Growth stocks are rising, offering stellar gains so far this year. The tech-heavy S&P 500 continues to post new highs, with investors shrugging off inflation concerns. Moreover, with interest rate cuts likely in the next few months, expect growth stocks to continue rallying.
However, not all growth stocks are worth investing in. In fact, concerns surrounding an AI bubble warrant caution and investment in stocks offering long-term value. Hence, in such a scenario, it is always a great idea to consider opinions from Wall Street analysts to gauge stocks. Analysts typically lean towards growth stocks, especially those with strong track records in posting top-and-bottom-line growth. With that said, here are seven analyst-backed growth stocks you should wager on for the long haul.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) had one of the most forgettable years in its storied history in 2022. However, a major strategic shift as part of the “Year of Efficiency” and a greater focus on artificial intelligence (AI) led to a complete turnaround in 2023. The year was marked by improving operational efficiency, effective user base monetization and greater investments in its AI competencies. The result was four straight quarters of comfortable top-and-bottom-line beats, taking its free cash flow per share to $17 last year from $7 in 2022. Moreover, META stock was up a spectacular 144% last year while gaining a healthy 62% in the past six months alone.
Furthermore, Meta will continue betting on AI as the cornerstone of its future success, embedding the technology across its operations and product development. Meta CEO Mark Zuckerberg recently announced plans to spend billions in procuring microchips from Nvidia (NASDAQ:NVDA). Moreover, the company announced the development of a robust new AI model to effectively power its video recommendation engine across its family of apps.
Mastercard (MA)
If you’re looking for quality, look no further than Mastercard (NYSE:MA). The credit card giant boasts an A-graded profitability profile, with double-digit growth across virtually every key metric. To put things in perspective, its 5-year average net income and free cash flow margins, for instance, are at 44.33% and 42.70%, respectively. Moreover, it has rewarded its shareholders handsomely over the years, hiking its payouts in the past 12 consecutive quarters, yielding 0.55%. To start off the year, it hiked its dividend by 16%.
It’s tough to pick a bone with its recent financials, which continue to impress across the board. Its fourth-quarter (Q4) results showed an impressive 12.60% year-over-year (YOY) increase in revenues to $6.55 billion. Likewise, its EPS stood at an amazing $3.18, beating estimates by 10 cents. Mastercard regularly beats analyst estimates across both lines by sizeable margins.
Nvidia (NVDA)
Nvidia is arguably the most indispensable company, given its role in powering the AI revolution. Its powerful GPUs and processors continue to power virtually every major tech breakthrough over the past decade, positioning it as a true juggernaut in its niche. From the crypto surge to the AI explosion, it remains a business that continues turning heads in the tech sphere.
AI has been a major theme for the business in the past year, reflected in its solid quarterly results. In the past three quarters, the company has beaten top-line estimates by almost $2 billion on average. Consequently, its operational cash flows have surged by a whopping 398% in the past year alone.
Its Q4 earnings show sales hit the roof with a YOY growth of 265% to $22.1 billion. Its primary growth driver was its timeless data center segment, which shot up 409% YOY, coming in at $18.40 billion. Hence, with these tremendous results and the growing adoption of AI across various segments, expect NVDA stock to continue offering incredible long-term shareholder value.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) needs no introduction as perhaps the pick of the AI stocks at this time. It surprised everyone with its investments in OpenAI, effectively setting the pace in the industry. MSFT is now an AI frontrunner, integrating the transformative technology into its timeless software stack. Moreover, AI tailwinds continue to fuel growth in its lucrative cloud computing platform, adding new chapters to its growth story.
Its recently released quarterly results were a peach, with it beating revenue and earnings estimates by sizeable margins. Revenue was up 17.70% to $62.02 billion, beating estimates by $890 million. Similarly, its EPS of $2.93 eclipsed market estimates by 16 cents in Q2, representing the 4th consecutive quarter of earning beats. Perhaps the most encouraging result was the 20% jump YOY in intelligent cloud sales to $25.9 billion, signaling robust demand for its cloud services.
Spotify Technology (SPOT)
Spotify Technology (NYSE:SPOT) is a giant in the streaming realm, with a proven track record of posting impressive user growth and engagement. This is reflected in its 5-year average revenue growth, which stands at an excellent 21.90%. Moreover, its monthly active users (MAUs) continue to show an upward trend, growing a superb 23% YOY to 602 million, exceeding estimates by 1 million. Additionally, MAU net additions during the quarter came in at an astonishing 28 million.
Total sales growth for Q4 stood at 16% YOY, marked by solid growth in ad-supported and premium revenues. Premium revenues were up 17% YOY, while ad-supported revenues shot up 12% YOY. Given these solid results, the company is positioned well for a transformative leap, potentially posting its first GAAP profit this year. Analysts estimate the company to post a $3.72 EPS for fiscal year 2024, a massive leap from its negative $2.96 EPS last year.
Walmart (WMT)
Walmart (NYSE:WMT) is the largest retailer in the world, specializing in its domain for over 60 years. Moreover, for the bulk of its years in business, it has handsomely rewarded its shareholders. It has raised its dividend payouts for the past 50 years, earning it the esteemed title of a Dividend King.
The company has shrugged off inflation concerns, posting strong numbers in its recent quarterly report. Its Q4 results show a healthy 5.70% increase YOY in sales to $173.4 billion, beating estimates by a colossal $2.55 billion. Moreover, its EPS of 60 cents, beat estimates by five cents. Its top-line growth has been positively impacted by the expansion of its eCommerce segment, which was up 23% YOY in Q4, blowing past the $100 billion mark in annualized sales. Also, advertising sales were up 28% YOY, a segment poised to flourish further following WMT’s acquisition of Vizio Holdings (NYSE:VZIO).
Eli Lilly (LLY)
Eli Lilly (NYSE:LLY) operates the most valuable pharmaceutical business in the world, with a market cap exceeding $700 billion. Its products cover a variety of medical conditions, including diabetes, depression and anti-obesity, among others. LLY stock is up more than 30% year-to-date (YTD) and gained a staggering 129% last year due to the buzz surrounding its anti-obesity drugs.
A look at its spectacular Q4 results shows the incredible impact of its anti-obesity drugs on its top-line results. Q4 sales were at $9.35 billion, an extraordinary 28% increase YOY. Its anti-obesity offering in Mounjaro contributed $2.2 billion during the quarter, representing about 25% of total sales. Moreover, Zepbound, its latest weight-loss injection, generated $175.8 million in its debut quarter, with more growth expected ahead. Additionally, the company’s Q4 GAAP EPS of $2.42 represented a 13% bump YOY.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
