Transcription
This is my personal stock portfolio, and in this video, we'll be going through the top seven stocks to buy now.
So, first off, we have a fintech stock that has increased in price by 148% since I last covered it on this channel. Based on what I'm seeing with their insane new products and the stock finally starting to earn an innovation premium—a well-known concept where companies inventing new technology or doing business in a new way tend to see their stock prices rise higher than traditional companies—this stock could double again.
To respect your time, here's a list of all seven stocks that I'll be covering in this video. I'll start by putting my money where my mouth is and showing you my actual portfolio. Over the last year, my portfolio is up just around 82%, and we can see it's had some big swings and drops. For example, this drop was mainly due to CrowdStrike, but it's done okay since then. In the last three months, it's up around 40%, so not bad. However, this portfolio is fairly volatile since I invest in a lot of high-growth tech stocks, and I am exposed to a certain amount of concentration risk because I like investing in what I know. Since I've worked as a solution architect for Fortune 500 companies, technology is what I know best. For everything else, I still have index funds.
The first stock on our list is reinventing what it means to be a bank, blurring the lines between the old world, where you had stuffy bankers in suits but where credibility was king, and the new world of fintech, where speed and convenience are the most important things. That is why this company is starting to see their stock value absolutely take off. When it comes to new technology like AI or fintech, we need to pay attention to a company's products and not just their numbers because outsized returns, like investors saw with Nvidia or Microsoft, happen when you cross the right technology with the right opportunity before it happens.
SoFi has been on the leading edge of a new walled garden approach to banking. In the same way that Apple has set up a whole ecosystem of products that together act like a walled garden around their ecosystem—where every individual product makes their other products more valuable—SoFi is following a similar strategy. If we think of Apple as a bunch of businesses together, you have their services like iCloud or Apple TV, their devices like iPhones and MacBooks, and of course, their accessories like Apple AirPods and the Apple Watch.
Well, SoFi works similarly. They have their loan segment, which includes things like student loans, personal loans, and mortgages. They have their financial services, which include things like their credit card, budgeting app, and investing app. They also have their technology platform, which allows people to move their money around, process transactions, and accept payments. So, similar to Apple, SoFi's services work better when they're used together. For example, they could use their credit card, and if they pay it off on time, they could have points knocked off their loan. So, every time a customer uses a new product, it makes all the other products they use more valuable as well.
If we look at a graph of their products sold over time, it has been growing at 31% per year, while their revenue from financial services is growing at 64% per year. This is all part of what SoFi calls their financial services productivity loop. SoFi will land a new customer with something like SoFi Invest, where they can acquire a customer cheaply. They'll then upsell them to more valuable areas of the company, like lending, and then they can use the revenue from lending, plus positive word of mouth, to go out and acquire new customers to keep the whole thing spinning.
I get it; that sounds all neat and tidy, but that's also been SoFi's strategy for several years at this point. The stock price has only increased recently, so even though I've been talking about this stock since back in 2023, let's look at why the stock price is rising now specifically.
There are two main reasons that I see for their recent change. The first is their product mix. This chart shows in light blue the percent of SoFi's revenue that comes from their financial services and their technology platform, combined with the rest of their revenue coming from lending. As you can see, it has grown steadily from around 24% of their revenue back in 2021 to now making up 49% of their revenue. Basically, half of their revenue now is coming from their financial services, which is sort of like the fintech part of their business. Meanwhile, the other 50% is coming from lending, which acts more like a bank.
The thing is, a fintech and a bank are very different companies that are valued very differently. If we were to look up SoFi's price-to-book value, which represents what the company would be worth if you just broke it up into pieces and sold it off for parts, it's currently sitting at a price-to-book value of 2.78. A bank will typically have a price-to-book value of around 1, while a fintech will have a price-to-book value of around 3 to 5. As we can see, SoFi is sitting in the middle of that range, and this is because, as time has gone on, SoFi has become more and more of a fintech stock and less of a banking stock.
We'll see in a second how this will play a role in where their stock price could go from here. I think the second aspect of why SoFi's stock price has risen so quickly is trust, specifically around the brand they have built. If you think of a bank, what does a bank actually sell? I mean, you give them your money, and they just kind of hold on to it for you. Really, the most important thing for a bank is trust. It sounds weird because we think of Wall Street banks, which absolutely no one trusts, but I'm talking about the credit union on the corner. When I give them my paycheck at the end of every two weeks, I expect that paycheck to be there when I come back. I assume it's safer there than sitting under my mattress in cash. Even if that bank were to go under, the US government backs up that money with FDIC insurance.
