacy changes on iOS, intense competition from ByteDance's TikTok, and macro headwinds for the digital advertising market. At the same time, it ramped up its spending on its unprofitable Reality Labs segment. That mix of slowing growth and higher spending spooked the bulls.
But in 2023 Meta's revenue and EPS rose 16% and 73%, respectively. It countered Apple's iOS changes with new tools for gathering first-party data, widened its moat against TikTok by expanding Reels, and offset its declining ad prices with more ad impressions. It also attracted an influx of spending from Chinese e-commerce and gaming companies that wanted to reach more overseas customers. It also approved a $50 billion buyback and initiated its first dividend earlier this year.
For 2024, analysts expect Meta's revenue and EPS to grow 18% and 36%, respectively. Those are robust growth rates for a stock that trades at 24 times forward earnings.
3. CrowdStrike
CrowdStrike is one of the world's fastest-growing cybersecurity companies. Unlike many of its peers, which install their services through on-site appliances, CrowdStrike only provides its end-to-end security tools as cloud-native services -- which are stickier, more cost-efficient, and easier to scale as an organization expands.
NASDAQ: CRWD
Key Data Points
CrowdStrike's revenue surged 54% in fiscal 2023 (which ended in Jan. 2023) and grew 36% in fiscal 2024. Its growth decelerated as the macro headwinds made it harder for the company to lock large customers into longer contracts.
As a result, its net new annual recurring revenue (ARR) declined in the first half of fiscal 2024. But in the second half of fiscal 2024, its net new ARR increased year over year again. That stabilization was supported by its market share gains, new government contracts, and generative AI upgrades for its extended detection and response (XDR) platform. It's also cross-selling more modules to its existing customers.
For fiscal 2025, analysts expect CrowdStrike's revenue and adjusted EPS to grow 30% and 27%, respectively. Its stock might seem pricey relative to its peers at 88 times forward earnings, but I believe its rapid growth and early mover's advantage in the cloud-native cybersecurity space justify its premium valuation.
