Here, I’m going to highlight three S&P 500 stocks that I reckon will soar over the next five years, and make passive index fund strategies look silly. Are these names worth a closer look today?

A cybersecurity powerhouse

Over the next five years, the cybersecurity industry is likely to experience prolific growth as companies embrace artificial intelligence (this will increase the attack surface). This industry expansion should fuel strong growth at CrowdStrike (NASDAQ: CRWD).

It’s one of the largest players in the cybersecurity sector with a market-cap of around $120bn. It aims to secure the most critical areas of risk for businesses – endpoints, cloud workloads, identity, and data – to keep customers ahead of cyber criminals.

Now, like a lot of high-growth stocks, CrowdStrike carries a fair bit of risk from an investment perspective. Not only does it operate in a very dynamic environment (the cybercrime landscape’s always shifting) but it has a high valuation because its earnings are still small.

Taking a five-year view however, I see a ton of potential. I think it’s worth a look right now.

A chip monster

Another industry I believe will see massive growth in the years ahead is semiconductor (chip) manufacturing. And one company that looks well placed to benefit here – and could be worth considering as a long-term investment – is KLA Corp (NASDAQ: KLAC).

It specialises in process control and yield management solutions for the industry. So it’s essentially a ‘picks-and-shovels’ play on the theme – it should do well no matter which companies have the best chips.

One thing I like about this company from an investment perspective is that it’s very profitable. Return on capital employed (ROCE) is very high, meaning that the company should have plenty of capital to reinvest for future growth (and get bigger).

I’ll point out however, that the chip industry is cyclical (up and down). So while I’m bullish on the long-term outlook here, there could be periods where this stock experiences some short-term underperformance.

A stock for public safety

Finally, I’m bullish on Axon Enterprise (NASDAQ: AXON). It’s known for its Tasers (stun guns) but it also manufactures other policing and security solutions such as body cameras and drones.

This company has been growing at an incredible rate in recent years. Over the last five years, for example, revenue has climbed from $531m to $2,083m.

Looking ahead, I expect it to continue growing at a fast pace. Ultimately, it looks set to benefit from a ‘perfect storm’ of socio-political factors (more unrest globally, lower levels of police staffing, the demand for policing transparency, etc).

Of course, there are risks here. Slowing growth’s one – right now the stock’s priced for strong growth.

When I look to the long term here though, I can see this stock doing very well given the complex socio-political backdrop. I think it’s worth considering while it’s 30% below its highs.

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Looking ahead to 2025, I expect this index to be a source of opportunity for investors again. With that in mind, here are three S&P 500 growth shares to consider buying for a Stocks and Shares ISA.

Amazon

Starting with a Big Tech play, I like Amazon (NASDAQ: AMZN) right now. It has done well this year (rising around 50%). However, I think the uptrend here has legs.

One reason I’m bullish is that after years of cost-cutting, Amazon is on a growth drive again. Recently, it has been rolling out some incredible artificial intelligence products designed to help customers build their own AI applications.

It has also entered the AI chip space, and recently launched its high-powered ‘Trainium 3’ product. These chips could be popular given that Nvidia’s chips are both very expensive and supply-constrained.

Now, a risk is a slowdown in consumer spending. Today, a large chunk of Amazon’s revenues still comes from online shopping.

With the price-to-earnings (P/E) ratio under 40, however, I like the risk/reward set-up. I’ve made the stock my largest holding.

KLA Corp

2024 was a mixed year for companies in the AI chip ecosystem. While Nvidia (which designs chips) did really well, a lot of companies that specialise in chip manufacturing equipment didn’t.

Given this lack of performance in the chip manufacturing equipment space, I think there could be some opportunities here for 2025. And one stock I like is KLA Corp (NASDAQ: KLAC).

This company specialises in technology that helps to ensure chip quality and production efficiency. So, the way I see it, it’s a good ‘picks-and-shovels’ play on the semiconductor industry.

That’s not the only reason I like it though. I’m also attracted to the earnings growth and the valuation. For the year ending 30 June 2025, Wall Street expects earnings growth of a high 30%. Meanwhile, the P/E ratio here right now is just 20.7, which is not high.

Now, I’ll point out that KLA generates around 20% of its revenues in China. So US export restrictions are a risk.

I believe the company will do well in the years ahead though. That’s because it plays a crucial role in the chip industry.

Nasdaq

Finally, I like the look of Nasdaq (NASDAQ: NDAQ) as we head towards 2025. It operates stock market platforms and also offers solutions in relation to data, indexing, analytics, and regulatory technology.

There are a few reasons I’m bullish here. One is that as the operator of the tech-focused Nasdaq index, it should do well as the tech industry continues to grow.

Another is that there’s a good chance that the IPO market will heat up next year. This could lead to more revenue for the company.

