There are many ways to define "the fastest-growing" stocks. You can focus on market returns, sales growth, or profits, and you can look at proven results or future expectations. Traditionalists may prefer analysing reported results and historical market data. Growth-oriented investors can lean into forward-looking projections, based on rapid top-line growth or beefy long-term profit targets.

Today, I'm looking at the fastest-growing artificial intelligence (AI) stocks of the last three years, in terms of estimated revenue growth. This way, I'll zoom in on companies with plenty of business growth expected in the years ahead, no matter what they did in the early days of the generative AI boom.

So here are the top three names of that analysis, based on their top-line sales' expected compound annual growth rate (CAGR) in the next three years.

1. Nvidia: 50.4% estimated CAGR

It's no secret that semiconductor designer Nvidia (NASDAQ: NVDA) has grown like wildfire in recent years. Its trailing 3-year revenue growth stands at a spine-chilling CAGR of 63.8% at the moment. OpenAI introduced its groundbreaking ChatGPT system in November 2022. As the primary provider of AI accelerator hardware for that platform, Nvidia has enjoyed skyrocketing sales ever since.

And analysts see no end to that trend. Your average analyst firm expects Nvidia to deliver annual sales growth of roughly 50.4% over the next three years.

I agree that Nvidia should deliver strong sales growth in this AI boom. However, it gets harder and harder to maintain these skyrocketing growth rates as the base figure for each year-over-year comparison increases. Moreover, I'm not convinced that the analyst community gives enough respect to Nvidia's current and potential rivals. If nothing else, having plenty of high-powered AI accelerator chips available could limit Nvidia's gross profit margins over time.

So Nvidia looks overpriced to me, since Wall Street's growth targets seem a bit too optimistic. I cashed in some of my paper gains on this stock several months ago. Yet, the analysts might be right. I'd be kicking myself if Nvidia continues to dominate the AI hardware space and my portfolio had no connection to that opportunity. You should check your risk tolerance before backing away from Nvidia's soaring stock -- or doubling down on it.

2. Super Micro Computers: 36% estimated CAGR

Nvidia is the leading seller of AI accelerator chips, and Super Micro Computers (NASDAQ: SMCI) sells a ton of custom server systems using those chips. As a result, Supermicro's sales growth is trailing slightly behind Nvidia's. In an alternate universe where this was the only builder of AI servers, Supermicro could have shown growth equal to or even greater than Nvidia's.

In this world, Supermicro started this surge from a much lower revenue level than Nvidia, as is currently raising its long-term growth rate faster. Supermicro stands out in the system-building market with a combination of unique cooling solutions and relatively low system prices.

That being said, Supermicro's target market is even more fragmented than Nvidia's. Hewlett Packard Enterprise and Dell sell far more servers than Supermicro, even in the AI server niche. On the upside, this situation gives Supermicro more room to take market share from rivals, outgrowing its peers in the process. On the downside, the HPs and Dells out there won't simply stand back and let Supermicro win.

So this is another challenging growth target. At the same time, Supermicro comes with lofty valuation ratios for this subsector. As such, it's far from my favourite buying idea among AI stocks.

3. Cloudflare: 27.7% estimated CAGR

Finally, network security and performance specialist Cloudflare (NYSE: NET) trails behind Supermicro's revenue growth due to a significant slowdown in the last two years.

Cloudflare isn't a pure-play AI investment, but the company has strong ties to the emerging AI space. You can already buy AI-oriented edge computing services directly from Cloudflare, using its global network of servers and AI accelerators to deliver results near the end user. Its cybersecurity and network acceleration features are also quite valuable for AI service providers. For example, ChatGPT's services always pass through Cloudflare's content delivery and data security tools.

So Cloudflare is a serious AI investment with robust revenue growth. The company is also boosting its AI computing infrastructure over time. Meanwhile, Cloudflare recently revamped its sales department, boosting both its revenue growth per sales agent and operating margin.

The stock is far from cheap, but Cloudflare is perhaps the most convincing long-term growth story on this list. This company is pulling several levers to keep the growth fires burning, and the best chapters of Cloudflare's story may still be unwritten.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post These are the 3 fastest-growing artificial intelligence (AI) US stocks appeared first on The Motley Fool Australia.

While market sell-offs can be brutal, they also open up opportunities to purchase some stocks that were previously trading near uninvestable levels. According to Wall Street analysts, two companies that have come down to that point are Cloudflare (NYSE: NET) and Datadog (NASDAQ: DDOG).

On average, analysts see 57% upside for Cloudflare and 56% for Datadog. That's quite a turnaround in one year, but is it realistic? 

The businesses

First, it's helpful to understand what these two do. Both are rapidly growing tech companies whose valuations reached unsustainable levels in 2021, contributing to their significant decline. To be clear, the businesses are both performing admirably; it was the exuberance of 2021 that caused their terrible stock performance.

