But what does this all mean in terms of money? For those who have been drip feeding £350 into an S&P 500 index tracker every month since February 2016, their portfolios have now reached £82 shy of £100,000. And of that near-six-figure sum, £57,918 is pure stock market profit.

Yet, for some intelligent stock pickers, their journey to £100,000 has been significantly faster, with some now sitting on close to £650,000! Here’s how.

Stock-picking power

By investing directly into the best and brightest businesses, investors can go on to earn some pretty remarkable returns. And that’s definitely been the case for shareholders of Arista Networks (NYSE:ANET).

Since February 2016, shares of the cloud networking enterprise have skyrocketed a staggering 3,391%. That’s the equivalent of a 42.7% annualised return – almost three times what the S&P 500 achieved. And anyone who’s been drip feeding £350 each month at this rate now has just over £643,336 in the bank.

Where did all this growth come from? The business has spent most of its existence establishing itself as a global leader in cloud infrastructure hardware and software, stealing market share from incumbents like Cisco Systems.

But this also perfectly positioned Arista to capitalise on the enormous AI data centre investments that kicked off in 2023. And the company quickly found itself at the heart of an AI gold rush.

The result? Revenues for 2025 are forecast to reach $8.9bn versus $2.3bn in 2020, with some of the highest profit margins in the networking hardware sector.

Still worth considering in 2026?

With its market-cap now sitting at $173bn, it’s highly unlikely Arista shares will continue delivering an average 42.7% annual return moving forward. But that doesn’t mean the growth story’s over.

Despite concerns surrounding AI spending, companies like Microsoft and Meta continue to charge ahead with hundreds of billions in AI-related spending this year. That’s terrific news for Arista since it just so happens that Microsoft and Meta are two of its biggest customers.

Of course, that also reveals a critical risk. Arista’s skyrocketing AI-related revenues stem almost exclusively from these large hyperscalers. As such, if management decides to slow AI spending then, at its current premium valuation, Arista Networks’ share price could be exposed to some serious volatility.

Even if AI spending remains robust, both of these customers are actively developing their own data centre hardware and software solutions. And given enough time, they may soon no longer need Arista to power their cloud and AI infrastructure.

Needless to say, it’s a significant risk. And it’s one that growth investors must consider carefully before thinking about investing in Arista. However, at a more attractive price, that could be a risk worth considering, in my opinion. And it’s not the only exciting US stock on my radar right now.

The post How much do you need to invest in US stocks to make £100,000? appeared first on The Motley Fool UK.

While few experts are predicting a US stock market crash right now, the S&P 500 will undoubtedly drop sharply again at some point in the future. And when it does, investors need to be intelligent.

By avoiding the critical mistake that most investors make, wealth can potentially flourish rather than being decimated.

Golden rule: don’t panic

In the short term, the stock market is incredibly erratic. That makes it exceptionally difficult to predict, even by experienced experts. This has been demonstrated countless times throughout history, and investors have once again seen it first-hand in April.

When tariffs were first announced, experts predicted a new recession and sky-high inflation. Investors panicked, sending the S&P 500 crashing by double-digits in a matter of days. And yet, just as soon as things seemed to be getting worse, the index rallied.

Within less than a month, the S&P 500 fully recovered, before going on to reach new record highs. And anyone who sold at the bottom has subsequently missed out on a 33% return.

History has shown countless times that when the stock market collapses, one of the best moves is to simply do nothing. Investors who just sat on their hands throughout April suffered some painful losses initially, but ultimately recovered and went on to enjoy a 17% gain.

Some have earned even more by capitalising on the chaos and loading up on fantastic stocks while everyone else was busy selling.

Focus on the long run

Arista Networks (NYSE:ANET) is one of many S&P 500 stocks that suffered a major sell-off in April. In fact, within two days, it had lost 20% of its market capitalisation. Yet even with the disruptive forces of tariffs, the group’s networking infrastructure technology didn’t lose its critical status. And investors who remained focused on the long run and snapped up more shares have gone on to enjoy a staggering 121% return!

Today, Arista continues to show promising long-term potential. The group’s positioned itself as a leader in high-bandwidth networking, benefiting from cloud adoption trends as well as increasing AI data centre investments. So much so that the group’s latest results firmly beat expert predictions, sending shares flying once again.

