Sarah Travers
As the fall season begins, investors might feel apprehensive about the notorious “October effect,” a historical pattern linked to market crashes like Black Monday in 1987. However, contrary to this belief, October has often been a strong month for stocks. Over the past two decades, the S&P 500 has averaged a 1.4% gain during this month, suggesting that instead of selling, savvy investors might find attractive opportunities to buy. In particular, growth stocks present an enticing option, offering the potential for significant returns even during volatile periods. This October, two tech giants stand out as top growth stock picks: Amazon and Nvidia.
Amazon: Dominating E-Commerce and Cloud Services
Amazon (AMZN) remains a powerhouse in both e-commerce and cloud services, making it one of the most compelling growth stocks to consider this month. With its stock already up 22% year-to-date, analysts predict an additional 18.3% growth over the next 12 months. Amazon’s wide economic moat—created through its network effects, cost advantages, and strong customer loyalty—continues to provide a solid foundation for sustained growth.
Recent financial performance underscores Amazon’s market dominance. In the second quarter of this year, the company saw an 11% year-over-year revenue growth, bringing its total to $148 billion. Amazon Web Services (AWS), its cloud computing segment, was a major contributor, with a 19% increase in revenue. Meanwhile, Amazon’s advertising business grew by 20%, showcasing the company’s expanding reach in multiple sectors.
The company’s profitability has also seen significant improvements. Its Q2 operating profit hit $14.7 billion, with an operating margin of 9.9%, a noticeable jump from 5.7% a year earlier. These gains illustrate Amazon’s ability to efficiently scale its operations while maintaining cost control.
Amazon’s Prime membership program, with millions of loyal subscribers worldwide, further strengthens its competitive edge. Combined with the growth of its advertising business and AWS leadership, the company is well-positioned to maintain its upward trajectory. Despite its premium valuation, trading at 25.5 times its projected 2026 earnings, Amazon’s market leadership and diverse revenue streams make it an attractive stock for those looking to invest in October.
Nvidia: Leading the AI Revolution
Nvidia (NVDA) has emerged as a leader in the artificial intelligence (AI) space, and its stock is riding high on the back of the AI boom. With a staggering 122% stock increase year-to-date, Nvidia is showing no signs of slowing down. Analysts forecast an additional 21.5% upside in the next 12 months, making it another standout growth stock for October.
Nvidia’s recent financial results are nothing short of impressive. In fiscal Q2, the company reported a 122% year-over-year increase in revenue, reaching $30 billion. A significant portion of this growth came from its data-center segment, which includes AI products and solutions. This segment grew by a remarkable 154%, bringing in $26.3 billion in revenue, as demand for Nvidia’s graphics processing units (GPUs) and AI-related hardware skyrocketed.
The company’s dominance in the AI chip market is fueled by its leadership in both hardware and software. Nvidia’s GPUs are the go-to choice for AI model training, while its CUDA platform creates high customer-switching costs, giving the company a strong foothold in the industry. As AI applications continue to expand across industries, Nvidia is positioned to capture a large share of this growing market.
Nvidia’s premium valuation, trading at 28.5 times its projected earnings for fiscal year 2028, reflects the company’s dominant position in the AI chip market. As the demand for AI technology continues to rise, Nvidia is poised to benefit from the exponential growth in AI development, making it a top contender for growth-oriented investors this month.
A Strong October for Growth Stocks
October’s market volatility may create the perfect environment to invest in high-potential growth stocks. Both Amazon and Nvidia are leading their respective industries and showing strong financial performance, making them top picks for investors looking to capitalize on market dips or opportunities this month. While both stocks trade at premium valuations, their dominance in key sectors—e-commerce, cloud services, and AI—positions them well for continued growth in the months and years to come.
Investors willing to navigate October’s market fluctuations could find these stocks to be smart additions to their portfolios. With Amazon’s diversified revenue streams and Nvidia’s leadership in AI, both companies offer the potential for significant returns as they continue to innovate and expand their reach.
