Tech stocks have risen sharply in the last year Nasdaq-100 The technology sector index is up 48% since April last year. Companies across the industry have benefited from the artificial intelligence (AI) boom, which has boosted countless tech stocks.
AI has the potential to empower sectors across technology, such as consumer products, cloud computing, video games, autonomous vehicles, machine learning, and more. The AI market reached nearly $200 billion last year and is expected to grow at a compound annual growth rate of 37% through 2030.
So now is an excellent time to dedicate more of your portfolio to technology and potentially reap big gains in the coming years as AI expands and reaches more areas of the industry.
Here are two high-growth tech stocks to buy in 2024 and beyond.
1. Intel
Intel (NASDAQ:INTC) has been a major player in the technology industry since its founding 55 years ago. As a leading chip manufacturer, the company has supplied its hardware to all sectors of the industry, including customized gaming PCs, Microsoft‘s Windows computer, Apple‘S (NASDAQ:AAPL) Mac product range, cloud platforms and more.
But Intel has repeatedly faced challenges in recent years. Its stock has fallen about 48% over the past three years following a decline in central processing unit (CPU) market share and the end of a more than decade-long partnership with Apple.
As a result, the company has made major structural changes to its business model that could pay dividends in 2024 and beyond. Last June, Intel announced a “fundamental shift” in its business, introducing an internal foundry model that it believes will help it save $10 billion by 2025. This change would result in a similar model being adopted Taiwan semiconductor manufacturingand is becoming a major provider of foundry capacity in North America and Europe.
Additionally, Intel is getting into AI. In December 2023, the company unveiled a range of AI chips, including Gaudi3, a graphics processing unit (GPU) designed to challenge similar offerings from the market leader Nvidia. The company also introduced new Core Ultra processors and Xeon server chips that feature neural processing units to run AI programs more efficiently.
Chip stocks are among the best ways to invest in technology. With almost all areas of the industry increasingly requiring more powerful hardware, demand is unlikely to slow down any time soon. And the chart above shows that Intel is one of the best valued chip stocks.
Compared to its two largest competitors Nvidia and Nvidia, the company has the lowest forward price-to-earnings (P/E) and price-to-sales (P/E) ratios modern micro devices. With promising changes to its business model and a growing position in AI, Intel stock is a sure-fire success this year.
2. Apple
It hasn’t been easy being an Apple investor this year, with shares of the company down 8% since January 1st.
Macroeconomic headwinds hit the company in 2023, resulting in four consecutive quarters of revenue declines. The winning streak was finally broken in the first quarter of 2024, with revenue growing 2% year over year to $120 billion, beating Wall Street forecasts by more than $1 billion.
But beating estimates wasn’t enough to assuage investor concerns about Apple’s other businesses. In the first quarter of 2024, the iPhone division recorded a 6% increase in overall sales, but in China they fell by 13%. This country is increasingly favoring domestic brands over the iPhone, threatening business in Apple’s third-largest market.
But like Intel, Apple is making big changes to its business. The company’s stock rose 4% on April 11, marking its best performance in nearly a year. The rally came after a Bloomberg report revealed that the company will revamp its Mac computer lineup to focus on AI.
Apple dominates consumer technology and commands leading market share in most of its product categories. Consumers’ tremendous brand loyalty could lead the company to become a key growth driver in the public’s acceptance of AI and carve out a lucrative position in the market. Therefore, the news that future products will have a greater focus on generative technology is promising.
Additionally, despite recent headwinds, Apple’s free cash flow reached $107 billion last year, significantly more than competitors like Microsoft, Amazonor alphabet. The number shows that Apple has the financial resources to continue investing in its business and overcoming recurring challenges.
High free cash flow has also made Apple one of the best-valued stocks in Big Tech. The chart above shows that the company has the lowest price-to-free cash flow ratio and one of the lowest P/E ratios compared to many of its peers.
The company has a reputation for providing investors with significant and consistent returns over the long term. I wouldn’t bet against Apple continuing this trend over the next decade, and the company’s stock is worth considering right now.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Microsoft, Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long January 2023 calls above $57.50 on Intel, long January 2025 calls above $45 on Intel, long January 2026 calls above $395 on Microsoft, short January 2026 $405 calls on Microsoft and May 2024 short $47 calls on Intel. The Motley Fool has a disclosure policy.
“2 Hypergrowth Tech Stocks to Buy in 2024 and Beyond” was originally published by The Motley Fool