Companies with potentially large future growth prospects are referred to as growth stocks because investors anticipate that their share prices will rise significantly faster than the markets’ forecasted growth rate due to their future potential. Growth shares are typically smaller firms that are generating a lot of hype; they can be creating a ground-breaking new product or service, or they might be intimately associated with new global trends like decarbonization or artificial intelligence (AI).

Tech firms make up a large portion of ASX growth shares as products and services that were virtually unthinkable just a few decades ago are increasingly common due to rapid advancements in technology such as smartphones, streaming services, and cryptocurrency. Because of the fast pace at which innovations are advancing, tech start-ups can go viral overnight, making their investors extremely wealthy and causing fear of missing out. But growth stocks don't have to be tech shares only; small or emerging mining businesses frequently enjoy quick price increases when they discover sizable new resources, and even the odd retail stock can see rapid rises when it enters a potentially lucrative new market. 

But keep in mind that growth stocks carry greater risk than other stocks in the ASX. They are regarded as risky bets, and not all of them will be profitable. Thus, take on only as much danger as you can bear.

Investing in growth stocks is good both for diversification and returns, even if there is some risk involved. Fortunately, there are lots of options for us ASX investors to select from. In this article, we present three ASX growth stocks worth investing $5000 in. 

1. Audinate Group Ltd (ASX: AD8)

Audinate shares have been performing very well over the past 12 months where its share price has risen by over 65%, despite a 30% drop from a 52-week high of $23.51 back in March. The rise in its share price is driven by strong financial performance with  US dollar revenues for 2023 growing 40% to $46.7 million driving a net profit before tax of AU $1.4 million up from a loss of $4.4 million in the prior period (i.e. 2022). 

Audinate specialises in audiovisual (AV) technology and its flagship product is called Dante, which replaces old-school analogue cable AV connections with a digital computer network and has made it a market leader. It has a large variety of applications, from corporate office buildings, broadcast media, and even churches and other places of worship.

2. Light & Wonder Inc. CDI (ASX: LNW)

Headquartered in Las Vegas, Light & Wonder is a growing gaming company that specialises in poker machines, online casino games, and what it calls 'social games' – essentially mobile and web casino games where you don't play for real money or prizes. In the last year, its share price has risen by 47.8%, driven by its double-digit revenue growth across all our businesses. 

It's impressive that its share price has risen by almost 50% in the last 12 months, well above established rivals such as rival Aristocrat Leisure Limited (ASX: ALL).  Quarterly revenue for the 3 months ended 31 March 2024 was up 13% versus the prior comparative period to US$756 million. This revenue uplift – combined with lower depreciation and amortisation expenses – led to a staggering 273% jump in net profit (to US$82 million for the quarter).  This is the type of stock you may want to invest in and ride out any structural or financial storms. 

3. Nextdc Ltd (ASX: NXT)

Despite being well-established as an ASX technology firm, Nextdc is still a worthwhile addition to this list because it still has a lot of growth potential. Data centres are run by Nextdc both domestically in Australia and abroad in Malaysia, Japan, and New Zealand. Considering how much of our time is spent online these days, this huge portfolio is an indicator of the always-expanding tech sector and the need to keep all usable data somewhere. Not only has its revenue been growing at an average of 18%, but it is forecast to generate around $1.1 billion in net profit in 2024, giving it a return on assets of just 3.7%. Next still has a strong high street presence though, which is holding up well and this will boost its prospects over the near term. 

In the current environment of high interest rates and high inflation, you may be wondering which ASX stocks to invest $5,000 in. These three stocks have strong growth potential and all trade on the Australian Stock Exchange. Judging by their performance over the last two years, these stocks are set to perform well and although we can not guarantee their return, they have displayed strong growth prospects.