Many of the market's top cryptocurrencies surged over the past 12 months. Bitcoin's (CRYPTO: BTC) price rose more than 180% as the first spot price exchange-traded funds (ETFs) were approved and investors looked toward the next "halving" which will cut the rewards for Bitcoin mining in half this April. Ethereum's (CRYPTO: ETH) price has also jumped nearly 130% as the Ethereum Network's big Dencun upgrade and hopes for fresh ETF approvals brought back the bulls.
Expectations for stable or lower interest rates also drove more investors back toward cryptocurrencies. That shift might herald the end of the "crypto winter" that started in 2022, but cryptocurrencies are still riskier than most tech stocks -- since they're only trading on supply and demand instead of the growth of an underlying business.
Image source: Getty Images.
So if you're looking for growth but can't stomach the crypto market's wild swings, you can buy some high-growth tech stocks, which might still have more upside potential than the top cryptocurrencies. I believe Nvidia (NASDAQ: NVDA), Super Micro Computer(NASDAQ: SMCI), and ASML(NASDAQ: ASML) check all the right boxes. Let's find out a bit more about these three tech stocks with so much potential.
1. Nvidia
Nvidia became the world's third-most-valuable company in early March. Its market cap hit $2.2 trillion as the explosive growth of the artificial intelligence (AI) market drove more companies to purchase its data center GPUs to process their AI tasks.
Nvidia generated 78% of its revenue from its data center GPUs in fiscal 2024 (which ended this January), which greatly reduced its dependence on gaming and professional visualization GPUs for the PC market. The expansion of that business was driven by the soaring popularity of generative AI platforms like OpenAI's ChatGPT.
Nvidia's revenue and adjusted earnings per share (EPS) soared 126% and 288%, respectively, in fiscal 2024 as the AI market grew. Analysts expect its revenue and adjusted EPS to soar another 81% and 89%, respectively, in fiscal 2025. Based on those bullish expectations, Nvidia's stock doesn't seem expensive at 36 times forward earnings.
2. Super Micro Computer
Supermicro (as the company is better known) produces high-performance servers for data centers. It controls a smaller slice of the enterprise server market than Hewlett Packard Enterprise and Dell, but its close relationship with Nvidia grants it access to the chipmaker's top-tier data center GPUs before its larger competitors.
The partnership enabled Supermicro to carve out a niche in the rapidly growing market for dedicated AI servers. That's why its revenue and adjusted EPS rose 37% and 109%, respectively, in fiscal 2023 (which ended last June). Analysts expect its revenue and adjusted EPS to rise another 104% and 86%, respectively, in fiscal 2024.
Those are astounding growth rates for a stock that trades at 34 times forward earnings. It's also been developing AI servers that use Advanced Micro Devices' new AI-oriented GPUs -- and that shift should reduce its long-term dependence on Nvidia.
3. ASML
ASML is the world's largest producer of lithography systems for optically etching circuit patterns onto silicon wafers. It's also the only manufacturer of extreme ultraviolet (EUV) lithography systems -- which leading foundries like Taiwan Semiconductor Manufacturing use to manufacture their smallest, densest, and most power-efficient chips.
Like many other chipmakers, Nvidia outsources its manufacturing to TSMC -- but TSMC can't produce those high-end chips without ASML's machines. That's why ASML is an indispensable linchpin of the global semiconductor industry. That reputation, along with its lack of meaningful competitors, gives it unmatched pricing power.
ASML's revenue and EPS rose 30% and 41%, respectively, in 2023. But in 2024, analysts expect its revenue to rise less than 1% as its EPS dips 4%. That slowdown will be caused by tighter export curbs on its shipments to Chinese chipmakers and the excess inventory of chips in the PC and smartphone markets. However, it expects its growth to accelerate again in 2025 as it overcomes those challenges -- so I believe its stock deserves its higher valuation at 43 times forward earnings.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, 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 Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
Leo Sun has positions in ASML. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Bitcoin, Ethereum, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
