Sunday, December 22, 2024

2 Millionaire-Maker Technology Stocks

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To turn a relatively small investment into $1 million, you need to look for fast-growing companies operating in a large market. Ideally, you should look for companies growing their revenue at high rates. Companies posting consistently high growth rates in revenue indicates growing demand for a product that is filling a massive market opportunity.

That said, let’s look at two growing companies that could potentially help you become a millionaire investor.

1. CrowdStrike Holdings

Annual spending on cybersecurity is growing rapidly and is estimated to reach $87 billion this year. It will only continue to grow, as the cost of cyberattacks on organizations is mounting. For example, McKinsey estimates the damage caused by cyberattacks will reach $10 trillion by 2025. These trends point to tremendous upside for cybersecurity leader CrowdStrike Holdings (NASDAQ: CRWD).

The company is showing strong growth, with revenue up 33% year over year in the April-ending quarter. These revenue gains are the result of CrowdStrike being chosen by 62 of some of the largest companies in the world as their cloud security provider, but its momentum is set to continue.

CrowdStrike has a valuable partnership with artificial intelligence (AI) leader Nvidia, which allows CrowdStrike to offer Nvidia‘s AI computing services within its Falcon security platform to enhance threat detection.

Everything points to big upside for investors, but there are a few possible pitfalls. CrowdStrike already has a large market cap of $94 billion, so the company would have to be worth trillions of dollars to turn an investment of say, $10,000, into $1 million in the next few decades. There are only a few companies with market caps over $1 trillion right now, so you would have to make a bet that CrowdStrike will be one of the elite tech companies in the world one day.

Still, the growing cost of cyberattacks makes cybersecurity essential for just about every company in the world, so it’s not inconceivable that CrowdStrike could rank high on the list of valuable companies down the road.

CrowdStrike is also starting to turn report a profit as the business expands. A stock can’t deliver meaningful returns over the long term unless the business can turn a profit. On that note, Wall Street analysts currently expect the company’s earnings per share to grow at an annualized rate of 40% over the next several years, which has millionaire-making potential written all over it.

2. Soundhound AI

Another market that is a ripe field for millionaire-making stocks is AI. Restaurants and automotive companies are adopting Soundhound AI‘s (NASDAQ: SOUN) voice AI technology, which is driving strong top-line growth.

Revenue grew 73% year over year in the first quarter. The company has an advantage with billions of customer interactions to improve the capability of its voice recognition technology, which could lead to more innovation and customer wins over time.

Soundhound has an impressive list of customers in the restaurant industry, including Applebee’s, Church’s Chicken, and other quick-service brands that are using the company’s technology for ordering. Restaurants are clearly finding great value in the speed and efficiency of processing orders, which is very encouraging for this rising star.

What’s more, SoundHound is also partnering with Nvidia to offer generative AI-powered responses in cars running on Nvidia DRIVE. This could open up Soundhound’s growth opportunity in the automotive sector and expand its addressable market opportunity over the long term.

Soundhound is a relatively small company with a market cap of just $1.3 billion, so more robust growth could send the stock soaring in the coming years. However, the main risk here is that Soundhound is not turning a profit. Its adjusted net loss was $19.9 million in the last quarter, which is massive for a company with only $11 million in quarterly revenue. At some point, it will need to narrow those losses significantly for the stock to deliver meaningful returns to investors.

Nonetheless, Soundhound has a promising technology that is gaining traction with large businesses. The customer wins in the restaurant sector and the potential to gain similar wins in the auto industry could lead to increased scale, profitability, and substantial upside for this small-cap AI stock.

Should you invest $1,000 in CrowdStrike right now?

Before you buy stock in CrowdStrike, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CrowdStrike wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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John Ballard has positions in Nvidia and SoundHound AI. The Motley Fool has positions in and recommends CrowdStrike and Nvidia. The Motley Fool has a disclosure policy.

2 Millionaire-Maker Technology Stocks was originally published by The Motley Fool

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