A new year is just around the corner, making it the perfect time for investors to consider what companies are likely to flourish in 2024. The tech market is a great place to start, and is known for rewarding investors with gains over the long term. The Nasdaq-100 Technology Sector index has risen 122% over the last five years, outperforming the broader Nasdaq Composite and S&P 500.
This year, many tech companies have made artificial intelligence (AI) their top priority, and interest in the technology is unlikely to dissipate in 2024. AI has the potential to boost countless industries, from cloud computing to machine learning to consumer products to gaming to healthcare, and more.
AI stocks are an excellent way to invest in tech right now, and they show up in high-growth sectors such as chip development, digital advertising, and cloud computing. Here are three you should consider buying in December.
Nvidia (NASDAQ: NVDA) shares have soared 229% so far this year. The company has massively profited from the boom in AI, which led to a spike in demand for the chips that can effectively power those computationally intensive programs. Nvidia became the primary supplier of graphics processing units (GPUs) to the AI market, paving the way for multiple quarters of impressive growth.
In Nvidia's fiscal 2024 third quarter (which ended Oct. 29), revenue increased by 206% year over year, and operating income climbed by more than 1,600%. That monster growth was due mainly to a 279% rise in data center revenue that was driven by a surge in AI GPU sales. Meanwhile, a recovery in the PC market positively affected Nvidia's gaming segment, which posted revenue gains of 81%.
As a leading chipmaker, Nvidia is an attractive way to invest in tech, as its hardware powers numerous products. Along with AI, the company has roles in cloud computing, game consoles, PCs, virtual reality, and more. Nvidia's stock is an attractive long-term investment.
2. Advanced Micro Devices
Like Nvidia, Advanced Micro Devices (NASDAQ: AMD) manufactures a variety of chips that allow it to profit from developments across multiple areas of tech. The company's hardware can be found powering popular devices such as video game consoles, laptops, PCs, and virtual reality headsets.
You might be wondering why I'm suggesting investment in more than one chip stock. While Nvidia is attractive thanks to its spot at the top of the AI chip business, AMD is a buy for its less mature venture into the market. The company could have more room to grow as it prepares for an exciting product launch in 2024.
AMD is gearing up to release the next installment in its MI300 series of chips, which it has described as its most powerful GPU ever. The new chip, expected to come out next year, is designed to compete head-to-head with Nvidia's AI offerings. Considering the monster growth in revenue Nvidia has experienced this year, AMD could be in for a lucrative 2024.
AMD shares have increased by 483% over the past five years, but could rise even higher over the next half-decade as the company expands its footprint in AI.
As the owner of popular brands such as Google, YouTube, and Android, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) has a powerful position in tech. The company has nine products with over a billion users each, which provides it with almost endless opportunities to sell advertising space. The digital advertising market is forecast to hit $680 billion this year, with Alphabet responsible for about 25% of that.
In Q3, Alphabet's revenue grew 11% year over year to $69.1 billion, beating Wall Street's consensus expectation by $980 million. The rise was mainly thanks to gains in its advertising segments: Google Search revenue increased by 11% and YouTube Ads sales grew by 12%.
Alphabet has heavily invested in AI over the last year, and plans to release its highly anticipated large language model, Gemini, in 2024. Alphabet could see a boost to earnings as it deploys AI upgrades across its product lineup, offering better pinpointed advertising, introducing new AI tools on Google Cloud, and making Google Search closer to ChatGPT.
Alphabet's price-to-earnings ratio has declined by 37% over the last five years and currently sits at 26. That is significantly lower than the earnings ratios sported by Amazon or Microsoft, its biggest cloud infrastructure competitors. As a result, Amazon's stock is one of the best values in tech right now, making it a screaming buy in December.
10 stocks we like better than Nvidia
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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, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
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