The S&P 500 Index has been well received by investors, rising 52% since hitting its most recent low in October 2022. There are many factors driving the bull market, but the biggest one is excitement about tech stocks.
Advancements in markets such as artificial intelligence (AI), cloud computing, self-driving cars, and virtual/augmented reality signal major changes in the technology industry that could mean a lucrative future for the companies involved.
Many of the technology industry's most prominent companies have a reputation for delivering big profits over the long term, giving patient shareholders the chance to become millionaires with the right investment. Many areas of technology still appear to be in their infancy, so now may be a great time to invest and profit from market developments.
So here are the top two tech stocks that can make you a millionaire.
1. Nvidia: Hardware leads the tech industry
Nvidia (NASDAQ: NVDA) has seen impressive growth since the start of 2023, with its stock price up 828%. This success has seen the company surpass Microsoft (NASDAQ: MSFT) and Apple to become the world's most valuable company with a market capitalization of over $3.3 trillion. The chipmaker has undoubtedly created many billionaires on its way to the top spot, and it shows no signs of slowing down. This means it's not too late to make a long-term investment in Nvidia.
For many years, Nvidia has been best known for its role in the video game market, and its graphics processing units (GPUs) have been the go-to for millions of consumers building custom powerful gaming PCs. While the company is still very active in the gaming space, the focus has shifted to Nvidia's efforts in AI.
NVDA Revenues (Quarterly) Chart
Advances in generative technology spurred the need for high-performance GPU chips that could handle the intense workloads required to train AI models, and as the GPU giant, Nvidia was in a position to quickly supply chips to AI developers around the world, causing its revenue to soar.
Despite increased competition, Nvidia has maintained an estimated 80% market share in AI chips, indicating it has significant growth potential as the sector develops.
In addition to AI, Nvidia also supplies chips for gaming consoles, self-driving cars, cloud platforms, and more. The chipmaker has growth catalysts across technology that will likely continue to benefit investors for years to come. Despite its recent growth, Nvidia's price-to-earnings growth ratio remains below 1, indicating the company's stock is valuable and worth buying this month.
2. Microsoft: Bringing AI to Billions of Consumers and Businesses
Like Nvidia, Microsoft is also leading the way in AI: It is the largest investor in OpenAI's ChatGPT, having pumped roughly $13 billion into the startup since 2019. The partnership gives Microsoft access to some of the most advanced AI models in the industry, which it has used to bring generative capabilities across its product lineup.
The story continues
“Powerful brands like Windows, Office and Azure have made Microsoft the leader in productivity software, with billions of consumers and businesses relying on its products every day. Combining OpenAI's technology with Microsoft's software gives Microsoft nearly unlimited opportunities to promote its AI products and become a key growth driver in mass AI adoption.
Microsoft has leveraged this to add various AI features to its Office productivity suite, including an AI assistant called Copilot. The company has also integrated aspects of ChatGPT into its search engine Bing and expanded its library of AI tools on its cloud platform Azure.
The tech giant's efforts are paying off, with revenue up 17% year over year in the third quarter of 2024 (ended in March) and operating profit up 23%. Microsoft benefited from a 21% increase in cloud sales and a 12% increase in its “productivity and business process” division, reflecting an AI push in both divisions.
Microsoft shares aren't exactly a bargain, trading at 37 times forward earnings, but the company's dominant role in the tech sector, more than $70 billion in free cash flow, and robust outlook for AI make it likely worth the premium price and a stock to consider investing in right now.
Should I invest $1,000 in Nvidia right now?
Before you buy Nvidia stock, consider the following:
The analyst team at Motley Fool Stock Advisor has identified 10 stocks that investors should buy right now, and Nvidia is not among them. The 10 selected stocks have the potential to generate big gains over the next few years.
Consider the date when Nvidia made this list: April 15, 2005… If you had invested $1,000 at the time of recommendation, you would have made $775,568!*
Stock Advisor gives investors an easy-to-follow blueprint for success, with portfolio construction guidance, regular updates from analysts, and two new stock picks every month. The Stock Advisor service has more than quadrupled S&P 500 returns since 2002*.
View 10 stocks »
*Stock Advisor returns as of June 10, 2024
Dani Cook has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends 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.
2 Top Tech Stocks That Will Make You a Millionaire was originally published by The Motley Fool.
