The cryptocurrency market warmed up over the past year as stabilizing interest rates drove many investors toward speculative investments again. But cryptocurrencies still aren't for everyone; most of the market's top tokens are still notoriously volatile, and their prices are largely driven by supply, demand, and market hype.
So if you're looking for growth but don't want to roll the dice on cryptocurrencies yet, it's a good idea to buy a few promising tech stocks with firmer underlying businesses instead. I believe these three stocks fit the bill: Nvidia (NVDA +4.30%), Axcelis Technologies (ACLS +2.34%), and Pinterest (PINS +0.66%).
Image source: Getty Images.
1. Nvidia
Nvidia is the world's largest producer of discrete graphics processing units (GPUs). The chipmaker controlled 88% of the discrete desktop GPU market in the first quarter of 2024, according to Jon Peddle Research, and 97% of the AI accelerator market in 2023, according to TechInsights.
Nvidia once generated most of its revenue from gaming GPUs, but the rapid growth of the artificial intelligence (AI) market turned its data center business into its core growth engine. Leading AI companies like Microsoft, OpenAI, and Alphabet's Google all use its data center GPUs to process complex AI tasks. It generated 87% of its revenue from those chips in its latest quarter.
NASDAQ: NVDA
Key Data Points
Nvidia's stock has already soared 3,220% over the past five years, but it could head even higher for two simple reasons. First, it's still growing like a weed. Its revenue and adjusted EPS surged 126% and 288%, respectively, in fiscal 2024 (which ended in January 2024).
Analysts expect its revenue and adjusted EPS to rise another 98% and 109%, respectively, in fiscal 2025 as the market's demand for its data center chips continues to outstrip its available supply. Second, Nvidia's stock looks reasonably valued at 47 times forward earnings, so it could still generate bigger gains than most cryptocurrencies.
2. Axcelis Technologies
Axcelis' ion implantation systems are used to implant the ions of one element into another material. In the semiconductor market, its systems are used to insert carbon ions into silicon to produce silicon carbide (SiC), a robust material that can operate at higher voltages, temperatures, and frequencies than traditional silicon chips.
NASDAQ: ACLS
Key Data Points
The resilience of SiC chips makes them ideal for short-length LEDs, lasers, 5G base stations, military radars, and electric vehicles (EVs). Brisk sales of EVs initially lit a fire under Axcelis and other SiC stocks, but the bulls eventually retreated as the EV market cooled off over the past two years. It was also affected by the memory market's cyclical slowdown, because its systems are used to produce DRAM and NAND chips, as well as macro headwinds in China.
That's why Axcelis' stock has tumbled nearly 40% after it hit its all-time high last July. But after that decline, its shares look reasonably valued at 20 times forward earnings. Analysts expect its revenue and adjusted EPS to dip 7% and 15%, respectively, in 2024. But in 2025, they forecast its revenue and adjusted EPS to grow 16% and 28%, respectively, as it overcomes cyclical and macroeconomic challenges.
From 2024 to 2029, the SiC industry could expand at a compound annual growth rate (CAGR) of 32.6%, according to Markets and Markets. That secular growth could drive Axcelis' stock to fresh highs through the end of the decade.
3. Pinterest
Pinterest carved out its own niche in the crowded social media market with its virtual pinboards, which encouraged users to curate and share their hobbies and interests with each other. Its pinboards were also a natural fit for retailers, allowing them to upload their catalogs to its platform as shoppable pins with integrated payments.
NYSE: PINS
Key Data Points
Pinterest's growth accelerated significantly during the pandemic as more people searched for online shopping ideas, recipes, DIY projects, and family activities across its pinboards. But its expansion cooled off after the pandemic waned, and its revenue only rose 9% in both 2022 and 2023. That slowdown caused many investors to dismiss it as pandemic-era fad stock, but its revenue growth actually accelerated over the past five quarters.
Its monthly active users (MAUs) rose 12% year over year to 518 million in Q1 2024, marking its second consecutive quarter of double-digit MAU growth, as its average revenue per user (ARPU) increased again over the past three quarters. That recovery was fueled by its overseas expansion, fresh video content, AI-driven recommendations based on its curated content, new e-commerce tools, and a healthy influx of Gen Z users, who now account for over 40% of its MAUs.
Analysts expect Pinterest's revenue and adjusted EPS to jump 20% and 33%, respectively, in 2024. That acceleration suggests it has plenty of room to grow -- and its stock still looks reasonably valued at 30 times forward earnings.
