2021 was another excellent year for U.S. stocks, as some of Wall Street’s major indices—the Dow Jones, S&P 500 and NASDAQ—all ended the year with strong gains as optimism over the global economy played a powerful role, despite ongoing COVID worries.
While there are plenty of reasons to be cautious about the stock market in 2022, mainly risks related to the Federal Reserve’s tightening path and the ongoing coronavirus health crisis—these three proven winners are likely to continue providing shareholders with impressive returns in the new year.
1. Alphabet
Google-parent Alphabet (NASDAQ:GOOGL) shares soared in 2021 and are well-positioned to continue their march higher in 2022 thanks to surging demand for the tech behemoth’s innovative products and services.
GOOGL was last year’s best-performing ‘FAAMG’ stock, with an annual gain of nearly 65%. It ended Tuesday’s session at $2,887.99, within sight of its record high of $3,037.00 reached on Nov. 19.
At current levels, the Mountain View, California-based internet search giant has a market cap of $1.92 trillion, making it the third most valuable company trading on the U.S. stock exchange, trailing only Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT).
Google’s 2021 rally was fueled by signs of broad strength in the online advertising market as well as booming demand for its cloud platform, which saw sales surge 45% to $4.99 billion in Q3. The company has been investing heavily in its cloud business as it plays catch up with Amazon (NASDAQ:AMZN) Web Services and Microsoft Azure.
Additionally, Wall Street was encouraged by strong growth in ad revenue from GOOGL's YouTube segment, which climbed 43% from a year-ago to a record $7.21 billion in the last quarter.
Looking ahead to 2022, Google is expected to see continued momentum from an ongoing surge in digital ad spending as the economy continues to rebound from COVID-related disruptions. The tech company’s core ad revenue business saw a Y-o-Y gain of 43% to $53.1 billion in the previous quarter.
Taking this into consideration, we expect GOOGL stock to continue its strong uptrend in the year ahead. Indeed, the quantitative models in InvestingPro point to 15.9% upside in Alphabet shares from current levels over the next 12 months to a fair value of $3,348.46/share.
Source: InvestingPro
2. NVIDIA
Widely considered one of the global leaders in providing high-performance graphic processing units (GPUs) for gaming consoles, data centers, and self-driving vehicles, NVIDIA (NASDAQ:NVDA) ended 2021 as one of the big winners of the year, with shares gaining 125% thanks to soaring demand for its chips.
In addition, the company—which is the world’s largest maker of video game chips—has stepped up efforts in recent months to become a major player in the emerging metaverse space, which is viewed as the next-generation version of the internet.
NVDA stock climbed to a record peak of $346.47 on Nov. 22. It closed yesterday at $292.90. At current levels, the Santa Clara, California-based tech giant has a market cap of $732.2 billion, making it the seventh most valuable company trading on the U.S. stock exchange, ahead of names like JPMorgan Chase (NYSE:JPM), Walmart (NYSE:WMT), and Exxon Mobil (NYSE:XOM).
In a sign of how well NVIDIA’s business has performed in the current environment, the chipmaker has turned in earnings reports that have beaten Wall Street’s profit and revenue estimates in each quarter last year.
That trend will likely continue in 2022 as NVIDIA's guidance for the current quarter made clear that the semiconductor giant does not expect any slowdown in the months ahead, with revenue forecast to grow by 48% year-over-year to a record $7.4 billion.
Besides the anticipated uptick in demand for its chips used in gaming consoles and data centers, NVIDIA is also set to benefit from its growing involvement in the metaverse following the unveiling of its ‘Omniverse’ software, a virtual world simulation and collaboration platform for 3D workflows.
As such, we anticipate the positive trend in NVIDIA to continue in the new year thanks to its status as one of the leading names in the booming tech sector.
Analysts too remain bullish on the stock.
Source: Investing.com
In an Investing.com survey of 42 analysts, 36 rate the stock as “outperform,” implying 16% upside from current levels.
3. Roblox
Roblox (NYSE:RBLX) made headlines last year when the digital entertainment company completed its well-received debut on the New York Stock Exchange in March of 2021.
The San Mateo, California-based firm scored a gain of 48%, benefiting from strong demand for its wildly popular online platform that allows users to easily play and develop videogames in 3D virtual worlds.
RBLX stock closed at $95.15 last night, earning the gaming platform provider a valuation of roughly $55.1 billion. At current levels, shares are about 32% below their all-time high of $141.60 touched on Nov. 22.
Despite a recent pullback due to valuation concerns, we expect Roblox’s stock to continue its remarkable performance in 2022 thanks to its emerging status as one of the leading names in the budding metaverse space.
At its recent analyst day event in November, company executives said that most consumer brands will likely need to employ a metaverse strategy in the next three to five years as corporations adapt to the shifting digital landscape. That should bode well for Roblox, which already counts notable names such as Nike (NYSE:NKE), Chipotle Mexican Grill (NYSE:CMG), and VF Corporation's (NYSE:VFC) Vans footwear as customers.
The fast-growing tech company reported solid earnings and revenue when it posted Q3 financial results on Nov. 8, fueled by robust user engagement and strong growth in customer additions.
The gaming platform’s average daily active users (DAUs)—comprising mainly teens and preteens—climbed 31% from a year ago to 47.3 million in the last quarter. Those users spent 11.2 billion hours engaged on the platform, an increase of 28% from the same period last year.
Still, Roblox is not yet profitable as the company’s net loss widened to $74 million in Q3 from $48.6 million in the same period the previous year, due mostly to increased expenses related to its marketing, infrastructure, and research and development.
Not surprisingly, 9 out of the 12 analysts surveyed by Investing.com are optimistic about RBLX stock.
Source: Investing.com
The consensus among those polled forecast a gain of roughly 22% from current prices to $116.36/share.