Of course, no stock, even those in the S&P 500, is without its risks. Beyond a lofty valuation, the group has enormous levels of customer concentration.

More than a third of its top-line income stems from Microsoft and Meta Platforms. Apart from limiting its negotiating power in product pricing, should either of these companies decide to swap to a competing supplier, Arista could become massively disrupted, likely sparking enormous volatility.

While that’s a significant risk, the industry-leading quality of its hardware and software acts as a natural buffer. And while the valuation’s definitely pricey today, that may no longer be the case when the S&P 500 suffers another crash in the future. That’s why I’m patiently waiting for a new opportunity to buy more in the future.

The post 1 critical mistake to avoid at all costs when the S&P 500 crashes appeared first on The Motley Fool UK.

2025’s been a remarkable year for the S&P 500. Despite macroeconomic uncertainty, US stocks have continued to climb and reach record highs. That’s been fantastic for investors, but there’s a risk that it might not last for much longer.

Right now, America’s flagship index is trading at a pretty stretched price-to-earnings ratio of 26 versus its historical average of 16. And combining lofty valuations with upcoming economic headwinds could open the floodgates to market volatility.

The pending storm

US inflation has started to rise, but it’s only been a small incremental step change – hardly the disaster that many economists were projecting earlier this year. Yet, this might change.

A lot of companies flooded their inventories with new products and raw materials ahead of the 10% tariffs that emerged in April. This frontloading has allowed businesses to keep prices relatively stable and avoid pushing customers into the arms of competitors.

However, inventory stockpiles will eventually run out. And while trade deals are starting to emerge, baseline tariffs are still in place, increasing import costs for US companies to replenish inventory.

Unless these firms are willing to absorb these incoming expenses, price inflation could start to creep in over the next few months. This is what’s causing a lot of investing experts like Jamie Dimon to become increasing cautious as we enter the second half of 2025. And even Buffett and his team are seemingly being similarly careful, given his investment firm, Berkshire Hathaway, has been a net seller of stocks in 2025.

Avoid panicking by preparing

Of course, there’s no guarantee that a crash or correction will occur this year. After all, businesses may prove to be more resilient than expected, and earnings may start to catch up to valuations. But if the market does decide to throw a tantrum, this could present a fantastic buying opportunity for US stocks. As Buffett puts it: “Be fearful when others are greedy and greedy when others are fearful”.

To capitalise on this advice, I’ve been trimming some of my largest US holdings that have reached lofty multiples. And one example would be Arista Networks (NYSE:ANET).

The networking infrastructure business is actually performing admirably at the moment. Even with substantial customer concentration risk, revenue, free cash flow, and profits have been surging on the back of rapidly rising artificial intelligence (AI) infrastructure spending. And that’s translated into a phenomenal 600% share price gain over the last five years.

But, with its forward price-to-earnings ratio and price-to-sales ratio reaching 44 and 20 respectively, investor growth expectations are getting unreasonably high, in my opinion. Don’t forget, data centre spending’s notoriously cyclical. And with competitors like Nvidia now starting to encroach on its market, Arista could struggle to maintain this valuation, especially if customer spending begins to slow as economic conditions turn.  

At a better price, there remains an exciting opportunity here. And the same’s true for plenty of other top-notch US growth stocks that have become a bit pricey. Building a cash position not only helps hedge against potential volatility. But also, if the worst does come to pass, investors will be able to follow in Buffett’s footsteps, be greedy, and potentially unlock exceptional long-term gains.

The post As the US stock market looks vulnerable, I’m following Warren Buffett’s advice appeared first on The Motley Fool UK.

So, what are the key risks that could lead to a market slowdown?

Catalysts for a crash

Right now, there are three main concerns that even bullish analysts have highlighted:

1. Inflation pressure – the latest CPI data for the US economy in June came in higher than expected, even when stripping out volatile energy and food prices.
2. Trade uncertainty – the ongoing implementation of US tariffs is disrupting global trade, creating market instability.
3. Earnings headwinds – higher costs for consumers could lead to a spending slowdown that might cause companies to fall short of earnings targets.

