These companies hold leadership positions in multiple areas of technology and are well positioned to benefit from industry tailwinds for years to come.
Tech stocks have been on the move this year. Nasdaq Composite IndexIt has grown 13% since January. Investors are excited by the huge potential of artificial intelligence (AI) and its ability to power the entire technology industry. Industries such as cloud computing, chip manufacturing, data centers, autonomous vehicles, and consumer products are all boosted by AI and are likely to continue expanding for years to come.
The technology industry has a strong reputation for delivering consistent profits over the years, making it a great place to start for both stock market beginners and seasoned investors looking for new opportunities. Technology companies tend to benefit from steady demand for hardware and software upgrades, making it rare for the industry to stagnate from year to year.
actual, Nasdaq 100 Technology Sector Despite the COVID-19 pandemic and the market downturn in 2022, the technology index is up 409% over the past decade. Meanwhile, the rise of AI and other industries suggests technology still has a lot to offer new investors in the coming years.
So here are two top tech stocks to buy in 2024 and beyond.
1. Advanced Micro Devices
As a major semiconductor manufacturer, Advanced Micro Devices (AMD 0.09%) AMD holds a powerful position in the technology industry. The company supplies hardware to companies across industries, and its chips are used in custom-built PCs, laptops, cloud platforms, video game consoles, and more. Many of your devices likely use AMD chips, but you might not even know it.
For example, in 2020, AMD became the exclusive supplier of chips for two of the world's most popular gaming consoles. SonyPlayStation 5 and Microsoft's Xbox Series X|S. The companies have sold around 80 million units since the launch of their respective consoles, showing just how profitable this partnership has been for AMD.
But in the last year, the chipmaker's growing presence in AI has been in the spotlight. AMD is challenging it. NVIDIAGraphics processing units (GPUs), the chips needed to build AI models, are a competitive challenge for AMD, which has been in a leading position since it launched its MI300X AI GPU series in December last year, and its efforts appear to be paying off.
In the first quarter of 2024, AMD's revenue grew 2% year over year, beating Wall Street expectations by $20 million. While it wasn't a massive growth, the performance of its major segments shows that the company is moving in the right direction. GPU sales surged during the quarter, and data center segment revenue increased 80% year over year.
Additionally, AMD's client division saw revenue increase by 85% due to increased sales of central processing units (CPUs).
AMD still has a lot of work ahead of it to take market share from Nvidia and expand its AI PC division. But the company is taking a long-term view. Meanwhile, AMD's price-to-earnings ratio has fallen 75% over the past six months, suggesting the stock has actually risen. Given its strong position in the technology sector, AMD stock is worth considering beyond 2024.
2. Amazon
Amazon (AMZN -1.61%) Thanks to its diverse business model, Amazon is undoubtedly one of the most attractive ways to invest in technology. The company is best known for its online retail site, but it has grown into much more over the years. In addition to holding the top market share in e-commerce (by a large margin), Amazon is also the leader in cloud computing with Amazon Web Services (AWS), has expanded into video streaming, groceries, space satellites, and is now all-in on AI.
In fact, Amazon's influence is so great that it now dominates markets it never targeted. For example, it is the largest video game retailer in the country, with 44% market share. GameStop and appleApp Store/Arcade.
Amazon's e-commerce division remains a highly profitable business: In the first quarter of 2024, revenue from its North American and international divisions grew 12% and 10%, respectively, year over year, while operating profit for both retail divisions reached a combined $6 billion, a significant improvement from the $349 million loss it reported a year ago.
But the biggest reason to invest in Amazon is AWS: The cloud platform delivered 17% year-over-year revenue growth and 84% growth in operating profit to more than $9 billion in the first quarter of 2024. AWS gives Amazon a promising role in AI, and the company is gradually expanding its library of AI cloud services and investing in new data centers around the world.
Data by YCharts
Additionally, the chart shows that Amazon has the lowest price-to-sales multiple among its biggest competitors in the technology and AI space. This figure suggests that Amazon stock may be trading at a discount relative to its peers, making 2024 a great time to buy.
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 owns shares of and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Microsoft, and NVIDIA. The Motley Fool recommends long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
