Growth stocks are shares of companies that are expected to increase their revenue and earnings at a faster rate than the overall market. These companies typically reinvest their profits back into the business rather than paying dividends, focusing on expansion, innovation, and market share.
Technology companies like Amazon, Tesla, and Google are classic examples of growth stocks. Investors buy growth stocks with the expectation that the stock price will appreciate significantly over time as the company grows.
While growth stocks offer the potential for high returns, they also carry higher risk. If a company fails to meet growth expectations, its stock price can decline sharply. Growth investing requires patience, thorough research, and a willingness to accept short-term volatility for long-term gains.