With uncertainty surrounding all three catalysts, most institutional analysts are warning of further market turbulence in the second half of the year. And with the September-October period having a history of market downturns, a combination of behavioural bias with economic weakness might be the spark that lights the fire.

Panic isn’t a strategy

Overvalued AI stocks would likely be the first to get hit. And it’s why I recently trimmed my position in Arista Networks (NYSE:ANET). Having said that, while there’s valid reason for caution, I don’t think a full-blown stock market crash is on the horizon, but rather a natural ‘correction’. After all, both 2023 and 2024 were exceptional years for the S&P 500.

That’s why, beyond reducing a few of my largest positions, I’ve also been saving up cash to take advantage of any new buying opportunity that may soon emerge.

Looking again at Arista, the networking infrastructure enterprise continues to be a fantastic business in my eyes. The firm is on track to generate close to $3bn of free cash flow this year as data centres continue to upgrade their technology. And even outside of the world of AI, demand for Arista’s Ethernet switches remains staggeringly high.

However, with the shares now trading at a price-to-sales ratio of 18.5, it’s hard to ignore that a large chunk of its recent strong share price run is likely being driven by AI-networking hype. And it’s easy to forget that this sort of spending is ultimately cyclical.

Even without the threat of a potential slowdown, the company is highly reliant on two hyperscaler customers (Meta Platforms and Microsoft) for the bulk of its revenue. And this customer concentration risk could lead to disastrous consequences if either decides to use competitor or in-house alternatives to Arista’s products.

But at the right price, that risk could be worth taking. That’s why I’m planning to snap up more Arista shares in the future, if the stock does take a tumble.

The bottom line

The S&P 500 will eventually crash again. However, when that will be is anyone’s best guess. Personally, I remain optimistic but cautious. And in my opinion, now is a good time for investors to build up a cash position just in case a new wave of buying opportunities does emerge later this year.

The post Is the S&P 500 heading towards a market crash? appeared first on The Motley Fool UK.

Despite the arguments being made, the stock market’s largely proven to be resilient to the shifting political landscape. In the short term, volatility has increased surrounding big political events. But as the market digests and adjusts, these ‘mini-crashes’ often reverse in a matter of weeks.

Therefore personally, I remain bullish. However, there’s no denying that another stock market crash will eventually happen. So let’s assume the worst-case scenario and say stock prices are about to plummet. Which stock am I getting ready to buy to capitalise on the lower prices?

Double-down on winners

When deciding where to invest capital during a market downturn, the first place I start looking is my own portfolio. And one stock I’d love to buy more of at a better price right now is Arista Networks (NYSE:ANET).

Arista’s not a name commonly known in most households. But its ethernet switches power data centres across the planet, creating the bandwidth needed for reliable, low-latency network performance.

Over the last decade, management’s evolved the business to become a critical part of global IT infrastructure, disrupting previous industry leaders such as Cisco Systems. And with AI driving up demand for ultra-fast network technologies, it’s no surprise that the firm has just launched its Etherlink artificial intelligence (AI) platform to capitalise on this tailwind.

Subsequently, its latest results significantly outpaced expectations, beating both revenue and earnings forecasts. Delivering better-than-expected results seems to be a recurring theme for this enterprise. So it’s hardly a surprise that shares have skyrocketed by more than 700% over the last five years.

Every investment carries risk

Despite systematically stealing market share from Cisco over the last decade, Arista still battles against intensely fierce competition. Beyond Cisco, management has Nvidia to fend off, as well as Microsoft, which is reportedly developing its own proprietary networking hardware for AI. The latter’s particularly troubling, as 39% of Arista’s revenue in 2023 came from Microsoft and Meta Platforms.

Then there’s the question of valuation, as Arista isn’t cheap. The stock’s price-to-sales ratio currently sits at just shy of 20. And its forward price-to-earnings ratio is closer to 42! In other words, the firm’s explosive long-term growth potential seems to have already been baked into the share price, making it an expensive investment right now, especially considering the revenue concentration risk.

However, should a stock market crash come along and Arista shares take a tumble, then snapping up more shares of this terrific business seems like a no-brainer for my portfolio.

