3 Exceptional Growth Stocks You’ll Wish You’d Invested In During the Nasdaq Stock Pullback

In the span of about three weeks, Wall Street has shown investors that stocks can just as easily decline as they can soar.

While the benchmark S&P 500 experienced its ninth-largest single-day drop on Monday, March 10, the growth stock-driven Nasdaq Composite (^IXIC -1.04%) has been at the forefront of this downturn. The Nasdaq lost 728 points on Monday, marking its third-largest daily point drop since its inception in February 1971. Over 13 trading sessions, the Nasdaq Composite has retracted by almost 13%.

Although fear and uncertainty are common feelings among investors when stocks drop sharply, market corrections historically offer an excellent time to invest in Wall Street. With the Nasdaq Composite firmly in correction territory and facing significant volatility, here are three exceptional growth stocks you won’t want to miss buying during this dip.

The Trade Desk

The first remarkable growth stock that’s been significantly impacted during the Nasdaq correction and is ripe for purchasing by savvy long-term investors is the cloud-based adtech titan The Trade Desk (TTD -5.22%). The company’s shares have plummeted 57% since reaching an all-time high in the fourth quarter.

The Trade Desk is currently facing a bit of a double bind. Primarily, investors have been disappointed with its fourth-quarter operating results and guidance for the quarter ending March. Despite achieving a 22% sales growth in the fourth quarter, revenue came in about $17 million below expectations.

Another concern for The Trade Desk is the Federal Reserve Bank of Atlanta’s GDPNow forecast predicting a 2.4% contraction in U.S. gross domestic product in the first quarter. The advertising sector is extremely cyclical, and companies often significantly reduce ad spending at the first sign of trouble. Even if the U.S. economy doesn’t dip into recession, the fear of economic instability can negatively impact ad expenditures.

While both of these headwinds are real and help to clarify why The Trade Desk stock has been struggling, neither has changed the company’s strong position as a demand-side digital advertising platform.

Particularly, the widespread adoption of the company’s Unified ID 2.0 (UID2) technology, which operates without third-party cookies but effectively targets consumers with relevant messaging, is noteworthy. UID2 is expected to play a crucial role in reaching larger audiences on connected TV (CTV). As consumers move away from traditional cable to streaming services, The Trade Desk’s technology and demand-side ad platform will become increasingly significant.

Furthermore, The Trade Desk benefits from the non-linearity inherent in economic cycles. While downturns in the U.S. economy and advertising spending are unavoidable, there’s a stark contrast between recessions and expansions. On average, recessions have lasted just 10 months since the end of World War II, while periods of economic expansion have typically lasted around five years. Betting on a rise in ad spending over time — especially on CTV and within digital advertising — is a seemingly foolproof strategy.

Additionally, The Trade Desk’s valuation presents an attractive opportunity. The 57% drop in its value has brought its forward price-to-earnings (P/E) ratio down to below 28. Given its continued sales growth rate of approximately 20%, it now represents a great bargain.

Alphabet

Among the “Magnificent Seven” stocks that have significantly influenced the decline of the Nasdaq Composite in recent weeks, Alphabet (GOOGL -2.57%) (GOOG -2.45%) stands out as potentially the best value. Alphabet is the parent company of the widely-used search engine Google, the streaming platform YouTube, and the cloud service Google Cloud, along with various other ventures.

Like The Trade Desk, Alphabet’s stock is under pressure due to concerns about a slowing U.S. economy. Including Google, YouTube, and Google Network, 75% of its $96.5 billion in fourth-quarter revenue comes from advertising. If businesses grow wary of the U.S. or global economy, it could directly impact Alphabet’s main source of income.

Another point of concern is how the Trump administration plans to regulate large-tech firms. The U.S. Department of Justice has suggested breaking up Alphabet, which would entail the company divesting its flagship search engine, Google.

Once again, though these challenges are capturing headlines right now, they haven’t altered the company’s overall long-term growth outlook.

Alphabet’s core strength remains its advertising platforms. Despite facing significant competition, Google has maintained an impressive 89% to 93% monthly share of global internet search over the past decade. Extended periods of economic growth indicate that Google’s pricing power in advertising is likely to remain robust.

However, what’s particularly exciting about Alphabet is its cloud infrastructure, Google Cloud. Tech firm Canalys estimates that Google Cloud has captured an 11% share of global cloud service expenditures as of the fourth quarter. This is promising, especially considering that businesses are still early in increasing their cloud spending and integrating artificial intelligence (AI). Google Cloud is a higher-margin segment that will be a key driver of cash flow in the latter half of the decade.

Although the stock market is generally expensive, the recent decline in Alphabet’s stock has reduced its forward P/E ratio to just 16, which is a 28% discount compared to its average forward-year earnings multiple over the last five years.

Intuitive Surgical

The third exceptional growth stock you’ll regret not purchasing during the Nasdaq correction is Intuitive Surgical (ISRG -2.74%). Intuitive Surgical’s shares have fallen nearly 21% since the Nasdaq downturn began three weeks ago.

Valuation is often the most significant factor affecting the company’s stock performance. Just three weeks ago, its trailing twelve-month P/E ratio hovered around 90. When market corrections occur, stocks with inflated valuations are typically the most severely impacted.

Another prevailing worry arises from President Donald Trump’s imposition of tariffs. During the company’s fourth-quarter conference call, Chief Financial Officer Jamie Samath stated, “A significant portion of our instruments are currently manufactured in Mexico.” With the introduction of a 25% tariff on select imports from Mexico, there’s potential for these tariffs to erode Intuitive Surgical’s margins, unless the company opts to raise prices for its da Vinci surgical systems.

However, these challenges are temporary and do not diminish the company’s undeniable competitive advantages.

Intuitive Surgical commands the majority of the market for robotic-assisted surgical systems. The high price of its da Vinci systems, along with the extensive training required for surgeons to operate these systems, results in long-term customer loyalty to Intuitive Surgical.

Arguably even more vital for Intuitive Surgical is its evolving revenue composition, which has steadily become more favorable over time. Decades ago, most of its revenue came from selling its expensive, yet costly-to-manufacture, da Vinci surgical systems. Over time, higher-margin revenue sources, such as surgical instruments sold per procedure and system servicing, have started to account for the majority of the company’s net sales.

Intuitive Surgical has a significant growth trajectory ahead in thoracic and soft tissue surgeries. With a strong competitive moat and robust pricing power, it promises a sustainable annual growth rate of 15% for the foreseeable future.