So, banks have these layers of trust built on top of each other to make consumers comfortable with their money. I think this is also why a lot of fintech stocks have failed to take off in this area. Robinhood, for example, has their sort of checking account, but Robinhood isn't actually a bank. Instead, they're partnering with JP Morgan Chase to offer this capability. In the past, we have seen high-profile bank-like services like this fail. We had people who kept their money on crypto platforms like FTX unable to access their money. Similarly, customers in Yotta were unable to access their money after the middleman between them and their actual bank ended up having a disruption, so people couldn't get their money back out.
The difference with SoFi is they actually are a bank after they completed their acquisition of the Golden Pacific Bank Corp, giving them an actual banking license. SoFi can potentially get the best of both worlds; they can act like a fintech while having the credibility of a bank. I think it's because of this that they've been investing so heavily into their brand, with big spending on things like SoFi Stadium or partnering with celebrity athletes, all around building credibility around their company.
While that helps explain why SoFi saw this huge run-up in price over the last few months, let's take a look at why the stock price might double again. I want to break this down using first principles. We know SoFi is part bank and part fintech, and it's kind of like a balance between those two things. We also know that the fintech part of SoFi's business is growing faster than the banking part, and this is only getting faster and faster as their financial services make each other more valuable in the financial services productivity loop. This means that, given that this is true, SoFi will become more of a fintech in the future than it is today.
It kind of gives SoFi a double boost. First, they see just a boost to their absolute valuation; their price-to-book value will likely rise as they become more and more of a fintech company. Then, second, they just have more revenue in the business as this segment starts to churn out more and more money. After SoFi's recent rise, they have currently hit a valuation of $46,000 in my portfolio, which is up around $26,000 overall, and I plan to keep holding these shares.
But let's now turn to a stock that's growing even faster than SoFi, that's up around 70% since I first deep-dived them back in August, and is now my second-largest stock position overall. By the way, at the end of the video, I'll also show you exactly how much I have in every stock in my portfolio.
Cybersecurity has been silently growing at an exponential rate, with an ever-increasing number of critical data breaches costing companies billions of dollars. As the number and scale of data breaches have continued to climb, it is no longer possible for humans to keep up, especially with the advent of AI. But for every problem, there's a solution.
CrowdStrike first burst onto the scene in 2020 after the SolarWinds hack. This was the largest data breach in history, targeting companies ranging from Microsoft to Cisco to the federal government. This was such a wide-ranging breach that some of the only companies that weren't affected were CrowdStrike's customers. This is because CrowdStrike did security a little bit differently. See, CrowdStrike was one of the world's first cloud-native cybersecurity companies. Pretty much anytime there's a new wave of technology—cloud, metaverse, blockchain—there's a new series of threats that emerge, and this is one of the reasons that cybersecurity is considered a mega trend that is driven by every other technology trend.
That's how CrowdStrike first got off the ground; they specialized in protecting cloud workloads. But that's just how CrowdStrike got to where it is today. To figure out where CrowdStrike's stock price is going to go next, we first need to look at what is driving CrowdStrike's growth in the short term and then look at what the long-term drivers of CrowdStrike are over the next 5 to 10 years.
First, growth. CrowdStrike has a lot of it. The stock is up just under 35% from when I made a video deep-diving the company and explaining why I was a long-term believer in the stock. With the company's revenue up 31%, tons of free cash flow, and the company becoming profitable for the last couple of years, the stock looks like it's on a pretty good track. This is despite the huge PR hit that the company suffered after they accidentally caused the world's largest blue screen of death when they pushed an update to Microsoft machines that brought much of the digital world to a halt back in July.
This incident caused an immediate $50 billion drop in the company's stock price, and we're still feeling the effects of that outage today. I dug into the company's most recent earnings, and they had this line buried in there: visibility remains limited given the headwinds related to the July 19th incident, with their next quarter's cash flow facing a much bigger impact from the outage than their most recent quarters. So those risks do exist in the short term, but assuming the company learned their lesson about pushing updates that break half the world's computers, I think that their potential in the long term doesn't have those same risks, especially with the advent of AI-powered threats.