The post 1 no-brainer share I’d buy when the stock market crashes again appeared first on The Motley Fool UK.

Today, the situation’s rather different. Aggressive interest rate hikes to combat inflation have made savings accounts interesting again. Even after the recent cut, savers are still able to enjoy a near 4%-5% risk-free return at most banks.

So is there any point in investing in a Stocks and Shares ISA while Cash ISAs offer this boosted return? Here’s my take.

A safe way to build wealth?

Savings accounts have a massive advantage over the stock market when it comes to risk. Unless an institution suddenly goes belly up, there’s virtually no risk in building wealth with these financial instruments. The same is relatively true for government bonds through NS&I.

Historically, UK stocks have offered annual returns of around 8%. And so far this year, their performance has been a bit better than usual. That’s obviously an improvement on what many Cash ISAs are currently offering, yet building wealth in the stock market comes with significantly higher risk. And the last few years, in particular, have been quite volatile.

So which is the better choice?

What’s the investment objective?

Knowing which financial vehicle to use right now really depends on personal circumstances. Someone in retirement is likely better suited to stick to safer solutions. Whereas a younger investor with a long time horizon likely has the capacity to take on more risk.

In my case, I have the benefit of being in the latter category. Yet, instead of strictly sticking to one strategy, I’m using both. My emergency fund is in a high-interest savings account, while the bulk of my wealth is tied up in a Stocks and Shares ISA.

Finding stocks to buy in an ISA

There are a lot of different strategies investors can use to build wealth in a Stocks and Shares ISA. Dividend shares tend to offer a bit more stability and passive income versus growth stocks that often have the biggest return potential.

Personally, I like to steer in the direction of growth. And one of my largest positions right now is Arista Networks (NYSE:ANET). The company designs and manufactures ethernet switches used by data centres – a critical component that helps power the internet.

With the amount of data flowing around the world increasing exponentially, management has had little trouble finding demand. And subsequently, shares are up almost 500% since I invested in 2019. That’s an average of nearly 40% annualised return – massively ahead of even the best savings accounts right now.

Of course, this journey hasn’t exactly been smooth, with multiple double-digit drops along the way. Even today, the firm continues to face fierce competition from the likes of Cisco Systems, a much larger business with far deeper pockets.

Nevertheless, I remain cautiously optimistic. And with the potential to find more stocks with Arista-like returns, investing in the stock market remains my preferred way to build wealth despite the higher risk.

The post With interest rates at 5%, are Stocks and Shares ISAs still worth it? appeared first on The Motley Fool UK.

Arista Networks

What it does: Arista Networks develops mission-critical cloud networking hardware and software for data centres worldwide.

By Zaven Boyrazian. One of the largest positions in my growth portfolio is Arista Networks (NYSE:ANET). The firm specialises in ethernet switches – a small but critical component that powers the entire internet. These devices are ultimately what provide the bandwidth within a datacentre ensuring reliability and low latency.

Historically, this arena has been dominated by Cisco Systems. And Cisco continues to be a significant competitior. But Arista’s technological edge has resulted in the firm systematically taking market share. Today it stands at 29.9% in 10GbE switches compared to 3.5% in 2012. Meanwhile Cisco is at 34.3% down massively from 78.1% over the same period.

Arista’s rampage has translated into staggering growth, consistent beating of analyst expectations, and operating margins just shy of 50%. Today’s valuation is a bit lofty, opening the door to volatility. But in the long run, paying a premium may be worthwhile in my opinion.

Zaven Boyrazian owns shares in Arista Networks.

Burberry

What it does: Burberry designs and sells a range of premium-priced clothes and accessories drawing on its British roots.

By Christopher Ruane. There is no doubt that Burberry (LSE: BRBY) has been going through a tough patch. Lower customer spending is a problem across the high end of the rag trade in the current economic environment. The British firm has felt the consequences.

Last year saw revenues fall 4% (due to exchange rate movements). Attributable profit fell an alarming 45%. Free cash flows tumbled 84%.Ouch!

The dividend has been suspended. Weak demand generally remains a risk, as do brand-specific challenges. First-quarter revenues fell over a fifth year on year.

