In this article, we will take a look at the 8 stocks that could 10x over the next 3 years.
The New Presidency and The Future of Big Tech
The new president of the United States is set to take office in January 2025, and investors are concerned about how the new policies will impact big tech. On November 14, Arvind Krishna, Chairman and CEO of IBM, appeared in an interview on Yahoo Finance to share his expectations from big tech as the new presidency takes over the White House. Krishna shares that he expects more innovation and less regulation in the tech sector, with certain “guardrails.” He adds that the business community is particularly excited and expects strong tailwinds to the US economy as we enter 2025.
In the same interview, William Kerwin, an analyst at Morningstar Technology, appeared to discuss the potential future of big tech under the new presidency and how the new policies could impact companies, particularly those trading in China. Kerwin emphasizes that a lot is yet to unfold but the most crucial element is tariffs. With a proposed 60% tariff on Chinese imports, companies reliant on the region will face severe headwinds and may have to seek trade relationships with other regions like India and Southeast Asia. However, he does add that high exposure to China does not necessarily equate to “high investment risk.”
READ ALSO 10 Best Predictive Analytics Stocks to Invest in Now and 12 Cheap Chinese Stocks to Buy According to Hedge Funds.
Speaking of mergers and acquisitions and antitrust regulations, Kerwin is rather optimistic. He expects more merger and acquisition deals to come through over the next four years. In addition to that, he expresses that anti-trust regulations are less likely to be focused on a specific company or a product, and more on the platforms and their respective use cases offered by big tech. Kerwin also adds that he does not expect significant breakups but foresees regulations to be enforced that “erode” the competitive advantages the big tech companies enjoy at the moment.
Kerwin believes that companies well exposed to artificial intelligence are currently overvalued. However, he reiterates that this “does not mean” that there are not any opportunities within the sector. He also shares a couple of names in the chip equipment and semiconductor sectors that are well-positioned at the moment. He suggests that while these sectors are pressed over cyclicality worries and the fear of AI reaching maturity, some companies hold promise and are valuable.
Since investors are excited to see the business opportunities coming over the next four years, there are certain stocks, especially in the realm of technology, most likely to gain significant momentum. That said, let’s take a look at the 8 stocks that could 10x over the next 3 years.
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Our Methodology
To come up with the 8 stocks that could 10x over the next 3 years, we sifted through multiple similar rankings and compiled an initial list of 20 stocks. We then ranked the top 8 based on their upside potential, as of November 18, 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8. Microsoft Corporation (NASDAQ:MSFT)
Analyst Upside as of November 18, 2024: 20%
Microsoft Corporation (NASDAQ:MSFT) is a technology giant that is spending generously on artificial intelligence. As the company ventures into new technologies and AI, it does represent a breakthrough stock that could 10x over the next three years.
Microsoft Corporation (NASDAQ:MSFT) is part of the list because of its strategic investments, positioning it as a leader in AI and autonomous agents. On October 10, the company revealed several breakthrough AI capabilities in healthcare. Previously on October 3, Microsoft Corporation (NASDAQ:MSFT) closed a partnership with Rezolve AI to develop innovative AI-backed online retail solutions.
More recently, on November 14, Microsoft Corporation (NASDAQ:MSFT) partnered with Accenture and Avanade to help businesses transform their functions using artificial intelligence and Microsoft Copilot. Similarly, on November 13, the company launched new and improved adapted AI models expanding its position in various industries. The new models will help organizations address their particular AI needs with greater efficacy. The AI models will readily be available through the Azure AI model catalog, allowing customers to develop custom AI tools and workloads.
Microsoft Corporation (NASDAQ:MSFT) is a long-standing company with solid fundamentals. This coupled with its investments in AI and data position it as a solid investment opportunity, especially in the coming years.
