Want to beat average stock market returns? Introducing 10 stocks that will help you

benchmark S&P 500 (^GSPC -0.15%) The stock market index has returned 67,036% (including dividends) since its inception in 1957. This means a compound annual rate of return of 10.2%.

That’s more than double the return investors could earn if they held on to their cash now, even if interest rates were at their highest in 15 years.

But historically, investors who have purchased specific individual stocks have outperformed the returns of the S&P 500 by far. I’m sharing 10 stocks that have beaten the index since their IPOs. These stocks have the potential to benefit you. Continue to beat the market.

Image source: Getty Images.

1. Meta Platform: 826% return since IPO

meta platform (meta -0.34%) It is the parent company of popular social networks Facebook, Instagram, and WhatsApp. The stock went public in 2012 and has returned 826% since then, which equates to a compound annual return of 22.4%. This is twice the long-term average of the S&P 500.

But it wasn’t always smooth sailing. Meta stock fell 76% from peak to trough from 2021 to 2022, but then roared back to life, rising 194% in 2023. In the third quarter of 2023 (ending September 30), the company achieved record revenue, with net income (profit) surging 163% year over year.

Meta stocks remain cheap compared to the broader technology sector, and the company’s increased investments in artificial intelligence (AI) could lead to more market-beating returns this year and beyond.

2. Palo Alto Networks: 1,920% return since IPO

Next stock to beat the market Palo Alto Networks (PANW 3.77%)is a world-leading cybersecurity company that went public in 2012. Since then, the stock has soared 1,920%, or a 31.4% annual average, and has spent most of 2023 hitting all-time highs.

Investors have rewarded the company’s increased investment in futuristic AI-based cybersecurity, which is already generating significant returns. Palo Alto’s year-old Cortex XSIAM product is a security operations solution designed to reduce reliance on manual, human-led incident response with the help of AI. It has already amassed $1 billion worth of reservations, with one large organization using it to protect 300,000 computers and devices (endpoints).

Palo Alto is on track to achieve a record-high total revenue of $8.2 billion during fiscal year 2024 (ending July 31, 2024). Considering that the cost of cyberattacks continues to soar, investing in one of the world’s largest cybersecurity providers could go a long way in saving you money down the road.

3. Alphabet (Google): Post-IPO return of 6,311%

alphabet (GOOG 1.45%) (google 1.52%) is the parent company of Google, but is also home to other prominent technology subsidiaries, including YouTube and self-driving car developer Waymo. Google stock went public in 2004 (the company changed its name to Alphabet in 2015) and has since returned 6,311%. This corresponds to a compounded annual gain of 24.5%.

Advertising costs from Google Search remain Alphabet’s largest single source of revenue, but its cloud computing platform, Google Cloud, also makes a notable contribution. It is increasingly important because it is where large companies monetize many of their AI initiatives, from new data center chips to large-scale language models that form the basis of AI software applications.

Like Meta, Alphabet stock is trading at an attractive valuation compared to the tech giants, which could provide more upside going forward.

4. Netflix: 44,146% return since IPO

Here are the streaming giants netflix (NFL -0.61%). The company went public in 2002, shortly after the dot-com tech bubble burst, and since then its stock has risen a blistering 44,146%. Converting this to compound interest, the annual return is 33.7%.

Netflix has disrupted everything from video rental stores to cable TV. The streaming service has become the world’s largest with 247 million paid members, and the company continues to grow its target market by offering cheaper subscription tiers and expanding into new territories.

Netflix is ​​the only standalone streaming provider that generates revenue. This bodes well for its long-term staying power compared to its peers, many of which are currently cutting costs. This could increase Netflix’s market share over time and result in more gains for the stock.

Image source: Netflix.

5. Apple: Post-IPO return of 181,080%

apologize (AAPL -0.23%) It recently became the world’s first $3 trillion company, and its stock is one of the best performers in market history. It has gained 181,080% since its IPO in 1980, an average annual return of 19%.

The iPhone smartphone has become the company’s biggest value generator, leading to other billion-dollar hardware products like the Watch and AirPods. Apple also has a fast-growing services division centered on subscription-based Apple Music, Apple News, and Apple TV. But AI could be one of the biggest reasons to own stocks going forward.

The company’s iPhone 15 Pro features the Apple-designed A17 Pro chip, which enables the device to handle AI workloads. They are reportedly developing large-scale language models and AI chatbots, and the ability to run these applications on smartphones (rather than in the cloud) could mark a new beginning for mobile computing and pave the way for new capabilities. It’s hard to go wrong with owning this proven long-term performer.

6. Amazon: Post-IPO return of 193,553%

Started selling books online in 1994 Amazon (AMZN 1.52%) It has transformed into one of the most diversified technology companies in the world. It was listed in 1997 and its stock price has soared 193,553% since then. This is a compound annual return of 33.8%, or three times the long-term average annual return of the S&P 500.

