Tech stocks have surged over the last year, with the Nasdaq-100 Technology Sector index up 48% since last April. Companies across the industry have benefited from a boom in artificial intelligence (AI), which has boosted countless tech stocks.
AI has the potential to bolster sectors across tech, like consumer products, cloud computing, video games, autonomous vehicles, machine learning, and much more. The AI market hit close to $200 billion last year and is projected to have a compound annual growth rate of 37% through 2030.
So now is an excellent time to dedicate a larger portion of your portfolio to tech and potentially enjoy big gains in the coming years as AI expands and touches more areas of the industry.
Here are two hypergrowth tech stocks to buy in 2024 and beyond.
1. Intel
Intel (INTC -1.68%) has been a figure in tech since its founding 55 years ago. As a leading chipmaker, the company has supplied its hardware to all areas of the industry, including custom-built gaming PCs, Microsoft's Windows computers, Apple's (AAPL 2.90%) Mac lineup, cloud platforms, and more.
But Intel has faced repeated challenges in recent years. Its stock is down about 48% over the past three years after seeing decreased market share in central processing units (CPUs) and ending a more than decade-long partnership with Apple.
As a result, the company has made major structural changes to its business model that could pay off in 2024 and beyond. Last June, Intel announced a "fundamental shift" to its business, adopting an internal foundry model that it believes will help it save $10 billion by 2025. This change would see it adopt a model similar to Taiwan Semiconductor Manufacturing, becoming a major provider of foundry capacity in North America and Europe.
Moreover, Intel is moving into AI. In December 2023, the company debuted a range of AI chips, including Gaudi3, a graphics processing unit (GPU) designed to challenge similar offerings from market leader Nvidia. The company also showed off new Core Ultra processors and Xeon server chips, which include neural processing units for running AI programs more efficiently.
Data by YCharts; PE = price to earnings; PS = price to sales.
Chip stocks are some of the best ways to invest in tech. With nearly all areas of the industry increasingly requiring more powerful hardware, demand is unlikely to dissipate anytime soon. And the chart above shows Intel is one of the best-valued chip stocks.
It has the lowest forward price-to-earnings (P/E) ratio and price-to-sales (P/S) ratio compared to its two biggest rivals, Nvidia and Advanced Micro Devices. With promising changes to its business model and an expanding position in AI, Intel's stock is a no-brainer this year.
2. Apple
It hasn't been easy to be an Apple investor this year, with its shares down 8% since Jan. 1.
Macroeconomic headwinds caught up with the company in 2023, leading to four consecutive quarters of revenue declines. Its first quarter of 2024 finally broke the streak, with revenue growth of 2% year over year to $120 billion as it beat Wall Street forecasts by more than $1 billion.
But outperforming estimates hasn't been enough to quell investor concerns about other areas of Apple's business. In the first quarter of 2024, the iPhone division reported a 6% rise in total sales, yet they fell 13% in China. That country increasingly prefers domestic brands over the iPhone, threatening business from Apple's third-largest market.
Yet, like Intel, Apple is making major changes to its business. The company's stock popped 4% on April 11, marking its best performance in almost a year. The rally came after a Bloomberg report revealed the company will overhaul its Mac computer lineup to focus on AI.
Apple dominates consumer tech, with leading market shares in most of its product categories. Immense brand loyalty from consumers could see the company become a major growth driver in the public's adoption of AI, allowing it to carve out a lucrative position in the market. As a result, news that future products will place a stronger focus on the generative technology is promising.
Moreover, despite recent headwinds, Apple's free cash flow hit $107 billion last year, significantly more than rivals like Microsoft, Amazon, or Alphabet. The figure indicates Apple has the financial resources to continue investing in its business and overcome recurrent challenges.
Data by YCharts.
Apple's high free cash flow has also made it one of the best-valued stocks in big tech. The chart above shows it has the lowest price-to-free cash flow out of many of its competitors and one of the lowest forward P/E ratios.
The company has a reputation for providing investors with significant and consistent gains over the long term. I wouldn't bet against Apple continuing this trend over the next decade, and its stock is worth considering right now.
