2 High-Growth Tech Stocks to Buy in 2022

The bulk of my portfolio is in dividend stocks. Although, I’ve also invested in two of the best high-growth tech stocks. On one position, I’m down close to $13,000. It doesn’t feel great. But I haven’t put all my eggs in one basket. On the other growth stock, I’m up close to $20,000.

Even with these short-term price swings, I’m not selling. I’m not locking in the losses or gains. The reasons I’ve invested in these tech stocks haven’t changed. Each one has its own unique set of risks, but the growth potential is huge. The risk-to-reward is simply too good to pass up.

Already, these growth stocks are cashflow machines. And they’re reinvesting heavily into high-growth segments. But even with heavy reinvestment – to the tune of billions of dollars each year – cash keeps piling up. So, long-term, I think there’s the potential for big capital gains, as well as paying dividends.

I’m going to highlight both the biggest risks and growth opportunities for these two tech companies. I’ll show you why I’ve invested a good chunk of my life’s savings. And why I continue to hold tight, even in the face of constant pessimism.

Growth Tech Stocks to Buy in 2022

For the first company, many people have negative emotions when they hear the name… Facebook. And are you one of them? Either way, just hear me out. When it comes to investing, you need to leave your emotions at the door and take an objective, logical approach.

Facebook is an unloved company but it’s one of the best investing opportunities in 2022 and the years ahead. Heck, if you don’t like the company, you can still profit off of it. Then if you want, you can donate your profits to your favorite charity.

Facebook as a Top Growth Stock

Here’s an undeniable chart that shows why Facebook (recently renamed Meta Platforms) is one of the best high-growth tech stocks…

high-growth tech stock Meta Platforms revenue growth

I bought back in 2018 and revenue has roughly doubled since. Back then, there were just as many negative headlines, if not more. The share price had dropped due to the Cambridge Analytica scandal and other news.

Facebook continues to take non-stop punches from both sides of the political aisle. But is it warranted or just pandering for votes?

Sure, there are plenty of issues for Facebook to overcome. For example, it’s created a faster feedback loop for news and engagement. And even though Facebook and its other platforms are relatively new, human behavior hasn’t changed…

People tend to engage more with negative content and echo chambers form. This can help further polarize groups. Although, this isn’t unique to Facebook. It’s a truth across the internet.

In a sense, any social media platform is similar to the Hydra. You chop off one head, and two more will pop up to fill the void. Although, this analogy is a bit too negative. Facebook adds a lot of value for users. Otherwise, people wouldn’t stick around.

Facebook and other platforms can create subtle nudges to help reduce some of the negative impacts… but it’s a balancing act. If you reduce what engages users, they’ll gravitate towards other platforms with better engagement. As mentioned, human behavior hasn’t changed. And a really good book on this end is Hooked by Nir Eyal.

To sum up why I’m OK with investing in Facebook given the widely stated downsides, there are many overlooked benefits. If you take an objective look, you’ll see Facebook spends billions each year building and improving useful products that anyone can use for free. No one has to use them and there are plenty of alternatives. But they continue to do so because of the many benefits.

Meta Takes Users into the Metaverse

Facebook and Meta’s other platforms have close to three billion monthly active users. That’s close to 10 times the size of the total U.S. population. And it’s only continued to grow by adding more value to users.

… But there are limits to user growth. We share this world with close to 7.9 billion other people. Even with user growth limits, Meta is making moves to better engage and monetize its current users…

Facebook average revenue per user worldwide growth

Worldwide, average revenue per user (ARPU) has climbed from below $2 in 2012 to above $10 today.

Meta has done an excellent job at helping both large and small businesses, as well as millions of small creators. Meta’s platforms are some of the best and most cost-effective places to reach new audiences and customers.

Looking to the future for growth, we must look at current constraints and trends. Current day, Meta is largely at the mercy of hardware providers such as Apple. Companies that create phones and computers have a lot of control over which software they allow. Although, there are early signs of what might be the next major computing platform.

With Facebook’s rebrand to Meta Platforms, it’s making bold moves that VR and AR are the future. And looking at improving adoption and use cases, this is a good move to make. It’s going to take many years to play out but Meta is investing heavily into advancing these future technologies.

Meta Reality Labs invested roughly $10 billion last year and will invest even more this year. I’m excited to see the continued innovation. It’s going to give Meta new revenue streams, as well as improve its more traditional advertising potential.

Meta Platforms is already a cashflow machine and it isn’t resting on its laurels. Valuation-wise, it’s not as cheap as when I got in but it’s still one of best high-growth tech stocks in 2022 and beyond.

Investing in Alibaba Stock

For the position that I’m down on, it’s Alibaba. Although, that means you can get an even better entry price than me. One of the world’s best investors has also invested in Alibaba. Charlie Munger bought at an even higher price and clearly sees huge potential.

If you’ve been following Alibaba and other Chinese tech stocks, the biggest risks are easy to point out. There are geopolitical and regulatory risks. If tensions get worse between China and the U.S., Alibaba stock will drop even lower. Although, I think there’s a good probability that we’ve seen the worst of it. Reducing international trade and investment is a net-negative for both sides. And both China and the U.S. are taking steps to rein in giant tech stocks.

Nonetheless, it’s a balancing act as neither country wants to stifle growth too much. Overall, Alibaba’s fundamentals remain solid and it trades at a steep discount. People often compare Alibaba to Amazon and there are many similarities.

Here’s Alibaba’s revenue growth…

Alibaba total revenue growth 2016-2021 and will continue growing in 2022

To reduce errors and inconsistency with currency conversions over time, I’ve left these numbers in Yuan. And for perspective, the ¥717 billion from 2021 is about $113 billion today. 

As one of the best high-growth tech stocks, Alibaba continues to push sales higher. I’m not going to give a full company review in this video. You can check out my past Alibaba video for that. Instead, I want to highlight one of its fastest growing segments… 

Similar to Amazon, Alibaba has invested heavily into providing cloud services. Even with all the negative Chinese stock headlines in 2021, this segment is up 50% year-over-year. It came in at ¥60 billion and still has plenty of room to grow. 

Alibaba is well diversified and growing on many fronts. Its core businesses are already cashflow machines and cash is piling up. This gives it more than enough room to invest in high growth segments and play the long-game. 

Alibaba stock has been a bit painful but it’s still one of my highest conviction investments for the long-term. 

High-Growth Tech Stock Volatility 

With both these high-growth tech stocks there will continue to be ups-and-downs. When it comes to investing, that’s the cost of admission and it’s important to diversify. 

With the scale these companies have already reached, there’s plenty of geopolitical and other regulatory pressure. Although, both are well positioned to weather further storms. And looking at the trends and current valuations, these are some of the best investing opportunities today. 

Do you think there are better stocks I’m missing? Have you invested in Meta Platforms or Alibaba? Let me know in the comments below. Or feel free to comment on my YouTube video. More people tend to see those and leave comments.

Invest mindfully, 

Brian Kehm

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