Tech stocks have a long reputation for providing consistent and significant gains to patient investors. The chart below reflects this, with the Nasdaq-100 Technology Sector index delivering considerably more growth than the Nasdaq Composite and S&P 500 over the last decade.
Data by YCharts
So, it's not surprising that Warren Buffett's holding company, Berkshire Hathaway, has dedicated more than 40% of its portfolio to the high-growth industry. Meanwhile, Berkshire's holdings posted a compound annual gain of nearly 20% between 1965 and 2023.
While past growth isn't always an indication of what's to come, the tech market is a reasonably safe bet. Tech is an ever-expanding space that profits from consistent demand for upgrades to software and hardware products. With sectors like artificial intelligence (AI) and cloud computing growing rapidly, now seems an excellent time to invest in the industry.
So, here are three top tech stocks to buy in March.
1. Nvidia
If you follow tech even slightly, you're probably not surprised to see Nvidia (NVDA 6.18%) is on this list. The chipmaker won over Wall Street last year, illustrated by its 273% stock growth since March 2023.
The company's years of dominance in graphics processing units (GPUs) perfectly positioned it to profit significantly from the boom in AI as demand for the chips skyrocketed. As a result, Nvidia's quarterly revenue and free cash flow are up 207% and 430%, respectively, in the last 12 months.
Meanwhile, the AI market is nowhere near hitting its ceiling. It's projected to expand at a compound annual growth rate of 37% until at least 2030. The sector's potential indicates GPU demand is likely to continue rising for the foreseeable future, with Nvidia well equipped to continue enjoying significant gains from AI.
Data by YCharts
Additionally, this chart shows Nvidia's price-to-earnings ratio (P/E) and price-to-free cash flow have plunged 45% and 48% over the last year, respectively, meaning the company's stock is trading at its best value in months. Alongside a powerful role in AI, Nvidia is a screaming buy in March.
2. Microsoft
Microsoft (MSFT 1.82%) climbed to the tippy-top this year, becoming the world's most valuable company by achieving a market cap above $3 trillion. The company is a tech behemoth, home to a range of highly potent brands that attract billions of users, including Windows, Office, Xbox, Azure, and LinkedIn. The success of these services has granted Microsoft leading roles in operating systems, productivity software, cloud computing, and even social media.
However, all eyes have been on Microsoft's expanding AI efforts over the last year. Heavy investment in ChatGPT developer OpenAI led to a lucrative partnership and access to some of the most advanced AI models in the industry.
The Windows company has used OpenAI's technology to introduce AI features across its product lineup, such as new AI tools on its cloud platform Azure, and supported productivity in its Office software suite.
Microsoft's P/E of 37 means its stock isn't exactly trading at a bargain. However, its prominent role in AI and $67 billion in free cash flow make its stock worth the high price point, with the funds to continue investing in its business and retain its lead.
3. Alphabet
Like Microsoft, it's hard to deny Alphabet's (GOOG 9.96%) (GOOGL 10.22%) top spot in tech, with brands like Android, YouTube, and Google attracting billions of users worldwide. The success of these digital products has seen the company's annual revenue rise 90% in the last five years, with operating income up 135%.
Along with leading roles in online video sharing and search engines, Alphabet's most lucrative business is digital advertising. The popularity of its various services has resulted in almost endless advertising opportunities and allowed the company to achieve a 25% market share in the $740 billion digital advertising market.
In Alphabet's most recent quarter (Q4 ended Dec. 31, 2023), revenue increased by more than 13% year over year, beating expectations by $1 billion. Ad revenue slightly missed expectations in the quarter. However, its AI-focused Google Cloud segment posted revenue growth of 26% to $9 billion. Meanwhile, Google Cloud's operating income reached $864 million, versus the $186 million in losses it reported in the year-ago period.
The company has some work to do to catch rivals in AI and cloud computing, but it's on a promising growth trajectory. Additionally, Alphabet hit nearly $70 billion in free cash flow, suggesting it has the resources to retain its powerful role in tech and invest in high-growth areas.
Data by YCharts
Moreover, this chart shows that Alphabet's P/E and price-to-free cash flow are lower than three of its biggest competitors, making the Google company's stock one of the best-valued options in tech. Add in significant cash reserves and immense brand power, and Alphabet's stock is a no-brainer right now.
