Forget Nvidia: Consider These 3 Millionaire-Making Stocks to Buy Instead

Nvidia (NVDA -1.59%) has been one of the best-performing stocks over the past five years, creating many millionaires in the process. However, with these strong returns behind it, today’s investors might be better off focusing on the next round of potential big winners.

These three small technology companies have strong growth potential in the years to come.

1. AI SoundHound

AI SoundHound (HER -0.80%) The company first appeared on the radar of most investors after the announcement of Nvidia’s investment. The company uses an artificial intelligence (AI) voice platform that uses speech-to-sense technology and deep meaning understanding technology to process speech in real time, understand the speaker’s intent, and respond to complex questions, statements, and requests.

The company first found success in the automotive sector, with several automakers now using its technology in their vehicles’ voice assistant interfaces. SoundHound has since gained traction in the restaurant industry, both with restaurateurs and restaurant-focused fintech companies such as Grill And Hello.

Most recently, SoundHound acquired Amelia, a conversational and generative AI platform used for customer service, employee onboarding, and back-office tasks. The deal will help SoundHound expand into other industries such as healthcare, retail finance, and insurance, and opens up numerous cross-selling and up-selling opportunities.

While SoundHound is a more speculative investment, if it can become the standard for AI voice technology, it could be a stock that can create millionaires.

2. SentinelOne

Cybersecurity company SentinelleOne (S -2.75%) specializes in endpoint security, which is the protection of a network and its devices, such as smartphones and computers. Through its Singularity platform, the company uses artificial intelligence agents to not only monitor for threats, but also predict and remediate them. Additionally, when cyberattacks occur, SentinelOne claims to be able to “reboot” the systems it protects to their original state, saving its customers the hassle of manually performing tedious incident cleanups.

SentinelOne is well positioned to take advantage of the crippling global IT outage that Crowd strike SentinelOne was hit with a faulty software update earlier this year. Given its significantly smaller size, SentinelOne won’t need to attract a large number of customers from the industry heavyweight to be the big winner from this incident.

Meanwhile, Lenovo has just entered into a multi-year agreement with enterprise personal computer (PC) vendor Lenovo to provide endpoint security on all of its new PCs and to offer Lenovo hardware owners the ability to upgrade their security to the Singularity platform. Lenovo will also use the Singularity platform to create a new managed detection and response (MDR) service.

The company is already enjoying solid revenue growth, including a 33% year-over-year increase in the second quarter, and deals like the one with Lenovo could accelerate its growth even further. With a forward price-to-sales ratio of 7.5 over the next year, analysts estimate the stock is a bargain compared to its larger peers, giving it the potential to become a millionaire.

S PS Ratio (Forward 1y) data by YCharts.

3. AppLovin

Don’t let that ridiculous name fool you: AppLovin (APPLICATION 1.69%) is one of the biggest beneficiaries of the AI ​​revolution outside of Nvidia. Since the launch of its Axon 2 AI-powered advertising solution, the company’s software platform revenue has skyrocketed.

AppLovin has traditionally focused on mobile gaming companies, which use its solution to attract new customers and monetize their games. Since the launch of Axon 2, mobile app companies have flocked to its solution, seemingly at the expense of their competitors. Unity Softwarewhich has seen its advertising business (called Grow Solutions) stumble while AppLovin’s revenue has soared. In the second quarter, AppLovin’s software platform revenue grew 75%, while Unity’s fell 9%.

With a forward price-to-earnings ratio of 24.5 based on analyst estimates for the next year and a price-to-earnings-to-growth (PEG) ratio of 0.5, the stock is not expensive. Typically, a stock with a PEG below 1 is considered undervalued, so by this measure, AppLovin is practically in the bargain category.

APP Price-to-Earnings Ratio (1-Year Forward) data by YCharts.

However, the company’s potential to become a millionaire will depend on its ability to expand its solution beyond the mobile gaming market. If it succeeds in doing so, its rapid revenue growth could continue, in which case, the sky will be the limit for the stock.

Geoffrey Seiler holds positions at Toast. The Motley Fool holds positions in and recommends CrowdStrike, Nvidia, Olo, Toast, and Unity Software. The Motley Fool has a disclosure policy.