Nvidia: Riding the AI Wave
Launching into this roster with the nation’s third most valuable company by market cap might come across as audacious. However, Nvidia is in a league of its own with exponential growth. The company’s revenue has more than doubled over the past five quarters, exhibiting a track record of impressive growth.
Nvidia’s evolution from being primarily a leader in graphic processing units to dominating the artificial intelligence sector is a remarkable journey. Its core focus on AI chips has propelled its hardware to the forefront of cutting-edge technologies ranging from virtual reality to self-driving vehicles. In the AI chips arena, Nvidia has claimed the top spot, driving intense business growth as corporations vie to gain a competitive edge through AI supremacy.
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Despite its impressive performance, Nvidia’s meteoric revenue growth is anticipated to simmer down. The company’s own projections hint at a 79% increase in revenue for the current quarter, a significant deceleration compared to previous quarters. Wall Street analysts foresee a further slowdown to 42% growth in the following fiscal year.
Trading at a premium, Nvidia boasts a lofty valuation of 43 times this fiscal year’s projected earnings and 30 times next year’s estimates. Nevertheless, given Nvidia’s habit of exceeding expectations and analysts scrambling to revise their forecasts upward, the stock may be undervalued in relation to current projections.
Anticipation is rife as analyst estimates for earnings in the upcoming fiscal quarter have soared from $3.39 to $4.02 per share within a mere three months. The winds are favorable for AI chips and the expansion of data centers, presenting a lucrative landscape for Nvidia to seize. Endorsing this bullish outlook, Nvidia’s board sanctioned an additional $50 billion in share repurchases last summer, signaling confidence in the stock’s valuation.
Sweetgreen: Fresh Growth on the Menu
Transitioning from AI chips to gourmet salads, Sweetgreen takes center stage with a flourishing chain of upscale eateries specializing in premium salads. While it may sound straightforward, Sweetgreen has outperformed even tech giants like Nvidia this year, tripling in value through the first nine months.
Emerging strong from the initial pandemic-induced setbacks that plagued the food service industry, Sweetgreen has demonstrated resilience with 13 consecutive quarters of over 20% growth. Robust top-line growth is fueled by vigorous expansion efforts and encouraging same-store sales figures. While bottom-line profitability is on the rise, it is still a couple of years away.
Sweetgreen’s remarkable surge this year can be attributed largely to its starting point. After going public at $28 three years ago, the stock plummeted to the teens by the end of 2023. Despite its meteoric rise in 2024, the share price is only 25% higher than its IPO price. The future appears promising, especially with companies summoning employees back to offices, where Sweetgreen stands as a favored lunch choice among health-conscious workers. The company even offers a program to set up dedicated eateries in large office buildings for bulk lunchtime deliveries.
Sea Limited: Riding the Global Wave
Closing the trio is Sea Limited, the underdog in terms of gains this year with a 133% increase. The Singapore-based conglomerate dabbles in e-commerce, online gaming, and fintech. While benefiting from the surge in Asian stocks, Sea Limited’s ascent can also be credited to its independent growth trajectory as a global player.
Boasting significant revenue growth across all its segments in the latest quarter, Sea Limited made a pivotal transition into profitability last year after grappling with losses for an extended period. Analysts foresee earnings per share more than tripling in the current year and nearly tripling again in 2025. With a price tag of 47 times next year’s projected earnings, Sea Limited may not strike as a bargain at first glance. However, to surpass its all-time high from three years ago, the stock would need to nearly quadruple in value. Trading at a reasonable revenue multiple of under 4, Sea Limited is currently riding a strong momentum wave with immense growth potential.