Finally, the stock is trending up and the valuation looks attractive. Currently, the P/E ratio is under 25.

Of course, in the short term, a meltdown in the financial markets or the tech sector could lead to share price weakness. Taking a long-term view, however, I think the shares have tons of potential.

I’ve just bought a few for my own portfolio.

The post 3 top S&P 500 growth shares to consider buying for a Stocks and Shares ISA in 2025 appeared first on The Twelfth Magpie.

Interested in this? Here are three growth stocks at the heart of this revolution that could be worth considering.

Powering the AI industry

It’s impossible to talk about AI and not mention Nvidia (NASDAQ: NVDA). That’s because its ‘accelerated computing’ GPU (graphics processing unit) technology is powering the majority of AI applications today.

Without its technology, we wouldn’t have ChatGPT. To train this application, it took tens of thousands of Nvidia GPUs (these cost around $40k each).

Now, Nvidia shares have had an amazing run so they could pull back in the short term. However, taking a long-term view, I remain bullish.

In the near future, the company’s going to launch its new AI chip platform Blackwell. And in the words of CEO Jensen Huang, demand for these chips is ‘insane’:

We are at the beginning of a new industrial revolution

Nvidia CEO Jensen Huang

It’s worth noting that Nvidia’s a volatile stock. If there’s news a competitor’s developed a powerful new AI chip, it could fall.

I expect significant growth in the years ahead however. I plan to buy more shares for my portfolio on the dips.

The key to chip production

Taking a step back, computer chips in general are going to play a major role in the digital revolution. That’s because they’re essentially the ‘brains’ of all electronic devices.

One stock I like for exposure here is KLA Corp (NASDAQ: KLAC). It plays a vital role in the industry as its technology helps to ensure chip quality and production efficiency.

The way I see it, this is a great ‘picks-and-shovels play’ on the semiconductor industry. In the same way that those selling picks and shovels did well in the gold rush, this company should do well as the world becomes more digital in the years ahead (no matter which chip companies dominate the market).

I’ll point out that the chip industry can be cyclical at times. And concerns about market weakness can send this stock down.

We’re looking at a powerful long-term growth story here though. So I recently bought some shares in the company for my portfolio.

A UK data centre stock

Another area of technology that’s key to this digital revolution is data centres. These store and process the massive amounts of data used in AI applications.

One company I’ve invested in for exposure here is Volex (LSE: VLX). It’s a UK manufacturing company that specialises in data transmission cables. Recently, it’s been having success on the back of the global data centre boom. For the six-month period to the end of March, revenue growth in its Complex Industrial Technology division came in at 32%.

I have to remember that Volex also makes power products for other industries (electric vehicles, consumer electricals etc). And these industries can experience weakness at times.

I’m backing this company to do well on the back of the growth of the data centre industry though. Currently, it has a low valuation (the price-to-earnings (P/E) ratio is just 13) so I believe it has the potential to generate strong long-term returns.

The post The next industrial revolution has begun. Here are 3 growth stocks at its heart appeared first on The Twelfth Magpie.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

ASML

What it does: The company supplies the machines used in the manufacturing of semiconductors, including for AI.

By Oliver Rodzianko. ASML (NASDAQ:ASML) is the strongest investment I know of right now.

Management forecasts revenue growth of 45% for 2025, so now is a good time for me to buy the shares.

My outlook is reinforced by its forward price-to-earnings ratio of just 24. That’s only slightly higher than the industry median of 19.

ASML is known for its extreme ultraviolet lithography systems used to manufacture world-leading semiconductors. There are very few businesses able to challenge it.

I estimate the share price could increase by 40% in the next 12 months. However, its revenue growth is likely to slow down in 2026.

It’s also worth remembering that the demand for AI chips could taper soon as companies question the return on investment of data centre spending.

Nonetheless, I’m bullish on ASML. It’ll be the next investment that I make.

Oliver Rodzianko does not own shares in ASML.

Intel

What it does: Intel is one of the world’s largest design and manufacturer of computer components and related products.

By Jon Smith. Intel (NASDAQ:INTC) might seem a controversial choice right now. The stock is down 31% over the past year, largely due to poor financial results. The business has so far been unable to capitalise on artificial intelligence (A.I.) in the same way other tech firms are. The latest results shows a Q2 net loss, with the outlook for another loss this quarter.

Despite these risks, I think the stock looks cheap. I’m clearly not the only one, with several larger companies reportedly sniffing around for a potential buyout. Putting this to one side, the firm is now in full transformation mode.

Cost cutting alongside focusing investment on core business areas for growth should help to turn the company around in the medium term. Granted, I might not be able to pick the perfect lowest price on the share, but I’m seriously thinking about buying the stock for a long-term recovery.

Jon Smith does not own shares in Intel.

