Nvidia has turned out to be one of the hottest stocks on the market in the past decade, as the company has delivered phenomenal gains of more than 19,700% during this period and bested the S&P 500 index's gains of 156% by a massive margin.
What this means is that an investment of $5,100 made in Nvidia a decade ago is now worth just over a million dollars.
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Investors who had the foresight to put this much money into Nvidia 10 years ago and had the patience to hold the stock for such a long time are now sitting on handsome gains, becoming millionaires in the process.
The good part is that Nvidia still has a lot of catalysts that could send the stock higher in the coming decade. However, Nvidia is now the world's third-largest company with a market cap of $2.74 trillion, which is why it would be absurd for investors to expect it to repeat its past decade's performance in the future.
Of course, Nvidia can still fit into a diversified portfolio. But investors looking for stocks that could deliver bigger gains and help them construct a million-dollar portfolio, in the long run, would do well to take a closer look at two other companies that are at the beginning of a massive growth curve -- Broadcom(NASDAQ: AVGO) and Palantir Technologies(NASDAQ: PLTR).
Let's look at the reasons why these growth stocks could be worth buying as part of a million-dollar portfolio.
1. Broadcom
Nvidia is the dominant player in data center graphics processing units (GPUs), a market that has displayed stunning growth in the past couple of years as these chips are capable of carrying out multiple calculations simultaneously because of their parallel computing ability. That's why major cloud computing giants flocked to Nvidia to buy its GPUs in a bid to quickly train and deploy artificial intelligence (AI) models.
However, the application-specific integrated circuits (ASICs) designed by Broadcom are also gaining terrific traction among AI companies. ASICs are custom processors designed to perform specific tasks, which is why they can carry out those tasks at a greater speed with lower power consumption. As a result, major cloud computing and AI companies such as Microsoft, Alphabet, OpenAI, and Meta Platforms have been developing custom AI processors for their AI data centers.
This strong customer lineup has led to outstanding growth in demand for Broadcom's AI chips. The company's AI chip revenue shot up an impressive 220% in the previous fiscal year (which ended on Nov. 3, 2024) to $12.2 billion. Importantly, Broadcom sees a serviceable addressable market (SAM) worth $60 billion to $90 billion in AI chips over the next three years based on the three cloud customers that have already deployed its chips.
That number is likely to get much bigger, considering that it is developing custom AI chips for an additional four customers. As a result, Broadcom's AI revenue could multiply significantly in the coming years from last year's levels. A key reason why that is likely to happen is the company's dominant position in ASICs, with its market share estimated to be between 55% and 60%, as per JPMorgan.
If Broadcom manages to maintain its control over half of the custom AI chip market after three years and the addressable market nears the higher end of its estimated range based on the three customers it currently has, its AI chip revenue could jump almost fourfold. This explains why analysts are upbeat about the company's potential growth going forward.
Even better, Broadcom has a price/earnings-to-growth ratio (PEG ratio) of just 0.47 based on its projected earnings growth for the next five years, according to Yahoo! Finance. A PEG ratio of less than 1 means that a stock is undervalued after taking into account its long-term earnings growth potential. All this makes Broadcom an ideal fit for investors looking for the next big AI growth stock that could deliver robust long-term gains.
2. Palantir Technologies
Palantir Technologies' stock has shot up an impressive 349% in the past year despite witnessing a sharp pullback of late amid the tariff-related turmoil. This outstanding rally in Palantir's stock is because of the fast-growing demand for the company's AI software platform, which allows governments and businesses to integrate generative AI tools into their operations.
For instance, the North Atlantic Treaty Organization (NATO) has just selected Palantir's generative AI and machine learning-powered Maven Smart System to analyze data and support its operational abilities. This, however, is just one instance of the terrific demand for Palantir's AI software. The company's remaining deal value (RDV), which refers to the total remaining value of contracts at the end of a period, shot up an impressive 40% year over year in the fourth quarter of 2024.
Palantir's RDV stood at an impressive $5.4 billion at the end of Q4 2024. That's higher than its 2025 revenue forecast of $3.75 billion, which would be a 31% improvement over last year. However, don't be surprised to see Palantir's growth exceeding its own expectations as its AI solutions continue to attract more customers, with NATO being the latest example.
Meanwhile, commercial customers have been expanding their usage of Palantir's AI software platform thanks to the efficiency gains that they are witnessing. Palantir management cited many examples of its existing customers signing bigger contracts on the February earnings conference call. Singling out one such example, Chief Revenue Officer Ryan Taylor pointed out:
An American telecom company became a customer approximately two years ago and recently signed a $40 million TCV expansion deal to help manage and accelerate their decommissioning of old network technologies and equipment in order to achieve significant cost savings.
It won't be surprising to see the adoption of Palantir's AI software platform increasing in the future. This market is currently in its early phases of growth and is expected to clock almost 41% annual growth through 2028, according to IDC. The market research firm sees the annual spending on AI software platforms jumping to $153 billion in 2028.
Palantir, therefore, has tremendous room for growth going forward. Another thing worth noting is that the company's growth has accelerated following the launch of its AI software platform. That trend seems like it's here to stay, as the impressive growth in its RDV and the size of its addressable market tell us. Of course, the stock is expensive right now with a trailing earnings multiple of 517, but the forward earnings multiple of 182 points toward a big jump in its bottom line.
Additionally, Palantir's ability to win more business from existing customers is leading to healthy growth in its margins, contributing toward solid unit economics. So, the company seems well placed to justify its expensive valuation in the long run by cornering a bigger share of the AI software platforms market, which should also supercharge its earnings growth because of its improving margin profile.
All this makes Palantir a top growth stock to buy and hold for the long run, as the company is set up for a long period of healthy growth thanks to AI.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, JPMorgan Chase, Meta Platforms, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool recommends Broadcom and 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.
