We’re at a crossroads in this current market. Tech and growth stocks continue to soar while undervalued stocks lag. That dynamic has been in play for some time. However, the so-called “Magnificent 7” stocks continue to steal the spotlight away from other very profitable and high-growth companies worth considering. Several companies could produce much better growth than most of the Magnificent 7 stocks. Here are three growth stocks with greater potential than the Magnificent 7, that investors may not want to sleep on.
Advanced Micro Devices (AMD)
After peaking at around $225 per share, Advanced Micro Devices (NASDAQ:AMD) stock has certainly given up some of this year’s gains. Now that the trade is below the $180 per share level, cooler heads have prevailed, and investors are now wondering whether it is time to consider building positions in the #2 chip player position in the U.S.
The fact that Nvidia (NASDAQ:NVDA) has absolutely overshadowed AMD is no surprise. It remains a stock I’m bullish on, partly due to the company’s recent Blackwell GPU release and its other AI innovations.
The thing is, I think the overall AI chip market is big enough for both players. AMD forecasts $3.5B in revenue from MI300 GPU, signaling substantial growth. Analysts predict a 20-30% market share in AI data center GPUs, bolstered by competitive pricing. Additionally, AMD’s AI-compatible CPUs for PCs offer significant growth prospects.
Moreover, renowned leaks suggest AMD’s Zen 5 Ryzen 9000 CPUs could be 40% faster than current models. Details on the impending desktop processor battle are scarce, but sources anticipate significant performance gains for AMD’s next-gen chips.
Salesforce (CRM)
Investing in Salesforce (NYSE:CRM) stock hinges on confidence in Salesforce’s new focus on profit margins and generative AI. Despite Q4 earnings exceeding estimates, fiscal 2025 revenue guidance fell short. However, one upside is that the company will be giving out its first dividend and share buyback plans, signaling that now is a good time for investors to buy and hold this stock for the long term.
Anticipated revenue growth in 2024 is picking up, but Salesforce is working on improving efficiencies simultaneously. The company reported it cut 10% of its workforce last year, highlighting management’s goal of improving profitability. Analysts predict further job cuts as this trend continues. Additionally, the company ceased merger exploration, signaling no significant acquisitions are likely on the horizon. This likely means greater cash flow, which should bleed into a higher CRM stock over time.
Additionally, rising corporate digital spending benefits Salesforce, known for subscription-based sales, marketing, e-commerce and data analytics software. As the software market continues to see solid growth, this is one of the top ways to play this space, in my view.
Eli Lilly (LLY)
Surging more than 130% in 2023, pharmaceutical giant Eli Lilly (NYSE:LLY) currently has more upside, according to analysts. The consensus average price target on LLY stock is $845, implying more than 10% upside from current levels. That’s a reasonable estimate, given the company’s dominant position in the weight-loss drugs market.
The recent approval of Zepbound, among the leading weight-loss drugs, positions Eli Lilly as a company to be contended with in this space. This is a pharma giant with phenomenal growth potential, with earnings per share expected to soar more than 97% this year. Looking to next year, these estimates come in at a still-high 45%. That kind of growth can drive meaningful multiple expansion over retime.
Pharmacies continue to encounter supply challenges with Eli Lilly’s GIP/GLP-1 obesity drug, Zepbound, due to “unprecedented” demand. That said, that’s a good thing, at least for investors. This outsized demand should lead to considerable profits as the company scales production. Despite not being on the FDA’s shortage list, pharmacies nationwide struggle to maintain stock. This is a trend that’s likely to continue for some time, though investors would like the company’s production to meet demand at some point soon.
LLY stock isn’t cheap by any stretch. However, this company has some solid long-term secular catalysts supporting its valuation. So, for now, this is a stock worth holding onto for at least the next 12 months for investors looking for outperformance in their growth portfolios.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
