Over the past year, many growth stocks retreated from their all-time highs amid concerns of unpredictable tariffs and elevated interest rates. Many of those investors flocked back toward conservative blue chip stocks and other safe haven investments.
But if can look past those near-term headwinds, it might be a great time to accumulate a few resilient growth stocks which could churn out fortunes over the next few decades. These three stocks fit that description: The Trade Desk (TTD 2.57%), Super Micro Computer (SMCI +8.72%), and Palo Alto Networks (PANW 6.73%).
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1. The Trade Desk
The Trade Desk operates the world's largest independent demand-side platform (DSP) for digital ads. DSPs help advertisers purchase ad space across a wide range of platforms, and they generally work with ad supply chain as sell-side platforms (SSPs) that help publishers sell their own ad inventories. Alphabet's Google and Meta both operate their own DSPs and SSPs within their own advertising platforms, but they also lock their advertisers into their platforms.
NASDAQ: TTD
Key Data Points
For advertisers who want to reach a broader range of potential customers across the internet, The Trade Desk's DSP is a compelling option for buying ads across desktop, mobile, and connected TV (CTV) platforms. Most of its recent growth has been driven by its CTV ads across ad-supported streaming video platforms. It's also helping advertisers craft more ads with its own first-party data and its AI-driven Solimar platform, while its Unified ID 2.0 tools are replacing outdated third-party cookies.
From 2024 to 2027, analysts expect The Trade Desk's revenue to grow at a compound annual growth rate (CAGR) of 19% as its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rises at a CAGR of 20%. With an enterprise value of $29.9 billion, it doesn't seem that pricey at 10 times this year's sales. It could have plenty of room to grow over the next decade as the CTV market expands and more advertisers break free from Google and Meta's advertising ecosystems.
2. Super Micro Computer
Super Micro Computer, more commonly known as Supermicro, produces servers for enterprise and data center customers. It controls a much smaller slice of the market than Dell and Hewlett Packard Enterprise, but has carved out a high-growth niche with its dedicated AI servers. The company established that early mover's advantage by forging a partnership with Nvidia and building powerful liquid-cooled systems.
Supermicro's revenue surged at a CAGR of 61% from fiscal 2021 to fiscal 2024 (ended in June 2024) as shipments of AI servers skyrocketed, but its stock slumped over the past year as the company dealt with several major setbacks. For example, it repeatedly delayed its 10-K report for 2024, lost its longtime auditor, faced delisting threats, and was subpoenaed by both the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) over those blunders.
NASDAQ: SMCI
Key Data Points
However, Supermicro finally partnered with a new auditor, filed that overdue 10-K report in late February, and dodged a delisting. That course correction might appease the DOJ and SEC. Assuming the company overcomes those issues, analysts expect Supermicro's revenue and EPS to grow at a CAGR of 36% and 18%, respectively, from fiscal 2024 to fiscal 2027.
Those are stellar growth rates for a stock which trades at just 11 times next year's earnings. Its recent issues are compressing its valuations, but they could soar higher again over the next few years as the AI server market continues to expand.
3. Palo Alto Networks
Palo Alto Networks is one of the world's top cybersecurity companies. It operates three main ecosystems: Strata for its on-premise network security services, Prisma for its cloud-based services, and Cortex for its AI-driven threat detection tools. Most of the company's recent growth has been driven by Prisma and Cortex, which it collectively refers to as next-gen security (NGS) services.
NASDAQ: PANW
Key Data Points
Palo Alto's scale, stickiness, and diversification give it a wide moat against its smaller competitors. Its business model is also naturally insulated from economic downturns, since companies generally won't lower their digital defenses to save a few dollars.
From fiscal 2024 to fiscal 2027 (ending in July 2027), analysts expect Palo Alto's revenue to grow at a CAGR of 15%. Its EPS is expected to dip 52% in fiscal 2025 on a generally accepted accounting principles (GAAP) basis as it laps a one-time tax benefit from fiscal 2024, but analysts expect that figure to grow a healthy CAGR of 15% over the following two years.
Palo Alto's stock might seem a bit pricey at 91 times next year's GAAP EPS and 56 times its non-GAAP EPS, but it arguably deserves that premium valuation. I believe it will remain a bellwether of the evergreen cybersecurity sector for the foreseeable future, and shares could generate even bigger fortunes for patient investors.
