AppLovin, Opera, and Datadog deserve more attention from retail investors.
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 (APP -1.75%), Opera Limited (OPRA -2.35%), and Datadog (DDOG 4.08%) fit that description.
Image source: Getty Images.
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.
NASDAQ: APP
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.
NASDAQ: OPRA
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.
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