Buying solid technology stocks and holding them for the long term is a proven way to make money in the stock market. This strategy allows investors to take advantage of disruptive innovation in the sector and benefit from the power of compound interest.
For example, if you invest $1,000, Nasdaq 100 Technology Sector A decade-old index would be worth more than $5,000 today. Of course, the index has seen ups and downs over the past decade, but smart investors who put their money into stocks that have the potential to be long-term winners have seen their investments grow substantially.
$5,000 investment NVIDIA The stock price from 10 years ago is now worth about $1.35 million, suggesting that tech stocks have the power to make investors millionaires over the long term. Of course, not all tech stocks are Nvidia, and investors shouldn't get the impression that putting money into one company will make them millionaires.
But by buying solid tech stocks as part of a diversified portfolio, you could eventually build a million-dollar portfolio over the long term. Super Microcomputer (Nasdaq: SMCI) and SoundHound AI (Nasdaq: SOUN) Both companies have huge growth opportunities that could send their stock prices soaring and turn investors into millionaires.
1. Supermicrocomputer
Super Micro Computer (also known as Supermicro) has been one of the best-selling stocks on the market over the past year: a $1,000 investment in the stock a year ago would be worth $4,000 today, and it remains a solid buy thanks to its attractive valuation.
With a price-to-sales multiple of 4.4 and forward earnings multiple of 23, Supermicro makes a great buy, especially given the company's impressive growth. The server maker is on track to finish the current fiscal year with revenue of $14.9 billion, more than double the revenue from the previous fiscal year.
More importantly, Supermicro is taking steps to ensure it remains a fast-growing company for the long term. Supermicro recently announced that it will add three new manufacturing facilities to ramp up production of its liquid-cooled server racks. Specifically, the company hopes to more than double its total liquid-cooled server rack production from the current 1,000 units per month to help keep up with surging demand for artificial intelligence (AI).
It's a smart move: Demand for liquid-cooled data centers is expected to grow at more than 24% annually over the next decade, generating nearly $40 billion in revenue in 2033. Meanwhile, AI server sales are expected to soar from an estimated $30 billion last year to $150 billion by 2027. Supermicro stands to benefit greatly from the growing adoption of AI servers and is one of the major players in the space.
The company has significant growth opportunities ahead that should allow it to maintain healthy growth levels for the long term. It's no surprise then that analysts expect Supermicro's revenue to grow more than 62% annually over the next five years. The market is likely to reward such impressive growth with further upside, making Supermicro a great buy for anyone looking to build a million dollar portfolio.
2. SoundHound AI
SoundHound AI is another company looking to capitalize on the disruptive trend of voice AI solutions. Customers can use SoundHound's voice AI platform to enable solutions like designing custom wake words, converting text to speech, building conversational voice assistants, and more.
SoundHound's voice AI platform is already seeing strong demand, with revenues up 73% year over year to $11.6 million in the first quarter of 2024. More importantly, the company's full-year revenue guidance of $71 million signals accelerating growth as the year progresses, up 55% from last year.
SoundHound has been able to achieve this impressive growth by building a strong customer base in key industries such as restaurants and automotive. During its quarterly earnings call in May, SoundHound announced that it had signed deals with multiple quick service restaurants (QSRs) to deploy its voice AI solutions.
Meanwhile, automakers Stellantis The company has partnered with SoundHound to bring generative AI assistants to cars, and more importantly, SoundHound's solution will also be adopted by electric vehicle manufacturers in Asia and the US.
The company's cumulative subscription and booking backlog grew 80% year-over-year to a healthy $682 million last quarter. This metric combines SoundHound's in-contract customer engagements with potential revenue from existing customers for which the company is a leading provider of voice AI solutions. This healthy backlog has analysts predicting SoundHound's revenue will grow another 47% to $103.6 million in 2025.
But the size of the company's backlog suggests it may continue to grow at a high pace for a long time, and the conversational AI market that SoundHound serves is projected to grow at nearly 25% annually through the next decade, generating nearly $50 billion in revenue by 2030.
SoundHound's growth so far suggests the company is outperforming the market. Investors looking to buy AI stocks that can strengthen their portfolios over the long term may want to take a closer look at SoundHound AI. The company could become a key member of a million-dollar portfolio.
Should you invest $1,000 in SoundHound AI right now?
Before you buy SoundHound AI shares, consider the following:
of Motley Fool Stock Advisor The analyst team Top 10 Stocks Here are the stocks investors should buy right now… SoundHound AI wasn't among them. The 10 selected stocks have the potential to generate big gains over the next few years.
Things to consider NVIDIA This list was created on April 15, 2005…If you invested $1,000 at the time of recommendation, That comes to $775,568.!*
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has an investment in and recommends Nvidia. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.
The 2 Tech Stocks That Will Make Millionaires was originally published by The Motley Fool.
