2 Hot Growth Stocks for 2024 and Beyond

Growth investors face challenges from stock market indices' record highs. Some AI-driven stocks, especially the "Magnificent Seven," rallied, driving market gains. That may make investors question whether they are too late and suspicious of growth stocks that did not join the surge.

Growth company investors may benefit from equities that sell at a significant discount to 2021 highs, notwithstanding such risks. Cloud stocks DigitalOcean (NYSE: DOCN) and Snowflake (NYSE: SNOW) may appeal to such investors.

1. DigitalOcean DigitalOcean may offer a second opportunity to Magnificent Seven investors who missed AI-driven riches. SMBs use DigitalOcean's cloud services. It helps small businesses without an IT department with straightforward pricing, a developer community, and lessons and videos

More crucially, Nvidia H100 GPU processors for AI applications cost roughly $30,000. Thus, by hosting generative AI applications for SMBs, DigitalOcean may add value. Despite that potential benefit, DigitalOcean's business model suffered in the bear market as a slow economy limited client IT investment. Additionally, a recent CEO change left investors apprehensive about its future.

Still, the company hired former GoTo CEO Paddy Srinivasan as CEO. This top-level adjustment offers a chance to improve. Improvements started before the CEO change. Revenue rose 20% to $693 million in 2023. After a $28 million loss in 2022, the corporation earned $19 million in 2023.

The company expects midpoint revenue of $755 million to $775 million in 2024, up 10%. This should boost revenues significantly. Additionally, analysts predict a 24 future P/E ratio. If SMBs value DigitalOcean's cloud and AI services more, investors may see that valuation as a bargain, driving the stock higher in 2024 and beyond.

2. Snowflake Snowflake may look odd at first. Investors were deterred by slowing growth and high valuations. Investors were unimpressed with CEO Frank Slootman's abrupt retirement and his replacement with Sridhar Ramaswamy, the former CEO of Snowflake-owned Neema. Snowflake stock has plummeted by one-third since its late February earnings report

Due to its investor-friendly business plan, the company's shares are highly valued. First, its data cloud is cloud provider-agnostic. Even though they sell data cloud offerings, Amazon will push Snowflake. Additionally, customers pay per use. More utilization increases revenue.

Revenue rose 36% to $2.8 billion in fiscal 2024 (ending Jan. 31) due to higher usage. With 131% net revenue retention, the average long-term customer spent 31% more on the platform than a year before.

The fiscal 2024 loss was $836 million, up from $797 million the year before. The net loss was due to approximately $1.2 billion in non-cash stock-based compensation. Thus, non-GAAP (adjusted) free cash flow for the fiscal year was $810 million, allowing the corporation to cover immediate needs without outside investment.

Investors may be concerned about the company's 22% product revenue growth forecast for fiscal 2025. Snowflake's costly P/S ratio of 18 is reaching a historical low. This decreases downside risk and may make the recent stock price dip a buying opportunity.

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