If you're fighting a virus that can learn on the fly, you need a system of defense that can also learn as it goes, and CrowdStrike's AI-native platform puts them in a very strong position to combat these threats, with the company consistently being rated as a market leader from the likes of Gartner, Forrester, and IDC, outcompeting competitors like Microsoft.
Going forward, the company has amazing products, and if you saw my last video on CrowdStrike, you know their leadership has deep expertise in this area. My thesis on CrowdStrike is pretty simple: as long as they continue to innovate, they'll continue to be pushed by the twin trends of cloud and AI, and they're already well-positioned for whatever the next tech trend will be—whether that's a generative AI attacker that's actively changing the code you're trying to block or some new metaverse 2.0 threat that we've never seen before.
I currently own 116 shares worth of CrowdStrike, valued at just over $40,000. But let's now turn to a stock that I don't currently own, but seeing as this stock has been so beat down by the market, I think there could be some hidden value for investors to ride the stock back up.
The stock is Intel. Before you get your pitchforks out, hear me out. Yes, this is the same stock that that one Redditor blew his entire grandma's inheritance on, and yes, this is the same stock that completely missed the crypto boom and now is currently missing the AI boom, allowing Nvidia to basically clean up the entire GPU market. There's no question that Intel has made some massive mistakes in their strategy as well as just how they run the company, but this is also the largest chip manufacturer in the US by number of employees. They're the biggest company benefiting from the US government's current push toward domestic chip manufacturing, both through direct funding and tax credits.
While the company is currently in a bit of a tough spot, they're still in one of the fastest-growing industries on Earth, and they control one of the most used chip architectures on Earth, even if their overall market share has dropped a bit. The case for Intel basically goes like this: this isn't a high-growth stock, and they're not a particularly well-run company, but at their current price, you could almost break the company up into parts and just sell it off on the market, and it would still be worth almost the same price it is right now, seeing as their price-to-book value is 1.04, which is effectively the value of all the pieces that make up the company if they were split apart.
That would limit the downside risk of investing in the stock because this price can only go down so much before it wouldn't even make sense to exist as a company. You could theoretically get your investment back if they broke up the company, but I don't think that's going to happen because there's also some major upside with this company. In the past, when we've seen manufacturing companies that struggled just as hard as Intel is right now, we've seen the US government step in to prop up those companies. Whether or not you agree with this practice, that does seem like something that isn't being factored into the company's stock price.
At their current price, the stock could drop maybe 6%, but the upside—well, we've seen what the upside can look like. Intel has recently partnered with AMD on the future of x86 architectures, and their new fabrication facilities in Arizona, New Mexico, Ohio, and Oregon all provide possibilities for a desperately underserved US fab capacity that the US government is also pushing for aggressively. The US Chips Act was pushed through to try to lower costs and basically counter China by developing US chip manufacturing capabilities in the country.
Companies like Nvidia and AMD only design the chips; most of the fabrication is done by companies like TSMC out in China or Taiwan. Intel and the Commerce Department recently finalized $7.9 billion through grants from the Chips Act. In the short term, I think Intel is probably going to continue to struggle, but in the long term, once these fab capabilities come online, it seems like this is a company that, in some ways, is too big to fail, and the US is really reliant on them. I think there could be some major upside in the stock price for long-term investors.
But let's now go far to the other side. Intel is big, old, and moves slowly, but this next stock is one of the fastest-growing fintech stocks on the market, even growing faster than SoFi. It's not a secret that the US financial system moves pretty slowly. A lot of the technology used there was built in the 1980s and some of it in the 1960s. It kind of makes sense; when you already have the world's biggest financial system, you're better off just not breaking anything and not trying to innovate too much.
Because of this, we've seen a lot of the financial innovation in the world coming out of countries that are still developing their economies, with maybe one of the biggest success stories of all coming out of one country: Brazil. Brazil has been undergoing a digital transformation in recent years, with the country's government investing heavily in areas like cybersecurity, telecommunications, and most importantly, fintech. The last time we saw a country digitize this rapidly, we saw untold numbers of millionaires and billionaires minted by the tech giants that emerged.
