In the dynamic world of growth investing, few opportunities are as compelling as finding high-quality companies that have recently been overlooked or misunderstood by Wall Street.
For investors with $1,000 to deploy and a long-term horizon of at least five years, a deeper look at two such stocks, both down significantly from their recent peaks, reveals intriguing potential for substantial returns.
First on our radar is Reddit (NYSE: RDDT), the sprawling online platform known for its vibrant discussion communities. Despite a roughly 39% drop from its recent highs—a correction largely attributed to initial overvaluation and concerns about Google's AI features potentially summarizing its content—Reddit is showing robust underlying growth.
In its first quarter, the company reported an impressive 61% year-over-year revenue growth, fueled by a massive and engaged user base of 108 million daily active users. Advertisers continue to see immense value in Reddit's highly engaged audience.
Crucially, Reddit is also pioneering a significant new revenue stream by licensing its vast data archives to AI model-building companies, a segment that saw its "other" revenue surge by 66% year over year in Q1. This unique data licensing advantage, vital for training sophisticated AI models, appears to be a competitive edge that Wall Street has not yet fully appreciated.
The second compelling opportunity lies with Marvell Technology (NASDAQ: MRVL), a critical enabler of the artificial intelligence revolution. As a leader in supplying custom chip solutions and advanced networking products for data centers, Marvell sits at the heart of the AI-driven economy.
While its stock has experienced a significant downturn, falling 41% from its recent high, this pullback could present a prime buying opportunity.
Marvell's data center business is a powerhouse, accounting for 76% of its revenue last quarter and growing by an impressive 76% year over year. The company boasts significant partnerships, including a new five-year deal with Amazon Web Services to supply custom AI chips and networking solutions, and a collaboration with Nvidia to integrate its chips into Nvidia's high-speed NVLink Fusion. While its sales and earnings multiples might appear expensive on the surface, Marvell's margins are improving due to growing demand, and analysts are forecasting robust 46% annualized earnings growth over the next few years.
Before you invest in Marvell, consider this...
There's a tiny company that is front and center in the AI revolution is rapidly changing the landscape all around us... And for early bird investors, it has the potential to make you filthy rich.
Incredibly, this company is still a minnow in the ocean… With a market cap less than 1/1,000th that of Microsoft.
Click here now to get full details on this pick, including access to the name and ticker symbol of this $3 AI powerhouse.
