The Nasdaq Composite (^IXIC -2.70%) has experienced a dip of over 7% year-to-date as of this writing. While abrupt market fluctuations can be unsettling, they are commonplace and present an opportunity to acquire shares of high-quality growth stocks at more attractive prices.
No one can predict the direction of the stock market by 2025, but if it continues its downward trend, there are two expanding companies I would eagerly invest in. These stocks currently boast reasonable valuations in relation to their growth potential; if they drop further, they would represent incredible bargains.
1. Nvidia
A temporary decline in the stock market will not hinder the long-term adoption of artificial intelligence (AI). Major tech companies are investing billions in AI technology to secure future growth. As the top supplier of data center hardware, Nvidia (NVDA -1.51%) is a stock I would consider buying during a market sell-off. It has a proven track record of delivering excellent returns and is expected to evolve into a more valuable entity within the next decade.
Currently, Nvidia shares trade at a relatively high price-to-earnings ratio of 38. However, this valuation seems justified given its market dominance and growth potential. According to Statista, the AI server market is projected to expand more than tenfold over the next ten years, with Nvidia’s graphics processing units (GPUs) serving as the backbone of these systems. A surge in demand for its chips drove Nvidia’s revenue up by 114% year-over-year to $130 billion last year.
Nvidia’s GPU dominance is unparalleled. Its GPUs not only rank among the best-performing chips globally, but the company has also developed services and software surrounding its hardware, fostering a stronger customer relationship. Prominent cloud service providers are eager to purchase Nvidia’s new Blackwell AI computing platform, which generated $11 billion in sales last quarter and is poised for continued growth.
Analysts predict Nvidia’s revenue will reach $205 billion this year (fiscal 2026), reflecting a year-over-year growth of 57%. The company is on course to capture major spending on AI infrastructure in the years ahead. Statista forecasts that the AI market will grow at an annual rate of 26% to reach $1 trillion by 2031. I would take advantage of any dips to invest in Nvidia, as its business is likely to grow alongside this market.
2. Take-Two Interactive
Take-Two Interactive (TTWO -1.72%) ranks among the premier video game developers within an industry valued at approximately $200 billion or more, depending on the source. I would purchase this stock during dips, as it has consistently outperformed the market over the past decade, with the stock climbing by over 700%, and has a significant growth catalyst on the horizon.
Grand Theft Auto stands out as one of the best-selling franchises in the video game sector. Take-Two has not frequently released new installments in the series, creating considerable anticipation for the launch of Grand Theft Auto VI later this year. Historically, each of the five main releases over the last few decades succeeded in selling more copies than its predecessor. The release of Grand Theft Auto V during Take-Two’s fiscal year 2014 resulted in a staggering 93% revenue increase, with the game selling over 210 million copies to date.
Take-Two’s capacity to profit from this game for years post-release due to in-game updates underscores the substantial importance of a new Grand Theft Auto launch for the company’s growth outlook. Analysts project Take-Two’s revenue to reach $8.2 billion in fiscal 2026, marking an impressive 45% increase over the fiscal 2025 consensus estimate.
In addition to its flagship series, Take-Two also produces popular titles like NBA 2K, Sid Meier’s Civilization, and Borderlands, collectively generating over $5 billion in annual revenue. The company aims to release more titles in the coming years to diversify its portfolio and enhance shareholder returns.
Management has indicated that this year is shaping up to be among the strongest in the company’s history, and the momentum is just beginning. Analysts forecast an annualized earnings growth rate of 41% over the next few years. Currently trading at a reasonable 28 times fiscal 2026 earnings estimates, if the stock declines from here, it would be an easy decision to purchase Take-Two shares before the release of Grand Theft Auto.
John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia and Take-Two Interactive Software. The Motley Fool has a disclosure policy.
