Over the years, the market's hottest tech stocks have generated powerful gains for their long-term investors. For example, a $10,000 investment in artificial intelligence (AI) chip giant Nvidia made a decade ago would have grown to be worth nearly $3 million today, with dividends reinvested. A $20,000 investment in its rival AMD would have blossomed into a holding worth just over $1 million. However, it could be tough for those companies to replicate those types of gains over the next decade.
So if you're searching for promising tech stocks that might mint new millionaires in a few years, you should look among the smaller and faster-growing companies that haven't attracted quite as much attention yet. I believe AppLovin(NASDAQ: APP), Opera Limited(NASDAQ: OPRA), and Datadog(NASDAQ: DDOG) fit that description.
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1. AppLovin
AppLovin publishes its own mobile games and apps, but it also provides AI-powered app monetization tools to other companies. In 2022, its revenue growth plateaued, and it posted net losses on the bottom line. Its troubles then were largely the result of high inflation, rising interest rates, and other macro headwinds for the digital advertising market. All of those challenges offset the inorganic gains from its $1.1 billion purchase of MoPub from Twitter.
But in 2023, AppLovin's revenue grew by 17%, and it turned profitable again as the digital advertising market stabilized. During its Q3 2024 conference call this month, CEO Adam Foroughi reiterated his outlook for achieving "20% to 30% year-over-year growth for the foreseeable future." From 2023 to 2026, analysts expect its revenue to clock at a compound annual growth rate (CAGR) of 24% as its EPS rises at a CAGR of 91%.
Falling interest rates, a warmer macro environment, and the growing adoption of its AI-powered AXON ad discovery services should provide the tailwinds driving that robust growth. Based on those rosy expectations, AppLovin's stock still looks reasonably valued at 43 times forward earnings -- and it could generate millionaire-making gains over the next decade if it maintains its current momentum.
2. Opera
Opera's main product is a web browser for mobile and desktop devices. It only accounts for about 2% of the global web browser market, according to StatCounter, but it still served 296 million monthly active users across its mobile, web, and gaming browsers and news app in the third quarter of 2024.
Opera is struggling to gain new users in a market dominated by bigger browsers like Google Chrome, Apple Safari, and Microsoft Edge. But it's offsetting that pressure with new AI tools and integrated ads designed to grow its average revenue per user. That's why its revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose by 20% and 38%, respectively, in 2023.
Its newest browser, Opera One, combines generative AI tools from OpenAI with its own integrated AI assistant, Aria. These new AI-powered services could build loyalty among its current users and help differentiate it from more widely used browsers. From 2023 to 2026, analysts expect the company's revenue to rise at a compound annual rate of 17% as its adjusted EBITDA grows at a compound annual rate of 20%.
Opera's stock looks cheap at 11 times next year's adjusted EBITDA, and its dividend yields a surprisingly high 4.5% at the current share price. The company could come to command a higher valuation and generate some hefty gains over the next decade as it expands its ecosystem, widens its moat, and finds fresh ways to monetize its users.
3. Datadog
Datadog pulls diagnostic data from a wide range of computing platforms onto its unified dashboards. Its generative AI assistant, Bits AI, makes it easier to sift through all of that data. This streamlining process makes it much easier for IT professionals to spot and diagnose hardware and software problems. That valuable service explains how it has nearly quadrupled its number of large customers (those that provide it with at least $100,000 in annual revenue) from 858 in 2019 to 3,190 in 2023.
The company's revenue rose by 27% in 2023, which was its slowest growth rate since its IPO in 2019. However, it also turned profitable for the first time that year as it cut costs and reined in its stock-based compensation outlays.
Datadog faces some near-term macro and competitive headwinds that are weighing down its customer retention rates, but it expects its revenue to rise by 25% in 2024. From 2023 to 2026, analysts expect its revenue and EPS to grow at compound annual rates of 23% and 80%, respectively. The stock isn't a screaming bargain at 63 times its forward adjusted earnings, but it could still have plenty of room to grow as the IT observability market expands. If Datadog keeps growing its top line by at least 20% annually for the foreseeable future, it could rack up multibagger gains and mint some new millionaires in the future. That may be a stretch, but it's not an impossible target.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Leo Sun has positions in Apple. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, AppLovin, Apple, Datadog, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