Within this new powerhouse of a Brazilian economy, Nubank stands out as one of the top-performing companies in that economy. Nubank is a super app, which is more common outside the US, where you can do everything from store your money to pay with a card to ordering delivery services. The company now boasts over 100 million customers, with 20 million customers added in just the most recent quarters, making them now the biggest bank in all of Brazil. This impressive growth is partly responsible for why the stock price is up 65% over the past year, with the company reaching a market cap of just under $65 billion.
Going forward, there are two things that matter most for Nubank's growth: the first is international expansion, and the second is entering new markets. With 100 million users, Nubank has already basically saturated the Brazilian market. I've talked before about how a big piece of their potential lies in moving into other countries in Latin America, and things are going extremely well with this transition, with the company reaching $3.3 billion in deposits and 8 million customers in Mexico.
One of the things Nubank has done extremely well is understand how to adapt their products to the local customs and culture and advertise them, as well as assemble the products in a way that appeals to that country. That is how Nubank is going to maintain their current 56% year-over-year revenue growth rate, at least in the B2C space where they sell directly to consumers. But outside of moving internationally, the other way they can maintain their growth is by selling to an entirely new market.
This market, it turns out, has way more money than most consumers. The global B2C e-commerce market is estimated to reach over $7 trillion by 2028, but the B2B market, selling to other businesses, is estimated to reach more than five times that at $25 trillion. Nubank first started to enter the B2B space with a product called Nubank PJ, which was a service targeted at entrepreneurs, offering things like digital banking, loans, and credit cards—everything a small business needs to get off the ground. Since then, they've reached over 4 million business customers, and they continue to launch new tools to support this area.
I think this is a really cool stock because they very clearly stated what their plans were several years before, and we can basically track a straight line to what they're doing today. They keep delivering on every promise they make, and that's why we're seeing their stock price continue to rise. I currently own 1,393 shares of Nubank, currently valued at just under $119,000.
But let's now shift to a much bigger stock, which I don't yet own, but which is competing directly with Nvidia. Given the difference in the price between these two stocks, it may have substantially more room to grow in price from here. Make sure to stick around to see how much I have invested in every stock in my portfolio.
Pretty much every investor has seen the incredible rise that has been Nvidia over the past five years. I mean, their stock price has grown 2,383% over the past five years, and a lot of investors have been on the lookout for the next chip maker that can match this level of growth. While this stock might not see a 2,400% increase like Nvidia, I think from here they probably have more room to grow than Nvidia does.
So, AMD is a chip design company, much like Nvidia, but unlike their bigger competitor, they have been mostly muscled out of the AI data center market. This is the market that has been responsible for much of Nvidia's rise, and in large part because they haven't had that success in this market, AMD's stock price has not really seen the same increase recently.
I actually looked into exactly how much of the AI space Nvidia really owns, and I didn't really believe the numbers when I first saw them. It is estimated that Nvidia owns 98% of the AI data center market. Those numbers don't even make sense! For comparison, people complain about Walmart kind of taking over the grocery industry, but Walmart only controls 23.6% of that market, according to Numerator. So, Nvidia basically controls the entire market.
As anyone who's been investing for a long time will tell you, that probably can't stay that way forever. If for nothing else, the US government would probably step in eventually and break it up as a monopoly. But I think more likely what's going to happen is, as that market continues to grow, it's going to make room for new entrants. McKinsey published a report estimating how quickly the AI data center market would grow, with the midpoint estimate being at 22% per year through 2030. This could result in anywhere from a double to a triple in the size of the data center market over the next several years.
If AMD can capture even a small part of that, with their stock price at 1/15th the price of Nvidia, they have substantial upside. AMD recently announced their new MI 325X chips, which are set to provide industry-leading data center performance over Nvidia's current chips, and the market for these chips just keeps getting larger. We've seen an explosion in AI services from ChatGPT to Apple Intelligence to Google Gemini, and whether or not these run on the cloud or on your phone, the AI models have to be trained using huge amounts of computing power, most of which is going to come from Nvidia or maybe now AMD.
AMD also announced a partnership with Intel to drive x86 innovation, possibly as a way to compete against the growing encroachment of ARM-based architectures. So here's the thing with AMD: do I think they're going to beat Nvidia? No, but they don't need to. In fact, they don't even need to perform 25% as well as Nvidia to see a huge rise in their stock price from here. Whether their growth comes from x86 architectures or, more likely, from growing their data center share, I find it hard to believe that this company won't grow their market share from where it is today and thus grow the stock price.