Cloudflare's product allows its clients to host websites on its servers, eliminating the need to purchase expensive networking equipment that can quickly become obsolete. Cloudflare's 275-plus data centers in cities worldwide also place the information closer to website users, making the website load incredibly fast. With more than 151,000 paying customers, Cloudflare has a large base of customers that are expanding their use quarterly.

As businesses deploy more cloud solutions, it's becoming harder for IT teams to monitor how all their software solutions function. Datadog's platform solves this issue through its cloud monitoring service, allowing users to see how data flows function and to solve problems quickly when they arise. Datadog's product is more niche than Cloudflare's, but it still has about 21,200 paying customers. 

Although many businesses are tightening their budgets to prepare for an economic downturn, both companies posted solid revenue growth in the second quarter:

Data source: Cloudflare and Datadog. YOY: year-over-year.

These aren't small revenue streams, either; Cloudflare's and Datadog's second-quarter sales were $235 million and $406 million, respectively.

However, no matter how fast a business grows, there is always a reasonable price to pay for it. From a price-to-sales (P/S) standpoint, both companies were too expensive last year.

Data source: YCharts.

Even now, many would contend that 20 times sales is also too expensive. But the bigger picture for these companies is their prospects and growth, making the valuation more palatable.

The road ahead is bright

Both Cloudflare and Datadog operate in massive markets. Datadog believes its market could be $53 billion by 2025, and Cloudflare sees its total addressable market at $135 billion by 2024. While it's impossible for one company to capture an entire market completely, these two have a long way to go before they saturate their market opportunity.

And both companies are teetering on the brink of profitability. In the second quarter, Datadog had a mere $3.1 million in operating losses, and Cloudflare is projecting an operating profit for its full-year 2022. Unlike some tech companies that are laying off part of their workforce even to get remotely close to breaking even, these two are on the brink.

These two factors are significant reasons both stocks still command a premium price. Wall Street also expects these stocks to maintain their valuation; analysts forecast Cloudflare and Datadog to grow their revenues by 36% and 38%, respectively, in 2023. And there is likely further upside beyond that point.

I think both stocks are strong buys because of their massive opportunities, but investors must be committed to holding the stocks for at least three to five years. This will allow investors to wait out market downturns like the one we are in right now. For Datadog and Cloudflare, the best days are still ahead, and investors should take positions accordingly. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Yes, since 4 October, the HACK ETF has put on an impressive 7.27%, including the healthy 1.5% it's managed today so far. That's almost triple the broader market.

So what's gone so right for this ASX ETF?

Why has the BetaShares Global Cybersecurity ETF HACKed such a good month?

Well, to answer that question, let's check out this ETF's top holdings. So the BetaShares Cybersecurity ETF tracks the performance of the Nasdaq Consumer Technology Association Cybersecurity Index. This aims to provide "exposure to the leading companies in the global cybersecurity sector."

So let's check out which companies this ETF's portfolio is currently most heavily invested in, as of 2 November:

1. Palo Alto Networks Inc (NYSE: PANW) with a portfolio weighting of 6.3%
2. Accenture plc (NYSE: ACN) with a weighting of 6.1%
3. Cisco Systems Inc (NASDAQ: CSCO) with a weighting of 5.6%
4. Okta Inc (NASDAQ: OKTA) with a weighting of 5.5%
5. Crowdstrike Holdings Inc (NASDAQ: CRWD) with a weighting of 5.4%
6. Cloudflare Inc (NYSE: NET) with a weighting of 4.5%
7. Tenable Holdings Inc (NASDAQ: TENB) with a weighting of 3.4%
8. Zscaler Inc (NASDAQ: ZS) with a weighting of 3.3%
9. F5 Networks Inc (NASDAQ: FFIV) with a weighting of 3.1%
10. Cyberark Software Ltd (NASDAQ: CYBR) with a weighting of 3.1%

So the shares with the most weighting (and thus influence) in the HACK ETF are Palo Alto, Accenture, Cisco, Okta and Crowdstrike. Together, these companies make up 28.9% of this ETF's portfolio. So let's see how they've performed over the past month.

Since 4 October, Palo Alto shares are up a healthy 8.3%.

Accenture shares are up 13.15%.

Cisco has enjoyed gains of 6.25%.

Okta is up 12.8%.

And Crowdstrike has managed 12.2% in gains.

So with the top shelf of HACK's portfolio enjoying such a successful month, it's perhaps no surprise that this ETF's pricing has commensurately appreciated.

But investors in this ETF might be used to outperformance by now. Since its inception in August 2016, the HACK ETF has averaged an annual gain of 22.47%. Over the past year alone, investors have enjoyed a gain of 39.26%.

The BetaShares Global Cybersecurity ETF charges a management fee of 0.67% per annum.

The post Why has the BetaShares Global Cybersecurity ETF (ASX:HACK) share price leapt 7% in a month? appeared first on The Motley Fool Australia.