Over the past year, many tech stocks have risen on the prospect of lower interest rates. But with the Nasdaq currently hovering near all-time highs, it may seem like a good time to book profits in some of these stocks before the bears return.
That's a smart strategy, but I think investors should still add blue-chip tech stocks to their portfolios rather than selling them too quickly. For me, Nvidia (NASDAQ: NVDA), Meta Platforms (NASDAQ: META), and CrowdStrike (NASDAQ: CRWD) are three stocks that are still easy buys in May.
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1. Nvidia
Nvidia, the world's leading manufacturer of discrete GPUs, is one of the hottest growth stocks on the market. The company's stock has soared more than 560% over the past three years as the explosive growth of the artificial intelligence (AI) market has led more companies to buy the company's high-end data center chips to handle AI tasks.
This rapid growth initially surprised the bears. Returning to fiscal year 2023 (ending in January 2023), his adjusted EPS fell by 25% and revenue growth was flat. This slowdown was caused by the post-pandemic downturn in the PC market and macro headwinds to the data center market. However, in FY2024, its revenue and adjusted EPS grew by 126% and 288%, respectively, as ChatGPT's popularity sparked a firestorm under the generative AI market.
For fiscal 2025, analysts expect Nvidia's revenue and adjusted EPS to grow an additional 84% and 93%, respectively, as demand for new AI chips continues to outstrip available supply. This is an incredible growth rate for a stock trading at a forward P/E ratio of 39 times.
Nvidia's long-term growth could eventually slow due to AMD's cheaper data center GPUs, competition from first-party chips from hyperscale cloud providers, and tighter export controls on chip sales to China. be. But for now, it is undoubtedly the easiest way to profit from the long-term expansion of the global AI market.
2. Metaplatform
Meta Platforms, the world's top social media company that owns Facebook, Messenger, Instagram and WhatsApp, has seen its stock rise more than 50% over the past three years, despite some tough challenges.
In 2022, Meta's revenue and EPS decreased by 1% and 38%, respectively. The slowdown was caused by privacy changes in Apple's iOS, intense competition from ByteDance-owned TikTok, and macro headwinds to the digital advertising market. At the same time, it increased spending on its unprofitable Reality Labs division. The combination of slower growth and higher spending scared the bulls.
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However, Meta's revenue and EPS in 2023 increased by 16% and 73%, respectively. It countered Apple's iOS changes with new tools to collect first-party data, widened its moat against TikTok by expanding Reels, and offset falling ad prices with increased ad impressions. It also attracted an influx of capital from Chinese e-commerce and gaming companies looking to reach more overseas customers. It also authorized $50 billion in stock buybacks and began paying its first dividend earlier this year.
Analysts expect Meta's revenue and EPS to grow 18% and 36%, respectively, in 2024. This is a solid growth rate for a stock with a forward P/E ratio of 24 times.
3.Cloud Strike
CrowdStrike is one of the fastest growing cybersecurity companies in the world. Unlike many of our peers who install their services through on-site appliances, CrowdStrike offers end-to-end security tools only as cloud-native services. It's more stable, cost-effective, and easier to scale as an organization. Expand.
CrowdStrike's revenue surged 54% in fiscal 2023 (ending January 2023) and 36% in fiscal 2024. Growth slowed as macro headwinds made it difficult for the company to lock in large customers into long-term contracts.
As a result, the company's net new annual recurring revenue (ARR) declined in the first half of FY2024. However, in the second half of fiscal 2024, net new ARR increased again year-on-year. This stabilization was supported by increased market share, new government contracts, and generative AI upgrades to the Extended Detection and Response (XDR) platform. We are also cross-selling more modules to our existing customers.
Analysts expect CrowdStrike's revenue and adjusted EPS to increase 30% and 27%, respectively, in fiscal 2025. At a forward P/E ratio of 88x, the company's stock may seem expensive compared to its peers, but we believe its rapid growth and first-mover advantage in cloud-native cybersecurity justifies its premium valuation. I believe.
Should you invest $1,000 in Nvidia right now?
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Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. Leo Sun has positions at Apple, CrowdStrike, and Metahis platforms. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, CrowdStrike, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
3 Top Tech Stocks to Buy in May was originally published by The Motley Fool