Still, Burberry sales remain significant. It has a distinctive identity I see as a potential asset and it is still making money, albeit at a sharply lower level.

As a long-term investor, I think its share price fall of almost two thirds in the past year has gone too far. I bought some Burberry shares recently to take advantage of what I see as an attractive valuation.

Christopher Ruane owns shares in Burberry.

HSBC Holdings

What it does: HSBC is an international bank with historical links to Asia. Today, it operates in over 60 countries.

By Charlie Keough. I recently added to my position in HSBC (LSE: HSBA). There are a few reasons why I’m a big fan of the stock.

Firstly, it looks cheap trading on just 7.4 times earnings. That’s considerably below the FTSE 100 average. What’s more, it’s trading on just 7.2 times forward earnings.

There’s also a meaty dividend yield on offer. The stock boasts a 7.4% payout, which has been steadily rising over the last couple of years. This year, it announced a special dividend which takes its yield up to 9.2%. The bank also continues to buy back shares, including $2bn worth last year.

As much as I’m a fan of its exposure to Asia, that does come with risks. Ongoing US and China tensions could prove to be an issue, especially if Donald Trump is elected. The Chinese property market has also encountered periods of volatility recently.

But over the long term, I think its focus on Asia will pay off. It’s home to some of the fastest-growing nations in the world. I reckon we could see demand for banking services soar in the years to come.

Charlie Keough owns shares in HSBC.

HSBC Holdings

What it does: HSBC is one of the world’s largest banks, with a strong focus on Asia.

By Ben McPoland. I recently added to my holding in HSBC (LSE: HSBA). The stock is trading below book value and the forward price-to-earnings (P/E) ratio is currently under seven. Meanwhile, the well-supported dividend yield of 7.3% is approximately double the FTSE 100 average.

In the first quarter, the bank’s revenue came in at $20.8bn, up 3% from the same period a year ago. And while pre-tax profit dipped slightly to $12.6bn, it was still higher than analysts were expecting. 

One thing adding a bit of uncertainty here is that there’s a new CEO at the helm. He’ll have to navigate rising tensions between the West and China, as well as falling interest rates, which will likely hit the bank’s bottom line. It could be a baptism of fire, so to speak.

However, I’m willing to take on these risks for the potential reward of those high-yield dividends. Plus, the Asia region where HSBC makes the lion’s share of its profits is tipped to grow rapidly for many years, offering higher earnings and share price growth potential.

I think the stock offers excellent all-round value.

Ben McPoland owns shares in HSBC Holdings. 

HSBC S&P 500 UCITS ETF

What it does: HSBC S&P 500 UCITS ETFtracks the performance of the 500 largest companies in the US by market capitalisation.

By Royston Wild. Investing in individual stocks can help investors to achieve market-beating returns. However, a good exchange-traded fund (ETF) can also turbocharge the profits an individual makes over time.

Someone who bought an S&P 500 tracker fund 30 years ago, for example, would have enjoyed a 10% average annual return over that time. They would also have endured lower risk by spreading their cash over hundreds of different companies.

This is why I’ve been steadily building my stake in HSBC S&P 500 UCITS ETF (LSE:HSPX). With one of the lowest ongoing charges, at 0.09%, it enables me to track the US share index in a cost-effective manner, too.

There’s no guarantee that I’ll make a double-digit return each year, of course. A persistence of high interest rates for one could compromise the S&P’s performance looking ahead.

But a strong long-term outlook for the US economy bodes well for me, as does the fund’s high concentration of AI stocks. Major holdings include Nvidia, Microsoft and Meta.

Royston Wild owns HSBC S&P 500 UCITS ETF.

Persimmon

What it does: York-based Persimmon is one of the UK’s biggest listed housebuilders

By Paul Summers: With the new Labour government setting a target of 1.5 million homes to be built over the next five years and interest rate cuts (hopefully) on the way, I’ve been busy buying more Persimmon (LSE: PSN) shares in July. 

As I type, this has worked out well with shares enjoying some nice upward momentum. A positive half-year report from the company in August could provide a further boost.

This is not to say there are no risks. Even if a rate cut does come soon, it may be less than the market’s hoping for. We also don’t know how long it will be before additional cuts arrive.  

