Rick Munarriz, The Motley Fool
6 min read
In This Article:
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Nvidia is the country's most valuable company by market cap, but its recent rally still has years to run for patient growth investors.
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Carnival delivered another blowout quarter last week, coasting along as the world's largest cruise line operator with a compelling valuation.
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Google parent Alphabet has a long track record of growth, and you can buy it now at a forward earnings multiple in the teens.
It's halftime for 2025, but investing isn't a game that is won or lost in a single year. You need patience and vision for the best market strategies to play out.
Nvidia (NASDAQ: NVDA), Carnival Corp. (NYSE: CCL), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) are three monster stocks that I think will deliver strong results in the next three years. Let's take a closer look.
Arguing that Nvidia is a monster stock to hold for the next three years may seem a lot like closing the barn door after the race horse has bolted. The leading developer of graphics processing units and artificial intelligence (AI) chips is a nine-bagger over the last three years. Am I three years too late? Am I three months too late?
Some will argue that the last great opportunity to buy Nvidia happened in early April, when Nvidia and most tech stocks were rattled in the early days of the trade war with China. Nvidia was already vulnerable from the problematic buzz a few months earlier that Chinese AI tech start-up DeepSeek was cranking out quality generative AI on the cheap without having to spring for the latest Nvidia hardware. With investors bracing for what was eventually a $4.5 billion charge related to export restrictions on Nvidia's H20 chips, it was in retrospect a great time to buy. Nvidia shares have soared 82% since bottoming out on April 7.
Worrywarts will argue that the days of scintillating gains are over for Nvidia investors. With its $3.8 trillion market cap, Nvidia has reclaimed its spot as the most valuable U.S.-exchange traded stock in the recent rally. There are still tariff headwinds aside from the export restrictions into China. The shares can still go higher.
Nvidia's latest quarter was a blowout performance. Revenue surged a better-than-expected 65% for its fiscal first quarter, fueled by a 73% jump in its data center revenue. All but 12% of its revenue is now coming from that business, and that's a good thing. Demand for the buildout of data centers remains strong as AI's hunger for computing power intensifies.
It's not the only thing that's intensifying unfortunately. Nvidia is modeling an $8 billion revenue hit from the export control limitations between the U.S. and China. The stock's pop over the last several weeks has boosted its valuation. Nvidia is now trading for 37 times this fiscal year's expected earnings and 27 times next year's target. It's not a cheap price for most companies, but it is a discount to Nvidia's growth. Nvidia's adjusted earnings exceeded expectations with a 57% increase in its latest quarter, and it wouldn't be a surprise to see Wall Street pros continue to raise their bottom-line forecasts as the the next three years play out.
