These companies have hit some roadblocks this year, but that only means their stocks are trading at a discount compared to their competitors.
Tech stocks have soared in the last year. Nasdaq-100 The technology sector index has risen 48% since April last year. Companies across industries are benefiting from the artificial intelligence (AI) boom, which is driving countless tech stocks higher.
AI has the potential to power technology across the board, including consumer products, cloud computing, video games, self-driving cars, and machine learning. The AI market reached nearly $200 billion last year and is expected to grow at a compound annual growth rate of 37% through 2030.
Therefore, now is a great time to dedicate a large part of your portfolio to technology, and you could reap significant benefits in the coming years as AI expands and impacts more areas of the industry.
Here are two fast-growing tech stocks to buy in 2024 and beyond.
1. Intel
intel (INTC -5.16%) has been a figure in the technology world since its founding 55 years ago. As a leading chip manufacturer, the company has supplied hardware to all sectors of the industry, including custom-built gaming PCs. microsoft's Windows computer, apple's (AAPL 0.86%) Mac lineup, cloud platforms, etc.
But Intel has faced repeated challenges in recent years. The company's stock has fallen about 48% over the past three years as its central processing unit (CPU) market share declines and its more than 10-year partnership with Apple ends.
As a result, the company has made major structural changes to its business model that could take effect from 2024 onwards. Last June, Intel announced a “fundamental shift” in its business, adopting an in-house foundry model that it believes will lead to savings of $10 billion by 2025. This change will result in a model that looks like this: taiwan semiconductor manufacturinghas become the leading provider of foundry capacity in North America and Europe.
Additionally, Intel is making inroads into AI. The company debuted a variety of AI chips in December 2023, including his Gaudi3, a graphics processing unit (GPU) designed to compete with similar products by market leaders. Nvidia. The company also showed off its new Core Ultra processors and its Xeon server chips, which contain neural processing units to run 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 technology. The need for more powerful hardware is increasing in almost every sector of the industry, and demand is unlikely to disappear anytime soon. And the chart above shows that Intel is one of the most valuable chip stocks.
The company has two biggest rivals, Nvidia and Advanced Micro Devices. With promising changes in its business model and growing position in AI, it's no surprise that Intel's stock price will rise this year.
2. Apple
It hasn't been easy to be an Apple investor this year, with Apple's stock price down 8% since January 1st.
Macroeconomic headwinds caught up with the company in 2023, leading to four consecutive quarters of declining revenue. The company finally broke its streak in the first quarter of 2024, with sales up 2% year over year to $120 billion, beating Wall Street expectations by more than $1 billion.
But even the better-than-expected results weren't enough to allay investor concerns about other areas of Apple's business. In the first quarter of 2024, the iPhone division's total sales were reported to have increased by 6%, but in China it decreased by 13%. The country increasingly favors domestic brands over the iPhone, threatening business from Apple's third-largest market.
But like Intel, Apple is making big changes to its business. The company's stock soared 4% on April 11, marking its best performance in nearly a year. The increase comes in the wake of a Bloomberg report that revealed the company is overhauling its Mac computer lineup to focus on AI.
Apple dominates consumer technology, with top market share in most product categories. The immense brand loyalty from consumers could enable the company to become a key growth driver for general AI adoption and establish a favorable position in the market. As a result, the news that future products will focus on generation technology is promising.
Moreover, despite recent headwinds, Apple's free cash flow reached $107 billion last year, significantly outpacing rivals such as Microsoft. Amazonor alphabet. This number shows that Apple has the financial strength to continue investing in its business and overcome recurring challenges.
Data by YCharts.
Apple's high free cash flow makes it one of the most highly valued big tech stocks. The graph above shows that the company has the lowest price to free cash flow and one of the lowest forward P/E ratios among its many competitors.
The company has a reputation for providing investors with significant and consistent returns over the long term. I don't think Apple will continue this trend for the next 10 years, and the company's stock is worth considering now.
Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Dani Cook has no position in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: Long January 2023 $57.50 Call on Intel, Long January 2025 $45 Call on Intel, Long January 2026 $395 Call on Microsoft, Short January 2026 $405 Call on Microsoft call, and a May 2024 $47 short call. Intel. The Motley Fool has a disclosure policy.
