Tech stocks have scored a major win in 2024, posting the best results on the S&P 500 and the Dow Jones Industrial Average. The biggest winners in each were Palantir Technologies and NVIDIA (NASDAQ: NVDA)respectively, thanks to the rise of artificial intelligence (AI). Investors are excited about technology’s potential to make businesses more efficient and even produce revolutionary products.
And the good news is that the growth of AI may be far from over. The current $200 billion market may reach $1 trillion by the end of the decade, according to analysts’ forecasts. This means AI stocks should continue to deliver growth going forward, making now a great time to buy. I generally prefer stocks that are not only present in AI, but also have a proven track record of growth that extends to other areas so that they are not dependent on a single industry or specialty.
If you have $50,000 to spread across several stocks, the four stocks I talk about below look like fantastic buys right now. And if you don’t have $50,000, there’s no reason to worry. You can also purchase these shares with a much smaller amount. If you haven’t diversified your portfolio across industries, you’ll want to limit your technology investment to part of $50,000 and use the rest to buy quality stocks in other sectors.
Diversification is important because it can reduce risk; If one industry or stock disappoints, others could make up for it. Well, it’s time to discover these top stocks to pick up now.
Image source: Getty Images.
Metaplatforms(NASDAQ: META) is investing heavily in AI, making it even the biggest investment area of 2024. But you probably know this company best for something else: social media apps.
As the owner of Facebook, Messenger, WhatsApp, and Instagram, Meta has generated billions of dollars in revenue and profits over time thanks to its dominance in the industry. This has been done through advertising, with advertisers flocking to Meta to reach us, the target audience, because they know they will find us on these popular apps.
So, Meta established itself as a social media giant before focusing on AI. Now, however, AI could offer the company the opportunity to boost growth. Meta aims to develop AI assistants that suit all of its users, which could push us to spend more time on apps and advertisers to spend more to reach us.
Today, Meta stock is particularly interesting because, at just 27 times forward earnings estimates, it is quite reasonably priced for a company with a strong earnings history and the potential to enter a new era of growth thanks to the AI.
Alphabet(NASDAQ:GOOG)(NASDAQ:GOOGL) is similar to Meta in regards to its revenue model and current low valuation. The company, which owns search leader Google, makes most of its revenue through advertising. Advertisers know we spend a lot of time on Google, so they want to get there. Alphabet uses AI to improve search and help its advertisers create better targeted campaigns.
Alphabet also operates another business that is showing strong growth: Google Cloud. This year, Google Cloud reached milestones of $10 billion in quarterly revenue and more than $1 billion in quarterly operating profit, thanks to its wide range of AI products and services for cloud customers.
So for these solid businesses, Alphabet looks like a bargain right now, trading for just 24 times forward earnings estimates. (It’s important to note that the company is going through an antitrust trial, but I wouldn’t let that stop me from buying this market leader, as it will clearly put up a strong fight to maintain its position.)
Amazon(NASDAQ:AMZN) you’re an AI user and marketer, something that could set you up for a big profit over time. The company uses AI to improve efficiency in its e-commerce business, from managing inventory and package delivery to offering customers purchasing assistance. Through its cloud computing business Amazon Web Services (AWS), it sells a wide range of artificial intelligence products and services. In fact, thanks to this focus on AI, AWS recently reached an annualized revenue rate of $110 billion.
Before the rise of AI, Amazon had already built leading businesses in e-commerce and cloud computing, which have helped the company generate billions of dollars in profit growth over time. In recent years, Amazon revamped its cost structure, a move that, along with AI, could drive growth in the coming years.
Today, Amazon stock trades at 44 times forward earnings estimates. This is not very cheap, but it is a reasonable price, considering the company’s track record and its bright future prospects.
Nvidia is often thought of as an artificial intelligence company, but this chip designer actually relied on sales in the video game market long before the rise of artificial intelligence. And it remains a strong player in that market, with gaming revenue increasing 15% to more than $3 billion in the latest quarter.
That said, data center revenue of $30 billion in the quarter shows us that today, client AI is driving revenue at Nvidia. Considering Nvidia’s commitment to innovation to stay ahead and the overall AI market forecast I mentioned above, I don’t mind that this particular company is so reliant on AI. Nvidia is likely to continue generating impressive growth for quite some time.
Nvidia is currently ramping up production of its new Blackwell architecture, an in-demand platform that could drive revenue growth next year and also share performance. Nvidia is also very profitable in sales, with a gross margin exceeding 70%. This strength means that even trading for 46 times forward earnings estimates, Nvidia looks like one of the top AI stocks to buy now.
Have you ever felt like you missed the boat when buying the hottest stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double bet” actions recommendation for companies that believe they are about to explode. If you’re worried you’ve missed an opportunity to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
NVIDIA:If you invested $1,000 when we doubled down in 2009,you would have $348,112!*
Apple: If you invested $1,000 when we doubled down in 2008, you would have $46,992!*
netflix: If you invested $1,000 when we doubled down in 2004, you would have $495,539!*
Right now, we are issuing “double bet” alerts for three incredible companies and there may not be another opportunity like this anytime soon.
See 3 “double bet” actions »
*Stock Advisor returns from December 9, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool ranks and recommends Alphabet, Amazon, Meta Platforms, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
The Best Stocks to Invest $50,000 in Right Now was originally published by The Motley Fool
