It’s obvious where many people think the best growth stocks to buy are today — anything related to the AI infrastructure buildout. Some of these semiconductor shares have gained 500%+ in the space of just 12 months!
However, it seems very likely many of these will come back down to earth with a heavy bump once chip supply catches up with demand. Though nobody knows when that will be, of course.
Over a five-year period, though, I like this beaten-down stock. I think it’s worth a look while it’s down more than 50%.
Hammered growth share
I’m talking about Roblox (NYSE:RBLX), which has crashed 67% since September. As a shareholder, this has been a painful drop to endure, despite the user-generated gaming platform never being one of my largest holdings.
What’s gone wrong? Well, to finally get a grip on disturbing child safety issues, Roblox introduced age-checking features a few months ago. But the additional friction from these checks led the firm to slash its full-year FY26 bookings forecast (from 22%-26% to just 8%-12%).
While this lowered growth expectation clearly adds risk, it also looks very conservative. I think there’s a chance the firm beats this.
After all, Roblox still ended the first quarter with 132m daily active users (up 35% year on year). The platform remains extremely popular, with 31bn hours of engagement in a single quarter.
Meanwhile, the valuation looks much more attractive on some metrics. For instance, the enterprise value is just four times projected FY26 bookings ($7.46bn at the midpoint). Historically, it has been more than double that.
Investing for long-term growth
Another issue here is that Roblox is investing heavily to attract more players over 18. And to incentivise developers to make more sophisticated games for the platform, the firm is upping its Developer Exchange (DevEx) rate.
This will go from 26.6% to 37.8%, assuming developers use its R15 avatar framework (which creates advanced visual and gameplay features). So DevEx fees will be going up.
Like the child safety features though, these investments should create a more valuable platform in the long run. The 18-34 cohort is already growing the fastest on Roblox, so it makes sense to invest more to capture this opportunity (older players spend more money, after all).
We are aggressively moving to capture the untapped opportunity to expand our O18 user base, the largest segment of the traditional gaming market.
Q1 2026
The growth story isn’t over
Long term, I think Roblox still has a large runway of growth, particularly in overseas markets. In Q1, daily active users surged 96% in Japan and 84% in India.
Then there’s the massive digital advertising opportunity. A few months ago, Ikea added a pop-up shop in Roblox after seeing kids and young adults building houses in there. Other big brands are likely to seek bigger exposure on a platform with 132m+ users.
Finally, Roblox looks perfectly placed to reap the rewards of advances in AI. On the Q1 earnings call, CEO David Baszucki said: “We do believe AI is going to fundamentally accelerate gaming, we are in a unique position to lead in this transformation.”
The company now has over 400 AI models running more than 1.5m inferences per second across its own data centres and the cloud!
Should you invest £5,000 in Roblox right now?
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Ben McPoland has positions in Roblox.
