Tech stocks have been helping to lead the market higher for much of the past two years, but many have taken a breather in recent weeks. That opens up an opportunity to grab some tech leaders trading off their highs.
Let's examine three leading tech stocks to consider buying before the end of the year.
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1. Taiwan Semiconductor Manufacturing
One of the companies best positioned for the ongoing artificial intelligence (AI) infrastructure boom is Taiwan Semiconductor Manufacturing (TSM +3.48%). While competition has increased in the AI chip race, with more companies turning to ASICs to run some of their AI workloads, TSMC remains in a prime position because it is the company that makes most of the world's advanced chips.
NYSE: TSM
Key Data Points
Manufacturing advanced semiconductors is not easy, and TSMC has proven to be the only company that can consistently manufacture chips at smaller node sizes (the number of transistors that fit on a chip) with high yields (few defects) at scale. This has made it a key cog in the semiconductor value chain, leading to strong pricing power. It also gives it solid visibility, with the company projecting that AI chip demand will increase by a more-than-40% compound annual growth rate (CAGR) over the next few years.
2. Amazon
After getting a lift following a strong earnings report, Amazon's (AMZN +2.54%) stock finds itself right back to where it was before it posted its results. That's good news for investors looking to pick up some shares before year's end, as the company is starting to show solid momentum in its cloud computing business and strong operating leverage in its e-commerce operations.
NASDAQ: AMZN
Key Data Points
In Q3, Amazon's AWS (Amazon Web Services) unit saw its revenue growth accelerate to 20% on the back of strong demand for AI infrastructure and related services. However, this could just be the beginning of AWS's acceleration, as it has just started ramping up its big Project Rainier for Anthropic, while it also recently announced a seven-year, $38 billion deal with OpenAI. It also boosted its capital expenditure (capex) budget, raising it from $118 billion to $125 billion, to take advantage of the opportunities it is seeing.
At the same time, Amazon is using AI and robotics to drive efficiencies and profitability in its e-commerce business. It now has over 1 million robots in its fulfillment centers, all coordinated by its DeepFleet AI model, while it's also using AI to optimize driver routes and inventory locations. This is leading to strong operating leverage, as demonstrated by its North American segment's 28% jump in adjusted operating income last quarter on just an 11% increase in revenue.
3. Meta Platforms
Meta Platforms' (META +3.16%) stock has been punished recently for its aggressive AI spending plans, but that could be an opportunity for investors looking to buy the stock before the end of the year. Operationally, Meta is firing on all cylinders, with its revenue soaring 26% in Q3 on the back of increased ad impressions (up 14%) and higher ad prices (up 10%).
The company's growth is driven by its push into AI. Today, the company's sites are much more about entertainment than connecting with friends, and it's using AI to push more of the type of content that its users want to see, which is keeping them on its apps for longer. It's also helping it grow its daily active user base, which was up 7.5% to 3.54 billion last quarter.
NASDAQ: META
Key Data Points
Meta is also using AI to help improve its advertisers' campaigns and better target users, which is leading to better-performing ads. This, in turn, is leading to higher prices. This dynamic is playing out not just in the U.S., where its average ad price climbed 13% last quarter, but also in Europe, where its price per ad jumped 17%.
The company also has a big opportunity in front of it, as it is just beginning to serve ads on its WhatsApp messaging service, which boasts over 3 billion users. In addition, it's still building out its newest social media platform, Threads, and just beginning to monetize that platform, as well.
