The recent market volatility has spooked many investors, especially those who’ve invested heavily in tech stocks. The NASDAQ-100 Technology Sector Index is down over 28% year to date and is officially trading in a bear market.
Although the market has been rocky, it’s time to consider the long-term potential of companies, many of which are down 50% or more from their all-time highs.
Two stocks that should reward long-term investors are: Meta Platforms (META) and Nvidia (NVDA). By 2030, we expect these two companies to be worth $1 trillion. If you can shake the short-term market uneasiness so many feel, these two stocks could be big winners.
Diving Deeper Into Meta Platforms
Last year, Meta hit the trillion-dollar mark when its stock was trading at its all-time high price of $384. More recently, Meta’s market cap sits closer to $500 billion — the stock has sunk nearly 46% year to date. Could it recover the half trillion dollars in market capitalization in the next 8 years that it lost in the last year? We think so.
For over a decade, Meta (formerly known as Facebook) was the leading social media platform. While it remains highly competitive, the company has its sights set on the next big thing — the metaverse.
It’s betting its future so heavily on the metaverse that it changed its name to Meta back in October 2021. Indeed, the firm’s stock symbol was recently changed from FB to META, showcasing its commitment to this emerging market, one set to transform everything from gaming to engineering. The metaverse offers immense potential, particularly when it comes to social networking. By 2030, it’s estimated that the metaverse could be worth as much as $30 trillion.
Even without dipping its toes in the metaverse, Zuckerberg’s company is well-positioned to reward investors. Over the last decade, Meta has increased revenue at a compound annual rate of 41.3%. The company’s suite of social media platforms, including Instagram, Facebook, Whatsapp, and Messenger, has grown to 2.87 billion daily active users.
The company reported that its total revenue for 2021 was over $117 billion, an increase of 37% compared to 2020. In 2021, the company reported revenue of over $114.9 billion in advertising alone, accounting for 97.4% of the company’s total revenue.
Takeaway: When we ran the numbers on META, we calculated 51.2% upside to $261.02 per share based on a discounted cash flow forecast analysis. But there are lots of reasons to believe that’s an underestimate if the firm does gain traction with its metaverse projects.
Making a Case for Nvidia
Nvidia is developing software by leveraging 3D rendering and artificial intelligence (AI) to offer solutions such as self-driving vehicle technology. Although this is only a small part of Nvidia’s business, this opportunity alone could be worth trillions by 2030. Sales are spread across several influential and emerging markets, from robotics to climate sciences, providing great protection. If sales in one market drop, the company still has a handful of others to lean on, including the emerging multi-trillion dollar metaverse market.
Looking at Nvidia’s financials, it’s clear that this AI computing leader has already shown immense growth. Its revenue grew from $4.3 billion in 2013 to a record $26.9 billion in 2022 — up 61% from a year earlier. Gaming, Data Center, and Professional Visualization market platforms each achieved record revenue for the fourth quarter and year. For the first quarter of fiscal 2023, Nvidia reported record quarterly revenue, hitting $8.29 billion, up 46% from a year ago. Jensen Huang, founder and CEO of NVIDIA, said, “We are gearing up for the largest wave of new products in our history. Our new chips and systems will greatly advance AI, graphics, Omniverse, self-driving cars, and robotics, as well as the many industries these technologies impact.”
If you’re seeking long-term investments that pay dividends, Nivida paid out $399 million in fiscal 2022. Although this stock is not a high-yield dividend (paying a quarterly cash dividend of $0.04), it still offers access to passive income. Not only that, but Nvidia has steadily increased its dividend since 2012.
Bottom line: Macroeconomic headwinds are hurting Nvidia’s stock. Shares are still not cheap, but with several multi-trillion dollar opportunities ahead, Nvidia is one stock you’ll regret not buying on the dip.