Investing in the Future: Two Tech Stocks to Watch in the AI Era
For many, $50,000 is a substantial amount, enough to purchase a decent car. However, investing that money could yield far greater returns over time.
When considering investment opportunities, technology stocks are often the top choice for long-term investors. Amid the rapid advancements in technology, particularly in artificial intelligence (AI), these companies have led the market in growth.
Nvidia: The AI Hardware Leader
No company has benefited from AI as much as Nvidia (NASDAQ: NVDA). Its graphics processing units (GPUs) have become essential for building AI infrastructure, with demand for its latest Blackwell chips described as “insane.”
With over 80% market share in the GPU sector, Nvidia’s success stems from its chips’ performance and its CUDA software platform. Even before AI surged in popularity, CUDA had established itself as the go-to platform for GPU programming, creating significant competitive advantages.
Currently, major technology firms are heavily investing in AI infrastructure, leading to a continued need for Nvidia’s computing power. For instance, Alphabet‘s new Llama 4 large language model (LLM) requires ten times the computing power of its predecessor, and xAI’s Grok 3 LLM has utilized five times more GPUs than Grok 2. Such investments in AI are expected to keep rising, with Oracle projecting continuous growth in spending over the next five to ten years, further benefiting Nvidia.
Despite its exceptional performance, Nvidia’s stock remains reasonably priced, trading at a forward price-to-earnings (P/E) ratio below 35 and a price/earnings-to-growth (PEG) ratio around 0.9—generally seen as undervalued compared to growth stocks.
Image source: Getty Images.
Microsoft: A Key Player in AI Software
Microsoft (NASDAQ: MSFT) also stands out in the AI arena after it made a substantial investment and partnership with OpenAI, positioning itself strategically in the industry.
The company’s Azure cloud computing division has been particularly successful as organizations increasingly rely on its platform to develop AI solutions. This model charges users based solely on resource consumption, resulting in strong growth—Azure’s revenue has increased approximately 29% to 30% over recent quarters.
Besides Azure, Microsoft’s GitHub platform has gained popularity as developers use its AI assistant, Copilot, to enhance their programming efficiency.
Looking ahead, Microsoft sees significant potential in its Microsoft 365 Copilot. This feature will allow users to interact with AI in Microsoft 365 applications like Excel and Word using natural language, simplifying processes such as data analysis and presentation creation.
With Microsoft 365 Copilot priced at $30 a month per user, this product could represent a major growth opportunity, as it costs more than many of its existing subscriptions. Users must hold a separate license for qualifying plans that range from $4.75 to $22 per month, depending on the services included.
Microsoft’s adaptability and innovative spirit have solidified its status as one of the world’s largest companies, making it a promising investment in the AI sector.
Investment Opportunities Await
Feel like you’ve missed out on investing in the biggest winners? Opportunities may still be out there.
Our analysts issue special recommendations called “Double Down” stocks, highlighting companies with strong potential for growth. Consider the following returns:
- Amazon: If you invested $1,000 when we recommended it in 2010, you’d have $21,121!
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- Netflix: A $1,000 investment from our 2004 recommendation would now be worth $370,844!
Our current “Double Down” alerts signal three exceptional companies that might provide another chance for investors.
See 3 “Double Down” stocks »
*Stock Advisor returns as of October 14, 2024
Suzanne Frey, an executive at Alphabet, serves on The Motley Fool’s board of directors. Geoffrey Seiler holds positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. For more information, see The Motley Fool’s disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