But I’m a long-term investor. This means I’m far more motivated to buy and hold Persimmon shares for decades rather than years as the UK’s chronic shortage of housing is addressed. 

The 4% dividend yield is another attraction.

Paul Summers owns shares in Persimmon.

Renewables Infrastructure Group

What it does: Renewables Infrastructure Group is an investment trust that owns wind farms, plus some solar and battery storage assets.

By Roland Head. Renewables Infrastructure Group (LSE: TRIG) is one of the older renewable energy investment trusts on the London market, having floated in 2013.

Shareholders have enjoyed an annualised total return (including dividends) of about 7% per year over the last 10 years. I think that’s quite respectable.

However, higher interest rates have created a short-term headwind, triggering a sell-off that’s left the stock trading 30% below the all-time high seen in 2022.

Investors are worried that higher borrowing costs could lead to a squeeze on the dividend.

I can’t ignore this risk altogether. But my analysis suggests the trust is conservatively financed and has some good assets. Debt levels are falling, and TRIG has recently sold some assets at attractive prices.

I think the situation should be manageable. And with interest rates expected to fall, I believe the stock’s 7.5% dividend yield and 20% discount to book value could represent an attractive entry point.

Roland Head owns shares in Renewables Infrastructure Group.

Snowflake

What it does: Snowflake is a technology company that offers cloud-based data storage and analytics services via a Software-as-a-Service (SaaS) model.

By Edward Sheldon, CFA. Snowflake (NYSE: SNOW) shares have taken a big hit this year and I’ve been buying more of them for my portfolio. 

One reason I’ve been adding to my holding here is that recent quarterly results were solid. For the quarter ended 30 April, revenue was up 34% year on year. So, the company is still growing at a very fast pace. 

Another is that regulatory filings show that board member Mike Speiser purchased around $10m worth of stock in early June. Mr. Speiser was Snowflake’s founding CEO from 2012 to 2014. Therefore, he’s likely to have a very good understanding of the technology company and its long-term outlook. 

Now, while this stock has underperformed this year, it’s still expensive. The high valuation doesn’t leave much room for error in terms of operational execution. 

Taking a long-term view, however, I reckon this tech stock has bags of potential. After all, demand for data storage and analytics is only likely to increase. 

Edward Sheldon owns shares in Snowflake 

TP ICAP

What it does: Provider of intermediary trade execution and settlement services to clients in Europe, Asia, and beyond.

By Mark David Hartley. This month I purchased shares in TP ICAP (LSE: TCAP) for my dividend portfolio. The share price recently breached the 200p level that it’s been trading below since Covid. But it’s still down 23% over the past five years.

In an attempt to appease shareholders, the company initiated a £30m share buyback program in March. This seems to be working, as the price is up 15% since the announcement.

Despite an improving price, the latest FY 2023 results weren’t great. Earnings per share (EPS) were down from 13p to 9.5p, along with net income down 28% and profit margins down 30%. Only revenue beat analyst expectations, up 3.4%.

But dividends-wise, it looks good. The yield is currently at 7% and has spent much of the past few years above 6%. Barring Covid, payments have been consistently increasing for over 10 years, so I think it’ll make a good addition. 

Mark David Hartley owns shares in TP ICAP..

Unilever

What it does: Established more than a century ago, Unilever is one of the world’s largest consumer goods companies. Some 3.4bn people in 190 different countries use its products every day. Famous brands include Ben & Jerry’s, Domestos, Dove, Hellmann’s and Sunsilk.

By Harvey Jones. I’d wanted to own Unilever (LSE: ULVR) shares for years, but its price-to-earnings (P/E) valuation was always too steep and the yield too low. Then the company lost its way. Revenues slowed. Management stumbled into culture wars. Activist investors pressed the board to shake up its business model. The share price went south. Unilever’s P/E ratio followed. The yield picked up.

I first bought it in June last year, only for the share price to fall another 12%. It swiftly recovered, and I decided there was more to come once the cost-of-living crisis eased.

So I topped up my stake in May this year, and again last month. So far, I’m up around 9%, including a couple of dividends. Over 12 months, the Unilever share price is up 12.44%.

