For most people, the entire goal of investing in the stock market is to increase our purchasing power over the long term. It's really that simple. However, there are some businesses that have done a much better job than others at helping investors achieve this objective. The returns can be truly jaw-dropping.
Here are two magnificent stocks that turned a $100,000 starting investment into $1 million or more in 10 years. It might be a good idea to keep these companies on your watch list.
1. Netflix turned a $100,000 starting investment into $1.1 million
First on this list of winning stocks is Netflix (NFLX 1.33%). The streaming entertainment pioneer's shares have surged 1,010% in the past 10 years (as of Oct. 14). Investors who bought $100,000 worth of the stock in October 2015 would have nearly $1.1 million today.
Netflix dominates the streaming video market. It was doing this a decade ago, too. But the company's growth has been impressive. Netflix ended last year with 301.6 million subscribers, up 453% versus 10 years before at the end of 2014. It still has lots of potential in international markets, like Asia-Pacific and Latin America, where streaming penetration is in earlier stages than in the U.S. and Canada.
Revenue continues increasing at a double-digit pace. And even more noteworthy is Netflix's profitability these days. It posted a superb operating margin of 34% in Q2 (ended June 30), showcasing the scalability of the business model that can leverage huge fixed content costs. The company is also producing lots of free cash flow that helps fund share buybacks.
Looking ahead, Netflix should keep up the healthy growth. It's finding lots of success with its popular ad-supported tier, as management said ad revenue should double in 2025. Netflix is getting more involved in live events with the NFL, boxing, and wrestling. And it's innovating within the gaming space. Plus, it can continue leaning on the occasional price hikes.
The streaming stock isn't trading at a bargain level these days. Investors can buy shares at forward price-to-earnings (P/E) ratio of 37.2. It's smart to wait for a pullback.
2. Nvidia turned a $100,000 starting investment into $29.3 million
Netflix is certainly a top-performing stock of the past decade, but it's not even in the same ZIP code as Nvidia (NVDA 0.86%). In the last 10 years, the leading AI (artificial intelligence) stock has skyrocketed and generated a total return of 29,250%. If you bought $100,000 of Nvidia shares a decade ago, you'd have a whopping $29.3 million today. Said differently, all it took was a $3,500 starting sum to get to $1 million over a 10-year period.
The main driver for Nvidia's stock has been its tremendous growth. Its revenue went from $1.2 billion in Q3 2016 to $46.7 billion in Q3 2026 (ended July 27). That translates to an unbelievable 44.1% annualized increase. It would be challenging to find other businesses that have expanded this quickly. Profits have also soared.
The company's success in recent years has been a direct result of the ongoing AI boom. Nvidia sells powerful graphics processing units (GPUs) that are used in data centers for AI training and inference. The AI buildout is seeing unprecedented levels of capital spending, as companies race to develop necessary infrastructure. This benefits Nvidia. And there are no signs yet of a slowdown.
It's wild to think that even after the monster performance of Nvidia shares, they present investors with a compelling opportunity. The stock trades at a forward P/E ratio of 28.2. That's much cheaper than Netflix's valuation. Additionally, Nvidia's earnings per share are projected to grow at a faster clip over the next three years than the streamer's bottom line, according to Wall Street consensus analyst estimates.
