When it comes to investing, there are several sectors that offer great opportunities. One such sector is the technology sector. In this article, we will explore two tech stocks that have excellent return prospects over the next five years. These stocks are Advanced Micro Devices and Alphabet (Google). Let's take a closer look at each of them.
Unlock the Potential of These Tech Stocks for Massive Returns
Advanced Micro Devices: A Rising Star in the Tech Sector
Nvidia may be the leader in the graphics processing unit (GPU) market, but Advanced Micro Devices (AMD) is not far behind. AMD sells chips in several markets and has returned 237% over the last five years. There is a strong possibility that the stock could double again by 2030.In Q3, AMD's revenue grew by 18% year over year, driven by strong demand for its data center GPUs and central processing units (CPUs). Although two business segments were experiencing weak revenue performance, the company's gaming and embedded segments showed a steep decline in revenue this year. However, these headwinds are expected to turn into tailwinds in the future.AMD is preparing to launch new Radeon gaming GPUs early in 2025, which could boost the gaming segment. The embedded segment also showed growth, with revenue increasing by 8% over the previous quarter. Management is seeing design wins gain momentum, indicating long-term growth potential.For now, the data center business is providing enough growth to be a key catalyst for the share price heading into 2025. With the growing demand for advanced data center chips used for artificial intelligence, AMD's earnings per share is expected to grow at an annualized rate of 42%. Although the stock is currently trading at a high forward price-to-earnings ratio (P/E) of 40, it could still double by 2030 if not sooner.Alphabet (Google): A Global Brand with Endless Opportunities
Alphabet's (GOOGL -0.40%) (GOOG -0.25%) Google is one of the strongest brands in the world. With seven online services having more than 2 billion users, Google has a strong advantage in the $740 billion digital-advertising market. Shares of Alphabet have more than doubled over the last five years, and the opportunities in AI and cloud computing could drive enough earnings growth to double again by 2030.Alphabet is experiencing strong momentum across the business, including search. New AI features are improving the usefulness of this daily utility for users, and management believes that these features will improve user engagement and satisfaction, which is good news for long-term growth in advertising revenue. In Q3, Alphabet posted a 15% increase in revenue, with advertising revenue up 10%.Google Cloud is also benefiting from Alphabet's massive investments in AI infrastructure. It is the No. 3 cloud services provider behind Amazon Web Services and Microsoft Azure and is gaining market share in the growing $313 billion cloud market. Last quarter, Google's cloud revenue grew by 35% year over year.Most importantly, management's focus on operating efficiency and improving profitability in Google Cloud pushed its earnings up by 36% over the year-ago quarter. Although the stock is currently trading at a forward P/E of just 22, it still has a lot of growth potential.However, the stock's conservative valuation reflects uncertainty over an antitrust ruling against Google in August. The Department of Justice wants Google to divest its Chrome web browser among other measures to prevent Google from gaining an unfair advantage in online search. Regardless of the outcome, Alphabet still has a wide competitive moat based on the millions, if not billions, of people who use its products like Gmail, Search, and YouTube every day. This large base of users provides the means to generate billions in ad revenue and positions Google well for long-term growth.READ MORE