It's very unwise to hold a portfolio that only includes technology stocks. Still, there's no denying that technology names have consistently -- even if erratically -- outperformed the rest of the market since the tech revolution of the late 1990s. This isn't apt to change in the near or distant future, either. The changes these companies are driving are just too big and too important. The key for investors is simply figuring out the "next big thing" and identifying which of these names is going to lead that charge.
Here are three companies working on the next generation of technological solutions that just might be smart additions to your growth portfolio.
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Navitas Semiconductor
Nvidia (NVDA +0.05%) may have been the shining star of the semiconductor industry since 2023, when the artificial intelligence race turned very, very hot. This sort of leadership doesn't last forever, though. Eventually, other players in any industry figure out how to do something better, cheaper, or faster.
Navitas Semiconductor (NVTS +0.65%) is one of these other players.
It's not an apples-to-apples comparison, in that Navitas doesn't make artificial intelligence (AI) processing chips ... at least, not yet. For the time being, it's focused on making circuitry of all sorts more power-efficient. This circuitry is found in consumer electronics as small as a mobile phone and as large as an electric vehicle, or even utility-scale grid solutions.
The underlying scientific advancement is the same in all cases, though. That's an improvement in ordinary silicon that's been used in electrical devices for decades now. This improvement is silicon carbide, where high voltage is involved, and gallium nitride for smaller circuitry in consumer electronics, computing platforms, and battery-charging equipment. Silicon carbide is on the order of 20% more power-efficient than commonly used industrial-scale alternatives, while gallium nitride can be up to 50% more efficient.
And, yes, AI data centers would benefit from these solutions.
NASDAQ: NVTS
Key Data Points
While the technology is proven, using it would require relatively big redesigns of existing technologies. Switching will require a big and potentially expensive leap that many manufacturers aren't eager to make.
This market is slowly but surely coming around, with key players recognizing they now have no choice but to minimize their technologies' power consumption as much as possible. That's why an outlook from Global Market Insights suggests that the combined worldwide market for both semiconductor materials is poised to grow at an annualized pace of 25% through 2032. Although it's not yet profitable, this long-term tailwind could push Navitas Semiconductor out of the red and into the black. It's just going to take some patience -- and some guts -- to give this stock the time the company needs.
Nokia
Nokia (NOK +0.08%) was once a titan of the mobile phone world. That started to end in 2007, when the debut of Apple's iPhone started a smartphone war that would largely exclude Nokia. Since then, networking and connectivity equipment has been the Finnish company's chief profit center. This is likely to remain the case for the foreseeable future.
Something interesting materialized in late October, however. Nvidia and Nokia announced a partnership meant to "pioneer the AI platform for 6G" wireless connectivity solutions using Nvidia's new Aerial RAN (radio access network) computer, or "ARC."
To the average layperson, it just sounds like techno-babble that's not fully understood, and doesn't need to be. The two companies' engineers are the only ones who need to truly understand it. Consumers and corporations will eventually appreciate the improvement of their current 5G connections.
This is actually a very big deal -- not so much for consumers, but for AI players that rely on mobile radio communications networks. As a press release from Nvidia explained in March of last year, well before its developmental partnership with Nokia was solidified:
Next-generation wireless networks must be fundamentally integrated with AI to seamlessly connect hundreds of billions of phones, sensors, cameras, robots and autonomous vehicles. AI-native wireless networks will provide enhanced services for billions of users and set new standards in spectral efficiency -- the rate at which data can be transmitted over a given bandwidth.
It's still early days for the artificial intelligence-powered 6G movement. We don't know where it will ultimately end up, or even how it will get there.
Whatever awaits, however, Nvidia just made sure that Nokia's coming along for what's sure to be a bullish ride.
Advanced Micro Devices
Last but not least, add Advanced Micro Devices (AMD +0.20%) to your list of next-generation technology stocks to buy sooner than later.
AMD isn't just behind Nvidia on the GPU (graphics processing unit) front. It's also the world's second-biggest computer processor unit (or CPU) manufacturer, behind Intel. While being the No. 2 outfit in any given business doesn't inherently mean your stock is also a second-best option for investors, in this case, it largely has.
Most of the things that have been holding Advanced Micro Devices back, however, are now finally abating.
That's what the data suggests. For example, AMD's data center revenue for the three-month stretch ending in September was up 22% year over year, with much of this growth being driven by its Instinct MI350 series of GPUs capable of tackling heavy-duty inference learning work. In the meantime, the company's recently launched Ryzen Embedded P100 processor is 35% faster than comparable predecessors and alternatives, and is capable of handling 50 trillion operations per second. That's enough performance to get the attention of several different industries that are increasingly relying on AI.
NASDAQ: AMD
Key Data Points
This is all part of a larger effort to generate long-term annualized revenue growth of 35%, per AMD's growth strategy unveiled in November, led by 80% annual growth of its AI business.
Advanced Micro Devices can now do it, allowing it to shake off its reputation as the less relevant player in not one but two different business lines. The demand in tech is certainly there.
Although the share price hasn't budged since hitting a record high in October, the analyst community remains firmly optimistic. The vast majority of this crowd still considers AMD a strong buy, supporting a consensus price target of $287.27 that's more than 30% above the stock's present price. That's not a bad way to start a new position.
