Growth stocks are powerful ways to build wealth. But it's important to know what to buy. The best opportunities are usually businesses with a clear competitive edge and robust demand for their services.
To help you find tomorrow's winners, here are two companies operating in the booming markets for data centers and digital advertising that could be rewarding investments over the next five years.
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1. Applied Digital
Shares of Applied Digital (APLD 3.61%) have had a monster run over the past few years. The company is designing and building data centers to meet the growing demand for artificial intelligence (AI). Recent developments point to a significant opportunity, and the stock appears undervalued.
Last year, it signed an $11 billion contract with CoreWeave and a second $5 billion deal with a second unnamed hyperscaler. Altogether, its data center campuses could generate upwards of $16 billion in lease revenue over the next 15 years. These deals validate the company's ability to build data centers on schedule and ease the concerns investors had a year ago, when the stock traded at a much lower valuation.
NASDAQ: APLD
Key Data Points
Notably, these data centers are located in North Dakota's cool climate. This will be an enormous long-term gain for the company. North Dakota was strategically targeted by management for its low-cost, abundant energy and cooler climate, which provides natural cooling for powerful chips. This will reduce energy costs and improve operating efficiency.
Applied Digital's revenue surged 250% year over year last quarter to $126 million, partly driven by the start of the CoreWeave lease. Management is targeting $1 billion in annual operating profit over the next five years, which could lift the stock substantially, given its relatively low market cap of $9.5 billion (share price times total shares outstanding).
2. Reddit
Shares of Reddit (RDDT 3.70%) have climbed about 300% over the past three years. This has been supported by surging growth in daily active users, which were up 19% year over year in the recent quarter, reaching 121 million. Despite beating revenue estimates in the fourth quarter, the stock is trading 54% off its recent highs, but this could be a great buying opportunity.
NYSE: RDDT
Key Data Points
Investors are concerned about competition from AI autonomously retrieving information, reducing the need for users to visit Reddit's platform, but this risk seems overblown. OpenAI partnered with Reddit to access its data and enhance the information accessible through ChatGPT. This underscores a valuable part of Reddit's business: control over billions of posts and comments made on its platform year-round by humans, not AI.
Advertisers clearly see a vibrant platform. Revenue surged 70% year over year in Q4 2025, driven by increased ad impressions. Notably, it also drove revenue growth through higher ad pricing -- indicating that Reddit offers high returns on investment for ad buyers.
Analysts' models are projecting 37% annualized earnings-per-share growth over the next several years. This makes the stock a steal at these prices, trading at a forward price-to-earnings ratio of 21.