KLA Corp 

What it does: KLA Corp provides quality control and yield management solutions to the global semiconductor industry. 

By Edward Sheldon, CFA. The semiconductor industry looks set for strong growth over the next decade and one stock I like in this area of the market (and have been buying for my own portfolio recently) is KLA Corp (NASDAQ: KLAC). It plays a vital role in the industry as its technology helps to ensure chip quality and production efficiency. 

The way I see it, this is a great ‘picks-and-shovels’ play on semiconductors. No matter who turns out to be the winner in the long run (I think there will probably be multiple winners), KLA Corp should do well as it provides essential services that all chip manufacturing plants require. It’s worth noting that the company is growing at an impressive rate today thanks to high demand for AI chips. This financial year (ending 30 June 2025), revenue and earnings per share are expected to climb 17% and 27% respectively. 

Now, one risk to be aware of here is that the chip industry can be cyclical at times. As a result, chip stocks can be volatile. We are looking at a long-term ‘secular’ growth trend here, however. So, I see huge potential in the long run. 

Edward Sheldon owns shares in KLA Corp.

Shopify

What it does: Shopify offers an all-inclusive e-commerce platform that enables sellers of all sizes to build online businesses.

By Alan Oscroft. Shopify (NYSE: SHOP) might just qualify as the best picks-and-shovels business in the online selling space. That is, like those who sell equipment to gold prospectors, it makes its money no matter who wins at the sharp end.

Shopify recently posted revenue of $2bn in its second quarter, up 21%. That’s billion, in just one quarter, and growing strongly.

And for the next quarter, the company expects revenue to grow at “a low-to-mid-twenties percentage rate on a year-over-year basis.” More twenties, excellent. Oh, and it’s aiming at a double-digit free cash flow margin.

What’s the risk? Right now, I think the big one is the price-to-earnings (P/E) valuation. We have a trailing P/E of 81. Eek! Forecasts would drop that to around 57 by 2026, which is still very high.

But I think Shopify’s long-term earnings growth potential could be phenomenal.

Alan Oscroft has no position in Shopify.

The post Best US stocks to consider buying in October appeared first on The Twelfth Magpie.

Here, I’m going to highlight three I’ve been buying for my ISA in the recent sell-off. I reckon these stocks have the potential to make me a lot of money in the long run.

Amazon

First up we have Amazon (NASDAQ: AMZN). It‘s one of the so-called Magnificent 7 stocks.

Amazon has had a significant pullback in the market sell-off. Only a few weeks ago, it was trading near $200. Now however, it’s in the $160s.

At current levels, I see considerable value on the table here. With analysts expecting earnings per share of $5.82 next year, the forward-looking price-to-earnings, or P/E, ratio is under 30. That’s a historically low valuation for this disruptive company.

It’s worth pointing out that consumer weakness (in the online shopping space) is a risk in the short term. This is one reason the shares have pulled back lately.

Taking a five-year view, however, I expect this stock to be sitting at much higher levels. Looking ahead, revenues and earnings should keep growing at an impressive rate thanks to the company’s exposure to cloud computing (19% growth last quarter) and artificial intelligence (AI).

ASML

Speaking of AI, one stock I’ve been buying for more exposure to the theme is ASML (NASDAQ: ASML). It’s a semiconductor manufacturing equipment maker that specialises in technology that can print microscopic patterns onto silicon wafers, enabling the creation of more powerful computer chips.

Like a lot of semiconductor equipment stocks, ASML has experienced a major pullback recently. In the space of a few weeks, its share price fell nearly 30%.

I see this pullback as an amazing opportunity. Next year, revenue and earnings are forecast to grow 33% and 57%, respectively, on the back of the AI boom. So, I think buying shares now – while the P/E ratio is in the mid-20s – is likely to pay off for me.

I’ll point out that I’m not expecting this stock to climb in a straight line in the years ahead. This company can experience lumpy sales and its share price can be quite volatile at times.

In the long run, however, I expect the stock to do well.

KLA Corp

Given the carnage across the semiconductor space, I decided to buy KLA Corp (NASDAQ: KLAC) too. Its share price had fallen more than 20%.

This is another company that’s likely to play a crucial role in the AI revolution. That’s because its technology helps semiconductor manufacturers with quality control and production efficiency.

In the years ahead, the chip industry is likely to experience huge growth on the back of the AI boom. And I see this company as the perfect ‘picks-and-shovels’ play.

A risk here is the ongoing US/China stand-off. This could lead to lower sales for the company in the future (it generates a lot of its revenues in China).

With the stock currently trading on a forward-looking P/E ratio in the low 20s, however, I like the long-term risk/reward skew.

The post I just invested £4k of my ISA in these 3 brilliant growth stocks appeared first on The Twelfth Magpie.