2 growth stocks that could become parabolic

Growth stocks tend to experience major declines during a market decline. This was especially evident in 2022 when Nasdaq Composite the index fell 33% as companies faced an economic downturn.

Nasdaq is known for its wealth of technology stocks, an innovation-driven industry with a reputation for long-term growth. As a result, many of the world’s most valuable companies saw their share prices fall during the year. However, the same index has risen 68% since January 1, 2023, demonstrating the technology’s ability to recover and grow if sustained long enough.

Recent industry changes and macroeconomic concerns have hit growth stocks again and sent the Nasdaq lower over the past month. Consequently, now could be a great time to expand your portfolio with companies that could see big gains over the next decade.

So here are two growth stocks that could go parabolic.

1. Intelligence

You might be surprised to see Intel (INTC 2.94%) on this list. The company has arguably lost its reputation as a growth stock over the past decade, with its stock down about 40%. However, despite recent declines, Intel shares have climbed 79,000% since going public in 1971. Meanwhile, last year Intel made major restructuring moves that could make the next decade one of growth.

In August, Intel caught a lot of heat after releasing its second quarter earnings. Revenue fell 1 percent year over year and missed Wall Street estimates by $150 million. The gains came alongside news that the company would freeze its fourth-quarter dividend and lay off 15% of its workforce, which didn’t sit well with investors.

However, after a decade of decline, drastic and even expensive moves by Intel are needed to turn things around. The cost-cutting measures align with the company’s plan to accelerate its foundry expansion by opening chip plants in the US, a move that requires major investment. The company is currently in the process of building the first of at least four chip factories, and its Ohio plant is expected to be operational by 2027 or 2028.

Intel aims to regain the lead in chip production from Taiwan Semiconductor Manufacturing and become the world’s largest AI chip maker. However, the plan will require time and money to succeed. And according to recent earnings, Intel’s financial situation could get worse before it gets better. However, AI remains a major growth market that could deliver major gains for Intel, meaning owning its stock will require patience.

The company’s price-to-sales (P/S) ratio currently stands at an attractive 2, indicating that its stock is a low-risk option and a bargain compared to its long-term potential to go parabolic.

2. The alphabet

Alphabet (GOOG 0.51%) (GOOGL 0.45%) has a long history of growth, its stock is up 476% over the past decade. The company is easily one of the most reliable long-term investments available, thanks to a deep economic moat, vast financial resources and a strong brand. Meanwhile, consistent reinvestment in its business means Alphabet is never standing still for long, continuing its positions in expanding markets such as AI, cloud computing, self-driving cars and more.

Powerful products like Google, YouTube, Cloud and Android have earned Alphabet a dominant role in technology and made the company one of the most financially stable organizations. In Q2 2024, Alphabet’s net income reached $24 billion, with net margins of 28%. Meanwhile, the company’s total cash, cash equivalents and marketable securities were $101 billion as of June 30, further highlighting its reliability.

Moreover, Alphabet has interesting prospects in AI. The company is no stranger to technology, having used it in Search since 2001. AI is also a critical integration in popular products like YouTube, Gmail, Maps and Cloud. These platforms have given Alphabet a vast user base and a valuable tool to put its AI offerings in the hands of billions of people as it continues to develop its technology.

Alphabet’s capital spending has reached $13 billion this year, with much of it going to AI. The company has the money and brand power to keep pace with its rivals and thrive in the industry for the long term.

Data by YCharts

This chart shows that Alphabet also boasts an attractively low forward price-to-earnings (P/E) ratio of just 22. This figure is also below its five-year average for the metric, making his stock to be too good to pass up. In addition to a strong brand and financial stability, Alpahbet shares will likely continue to rise for years.