It's never a bad idea to start investing in tech stocks as the industry is in a near-constant state of innovation, offering consistent gains over the long term. Tech covers a wide range of industries, with one of the best strategies being to invest in companies that have the most to gain from high-growth markets.
The launch of OpenAI's ChatGPT, an advanced chatbot capable of producing human-like speech, kicked off an artificial intelligence (AI) race last November. Countless companies have pivoted their business toward AI, with the market expected to expand at a compound annual growth rate of 37.3% through 2030.
As the leaders of computing components, Nvidia (NVDA 3.65%), Advanced Micro Devices (AMD 2.44%), and Intel (INTC -0.38%) produce the hardware necessary to run and develop AI software, making their stocks immensely compelling buys.
Here are three top tech stocks to buy right now and excellent ways to invest in the future of AI at three different price points.
1. Nvidia
Nvidia shares have skyrocketed this year, climbing 86% year to date. The company has rallied investors thanks to its position as the primary supplier of graphics processing units (GPUs) for ChatGPT, with the devices critical to run the AI program. According to research from TrendForce, ChatGPT utilized about 20,000 GPUs in 2020, with that figure expected to soon hit 30,000 as the software readies for commercialization. And Nvidia stands to profit significantly from its expansion.
The tech giant's recent bull run has pleased investors but has also made it more expensive to buy in. Nvidia's price-to-earnings ratio has risen 151% since Jan. 1, currently sitting at 156, with the metric making it the most expensive pick on this list.
However, it's crucial to keep a long-term perspective. Nvidia's stock may be pricey against its earnings, but it also has the strongest position in AI right now and is coming out of an economically challenging year that hurt it financially. Nvidia remains a top tech stock and will likely offer investors substantial gains in the coming years, thanks to AI.
2. Advanced Micro Devices
Wall Street has also grown bullish over AMD in 2023, with its stock up around 45% since the start of the year. In addition to developing GPUs like Nvidia, the company is leading the way in central processing units (CPUs). Its consumer line of Ryzen CPUs has helped AMD grow into a tech behemoth and given it the resources to branch out into other aspects of tech like data centers and AI.
The company's hardware powers data centers worldwide, with its chips servicing cloud giants Microsoft's Azure, Alphabet's Google Cloud, and Oracle. The cloud market has become closely aligned with AI development, with Microsoft's $1 billion investment in OpenAI in 2019 allowing it to integrate much of the start-up's technologies into Azure and other services.
As a result, AMD is indirectly profiting from the development of AI through the cloud market while also being a great option for companies needing GPU power.
With a recent price-to-earnings ratio of 106, AMD shares are a better value than Nvidia but still pricey. However, the same argument as with Nvidia is still valid here. AMD's stock climbed 858% in the last five years and more than 3,600% in the last decade. Alongside the development of AI, AMD is a top tech stock likely to soar over the long term.
3. Intel
Like the previous two companies, Intel is striving to grow its position in artificial intelligence. As a legacy chipmaker, the company spent years pushing the technology forward, with its AI chips generating about $3.5 billion in revenue in 2019. Steep competition from Nvidia and AMD has led Intel to lose a bit of steam, but it still has a lot to gain from the development of the industry.
At the start of January, Intel launched its Sapphire Rapids line of CPUs, designed with AI and cloud computing in mind. The chips have been slightly overshadowed by AMD's competing Genoa series, which was released two months before. However, the launch sees Intel making its strongest push into AI and is a promising sign of things to come.
With a price-to-earnings ratio of 16, Intel is by far the best-value tech stock on this list. Macroeconomic headwinds have hit its business hard in recent years, but the company continues to have a positive long-term outlook, making Intel an attractive tech stock right now.
