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There are many ways to make money in the stock market. Some investors like to peruse lists of best-performing stocks, looking for high-value stocks that are poised to rise even higher. Some people prefer to bet on battered stocks that will rebound.
Whichever strategy you prefer, you’ll probably find something to like about these two stocks. Both stocks are expected to soar next year.
1. Nvidia
Winners tend to keep winning. This is one of the most powerful lessons I learned during my analyst training at The Motley Fool. So, if you’re asking how you can benefit from the artificial intelligence (AI) boom, my first recommendation would be to look at the companies that already dominate the AI industry. Nvidia (NVDA 4.76%) It’s at the top of the list.
Nvidia designs computer chips that power cutting-edge AI applications. Demand for Nvidia’s chips is skyrocketing as companies of all sizes look to the huge productivity and efficiency gains brought about by AI.
The semiconductor giant’s sales for the quarter ending Oct. 29 rose 206% from a year earlier to $18.1 billion. Adjusted operating profit rose an even more impressive 652% to $11.6 billion.
There is much more growth ahead.According to fellow chipmakers, the AI chip market will explode to $400 billion by 2027. Advanced Micro Devices. So when combined with huge demand for chips for video game systems, self-driving cars, and cloud services, NVIDIA believes its total market opportunity could reach $1. Trillion.
What’s even better is that despite its breakneck growth and wealth-building stock price rally in 2023, NVIDIA stock can still be owned at an attractive valuation today. The company’s stock currently trades at less than 40 times expected 2024 earnings and less than 24 times expected 2025 earnings. That’s still a bargain for an elite company whose profits are expected to rise 268% this year and 66% next year.
2. Rivian Automotive
While the market’s best-performing stocks can certainly continue to rise, there’s also the fun of buying stocks when they’re on sale.The stocks that caught my attention were the ones with significant discounts. Rivian Automotive (Riven 0.86%). The electric vehicle (EV) startup’s stock price is down about 90% from the high it reached just after its initial public offering (IPO) in November 2021. But brighter days lie ahead for this future industry leader.
Rivian’s pickup truck “R1T” and SUV “R1S” are selling well. The company delivered 50,122 vehicles in 2023, up from 20,332 in 2022. Similarly, Rivian is expected to report a 165% increase in revenue to $4.4 billion when it reports its fourth quarter results on February 21st.
Furthermore, profit margins are improving due to increased production of Rivian. The company is working to squeeze costs out of its manufacturing operations. Management expects these efforts, combined with simpler and cheaper battery pack designs, will allow Rivian to generate positive gross margins in his 2024.
Importantly, the strength of Rivian’s balance sheet (it held more than $9 billion in cash and investments as of September 30) should be able to cover most of the capital needed to reach its profitability goals. I’m saying that. This should prevent further shareholder dilution. Rivian may need to issue more stock or debt, but as its operating results strengthen, it should become easier to raise capital on better terms.
Overall, Rivian produced 57,232 vehicles in 2023, up from 24,337 in 2022. This number is likely to continue to increase significantly in the coming years. According to the report, EV sales are expected to reach a whopping 73 million units by 2040. goldman sachsRivian has a long runway for further expansion.
a promising new contract with AT&T It should be helpful. The telecom giant plans to buy EVs from Rivian as part of its efforts to cut emissions and cut costs, but the number has not yet been disclosed.
Consider buying stock now. That would allow Rivian to benefit from future deals with other large fleet operators, where consumer sales are booming.
Joe Tenebruso has no position in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Goldman Sachs Group, and Nvidia. The Motley Fool has a disclosure policy.
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