External factors like the pandemic and the macroeconomic headwinds that followed have made the stock market unpredictable in recent years. However, easing inflation and excitement over technology like artificial intelligence (AI) appear to have many businesses back on a growth path.
Tech companies have easily been one of the biggest drivers in the stock market in 2023, with the Nasdaq-100 Technology Sector index up 45% since Jan. 1. Despite last year's challenges, the industry has a long history of offering stockholders reliable gains, which makes it an attractive investment choice.
The innovative nature of the tech market keeps companies' revenue and stocks consistently rising. So it's not a bad idea to fortify your portfolio by dedicating a large part of it to this high-growth industry.
Here are three top tech stocks to buy in September.
1. Microsoft
As the second most-valuable company in the world (behind Apple) with a market cap of $2.4 trillion, Microsoft (MSFT 0.94%) has become a behemoth in the tech world. Platforms such as Windows, Office, Xbox, Azure, and more have catapulted its business by making its services crucial to the daily workflows of countless companies. Its success has led to consistent gains for its stock, which has risen 192% over the last five years.
The biggest reason to invest in the company this month is its long-term potential in AI. In 2019, it made one of the best investments in its nearly 50-year history by sinking $1 billion into OpenAI. The collaboration allowed Microsoft to obtain exclusive licenses on several AI models and become the primary distributor of ChatGPT.
The company has so far used OpenAI's technology to bring AI upgrades to many of its homegrown platforms, including Office and Azure. These immensely popular products, alongside OpenAI's models, could see Microsoft become the go-to for anyone seeking AI services.
Shares are down 2% since the start of August, when executives announced AI revenue would grow slowly. However, it's crucial to keep a long-term perspective when investing in the company. Over the next five to 10 years, AI revenue could soar, with September an excellent time to take advantage of the dip in Microsoft's stock.
2. Amazon
Amazon (AMZN 1.34%) is by far Microsoft's biggest competitor. And that's why its stock is worth considering this year. The company has growing potential in AI, with its leading market shares in cloud computing and e-commerce making it one of tech's biggest players.
In 2022, Amazon's stock plunged nearly 50% after repeated declines in its retail profits. The company has enjoyed a correction this year, with its shares up 64% since Jan. 1. Wall Street's faith in the stock has been restored by a recovering e-commerce business and a swiftly expanding position in AI.
Amazon reported operating income over $3 billion in its North American segment in the second quarter of 2023. The achievement was a stark improvement from the $627 million in losses it had in the year-ago period, suggesting an end to retail declines.
Meanwhile, Amazon is heavily investing in AI. The company has debuted several new AI tools on its cloud platform, Amazon Web Services, this year. Then, in June, it announced a venture into chip development as it plans to go up against market leader Nvidia.
Despite the recent rally, Amazon's stock remains down 26% from its July 2021 high. As a result, the company has plenty of room for growth, with this month a great time to buy before it's too late.
3. Advanced Micro Devices
Technological advances across the industry have made it a no-brainer to add a chip stock to your list of holdings. These companies are crucial to the development of countless sectors, including AI, cloud computing, gaming, consumer tech, and more. Consequently, investing in a chipmaker like Advanced Micro Devices (AMD 0.61%) can allow stockholders to profit from the growth of multiple markets.
AMD's stock has risen 335% over the last five years. Its annual revenue has climbed 264% in the same period, with operating income up 180%. The massive growth has come as AMD has become a go-to for many tech companies seeking powerful hardware to take their products to the next level.
For instance, in 2020, AMD became the exclusive supplier of chips to Sony's PlayStation 5 and Microsoft's Xbox Series X|S game consoles. These partnerships have led AMD to power multiple handheld gaming devices, laptops, PCs, and cloud platforms such as Azure and Alphabet's Google Cloud.
The tech industry has a reputation for offering consistent gains over the long term and has massive potential. Chipmakers are crucial to that growth, so companies like AMD are well positioned to profit significantly over the long term. Don't miss out on this stock for a chance to benefit from soaring demand for chips across tech.
