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Scottish Mortgage Investment Trust holds around 95 growth stocks. While some of these are private holdings that could theoretically go under, adding risk, there are plenty of listed stocks that I think will drive value over the next five years.
Here are two of them.
Let’s start with the largest, namely Instagram and Facebook owner Meta Platforms (NASDAQ: META). Shares of the social media giant have rocketed 327% over the past three years, pushing the market cap up to a meaty $1.76trn.
Fears that TikTok would eat into Meta’s market share appear to have been misplaced. In the first quarter (Q1), the company reported a mind-boggling 3.43bn daily active people across its family of apps.
Even if some of those are bots, that’s still A LOT of people. And advertisers are forking out to tap into Meta’s massive user base. Ad impressions were up 5% in Q1, while the average price per ad grew 10%. This means advertisers are paying more per ad, on average, to reach users.
Naturally, a recession could cause a sharp fall in ad spend. Meanwhile, Chinese firms like Temu have already been pulling back on ad spending as high US tariffs and changes in shipping rules bite.
Despite this, I’m confident about Meta’s ability to use artificial intelligence (AI) to cement its dominance and become even more profitable. The company is using machine learning to serve better ads, recommend content, and ramp up user stickiness.
This is already bearing fruit. Last year, users spent 8% longer on Facebook on average as a result of AI-driven content recommendations.
By the end of 2026, the firm plans to offer fully automated ad creation and placement tools. Advertisers will just need to supply an image or URL and a budget, and Meta’s generative AI will handle the rest. It’s also monetising WhatsApp with ads.
The stock is trading at 25 times next year’s forecast earnings, falling to 22 times by 2027. At this valuation, I think Meta offers profitable growth at a reasonable price.
Roblox
Next is gaming platform Roblox (NYSE: RBLX). It reported nearly 100m average daily active users in Q1, up 26% year on year. Hours engaged were 21.7bn, up 30%!
Roblox stock has surged 74% this year, giving it a $68bn market cap.
A key risk with the firm is its lack of profitability. The Q1 operating loss was £255m on revenue of $1bn.
However, Roblox reminds me of a mini-Netflix, where content is theoretically unlimited and the advertising opportunity is vast. Unlike Netflix though, it doesn’t make any of its own content. Developers do through Roblox Studios, its game creation platform.
One massive recent hit is Grow a Garden, a farming simulator where players plant seeds and grow crops. It has attracted 8.2bn visits so far!
My young daughter recently said that all she wants for her next birthday is loads of Robux (the platform’s digital currency). While I laughed this off, it did strike home how powerful this company is becoming.
Roblox is continuing to attract older players, and aims for 1bn users long term. The stock is currently pricey, but I think it could still help generate solid long-term returns for Scottish Mortgage shareholders.
Stepping back, I’m bullish on Scottish Mortgage stock too, and think it’s worth considering.
