Well-chosen growth stocks can help you earn a fortune in the stock market. The key is to identify powerful long-term trends -- and the companies best positioned to profit from them.
To help you do just that, here are three outstanding businesses that are particularly well-suited to deliver sizable gains to their shareholders in the coming year.
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Taiwan Semiconductor
The rising adoption of technologies like 5G networks, virtual and augmented reality, artificial intelligence, and high-performance computing is fueling a surge in demand for semiconductors. As the world's largest chip foundry, Taiwan Semiconductor Manufacturing (NYSE: TSM) stands to profit from this global megatrend perhaps more than any other company.
TSMC, as the company is known, manufactures chips designed by companies like Apple, Advanced Micro Devices, and Qualcomm, as well as hundreds of other customers. And business is booming. TSMC's revenue and earnings per American Depository Receipt (ADR) jumped 24.9% and 21.5%, respectively, to $56.8 billion and $4.12 in 2021.
With new industries like autonomous vehicles and the Internet of Things set to drive demand for semiconductors even higher, TSMC's profits should continue to grow at an impressive clip in the coming years. That should lead to attractive returns for investors who buy the stock today.
Nvidia
Like Taiwan Semiconductor, several powerful technological trends are driving Nvidia's (NASDAQ: NVDA) growth. For one, the steady expansion of the global gaming market is increasing demand for Nvidia's graphics processing units, or GPUs, which help to deliver breathtaking visuals to gamers around the world. For another, the shift to the cloud is creating booming demand for the tech giant's chips that accelerate computing processes in data centers. And rising demand for metaverse-building tools is driving creators to Nvidia's new Omniverse 3D design collaboration and simulation platform.
Nvidia is expanding at a torrid pace for a $670 billion company. Its third-quarter revenue soared 50% year over year to $7.1 billion, driven by a 42% rise in gaming sales and a 55% surge in data center revenue. And these results don't yet reflect the company's metaverse initiatives, which Nvidia has barely begun to monetize.
Yet despite this impressive performance, Nvidia's shares are down more than 20% from the highs it reached in late November. Inflation concerns have led to a sharp pullback in the prices of many growth stocks in recent months. But this short-term swoon is giving patient, long-term-minded investors a chance to scoop up this tech leader at a sizable discount. If you find that intriguing, consider buying some Nvidia shares today.
Microsoft
Microsoft (NASDAQ: MSFT) is already a $2.3 trillion behemoth, and yet, it's expected to more than double its earnings per share over the next half-decade. Despite its awesome size and scale, the tech titan's massive growth opportunity in cloud services should allow it to continue to generate gravity-defying returns for its shareholders.
Microsoft's Azure platform is a leading provider of cloud infrastructure services. The cloud computing market is slated to grow by over 19% annually to a stunning $1.2 trillion by 2028, according to Grand View Research. Infrastructure services like Azure are projected to enjoy some of the highest growth rates in this booming industry during this period, as more companies shift their business processes online. Better still, some analysts expect Microsoft to take share from its rivals in the coming years, as large corporations turn to their longtime tech partner for their cloud computing needs.
With Azure powering its expansion, Microsoft's stock represents another great way for investors to add a potent growth element to their portfolios.
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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns and recommends Advanced Micro Devices, Apple, Microsoft, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