But now let's turn to the biggest company that I am currently investing in before moving on to a much smaller new stock that the market isn't talking about nearly as much as they should be. The next stock is Google, which is one of the Magnificent Seven stocks—not the Seven Samurai movie knockoff, but the seven giant US tech stocks that have outperformed the S&P 500 over the past few years.
First off, we need to understand what's been happening with Google's stock price recently to understand why they might outperform the other Magnificent Seven going forward. It all starts with a fall in Google's stock. Google recently saw around a 5% drop in their stock price following a case by the DOJ investigating the company for a monopoly in the ad space. A big part of that investigation centered around how much control Google had over online ads—from the platform you use to view them to serving the ads to selling them to other companies.
For example, Google's Chrome browser has had consistently around 65% of the entire internet browser market share for years, and we've seen several headlines about how Google is making changes to their Chrome browser to try to disable ad blockers from their platform. I read this really good article by Corbin Davenport about why that may be a bit of an exaggeration, showing why this is an oversimplification and that there are some very legitimate reasons that Google is making these browser changes. Davenport also called out how a total crackdown on ad blockers would give governments like the European Union and the United States more ammo for antitrust lawsuits.
Even though Google may have been trying to avoid that, it looks like the antitrust lawsuits are here anyway. The US Department of Justice is wrapping up a $100 million antitrust lawsuit against Google, claiming that they have been monopolizing the internet ad space. Back in August, a US judge ruled that Google has an illegal monopoly on search, paving the way for a second trial to determine potential fixes, including a potential breakup of Google's parent company, Alphabet. Even more recently, as part of the remedy for this monopoly, the DOJ has called on Google to sell off their web browser juggernaut, Google Chrome.
As you could guess, this government scrutiny has spooked a lot of Google investors. After all, Google still makes the majority of their revenue from advertising, with Google Search business alone generating nearly $50 billion in revenue, which makes up more than half of their total revenue of $88 billion. So, the stock saw a substantial 5% fall off this latest news, which might not sound like a lot, but when you're dealing with a company of Google's size, that's over $100 billion in lost value.
Anytime there's fear in the market, it also gives us a potential opportunity to invest. Here's why I plan to invest in Google despite the current risks. Google is part of the Magnificent Seven of stocks, and traditionally, betting on one of these stocks is a bet on US technology, which has seen unprecedented growth over the last five years. But Google is interesting because the market hasn't been giving them the same level of respect as some of the more hardware-focused companies on the list, with Google's stock price rising just under 162% over the past five years compared to Microsoft's 179% or Apple's 21%.
Let's just compare two of these stocks. Microsoft has a current valuation of just over $3 trillion; Google has a valuation of about $2 trillion, so about 66% the size of Microsoft. On the left side of the screen, we have Google's numbers, and on the right, we have Microsoft. Google has a PE ratio of 19, while Microsoft is 31. Even if we factor in growth, Google's PEG ratio is 1.6 compared to Microsoft's much more expensive 2.8. By every other valuation metric we can look at, Google is substantially cheaper than Microsoft, and this is despite the fact that Google and Microsoft are growing at about the same rate. Google actually makes more profit than Microsoft, and they are growing their profitability more quickly.
Maybe most importantly, Microsoft is much bigger to their maximum potential than Google is right now. Right now, the single biggest chunk of Microsoft's revenue comes from Microsoft Azure, their cloud computing services platform, with some other big chunks coming from Office 365, Windows, LinkedIn, Xbox, and Copilot. Google, meanwhile, brings in the vast majority of their revenue from search, but Google Cloud, their cloud platform, only makes up a little under 11% of their total revenue. At the same time, their cloud revenue is growing at 35% per year, meaning this is becoming a bigger and bigger part of their business.
If we look at Google Cloud's share over the entire market, here in gray, it has steadily grown from 6% back in 2019 up to 9% in 2021, and since then, it has only continued to grow in size, up to 10% in the most recent quarter. Over the past five years, Google Cloud's market share has effectively doubled, and that growth rate doesn't seem like it's slowing down. If the company is forced to sell Google Chrome, that's definitely not a good thing for the business, but I don't think it will be devastating for the company either. In fact, I think the bigger risk is one potential option the DOJ is considering, which is blocking them from setting up exclusive contracts with Samsung and Apple to make Google the default search engine. But that will also hurt those two companies as well since Google is paying them the money after all.
