Instead, consider these 2 millionaire stocks to buy

Nvidia (NASDAQ:NVDA) has been one of the hottest stocks on the market over the past 18 months. Stocks have risen sixfold thanks to the crucial role they play in the proliferation of artificial intelligence (AI). But Nvidia has also largely crushed the market as a whole over the past decade.

The stock has soared more than 20,000% over the past 10 years, with those eye-popping gains crushing the price. Nasdaq-100 Technology Sector the index jumped 428% by an astronomical margin. With a $5,000 investment made in the stock ten years ago, Nvidia became a millionaire manufacturer.

NVDA data by YCharts

Not everyone may be comfortable paying 38 times sales and 55 times earnings for Nvidia stock right now, although it may justify this expensive valuation due to a huge market total addressable worth $1 trillion. Investors looking to buy attractively valued stocks that could make them richer in the long run should instead consider Metaplatforms (NASDAQ:META) And Oracle (NYSE:ORCL).

These companies are not only significantly cheaper than Nvidia, but they are also poised to benefit from some massive growth opportunities that could send their stock prices skyrocketing in the long term. Let’s take a look at why Meta and Oracle could be ideal choices for investors looking to build a million-dollar portfolio.

1. Metaplatforms

Shares of Meta Platforms have soared 92% over the past year, and the company’s recent quarterly report indicates that it is set for more upside potential due to its accelerated growth. The social media giant’s first-quarter revenue rose 27% year-over-year to $36.5 billion, while adjusted profit soared 114% year-over-year to $4.71 per year. action.

Meta’s impressive year-over-year growth was driven by a solid 20% year-over-year increase in ad impressions, as well as a 6% increase in the average price of each announcement. AI plays an important role in further growing Meta’s advertising business by delivering relevant content to users across its family of applications, which in turn leads to an increase in the number of relevant advertisements served to its users.

CEO Mark Zuckerberg said during the company’s April earnings call that its AI recommendation system accounts for 30% of posts on its users’ Facebook feeds, while more than 50% of Content on Instagram is recommended by AI. It is worth noting that Meta is continually introducing AI-related tools for advertisers, allowing them to more easily create and optimize advertising campaigns.

The company will roll out more generative AI tools throughout the year to help advertisers improve the performance of their ads and enable them to increase the return on the advertising investment they spend. The good news is that advertisers are already reaping the benefits of Meta’s AI tools. In January of this year, a Meta executive said that AI was driving a 32% increase in advertisers’ ad ROI while helping them reduce their acquisition costs by 17%.

Based on this performance, Meta Platforms expects another quarter of solid growth. The company expects second-quarter revenue to reach $37.8 billion, midway through its forecast range, which would represent an 18% jump from the same period last year. last year, during which it announced revenue growth of 11%. Better yet, analysts predict the company’s earnings will grow at an annual rate of 30% over the next five years, which would represent an acceleration from the 11% annual earnings growth recorded over the past five years.

It won’t be surprising to see Meta experience such impressive growth as AI helps it capture a larger share of the digital advertising market. Digital ad spending is expected to grow 13.2% in 2024, and Meta’s Q1 and Q2 growth forecasts tell us it’s growing at a faster rate than the end market. More importantly, according to KBV Research, digital ad spending is expected to grow at an annual rate of 14.5% through 2030, generating annual revenue of just over $1 trillion.

Meta generated $143 billion in revenue over the past 12 months, meaning it still has plenty of room to grow in the future. Investors would do well to buy Meta stock when it trades at 27 times current earnings, which is significantly lower than Nvidia’s current earnings multiple. Its stronger earnings growth could reward investors with more upside potential.

2.Oracle

Demand for cloud-based AI services is booming as companies around the world look to develop AI applications, which has proven to be a boon for Oracle. The company, which made its name providing database software, is now seeing solid growth in its cloud computing business.

In the third quarter of fiscal 2024 (for the three months ended February 29, 2024), Oracle reported a 25% year-over-year increase in cloud revenue, to $5.1 billion. The segment’s growth outpaced the company’s overall revenue increase of 7%, to $13.3 billion. Specifically, demand for Oracle’s cloud infrastructure exploded and revenue from this niche jumped 49% year over year to $1.8 billion.

The good news for Oracle investors is that AI has helped the company create a healthy revenue pipeline. This is evident from the 29% year-over-year increase in the company’s remaining performance obligation (RPO) last quarter, a metric that refers to the total value of future contracts that Oracle must fill. The fact that this metric has grown at a faster rate than Oracle’s revenue is a positive sign.

Oracle highlighted that it “has received significant contracts reserving cloud infrastructure capacity as demand for our Gen2 AI infrastructure far exceeds supply.” The company brought new cloud data centers online very quickly to meet the high demand it saw. So it won’t be surprising to see the company’s cloud AI-focused revenue pipeline improve further in the future.

The cloud AI market is expected to grow at an annual rate of 31% through the end of the decade, generating annual revenue of $398 billion by the end of the forecast period, according to Fortune BusinessInsights. So there is a good chance that Oracle’s growth will accelerate in the long term. Analysts, for example, expect Oracle’s earnings growth to accelerate over the next two years from the $5.12 earnings per share generated in fiscal 2023.

ORCL EPS estimates for current fiscal year data by YCharts

Given that Oracle currently trades at 6.6 times sales and 20 times forward earnings, investors can buy it at a much lower valuation than Nvidia. This could prove to be a smart move: Oracle’s tremendous opportunity in the cloud AI market could translate into stronger long-term earnings growth and cause the market to reward the stock with more gains . Investors looking to add a cloud stock to their portfolio that could help them achieve their goal of becoming a millionaire would do well to buy Oracle immediately.

Should you invest $1,000 in meta platforms right now?

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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any of the securities mentioned. The Motley Fool holds positions and recommends meta-platforms, Nvidia and Oracle. The Motley Fool has a disclosure policy.