Tech
3 tech stocks with more potential than any cryptocurrency
Nvidia, Supermicro and ASML could generate bigger gains than Bitcoin.
Many of the market’s major cryptocurrencies have risen over the past 12 months. Bitcoin‘S (Bitcoin -0.71%) the price rose more than 180% as the first spot-priced exchange-traded funds (ETFs) were approved and investors looked to the next “halving” that will cut mining earnings in half of Bitcoin this April. Ethereum‘S (ET -1.32%) the price also jumped nearly 130% as the Ethereum network’s big Dencun update and hopes for new ETF approvals brought the bulls back.
Expectations of stable or lower interest rates have also pushed more investors back into cryptocurrencies. This change could announce the end of the “crypto winter” that began in 2022, but cryptocurrencies are still riskier than most tech stocks, as they trade only on supply and demand rather than the growth of an underlying asset.
Image source: Getty Images.
So, if you’re looking for growth but can’t stomach the wild swings of the cryptocurrency market, you can buy some high-growth tech stocks, which may still have more upside potential than the major cryptocurrencies. I believe Nvidia (NVDA -1.99%), Supermicrocomputer (SMCI -1.83%) e ASML (ASML 0.59%) checks all the right boxes. Let’s find out 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 capitalization has reached $2.2 trillion thanks to the explosive growth of artificial intelligence (TO THE) has pushed more companies to purchase their data center GPUs to process AI tasks.
Nvidia generated 78% of its revenue from its data center GPUs in fiscal 2024 (ended in January), which significantly reduced its reliance on gaming and professional display GPUs for the PC market. The expansion of that business has been driven by the growing popularity of generative AI platforms like OpenAI’s ChatGPT.
Nvidia’s revenue and adjusted earnings per share (EPS) rose 126% and 288%, respectively, in fiscal 2024 as the AI market grew. Analysts expect its revenue and adjusted EPS to rise another 81% and 89%, respectively, in fiscal 2025. Based on these bullish expectations, Nvidia stock doesn’t look expensive at 36 times forward earnings.
2. Supermicrocomputer
Supermicro (as the company is better known) makes high-performance servers for data centers. It controls a smaller slice of the enterprise server market than Hewlett Packard Enterprise AND Dellbut its close relationship with Nvidia grants it access to the chipmaker’s top-tier data center GPUs before its larger competitors.
The partnership has allowed Supermicro to carve out a niche in the rapidly growing market for dedicated AI servers. That’s why its revenue and adjusted EPS increased 37% and 109%, respectively, in fiscal 2023 (ended last June). Analysts expect revenue and adjusted EPS to increase another 104% and 86%, respectively, in fiscal 2024.
These are astonishing growth rates for a stock that trades at 34 times forward earnings. It is also developing AI servers that use Advanced microdevices‘ new AI-oriented GPUs – and this change should reduce its long-term dependence on Nvidia.
3. ASML
ASML is the world’s largest manufacturer of lithography systems for optically etching circuit diagrams onto silicon wafers. It is also the only manufacturer of extreme ultraviolet (EUV) lithography systems, which are popular with major foundries Taiwan semiconductor manufacturing they use to make the smallest, densest and most energy-efficient chips.
Like many other chipmakers, Nvidia outsources production to TSMC, but TSMC can’t produce those high-end chips without ASML machines. That’s why ASML is an indispensable centerpiece of the global semiconductor industry. This reputation, along with the lack of significant competitors, gives it unparalleled pricing power.
ASML’s revenue and EPS increased 30% and 41%, respectively, in 2023. But in 2024, analysts expect its revenue to increase less than 1% while EPS falls 4%. That slowdown will be caused from tighter export constraints to Chinese chipmakers and excess chip inventories in the PC and smartphone markets. However, it expects its growth to accelerate again in 2025 once these challenges are overcome, so I believe its shares deserve a higher valuation at 43 times forward earnings.
Leo Sun has positions in ASML. The Motley Fool has positions and recommends ASML, Advanced Micro Devices, Bitcoin, Ethereum, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.