Although e-commerce remains Amazon’s biggest source of revenue, the company derives most of its revenue from its cloud computing division, Amazon Web Services (AWS). AWS is leading the company’s AI initiatives, from developing data center chips to helping companies develop their own AI applications. Late last year, Amazon also purchased a $4 billion stake in leading AI startup Anthropic.

But there’s more to this company. Streaming service Prime is second only to Netflix in terms of memberships, and its digital advertising business is one of the fastest-growing businesses across the company. Simply put, Amazon stock is a great way for investors to expose their portfolios to the digital economy, and it’s trading at a very attractive valuation.

Image source: Amazon.

7. NVIDIA: 196,288% return since IPO

nvidia (NVDA 1.70%) The 2023 star has posted bigger gains than any other stock in the S&P 500. It has a history of remarkable growth. It was listed in 1999 and its stock price has soared 196,288% since then. Compounded, this translates to a 37.2% annual return.

Nvidia’s business is currently driven by astronomical demand for its AI data center chips, particularly the H100 and the soon-to-be-released H200. The world’s largest data center operators have been working to provide business customers with access to sufficient computing power to handle AI workloads so they can develop applications and integrate productivity-boosting AI into their workflows. Nvidia has a dominant market share in this space and there are currently few viable alternatives.

In the third quarter of its most recent fiscal year 2024 (ending October 29, 2023), Nvidia’s data center revenue surged a whopping 279% year over year to $14.5 billion. The company’s fourth-quarter forecast calls for it to end the year with a record $58.8 billion in total revenue, which Wall Street predicts could hit $92.2 billion in fiscal 2025. That said, it looks like there’s a lot of growth left in the tank.

8. Oracle: 221,826% return since IPO

Founded in 1977, trust (ORCL -0.98%) It is one of America’s oldest technology companies. Since executing an initial public offering (IPO) in 1986, the stock has recorded a gain of 221,826%, for a compound annual return of 23.1%.

Oracle started out developing database management software, but today is a leading provider of cloud-based applications designed to increase productivity across dozens of industries. Investors are focusing on the infrastructure portion of Oracle’s cloud business as the company said its Nvidia GPU chip clusters can train AI models twice as fast and at half the cost than other major cloud providers.

Oracle has already signed deals with leading AI startups such as Cohere and Elon Musk’s xAI, and the company is currently building 100 new data centers in addition to the existing 66 as it cannot keep up with demand. So now could be a good time to buy Oracle stock ahead of what could be a growth spurt in the coming years.

Image source: Getty Images.

9. Microsoft: 504,247% return since IPO

microsoft (MSFT 0.29%) It is close behind Apple for the title of the world’s most valuable company. The market capitalization is $2.7 trillion, so it’s not far off. However, Microsoft has made much bigger profits than Apple since its IPO in 1986 (its public valuation was much lower). Microsoft stock is up 504,247% year to date, or 25.9% compounded annually.

Microsoft still operates the Windows operating system and some of its flagship software products, such as Word. But it has also expanded into hardware (computers and devices), gaming, cloud computing, and AI. Last year, Microsoft invested $10 billion in OpenAI, a leading AI startup that developed the ChatGPT chatbot.

Microsoft has integrated OpenAI’s latest GPT-4 model into products including its Azure cloud platform, Bing search engine, 365 document suite, and Edge internet browser. This has already enabled the company to have 18,000 enterprises sign up for the Azure OpenAI service cloud segment and tens of thousands of organizations to successfully monetize AI using AI Copilot tools for 365 in its early access program.

These AI integrations could drive the next phase of Microsoft’s growth, and with the stock nearing all-time highs, investors certainly seem optimistic.

10. Berkshire Hathaway: 3,787,464% return since IPO

Finally, the stocks that have created the most value on this list are: Berkshire Hathaway (BRK.A -0.41%) (BRK.B -0.35%). The investment firm is led by Warren Buffett, who increased the company’s value by 3,787,464% between 1965 (when he took the helm) and 2022.

That’s a compound annual return of 19.8%, and while it’s a lower annual return than some of the other stocks I mentioned, we shouldn’t overlook Berkshire’s ability to nearly double the performance of the S&P 500 consistently over 58 years.

Berkshire has a $358 billion portfolio of publicly traded stocks and securities and holds a large stake in Apple. bank of america, american expressand Coca Cola. It also wholly owns private companies such as Dairy Queen, Duracell, and GEICO. Diverse exposure to a wide variety of industries has been the secret to consistent returns over long periods of time.

If you’re looking for a stock with a solid track record of beating the S&P 500, look no further.