Key Takeaways
- Identifying the next Nvidia stock requires you to dive deep into a stock's current and future operations
- Find stocks that are positioned to take advantage of high-growth industries such as health tech and quantum.
- Use AI to help screen out stocks that have similar financial growth to Nvidia's
Introduction
If you are like me, you may find yourself one or two steps behind everyone else in the market. With the recent surge in Nvidia's stock price, you may feel like the ship has already sailed. On the other hand, numerous potential stocks show signs of becoming the next Nvidia stock.
For once, it would be great to stay ahead of the market, hence this guide will attempt to uncover Nvidia-like stocks and what you need to pay attention to in your search, so you don't miss another AI stock opportunity.
Why Nvidia skyrocketed in 2024?
Unless you have been living under a rock, you should have a relative understanding of who Nvidia is and what it does. In lamens terms, the company produces GPUs designed to run complex computations for computers and IT services.
Recently, there has been an uptake in AI technologies, sparked predominantly by OpenAI's ChatGPT. Due to this rise in AI, Nvidia's GPUs have been placed at the forefront of processing AI algorithms, generating an increase in the company's revenue and driving its stock price higher, supported by strong fundamentals and speculation on future profitability.
Identifying the next Nvidia stock
You may think you need a crystal ball to identify potential Nvidia-like stocks, but it's far more simple. Although no one can accurately forecast a stock's price, we can turn to some key indicators that reveal whether a company can follow in Nvidia's footsteps.
Industry analysis
When searching for the next Nvidia stock, we must identify the industry and its future. For one, we are aware that semiconductors will play an integral part in the development of new technologies such as Waymo's self-driving cars, OpenAI's GPT, SpaceX's rockets, and many more.
Understanding what industry the company is in and whether the industry has an expansive future, is an important factor when deciding which stock to invest in. Health tech, energy solutions, and quantum computing are all examples of industries with strong growth potential.
Future investments
Based on the above analysis, you need to dive deeper into what each stock's companies are investing in for the future.
It wouldn't make much sense to invest in a mobile phone company that refuses to adapt, innovate, or develop new technologies (a great example of this would be Nokia).
You want to invest in a company that is considering its future operations and identifying paths to stay ahead of its competition.
For example, Intel, known to have begun lagging behind its competition, has made strides to pivot its operations toward B2B sales rather than B2C, by investing in new manufacturing technology.
Current infrastructure
Infrastructure plays a huge role, as the company will need to support any substantiative supply chains, manufacturing hubs, distribution channels, and more.
It would be unwise to assume new market entrants could compete with Nvidia-sized growth within a short period of time.
Fundamental analysis
Choosing the next Nvidia stock will also require companies to mimic similar growth trajectories.
You can customize an AI stock screener to identify stocks that follow growth similar to Nvidia's.
For example, Nvidia's key financials are:
- Quarterly Revenue YoY Growth > 10%
- Market Cap: Large & Mega
- Quarterly EPS YoY Growth > 10%
- Revenue 5-Year CAGR > 20%
- EPS 5-Year CAGR > 15%
Based on the above information, you can use your stock screener to screen out stocks that show similar fundamentals.
Summarized checklist
Now we've covered each part. Below is a checklist you should keep at hand when analyzing stocks, to find ones that best replicate Nvidia's growth trajectory.
- Industry analysis: Ensure the industry your chosen stock is in, has strong future growth potential.
- Investing for the future: Your chosen stock should also be re-investing profits back into key areas of the company.
- Access to infrastructure: Nvidia-like stocks will have access to key infrastructure that enables them to produce/distribute its products & services.
- Fundamentals: Yes, it's good to look at speculative stocks, but if the company's fundamentals are unable to support its valuation, you may want to hold off investing.
When searching for your future stock, it is important to keep each of these points in mind, especially industry analysis, as you'll likely be investing in the long term and the industry you choose must have thriving potential.
Stocks that could be the next Nvidia
Based on the above steps, I have integrated them into identifying potential next Nvidia stocks specializing in different industries.
Semiconductor industry
Micron Technology (MU)
Micron Technology. Another leader in the semiconductor industry, specializing in the production of memory and storage solutions.
The company has been investing heavily in advanced memory technologies, such as 3D NAND, and has been constantly expanding its operations across AI and data center markets, key areas that need memory and storage.