Baron Opportunity Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q3 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is the world’s largest software and cloud computing company. Microsoft was traditionally known for its Windows and Office products, but over the last five years it has built a $147 billion run-rate cloud business, including its Azure cloud infrastructure service and its Office 365 and Dynamics 365 cloud-delivered applications. Shares gave back some gains from strong performance over the first half of this year. For the fourth quarter of fiscal year 2024, Microsoft reported a strong quarter with total revenue growing 16%, in line with the Street; Microsoft Cloud up 22%; Azure up 30%; 43% operating income margins; and 36% free cash flow margins. Core Azure growth came in one point shy of expectations, however, due to a soft European market and continued constraints on AI compute capacity. In the same vein, while Microsoft reiterated its fiscal 2025 targets of double-digit top-line and operating income growth, quarterly guidance called for Azure growth to slow a bit before accelerating in the back half of the fiscal year, as capital expenditures increase, yielding an expansion of AI compute capacity. We believe this investment is a leading indicator for growth, with more than half of the spend related to durable land and data center build outs, which should monetize over the next 15-plus years. We remain confident that Microsoft is one of the best-positioned companies across the overlapping software, cloud computing, and AI landscapes, and we remain investors.”
7. Alphabet Inc. (NASDAQ:GOOGL)
Analyst Upside as of November 18, 2024: 21%
Alphabet Inc. (NASDAQ:GOOGL) is one of the biggest technology companies in the world that ranks seventh on our list of stocks expected to 10x over the next 3 years. It owns a range of products, including Google Search, Google Maps, YouTube, Google Cloud, and Waymo.
Alphabet’s (NASDAQ:GOOGL) performance in Q3 2024 was largely driven by its growing momentum in search and cloud due to AI. The company logged nearly $88.3 billion in revenue, of which cloud revenue reached $11.4 billion, up by 35%. In addition to that, overall revenue increased by 15% year-over-year, and market share is likely to expand as advancements continue.
Alphabet (NASDAQ:GOOGL) launched several AI breakthroughs in October. During the month, the company enhanced AI’s performance in search by expanding the type of questions people can ask. In addition to that, the company revealed that all new Chromebooks would now come with built-in artificial intelligence features. On the shopping front, the company launched a new artificial intelligence tool, currently available in the United States, to help consumers pick the right products supported by generous product details.
Alphabet Inc. (NASDAQ:GOOGL) is a pioneer in AI and we say that because it is focused on improving people’s lives using AI. Analysts are also bullish on the stock and their median price target represents an upside of 21% from current levels.
6. Uber Technologies, Inc. (NYSE:UBER)
Analyst Upside as of November 18, 2024: 23%
Ride-hailing company Uber Technologies, Inc. (NYSE:UBER) is one of the stocks that could 10x over the next three years. The ride-hailing company is expected to become a completely electric and zero-emission platform by 2040, contributing to its growing popularity.
In Q3 2024, Uber (NYSE:UBER) grew its gross bookings by 16% year-over-year, the fourth quarter of logging in at least 20% growth. As of Q3 2024, more than 7.8 million people now drive and deliver with Uber. In addition to that, the company is working to advance its autonomous strategy, as its 14 AV partners seem to align with Uber’s goals and strategic position.
During the quarter, the company launched all-electric Uber Green, an EV-only ride option in 40 cities globally with an EV preference feature in other markets. For drivers, Uber (NYSE:UBER) introduced an AI assistant that helps answer EV-related questions supported by an EV mentorship program. More recently, on October 3, Uber (NYSE:UBER) formed a partnership with ENSO, The Earthshot Prize Finalist, to launch a range of low-emission electric vehicle tires across the United Kingdom and the United States.
Uber Technologies, Inc. (NYSE:UBER) is making strides in electric and autonomous vehicles, contributing to its ranking on our list. Analysts are also bullish on the stock, and their 1-year median price target of $90 points to a 23% upside from current levels.
5. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Analyst Upside as of November 18, 2024: 29%
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the stocks that could 10x over the next three years. The semiconductor company makes chips for technology giants like NVIDIA and AMD.
