Shares of e-commerce company Shopify have been understandably punished, but far more than deserved.
Online brokerage firm Robinhood Markets has built a compelling, engaging app and trading experience for digitally-native consumers.
Now that the underlying tech is as capable as it needs to be, the era of edge computing is here. Qualcomm is positioned to lead it.
The market's getting walloped right now. As veteran investors can attest, however, this is only short-term noise. In the long run, you won't even remember this pullback.
With that as the backdrop, rather than lamenting the current weakness, use it to your advantage by scooping up some long-term positions at a discount. Here are three such top prospects to consider.
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Like so many other technology companies wading into artificial intelligence waters, the market has punished Shopify (NASDAQ: SHOP) shares for spending so much on AI, as well as dishing out disappointing revenue guidance. All told, this e-commerce platform's stock is now down nearly 40% from its late-October peak.
The sellers, however, may have overshot their target... and then some. While it's true that Shopify is spending more and earning less than the market has been anticipating, projected Q2 revenue growth in the "high-twenties" is still solid even if non-descript. Analysts also still expect full-year sales growth of 28%, improving last year's per-share profits of $1.43 to $1.84 this year, en route to $2.33 next year on 2027's top-line growth of nearly 24%. Again, not bad. The analyst community further suggests that SHOP shares are currently undervalued, priced more than 30% below their consensus target of $149.83.
Shopify helps merchants and brands establish their own online stores, allowing them to bypass online shopping platforms like Amazon and eBay. Although these massive online malls still play an important role in the e-commerce market, custom-built stores allow brands and sellers to foster a deeper, more intimate relationship with consumers. This is increasingly what people crave, which Amazon simply wasn't built to deliver. This paradigm shift isn't apt to end anytime soon, either.
Online brokers are nothing new or novel anymore. In fact, there are enough of them that they could be almost be considered a commodity... all more or less the same.
There's one relatively new name to the business, however, that's managed to distinguish itself from the crowd. That's Robinhood Markets (NASDAQ: HOOD).
Although launched in 2013, the app that specifically caters to younger investors (average age 26.5) and digitally native investors has turned its customer base into a highly engaged community with 27.7 million members and $377 billion in assets. Both numbers are still growing, too. Its customer headcount grew 6% year over year in Q1, while net deposits of $17.7 billion were up 22% from Q4's number. This, of course, translated into more average revenue per user, or ARPU, which increased 8% year over year to $157.
And that was before Robinhood was selected to participate in SpaceX's public offering in early June, which undoubtedly drew a slew of new customers to the app, where they'll enjoy a casual yet entertaining stock-trading experience. They'll also find credit cards, crypto, prediction markets, managed accounts, and access to a handful of private ventures that aren't readily accessible to other investors.
Image source: Getty Images.
It's a relatively unusual offering compared to online trading 20 years ago, when the industry was still dominated by traditional banks and brokers that had only recently moved into web-based self-service. What Robinhood offers is the industry's new norm, though, and the company executes very, very well. That's not likely to change anytime in the foreseeable future.
The only arguable knock on the company and its stock? The ever-changing market environment means interest in trading ebbs and flows, working for and against its fiscal results. The stock will ebb and flow accordingly.
If you're holding it for at least a decade, though, this volatility won't really matter much.
Finally, add Qualcomm (NASDAQ: QCOM) to your list of stocks to buy now and hold for a decade.
This is one of those companies that's seemingly been around forever, yet has never really been at the epicenter of any major, long-lived revolution in the technology sector. You probably know it best as an early mobile phone maker, but it doesn't even make handsets anymore. It was displaced by the proliferation of smartphones following 2007's debut of Apple's iPhone. These days, Qualcomm licenses only its mobile phone technology and its name.
The world, however, may finally be ready to embrace the technology that this company's been perfecting for many, many years now. That's a high-performance, low-power mobile processor called the Snapdragon found in a growing number of mobile phones, and even laptop computers.
This is a bigger deal than it may seem to be on the surface, too. So far, most of the work the world needs AI to handle is actually handled remotely in a data center and then delivered to a user's device. Snapdragon -- and processors using the same architecture -- don't need a constant cloud connection, though. They can do artificial intelligence work directly from the device itself. That's why this tech is now increasingly being tested in wearables, industrial robotics, medical devices, smart meters, and even automobiles with onboard driver assistance.
This is still a relatively new use of this processor know-how, to be clear, since mobile AI-capable processors have only recently been able to function as initially envisioned. But that's what makes Qualcomm such a compelling 10-year prospect. It's arguably one of the companies best positioned to capitalize on the growth of this so-called "edge" AI computing market, which Precedence Research expects to swell from last year's $25.6 billion to $165 billion in 2035.
It matters because, as Qualcomm's CEO Cristiano Amon put it earlier this year, "the winner of the edge is going to be the winner of the AI race."
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Qualcomm, Shopify, and eBay. The Motley Fool has a disclosure policy.