Three Potentially Wealth-Generating Tech Stocks Worth Exploring
Investors often find themselves drawn to the tech sector due to its reputation for housing some of the fastest-growing stocks in the market. Many of these high-flyers eventually fizzle out, but the resilient ones can deliver mind-blowing returns as they scale their thriving businesses.
The millionaire-makers among tech stocks often share common traits. They're frequently pioneers in their respective markets, offering game-changing products instead of following the crowd. They're willing to forgo near-term profits to nurture future growth. Lastly, they're led by visionary leaders who steer clear of wasteful acquisitions and buybacks.
Finding a company that checks all these boxes isn't easy, but studying the market's past millionaire-makers can offer valuable lessons on how they bucked trends and delivered the most significant returns to their most patient investors.
Let's look at three such success stories: Apple's transformation into a tech titan, Nvidia's journey from a gaming chipmaker to an AI leader, and Advanced Micro Devices' comeback against Intel in the x86 CPU market.
Investing in Apple in 1997
Investing $10,000 in Apple on September 16, 1997, when Steve Jobs returned as interim CEO, would have ballooned to $11.37 million by today. The investment also yields an annual dividend of roughly $51,165.
Apple's revenue grew at a compound annual growth rate (CAGR) of 16% from fiscal 1997 to fiscal 2024. This growth was initially driven by innovative products like the iMac, iPod, iPhone, and iPad, introducing Apple as an innovator of sleek electronic devices. Moreover, Apple didn't invent these gadgets, but it disrupted the markets with user-friendly devices tied to sticky software ecosystems.
After Jobs's passing in 2011, then-CEO Tim Cook kept the momentum alive by launching new products such as the Apple Watch and AirPods. Apple further expanded its subscription and services ecosystem to secure more customers, setting up a strong growth trajectory, even if it doesn't revolutionize the market again.
Investing in Nvidia in 1999
Investing $10,000 in Nvidia on October 11, 1999, after it introduced its first consumer-oriented GPU, the GeForce 256, would now be worth an astonishing $29.92 million. Over the years from fiscal 1999 to fiscal 2024, Nvidia's revenue grew at a CAGR of 26%, thanks to CEO Jensen Huang's vision and efforts.
Initially, Nvidia focused on producing gaming GPUs for PCs, but once it became the world's leading gaming GPU maker, it ventured into the data center market with even more powerful GPUs to handle AI tasks. Unlike CPUs, which process data one bit at a time, GPUs can process multiple integers and floating-point numbers simultaneously.
Nvidia launched its first data center GPU in 2007, but it gained more attention as the AI market expanded. Today, virtually every major AI company uses Nvidia GPUs to power their AI applications, making Nvidia a go-to supplier for the AI gold rush.
Investing in AMD in 2014
When Dr. Lisa Su became AMD's CEO on October 8, 2014, the chipmaker was struggling to keep pace with Intel in the CPU market and Nvidia in the GPU market. Investing $10,000 in AMD on that day would now be worth $375,000, while $30,000 would yield a staggering $1.13 million.
Under Su's leadership, AMD expanded its embedded chip business, revitalized its CPUs, launched new data center CPUs + GPUs, and deepened its partnership with Taiwan Semiconductor Manufacturing. AMD further bolstered its growth with the acquisition of programmable chipmaker Xilinx.
All these moves, coupled with Intel's production delays, allowed AMD to reclaim its position as an exciting growth stock. AMD's revenue grew at a CAGR of 17% from 2014 to 2023, despite challenges such as pandemic, supply chain disruptions, and inflation. Over the next few years, AMD's growth is expected to continue with the recovery of the PC market and increasing sales of AI data center GPUs, which are substantially cheaper than Nvidia's comparable chips.
These successful investment stories highlight the potential for significant returns in the tech sector with patience and an understanding of the company's growth trajectory. For instance, investing $10,000 in a finance-savvy company like Vanguard in 1996 would have grown to over $560,000 by 2021, proving that well-managed financial institutions can also yield substantial returns.
Furthermore, constantly re-evaluating your investment portfolio in light of market trends and company performance is crucial for maximizing returns. The tech sector, while risky, offers numerous opportunities for smart investors with a keen eye for disruptive technologies and a solid finance strategy.