So, the Google Chrome risk feels fairly short-term to me, and I don't know how much in terms of teeth the DOJ really has, given they haven't really prosecuted any major antitrust lawsuits in recent years. Given that Google's growth, as well as their future diversification with Google Cloud growing, seems to be undervalued by the market, I am very happy to invest in this stock, which is why I currently own 123.06 shares in the company, valued at just over $21,000.
But most people know about Google. Let's now turn to a growth stock that most of the market seems to be missing before I then show every single stock that I have in my portfolio. This next stock runs one of the biggest social media companies in the world, and the stock is up 177% for the year, but it may have substantial room to grow from here.
Just for fun, let's see if you can guess the stock as I run through a few of their stats. This platform boasts over 1.2 billion active users—close to four times as many as Twitter. The company has grown their number of daily active users by 47% over the past year to just shy of 100 million people, which by some estimates puts them at double the number of daily users as TikTok. The company grew their revenue by 67% in their most recent quarter, putting them as an extremely fast-growing stock that is also profitable and producing positive free cash flow.
So, who is this unicorn of a stock? Well, believe it or not, it's Reddit—birthplace of movements like WallStreetBets, political hotbeds like r/politics, and my personal favorite, r/SuperBowl, which has a name-spacing problem.
Here are three reasons that Reddit might be a great stock to buy now before I show my entire portfolio. The first point is Reddit's valuation. Reddit's stock price has increased substantially, with a rise in the last six months of 140%, but their current market cap sits at $26.5 billion. We can compare that to Twitter, who remember they have more users than and substantially more activity than, which last sold for $41 billion when Elon Musk bought it. Before he bought the stock, they were trading at around $25 billion.
So, the stock has four times as many users, and yet they're valued at around the same price that Twitter was before they were bought out, which ties into the second point in favor of this stock, which is their moat. Warren Buffett describes an economic moat as anything that makes your company impossible to copy. I like to think of a moat as what makes it so that another big company can't just come and copy your code and deploy a perfect replica of your company. Why can't Google launch their own Reddit?
There are two main points that Reddit has in favor of it: loyalty and community. If we go into a Reddit thread, Reddit operates very differently from Twitter, which is kind of based on projecting yourself out there into the world and building up your own credibility. On Reddit, it's much less focused on individuals and much more focused on the community conversation between people, with different threads of conversation that go many more levels deep than they do on pretty much any other platform. A key part of this is the Reddit community, which organizes itself into different subreddits that can all gather around common beliefs and objectives to talk about things that they're all interested in together.
We've seen the power of Reddit when r/WallStreetBets blew up during the pandemic, and I would argue that the type of engagement you are getting on Reddit is more valuable than the type of engagement you're seeing on a platform like Twitter or Threads or any of these other text-based communication platforms. But that doesn't mean anything unless you can also monetize that engagement, which is where the third point comes up in favor of Reddit: technology.
Now, I'm not talking about Reddit's own technology; I mean the overall website is fairly simple. But we've seen companies like Google, for example, license out their content so that Google can train their AI models. AI has gotten pretty good at speaking like a human and responding in conversation, but still, one of the areas that AI struggles with the most is real human engagement. It always kind of feels like AI, and this is one of the big problems that every AI company is currently trying to solve, with Meta pouring billions of dollars into creating their own AI models. You can pretty much guarantee that a company like Facebook or Meta is training a lot of their models on all the data Facebook has available to them.
But just look at the quality of conversation in your typical Facebook comments and compare that to a Reddit thread. The level of engagement isn't even close, and so the quality of the data you're getting on Reddit is going to be a lot higher. I think up until now, Reddit has been massively undervaluing what it is worth. I mean, the contract they signed with Google was only $60 million a year, but I think in the long term, having this central database of all this genuine human engagement is going to be unbelievably valuable to Reddit's future, especially with AI starting to focus more on images and video.
I promised I would show my full stock portfolio and head over to my Instagram to see the daily stock breakdowns that I'm posting over there. Here are eight more stocks that you might like from last month's video.