Micron’s manufacturing capabilities are extensive, with production facilities across North America, Europe, and Asia, indicating a strong and resilient supply chain. Micron's YoY revenue from 2023 has increased by 61.9% and an increase in profit of 365% over the same period.
- Industry analysis: The semiconductor industry is expected to grow to $1.19 trillion by 2035, up from today's $544 billion.
- Investing for the future: Micron has invested $3.4 billion in 2024, an 11.67% increase year-over-year, in its R&D efforts.
- Access to infrastructure: Complete ownership of its infrastructure, and key resources to continue its future development efforts.
- Fundamentals: In 2024 Micron's revenue was $25.5 billion, a 62% annual increase, proving the company has strong future growth.
Renewable Energy
Enphase Energy (ENPH)
The renewable energy sector is set for substantial growth, driven by global efforts to address climate change, government incentives, and advancements in solar and energy storage technologies.
Enphase Energy reinvests profits into research and development to enhance its solar microinverters and energy storage systems. The company has introduced new products and is expanding internationally, reflecting a commitment to innovation and market growth.
Enphase benefits from established manufacturing facilities and a reliable supply chain for its components. It also collaborates with installers and distributors to ensure efficient product delivery and customer access.
Enphase demonstrates robust financial health, with a 5-year revenue compound annual growth rate (CAGR) exceeding 30%. It maintains healthy profit margins and a manageable debt level, supporting its valuation and growth prospects.
- Industry analysis: The industry is set to grow to $4.6 trillion by 2035.
- Investing for the future: in 2023 Enhpase's R&D investment reached $220 million.
- Access to infrastructure: Established manufacturing and access to high-end facilities.
- Fundamentals: Strong fundamentals with an average revenue of $1.3 billion.
E-commerce
MercadoLibre (MELI)
E-commerce in Latin America is in a high-growth phase, fueled by rising internet penetration and an expanding middle class.
MercadoLibre channels profits into expanding its logistics network, enhancing its fintech arm (Mercado Pago), and improving its e-commerce platform.
The company has developed a strong logistics network and a widely adopted payment platform, both critical for scaling e-commerce operations across Latin America.
MercadoLibre exhibits strong revenue growth and maintains a solid balance sheet with manageable debt.
- Industry analysis: The e-commerce industry is set to grow to $79.9 trillion by 2035.
- Investing for the future: Profits channeled into its fintech arm and optimizing its logistics network.
- Access to infrastructure: Proprietary logistics network, fintech platform, and vast advertising network.
- Fundamentals: $20.78 billion in revenue in 2024 and $9.54 billion in profit, a 32% YoY increase.
Biotechnology
CRISPR Therapeutics (CRSP)
The biotechnology sector, particularly gene editing, holds immense promise due to innovations in personalized medicine, gene therapies, and treatments for complex diseases.
CRISPR Therapeutics heavily invests in R&D to develop new gene-editing therapies and advance clinical trials, positioning it to capitalize on future medical advancements.
Through partnerships with major pharmaceutical companies and access to cutting-edge research facilities, CRISPR Therapeutics has the infrastructure needed to support its development and eventual commercialization efforts.
As a pre-profit biotech, CRISPR Therapeutics relies on a strong cash position and funding from partnerships to sustain its research. While not yet profitable, its financial backing supports its speculative valuation and growth potential.
- Industry analysis: The gene editing industry is expected to surge from $3.4 billion to $13.3 billion by 2035.
- Investing for the future: Huge portions of investment toward R&D efforts, reportedly investing over $6 billion.
- Access to infrastructure: Via partnerships, the company has access to leading medical and testing facilities.
- Fundamentals: Fundamentally CRISPR fails to meet these criteria. However, it is speculated that CRISPR can soon balance its market cap to revenue over the next few years.
Conclusion
Attempting to find the next Nvidia is a challenging job, as numerous facets need to be considered, it is achievable. By diving deep into a stock's technology, operations, industry, and financials, you can gain a slightly clearer picture of what stock has the best potential for maximizing your portfolio's profits.
You can see our top list of potential Nvidia lookalikes that cover numerous different industries to assist you in generating a more diversified portfolio that could potentially capitalize off an industry's future growth.