In the third quarter of 2024, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) logged revenue worth $23.7 billion (NT$759.69 billion) and net income worth $10.13 billion (NT$325.26 billion), up by 39% and 54.2% year-over-year, respectively. TSM attributes its revenue growth to the increasing demand for artificial intelligence and expects its four-year revenue to increase by nearly 30%.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is expanding its presence across the world. The company recently formed a joint venture with major partners in Germany and expanded its partnership with Amkor to facilitate advanced packaging in Arizona, fueling the semiconductor ecosystem in the region.
In addition to that, the company expects to spend $32 billion to $40 billion in capital expenditures in 2024, allocated to advanced process technologies, specialty technologies, and advanced packaging and testing. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) expects revenue from AI chips to increase at a compound annual growth rate (CAGR) of 50% by 2027.
Baron Global Advantage Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q3 2024 investor letter:
“We established a small position in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). Morris Chang founded TSMC in 1987, as the world’s first dedicated semiconductor foundry. Until then, semiconductor chips were always designed and manufactured by the same company. TSMC introduced a groundbreaking new business model, in which it acted purely as a contract manufacturer, which proved to be highly successful. TSMC maintained a focus on improving its manufacturing process technology and enabled the emergence of innovative fabless design companies, including NVIDIA, Apple, and Qualcomm, who became TSMC’s key customers. Today, TSMC has a more than 60% share of the total semiconductor foundry market and over 90% share in leading-edge manufacturing. TSMC enjoys high barriers to entry given the ever-increasing cost and technological complexity of semiconductor manufacturing while benefiting from economies of scope as once leading-edge manufacturing becomes lagging edge on fully depreciated equipment. TSMC also benefits from scale– higher profits lead to higher R&D and capex investments, allowing for further technological differentiation, resulting in more profits. We believe TSMC will sustain strong double-digit earnings growth for years to come, driven by continued market share gains, strong pricing power, and structural growth in AI demand. According to C.C. Wei, TSMC’s CEO, “almost all the AI innovators are working with TSMC to address the insatiable AI-related demand.”6 Management forecasts that revenue from server AI chips, such as GPUs and other AI accelerators, will grow at a 50% CAGR from 2022 to 2028 and account for more than 20% of TSMC’s revenue by 2028. We except further long-term upside from the eventual proliferation of edge AI devices, including AI smartphones and AI PCs, which will require significantly more computing power and drive even stronger demand for TSMC’s leading-edge technology.”
4. ASML Holding N.V. (NASDAQ:ASML)
Analyst Upside as of November 18, 2024: 32%
ASML Holding (NASDAQ:ASML) is a semiconductor equipment company headquartered in the Netherlands. Foundries use ASML’s extreme ultraviolet (EUV) lithography machines to manufacture AI chips.
On November 14, the company held its 2024 investor day, where the company unveiled its long-term strategies and focus. ASML (NASDAQ:ASML) expects annual revenue in 2030 to range between EUR 44 billion and EUR 60 billion supported by a gross margin between 56% and 60%. The company’s outlook remains promising, as AI creates a bolstering opportunity for it. Due to rising demand for EUV, the company expects EUV lithography spending to grow in the double-digit range between the forecasted years of 2025 and 2030.
In the third quarter of 2024, ASML (NASDAQ:ASML) generated EUR 7.5 billion in sales and EUR 2.1 billion in net income. Revenue growth came from the demand for DUV and installed base management sales. In Q3, ASML reported net bookings worth EUR 2.6 billion, of which EUR 1.4 billion comprised EUV. For the fiscal fourth quarter of 2024, the company expects net sales to reach between EUR 8.8 billion and EUR 9.2 billion, with full-year revenue reaching EUR 28 billion.
The company has an 83% market share in lithography, explaining why analysts are bullish on the stock and their median price target of $869.22 represents an upside of 32% from current levels. According to the company’s CEO, the company expects EUV demand to grow gradually into the next decade, positioning it as a stock expected to 10x over the next 3 years.