This follows my investment strategy to a tee. Find a good company, that’s having a bad time. Buy its shares at a discount. Then sit back, reinvest my dividends and wait for the recovery. Unilever isn’t there, yet, but it’s on the right track.

Harvey Jones owns shares in Unilever

The post 10 shares that Fools have been buying! appeared first on The Motley Fool UK.

However, while the risk is certainly higher, these typically younger enterprises can enhance an investment portfolio to generate far superior returns in the long run.

The UK has its fair share of growth investments to pick from. But lately, I’ve had my eye on US tech stocks that continue to look like terrific opportunities even in the current economic climate.

With that in mind, let’s look at two firms from my portfolio that I’m currently tempted to add more of.

Driving drug development

It’s no secret that researching, developing, and eventually bringing new pharmaceutical drugs to the market is a challenging task. The process can take more than a decade from start to finish, costing billions along the way. That’s why pure-play pharmaceutical companies can be quite a risky investment.

However, one business that thrives even during failed clinical trials is Veeva Systems (NYSE:VEEV). The company provides a specialised CRM platform to aid pharmaceutical, biotech, medical device, and clinical research organisations in bringing new products to market faster without accidentally breaching compliance.

While there are alternative software solutions available, Veeva has managed to position itself as the industry standard, used by the biggest names in healthcare, including GSK, Moderna, Pfizer, AstraZeneca, Bristol Myers Squibb, and Novartis, among others.

While thousands of healthcare companies rely on Veeva, the bulk of the revenue stream stems from these industry leaders. As such, there is some sales concentration risk. If a key client decides to swap to an alternative solution, it could have a dire impact on the firm’s performance.

But with Veeva so heavily embedded into its customers’ operations, that’s far easier said than done. And since demand for new and effective medicine isn’t likely to disappear for decades, Veeva looks like a top-notch growth stock, in my eyes.

Powering the cloud

While Veeva’s platform is at the heart of healthcare, it wouldn’t function without cloud computing providers like Microsoft Azure. But, Azure itself is reliant on other firms to provide the critical hardware needed to create the necessary bandwidth for rapid computing.

Today, Cisco Systems is a key supplier to the cloud computing industry, providing critical hardware to data centres. But over the last decade, Arista Networks (NYSE:ANET) has been slowly pushing Cisco out of the market.

The group’s latest ethernet switching provides the largest bandwidth in the industry, far outperforming Cisco’s own technology.

Subsequently, Arista now controls more than 23% of the global ethernet switch market, versus only 7% in 2013. And this trend doesn’t look like it’s going to change anytime soon.

Similar to Veeva, Arista has a revenue concentration risk, with Microsoft and Meta Platform making up a ginormous chunk of its revenue stream. And the loss of one of these customers could have severe repercussions.

Nevertheless, management’s heavy investment in research & development has propelled the group to be significantly more technologically advanced than its competitors.

So much so that I believe Arista could become the new dominant industry leader within the next decade.

The post 2 growth stocks that could be big winners in the next decade and beyond! appeared first on The Motley Fool UK.

Other than a few exceptions, this class of equities remain largely unpopular due to the continued economic uncertainty. However, consequently, that means potentially explosive investments are currently trading at discounted prices versus their historical premium valuations.

With that in mind, here are two stocks from my portfolio I’ve been topping up throughout 2023, so far.

Investing in the future of surgery

While it still sounds like something out of a science fiction novel, robotic surgery is becoming increasingly common in medical institutions worldwide.

These procedures are still largely more expensive to perform versus traditional methods. But this price barrier has been falling rapidly over the last decade. And with the pinpoint precision provided, patients take on less risk with faster recovery times. That means better quality healthcare while simultaneously reducing costs for hospitals.

That’s why Intuitive Surgical (NASDAQ:ISRG) is one of the larger positions within my growth portfolio. The company is the global leader in this rising industry, with 8,042 of its da Vinci surgical systems installed worldwide.

With hundreds of new systems installed every quarter, Intuitive now controls an estimated 80% of the global robotic surgery market. In other words, it has a near monopoly in an industry which, according to Grand View Research, is on track to expand by 16.5% annually between now and 2030.

