The Russell 1000 is similar to the S&P 500 in that both indexes track large U.S. companies. However, while the S&P 500 includes approximately 80% of domestic equities by market capitalization, the Russell 1000 includes about 93% of domestic equities, meaning it covers more of the U.S. stock market.
With that in mind, YCharts analyzed the Russell 1000 to identify the best-performing U.S. stocks during the five-year period that ended on June 30, 2024. Of course, artificial intelligence chipmaker Nvidia (NVDA +0.07%) ranked among the top three, but investors may be surprised by the other companies on the list.
It's worth mentioning that all three companies have announced stock splits during the past year.
NASDAQ: NVDA
Key Data Points
Nvidia ranked no. 3 with a 2,909% return
Last year, Nvidia accounted for 98% of data center graphics processing unit (GPU) shipments. GPUs accelerate compute-intensive workloads like artificial intelligence (AI) applications. Baird analyst Ted Mortonson explained that dominance to Business Insider. "Over a decade ago, [CEO] Jensen Huang understood where the market was going to go, so [Nvidia] invested billions of dollars in not only silicon, but software."
Indeed, Nvidia is truly formidable because it offers a robust suite of software development tools called CUDA. The platform helps developers prepare data and build applications across disciplines like computational chemistry and machine learning. Nvidia also bundles CUDA with frameworks and pretrained models that streamline the development of AI applications for robotics, conversational assistants, and many other use cases.
Nvidia's dominance in data center GPUs has evolved into dominance in AI processors. Estimates differ slightly among analysts, but the company currently holds 70% to 95% market share in AI processors. That has translated into stunning financial results. Sales surged 644% during the last five years. The company has also become more profitable. Gross profit margin expanded 1,500 basis points during the same period.
Accordingly, strong financial results have led to exceptional share price appreciation. Nvidia completed a 10-for-1 stock split in June, its second stock split in three years.
Going forward, Grand View Research forecasts that graphics processor sales will increase at 27% annually through 2030. Nvidia is better positioned to capitalize on that opportunity than any other semiconductor company. Wall Street expects adjusted earnings to grow at 37% annually over the next three years. In my opinion, that estimate makes the current valuation of 76 times earnings look somewhat pricey, though not unreasonably expensive.
NASDAQ: CELH
Key Data Points
Celsius ranked no. 2 with a 3,757% return
Celsius (CELH 4.57%) is the third most popular energy drink brand in the United States behind Red Bull and Monster Beverage's Monster Energy, but the company is quickly closing the gap. Celsius has gained 425 basis points of market share since January 2023, but Red Bull and Monster Energy have lost 86 basis points and 308 basis points, respectively, according to a Celsius slide deck.
What's driving those share gains? Celsius has cultivated a reputation as being a healthier alternative to other energy drink brands. Its beverages do not contain sugar, artificial flavors, or high fructose corn syrup, and clinical trials have proven that its proprietary ingredients increase metabolism and calorie burn with exercise. In short, Celsius has positioned itself as a fitness beverage commonly found in gyms and health clubs.
CEO John Fieldly told Fortune, "Celsius was originally created as the world's only negative-calorie drink. It's clinically proven to burn 100 to 140 calories. There's science behind the product -- over six clinical studies." That foundation, coupled with effective marketing, has translated into eye-popping financial results. Revenue surged 2,310% during the last five years, while gross profit margin expanded 1,000 basis points during the same period.
Going forward, Grand View Research expects energy drink sales to increase at 8% annually through 2030. But consumers are increasingly health-conscious, and Celsius is the energy drink brand best positioned to benefit, so its sales growth should exceed the industry average.
Wall Street expects Celsius' earnings to increase at 11% annually through 2025. That estimate makes the current valuation of 38.8 times earnings look very expensive. Celsius has grown at an incredible pace, which led to a 3-for-1 stock split last November, but thriving businesses aren't always wise investments. I would keep this stock on my watchlist for now.
NASDAQ: SMCI
Key Data Points
Super Micro Computer ranked no. 1 with a 4,121% return
Super Micro Computer (SMCI +2.56%) designs high-performance computing platforms for data centers, including servers and storage solutions for use cases like analytics and machine learning. The company's manufacturing capabilities and modular approach to product development have helped it secure a leadership position in the AI server market.
To elaborate, Supermicro handles most R&D and manufacturing at facilities in Silicon Valley, and half of its employees in the San Francisco Bay Area are engineers. That "enables rapid prototyping and product roll-out," according to SEC filings. Additionally, the company uses common building blocks across product lines to quickly assemble a wide range of products featuring the latest chips from suppliers like Nvidia.
Supermicro's ability to quickly build a broad range of products (including full server racks) tailored to customer requests has driven strong financial results, especially amid surging demand for generative AI infrastructure. Revenue increased 327% and GAAP earnings jumped 1,330% in the last five years. Investors have reason to believe that momentum will persist for the foreseeable future.
Artificial intelligence server sales are projected to increase at 32% annually through 2030, according to analysts at JPMorgan Chase. Supermicro should be a major beneficiary of that trend. Indeed, Wall Street expects adjusted earnings to increase at 43% annually through fiscal 2026 (ends June 2026). That estimate makes its current valuation of 27.7 times adjusted earnings look quite reasonable. Investors should know that Supermicro recently announced a 10-for-1 stock split, so shares will be much cheaper in early October.