3. Snowflake Inc. (NYSE:SNOW)
Analyst Upside as of November 18, 2024: 34%
Snowflake Inc. (NYSE:SNOW) is a leading AI data cloud company in the United States. The company has more than 10,200 global customers that use its data storage, processing, and analytics products. Its AI data cloud is used by various companies including Adobe, AT&T, HP, Mastercard, PepsiCo, Nielsen, Siemens, Yamaha, and US Foods, to name a few.
Snowflake Inc. (NYSE:SNOW) launched its enterprise AI to more users earlier this year. The new enterprise AI unlocks advanced chat experiences, allowing organizations to develop chatbots within a few minutes. In October, the company partnered with ServiceNow, an AI platform for business transformation. The two companies came together to connect enterprise-wide data to solve mission-critical problems at scale.
More recently, on November 12, Snowflake Inc. (NYSE:SNOW) unveiled Snowflake Intelligence, a new and improved platform that helps enterprises acquire data-driven answers from enterprise data. On the same day, the company announced an approach that brings transactional and analytical data under the same roof using Unistore. Unistore is a platform that is backed by Hybrid Tables. It can support transactional workloads with consistent security and governance of data.
For the full fiscal year 2025, Snowflake Inc. (NYSE:SNOW) expects product revenue to reach $3.36 billion, representing a growth rate of 26%. Overall, Snowflake Inc. (NYSE:SNOW) is one of the stocks that could 10x over the next 3 years as it is transitioning to becoming a company fully backed by AI. Analysts are also bullish on the stock and their median price target represents an upside of 34% from current levels.
2. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Analyst Upside as of November 18, 2024: 37%
Advanced Micro Devices, Inc. (NASDAQ:AMD) ranks second on our list of the stocks that could 10x over the next 3 years. The semiconductor and IT company produces accelerators that are capable of managing complex AI workloads. These accelerators have high bandwidth memory and a huge memory density.
On October 10, Advanced Micro Devices, Inc. (NASDAQ:AMD) unveiled new processors that are able to power the next generation of commercial PCs. On the same day, the company launched high-performance computing solutions to keep up with the AI computing era. More recently, on November 1, the company forged a strategic partnership with Fujitsu to develop a sustainable computing infrastructure that will facilitate open-source AI initiatives.
In the third quarter of 2024, the company generated $6.8 billion in revenue, up by 18% year-over-year and 17% sequentially. The company attributed its strong financial results to revenue growth in data center and client segments. During the same quarter, net income grew by a staggering 158% year-over-year and 191% sequentially.
Overall, the company is leading the AI and technology wave with its advanced accelerators and processors. Advanced Micro Devices, Inc. (NASDAQ:AMD) expects to deliver strong results over the next few years in data center and client segments.
1. Micron Technology, Inc. (NASDAQ:MU)
Analyst Upside as of November 18, 2024: 51%
Micron Technology, Inc. (NASDAQ:MU) ranks first on our list of the stocks that could 10x over the next three years. Its primary offerings include memory and storage products for computers, consumer electronics, artificial intelligence use cases, servers, and automobiles.
Speaking of artificial intelligence, on October 15, Micron Technology, Inc. (NASDAQ:MU) launched a new portfolio of memory solutions that are capable of fueling the new wave of AI PCs. More recently on October 23, the company was added to the NVIDIA recommended vendor list for its new data center SSDs. On the chips front, the company launched the world’s fastest and most energy-friendly SSD on November 12, enhancing MU’s overall position in the sector.
During the fiscal fourth quarter of 2024, the company generated revenue worth $7.75 billion. The company increased its revenue by 93% year-over-year during the quarter, as strong AI demand fueled growth in its data center DRAM and memory products. Following its Q4 results, the company raised its guidance for the first fiscal quarter and the complete fiscal year of 2025.
Micron Technology, Inc. (NASDAQ:MU) is shifting its complete focus to meeting the demands for artificial intelligence and data center customers, two of the fastest-growing industries at the moment. The company expects demand for AI servers to continue to increase, positioning it as a major player in AI. Analysts are also bullish on the stock and their median price target of $145 implies an upside of 51% from current levels.
While we acknowledge the potential of MU to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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