Of course, no investment is without its risks. The high barriers to entry mean competition is currently scarce. But that won’t last forever. And if management can’t convince health insurance companies to include robotic surgery procedures in customer policies, growth may struggle to keep up with expectations.

Nevertheless, given the group’s explosive track record, I think these risks are worth taking.

Powering the cloud

Data centres have been money-making machines for cloud providers worldwide. But cloud technology wouldn’t exist today if it wasn’t for firms like Arista Networks (NYSE:ANET). Most consumers probably haven’t heard of this enterprise. But chances are they’ve relied on a server using the group’s tech.

Arista makes high-speed ethernet switches. These are ultimately responsible for the flow of traffic moving through servers, creating the world’s increasingly critical bandwidth. And while this sector has been historically dominated by the likes of Cisco, Arista has been systematically stealing market share for decades. And this trend looks set to continue.

At the end of 2022, the company launched its first 800 gigabit switch. It has double the bandwidth capacity of the group’s earlier generation, with an estimated 20-40% saving in electricity consumption. Apart from saving data centres considerable running costs, such performance will be critical for low-latency services from IoT, 5G, and AI devices.

With a focus on hyperscaler data centres, Arista has achieved tremendous growth. But that has also led to some serious customer concentration risk, with Microsoft and Meta Platforms responsible for 42% of the revenue stream! If either of these firms decides to switch to a competitor, it could be disastrous.

Having said that, even Cisco is seemingly struggling to keep up with Arista’s impressive pace of technological innovation. Therefore, while certainly risky, it remains a growth stock worth buying, in my opinion.

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I see Nvidia as a great AI stock. However, it’s not the only way to play the theme. With that in mind, here are three others for the AI boom.

AMD

First up, we have Advanced Micro Devices (NASDAQ: AMD) or ‘AMD’ for short. It’s another leading designer of high-performance computer chips.

AMD is very active in the AI space. But it doesn’t have the market position that Nvidia has.

Its market share could potentially rise in the future though.

Right now, AMD is ramping up production of its flagship MI300 artificial intelligence chips. These are are designed to compete against Nvidia’s H100 AI chips and could be launched by the end of the year.

If the company can get this product to the market in the near future, demand could be very high as right now Nvidia’s chips are in short supply.

AMD stock is a little cheaper than Nvidia from a valuation perspective. This is a plus.

However, it’s still quite expensive (the forward P/E ratio is about 39 versus 42 for Nvidia). If growth slows, the stock could take a hit.

Lam Research

Next, we have Lam Research (NASDAQ: LRCX). It’s a leading provider of semiconductor manufacturing equipment.

This company strikes me as a great ‘picks and shovels’ play on the artificial intelligence boom.

AI is going to require a lot of chips to be successful (it’s rumoured that ChatGPT-5 is going to require about 50,000 Nvidia H100 chips). So, demand for chip manufacturing equipment should be high in the years ahead.

Lam looks well placed to benefit here. It specialises in equipment that helps chip manufacturing plants (fabs) print layers of transistors in advanced chips. And it’s one of the biggest players in this space.

Lam shares currently trade on a P/E ratio of about 24. So, they are a bit less risky than Nvidia, to my mind. They can still be volatile though as the semiconductor industry is cyclical.

I’m confident in the long-term story, however.

It’s worth noting that Lam recently raised its quarterly guidance thanks to AI-related demand so it’s already benefiting from the technology.

Arista Networks

Finally, we have Arista Networks (NYSE: ANET).

It specialises in lightning-fast ethernet switches and routers for data centres. It also offers software that controls the hardware and keeps customers locked in.

I see this company – which serves the likes Microsoft, Alphabet, and Amazon – as a good play on AI due to the fact that its technology helps organisations move vast quantities of data over the Internet at incredible speeds.

With its products, tech companies can build high-performance AI networks in a simple and scalable manner.

This stock has done well this year thanks to AI, rising about 60%. After that kind of jump, and with the stock now trading on a P/E ratio of around 32, a pullback could be on the cards.

Taking a long-term view, however, I think it has huge potential. I’m keen to add it to my portfolio.

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