The S&P 500 index is treating investors well, up 52% since October 2022 when it reached its most recent low. Plenty of factors contributed to the bull market, but chief among them has been excitement over tech stocks.
Advances in markets like artificial intelligence (AI), cloud computing, self-driving cars, and virtual/augmented reality illustrate a major shift in the tech industry that could spell a lucrative future for the companies involved.
Many of tech's most prominent players have reputations for delivering significant gains over the long term, giving patient stockholders the opportunity to become millionaires with the right investment. With many areas of tech seemingly still in their infancy, now could be an excellent time to invest and potentially profit from the market's development.
So, here are two top tech stocks that could make you a millionaire.
1. Nvidia: Powering the tech industry with its hardware
Nvidia (NVDA) pulled off an impressive growth spurt since the start of 2023, with its stock up 828%. Its success saw it surpass Microsoft (MSFT) and Apple as the world's most valuable company, achieving a market cap above $3.3 trillion. The chipmaker undoubtedly created many millionaires on its way to the top spot and shows no signs of slowing, suggesting it's not too late to make a long-term investment in Nvidia.
For years, Nvidia was best known for its role in the video games market, with its graphics processing units (GPUs) becoming the go-to for millions of consumers custom-building powerful gaming PCs. While the company is still very active in gaming, the focus shifted to Nvidia's efforts in AI.
Data by YCharts
Advances in the generative technology increased the need for high-powered GPUs, chips capable of the heavy workloads required for training AI models. And as the biggest name in GPUs, Nvidia was positioned to immediately begin supplying its chips to AI developers worldwide, leading earnings to skyrocket.
Despite increased competition, Nvidia maintains an estimated 80% market share in AI chips, indicating massive growth potential as the sector develops.
In addition to AI, Nvidia supplies its chips to game consoles, self-driving cars, cloud platforms, and more. The chipmaker has growth catalysts across tech and will likely continue to reward investors for years. Despite recent growth, Nvidia's price/earnings-to-growth ratio remains at less than 1, suggesting its stock is a value and worth picking up this month.
2. Microsoft: Getting AI into the hands of billions of consumers and businesses
Like Nvidia, Microsoft got a head start in AI. The company is the biggest investor in OpenAI's ChatGPT, sinking about $13 billion in the start-up since 2019. The partnership granted Microsoft access to some of the most advanced AI models in the industry, which the company has in turn used introduce generative features across its product lineup.
Potent brands like Windows, Office, and Azure have seen Microsoft become the biggest name in productivity software, with billions of consumers and businesses relying on its offerings every day. The combination of OpenAI's technology and Microsoft's software gives it almost endless opportunities to promote its AI products and become a leading growth driver in the public's adoption of AI.
Microsoft took advantage of this by adding a range of AI features to its Office productivity suite, including an AI assistant called Copilot. The company has also integrated aspects of ChatGPT into its search engine Bing and expanded its library of AI tools on its cloud platform Azure.
The tech giant's efforts are paying off, with revenue rising 17% year over year in the third quarter of 2024 (ending in March), while operating income climbed 23%. Microsoft benefited from a 21% increase in cloud sales and a 12% rise in its "productivity and business processes" segment, reflecting a boost from AI in both segments.
Microsoft's stock is trading at 37 times its forward earnings, suggesting it's not exactly a bargain. However, its dominant role in tech, more than $70 billion in free cash flow, and a solid outlook in AI likely make Microsoft's stock worth its premium price tag and one you should consider investing in right now.
