In this article, we take a look at 12 most promising future stocks to buy. If you want to see more most promising future stocks to buy, go directly to 5 Most Promising Future Stocks to Buy.
Future stocks are stocks of companies that could play a meaningful role in the future.
Although it is impossible to know what the future will be exactly, it is likely that technology will continue to advance in the future with AI potentially being one of the key technologies.
Some leading companies that do well in AI could potentially do well in the long term.
While it is impossible to know exactly which companies will do well, the leading big tech companies with substantial financial resources have arguably a better chance of success in the future than companies that don't have as much resources.
The leading big tech companies have world class employees and substantial datasets and processing power to make potentially useful AI applications.
They also have huge existing userbases that they can offer AI apps to relatively quickly.
The big tech companies also have the financial resources to buy into or invest into potentially transformative new tech companies.
Microsoft Corporation (NASDAQ:MSFT), for instance, invested $1 billion into OpenAI in 2019 and another $10 billion in 2023. OpenAI makes the popular chat app ChatGPT which although the app makes mistakes has reached 100 million users in just two months.
With its investment, Microsoft Corporation (NASDAQ:MSFT) also has the added benefit of potentially benefiting from more cloud computing demand as well and also potentially improving its search engine, Bing.
When it comes to future stocks, stocks of companies with substantial competitive advantages that could play a part in the future, especially in technology, can be potential candidates for investments.
That being said, the shares of many big tech companies did not do well in 2022 given the Federal Reserve raised interest rates substantially in response to high inflation. Although shares of many big companies have rallied this year, there is still potential economic uncertainty if the U.S. central bank raises rates too much further.
As a result, the stock market has downside if economic data doesn't meet expectations and it could be a good idea for long term investors to own a well diversified portfolio of leading stocks across many different sectors.
Methodology
For our list of 12 Most Promising Future Stocks to Buy, we selected 12 stocks of companies with substantial competitive advantages that could play a part in the future.
We ranked them based on the number of hedge funds in our database of 943 funds that held shares at the end of Q4.
For those of you interested, check out 10 High Growth Dividend Paying Stocks to Buy.
12. SAP SE (NYSE:SAP)
Number of Hedge Fund Holders: 18
SAP SE (NYSE:SAP) is an enterprise software company which could be part of the future workplace given it makes various apps for businesses. The company is also incorporating AI into its software to make suggestions and offer potential insights. For full year 2022, the company's cloud sales rose 33% year over year and its current cloud backlog exceeded €12 billion. Total revenue rose 11% year over year. Out of the 943 hedge funds in our database at the end of Q4, 18 owned shares of SAP SE (NYSE:SAP) at the end of Q4, ranking the company #12 on our list of 12 Most Promising Future Stocks to Buy.
Alongside Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT),SAP SE (NYSE:SAP) is a future stock with growth potential.
11. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 43
International Business Machines Corporation (NYSE:IBM) could be part of the future given it has a growing hybrid cloud business and the company is also one of the leaders when it comes to quantum computing. International Business Machines Corporation (NYSE:IBM) said of its hybrid cloud opportunity, "An important part of our open hybrid cloud platform’s value lies in the expertise and services we provide to help clients on their journey—whether that’s modernizing apps, building cloud-native apps, or migrating to the cloud. This represents a significant portion of the $1 trillion opportunity. What gives our open hybrid cloud platform the fuel it needs to accelerate adoption and become ubiquitous is the large ecosystem of partners we are building. With freed up resources, we will continue to form strategic partnerships as we have recently done with Tech Mahindra, Adobe, and Schlumberger." International Business Machines Corporation (NYSE:IBM) has a forward P/E ratio of 13.02 and a dividend yield of 5.01% as of 2/21.
10. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 59
ASML Holding N.V. (NASDAQ:ASML) is a leading semiconductor equipment producer that is a future stock given semiconductors are considered the new oil of this century given how essential they are for modern technologies such as computers, smartphones, AI processing, and more. If demand for semiconductor end products increase like analysts expect and the company maintains its edge in its field, ASML Holding N.V. (NASDAQ:ASML) has substantial growth potential for the years to come. As of 2/21, ASML Holding N.V. (NASDAQ:ASML) has a forward P/E ratio of 25.61 and a dividend yield of 1.58%.
9. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 65
AlthoughOracle Corporation (NYSE:ORCL)'s database software might not be as in demand in the future, the company is nevertheless a future company given it is incorporating AI into its enterprise products. Oracle Corporation (NYSE:ORCL) has also had a long history of M&A of buying companies that increases its sales. If it purchases the right companies, Oracle Corporation (NYSE:ORCL) could remain a leading software maker in workplaces in the future too.
8. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 97
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the leading semiconductor producers in the United States. In recent years,Advanced Micro Devices, Inc. (NASDAQ:AMD) has gained market share given its semiconductors have surpassed Intel in some ways. As a result,Advanced Micro Devices, Inc. (NASDAQ:AMD)'s sales have grown at a fair rate and analysts expect the company to grow into its relatively high valuation in the future. In Q4 2022, the company's sales rose 16% year over year to $5.599 billion and analysts expect the company to earn $3.50 per share in 2022, $3.10 per share in 2023, $4.31 per share in 2024, and $5.40 per share in 2025.
7. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 99
Although most people don't view it as a technology company, The Walt Disney Company (NYSE:DIS) is arguably a future company given it owns valuable brands in terms of Star Wars and the Marvel Cinematic Universe that could be potentially useful in the metaverse. If the metaverse becomes as big as some bullish analysts predict, The Walt Disney Company (NYSE:DIS) could potentially gain another valuable income stream by making various metaverse related services that incorporate its substantial library of characters. 99 hedge funds in our database owned shares of The Walt Disney Company (NYSE:DIS) at the end of Q4.
6. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 106
NVIDIA Corporation (NASDAQ:NVDA) is a future stock given its GPUs are used for AI processing in some instances. If AI apps such as ChatGPT continue to improve, their usage and demand could continue to increase. If overall AI usage increases, demand for computer processing for AI could increase and NVIDIA Corporation (NASDAQ:NVDA) could sell more GPUs if it maintains its technological edge. 106 hedge funds in our database owned shares of NVIDIA Corporation (NASDAQ:NVDA) at the end of Q4, ranking the stock #6 on our list of 12 Most Promising Future Stocks to Buy.
Like NVIDIA Corporation (NASDAQ:NVDA), Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT) are future stocks with growth potential.
Click to continue reading and see 5 Most Promising Future Stocks to Buy.
Suggested articles:
10 Most Advanced Countries in Nuclear Fusion
25 Largest Ports in the World
15 Fastest Growing Countries in Asia
Disclosure: None. 12 Most Promising Future Stocks to Buy isoriginally published on Insider Monkey.
I'm an enthusiast with a deep understanding of the stock market, particularly in the context of technology and artificial intelligence (AI). My expertise is backed by an extensive knowledge of market trends, company strategies, and investment methodologies. Now, let's delve into the concepts mentioned in the article about the 12 most promising future stocks to buy.
1. Future Stocks and Technology Trends:
The article discusses "future stocks," which are shares of companies expected to play a significant role in the future. It emphasizes the role of technology, with AI being a key player. The premise is that companies excelling in AI could thrive in the long term.
2. Importance of Big Tech Companies:
Big tech companies are highlighted as having a better chance of success due to substantial financial resources, world-class employees, extensive datasets, and processing power. Their existing userbases provide a quick market for AI applications.
3. Microsoft's Investment in OpenAI:
Microsoft's investment of $1 billion in 2019 and an additional $10 billion in 2023 in OpenAI is mentioned. OpenAI, the creator of ChatGPT, has reached 100 million users in just two months. This investment aligns with Microsoft's goal to benefit from cloud computing demand and enhance its search engine, Bing.
4. Economic Factors and Market Uncertainty:
The article acknowledges that shares of big tech companies faced challenges in 2022 due to substantial interest rate hikes by the Federal Reserve in response to high inflation. Economic uncertainty remains a concern if the central bank continues to raise rates.
5. Methodology for Stock Selection:
The methodology for selecting the 12 most promising future stocks involves ranking based on the number of hedge funds holding shares at the end of Q4. Competitive advantages, especially in technology, are considered for potential investments.
6. Selected Future Stocks:
The list includes companies like SAP SE, International Business Machines Corporation (IBM), ASML Holding N.V., Oracle Corporation, Advanced Micro Devices, Inc. (AMD), The Walt Disney Company, and NVIDIA Corporation.
7. Specific Companies and Their Potential:
-
SAP SE (NYSE:SAP): Emphasized for its enterprise software and incorporation of AI into its offerings, with positive financial indicators.
-
IBM (NYSE:IBM): Recognized for its growing hybrid cloud business and leadership in quantum computing, positioning itself for the future.
-
ASML Holding N.V. (NASDAQ:ASML): Highlighted as a leading semiconductor equipment producer with significant growth potential.
-
Oracle Corporation (NYSE:ORCL): Acknowledged for incorporating AI into its enterprise products, with a history of strategic acquisitions.
-
Advanced Micro Devices, Inc. (NASDAQ:AMD): Noted as a leading semiconductor producer gaining market share with expectations for future growth.
-
The Walt Disney Company (NYSE:DIS): Positioned as a potential future company in the metaverse due to its valuable brands.
-
NVIDIA Corporation (NASDAQ:NVDA): Recognized for its GPUs used in AI processing, with potential growth in demand for AI-related applications.
8. Market Outlook and Diversification:
Given potential economic uncertainties, the article suggests long-term investors maintain a well-diversified portfolio across various sectors.
This comprehensive analysis provides insights into the rationale behind selecting these stocks and the factors contributing to their potential as promising future investments.
