The American capitalistic system has its fair share of negative headlines these days—and some of them for good reason. Since 2019, prices in the United States have risen by a staggering +31%.
In other words, the rise in day-to-day expenses is making it more difficult for the average American to get by. Inflation over the past decade has been driven by a burst of government spending from both sides of the political aisle in Washington. For instance, the Biden Administration passed a $1.9 trillion COVID-19 pandemic relief package in March 2021 while the Trump Administration’s “One Big Beautiful Bill Act” is projected to increase net federal spending by $1.2 trillion over a 10-year period.
Meanwhile, the wealth gap in America has reached its widest margin in over three decades. Federal Reserve data shows the top 1% of households own roughly 31.7% of all U.S. wealth—totaling around $55 trillion—which is equal to the combined wealth of the entire bottom 90% of Americans.
The Golden Goose of Capitalism
“The bottom 2% in terms of income in the United States, the bottom 5%, and for sure the top 1% all live better than John D. Rockefeller was living when I was six years old. John D. Rockefeller was the richest man in the world.” ~ Warren Buffett
Though the capitalist system in the U.S. is imperfect and sometimes controversial, it has undoubtedly produced the world’s most robust stock market and raised the standard of living for those who participate. "Golden Goose of Capitalism" refers to the economic system's ability to generate wealth and prosperity through innovation, entrepreneurship, and free-market dynamics. Straightforward ideas, such as an emphasis on competition and market-driven innovation are why rags-to-riches stories are so prevalent. For these reasons, the best entrepreneurs in the world flock to the States to start businesses, and it is still the center of commerce. Think about it: Tesla CEO Elon Musk was born in South Africa, Advanced Micro Devices CEO Lisa Su was born in Taiwan, and former Apple CEO Steve Jobs was born to Syrian parents.
At age 9, Jensen Huang moved to the United States despite not speaking English fluently. By age 15, Huang landed his first job working the graveyard shift at a local Denny’s restaurant as a dishwasher. Today, Huang is the CEO of NVIDIA (NVDA), the largest company on Earth.
Lessons From NVIDIA
Although Huang’s story is inspiring to most of us, it simply isn’t realistic that you or I can replicate building an advanced semiconductor company. However, I am sharing NVIDIA’s story to make a point. That is, you don’t need to be a technologist to make generational wealth. NVIDIA has created a staggering 27,000 millionaires, or roughly 75% of employees.
Meanwhile, NVIDIA is not the only example of how owning a growing tech company changed lives. David Choe, a Korean-American graffiti artist and muralist, was hired by Facebook’s then-president Sean Parker in 2005 to paint the wall of the company’s Palo Alto headquarters. Instead of taking $60k in cash, Choe opted to take Facebook stock. Today, his Facebook stock is worth a staggering $200 million. Most recently, Juan Hernandez became a millionaire after SpaceX (SPCX) went public in 2026. Hernandez immigrated from Mexico and took an hourly welding job at SpaceX paying $28/hour. His 6,500 shares of SPCX exploded in value when the company went public.
The Greatest Wealth Building Machine on Earth
The success stories above are no accident and are not uncommon in America. The U.S. stock market is an unparalleled wealth-building machine, offering investors like you and me a unique avenue for financial growth. Its dynamic nature, spanning a diverse range of industries and companies, offers ample opportunities for individuals to participate in the growth of successful businesses.
U.S Stocks Rise Over Time
Just take a minute to think about and look back at the history of U.S. equities. Our equity markets have endured multiple "Black Swan" events in just the past quarter century, including the internet bubble burst of 2000, the global financial and housing crisis of 2008, and the COVID-19 crash of 2020. Throughout the market's long history, the economy and stock market have rewarded patient and strategic investors. Moreover, the market's liquidity, transparency, and regulatory framework contribute to its status as a reliable wealth-building engine.
Did you know that if you invested $10,000 in the S&P 500 Index in 1988, it would be worth more than $675,000 today?
Finding the Best Growth Stocks
If you had taken that same $10,000 and put it into the Zacks system, with rebalancing at each period and not counting fees, it could have skyrocketed to $39.2 million! That’s because the Zacks Investment Research system not only benefits from the long-term compounding of the stock market, but it also finds the fastest-growing companies within the market, filtered by its mathematical and quantitative stock-rating model based on earnings estimate revisions.
The Tech Sector Provides the Best Opportunities
If you study the NVIDIA, Facebook, and SpaceX examples, you will see that they each have one thing in common—they are technology companies. While technology stocks are not the only ones that can produce life-changing gains, they are the most prevalent. Game-changing innovations and technological breakthroughs produce earnings growth, and earnings growth produces stock market winners.
More . . .
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The best part about investing in technology stocks is that you don’t need to be a technologist or the first to understand the technology to profit from it. Instead, you need to be perceptive. For instance, Apple (AAPL) launched the first iPhone in June 2007. Obviously, the iPhone was a massive product in hindsight. Nevertheless, even if you invested in Apple 10-years later, you still would have multiplied your investment by 10X! In other words, big technological breakthroughs produce years of compounding.
The Beauty of Asymmetric Risk Reward
Of course, not all stocks will be the next Apple or NVIDIA. The good news is that they don’t have to be. Paul Tudor Jones taught me that if you manage your risk by running your winners and cutting your losers, it’s hard not to find success over time:
“5:1 (risk/reward). Five to one means I’m risking one dollar to make five. What five-to-one does is allow you to have a hit ratio of 20%. I can actually be a complete imbecile. I can be wrong 80% of the time, and I’m still not going to lose.”
For more than two decades, I have combined technical analysis, fundamental analysis, and the Zacks Rank system to give me every advantage possible in finding the next winning tech stock. Today, I use that knowledge and experience to manage Zacks Technology Innovators. As you have learned from my early discourse, America has a way of producing these winners over and over again, and I hope to help you find them.
Top Market Moves to Watch Right Now
One of the strongest trends in the market is the resurgence of the tech sector. And it’s no surprise that the rapid expansion of Artificial Intelligence is driving a lot of the momentum in the sector.
This trend could be extremely lucrative for both shorter-term traders and long-term investors, even with the market reaching record highs.
Today, I invite you to look inside the portfolio I'm managing, Zacks Technology Innovators.
While not all our picks are winners, recent recommendations have led investors to gains of +120.7%, +140.5% and +153.0%.¹
And we’re expecting more outsized gains in the months ahead.
In fact, I'm about to add a stock to the portfolio that has exceptional upside.
While investors chase the biggest names in AI, this company has spent years building a business model designed to scale alongside the industry's biggest trends. With strong recurring revenue, expanding profitability, and a new catalyst just beginning to unfold, it may be entering its next major growth phase.
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All the Best,
Andrew Rocco
Andrew is Zacks' technology stock strategist. His passion is making money on stocks and providing education with valuable insights from both a fundamental and technical perspective. He invites you to explore his Technology Innovators portfolio.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.
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This article originally published on Zacks Investment Research (zacks.com).
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