This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Technology stocks have been the driving force in the market for more than the past decade, and with the advent of artificial intelligence (AI), that should continue well into the future. Let's look at five leading tech stocks to buy right now.
1. Nvidia
When it come to AI, Nvidia (NASDAQ: NVDA) has been the biggest beneficiary thus far, and it should continue to be a big winner in the space. Its graphics processing units (GPUs) are the backbone of AI infrastructure due to their fast processing speeds, and are the chips that power AI workloads.
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Nvidia's wide moat, however, comes from its CUDA software platform. It originally created the platform as a way to expand the market for its GPUs beyond video games, where its chips are used to speed up graphics rendering. Early on, it pushed the software to universities and research labs, where it became the software that developers learned to program GPUs. It later built tools and libraries on top of CUDA to improve the performance of its chips in AI.
The company's dominance was on display in the first quarter, when it captured a 92% market share in the GPU space. Nvidia continues to be one of the best ways to play the AI infrastructure boom.
2. Amazon
While Amazon (NASDAQ: AMZN) is best known as the world's largest e-commerce company, that's not its largest business by profitability. That distinction falls to its cloud computing segment Amazon Web Services (AWS). The company created the cloud and infrastructure-as-a-service model after its struggles ramping up its own data center, and it remains the market share leader today.
However, what's most impressive with AWS are its inner workings. Through its Annapurna Labs subsidiary, the company developed its own custom AI chips that give it a cost advantage.
It's Bedrock and SageMaker platforms help users customize, build, and run AI models on its infrastructure. This is leading to robust growth for AWS, and the company is investing aggressively to help keep up with demand.
On the e-commerce side of its business, Amazon is using AI to drive efficiencies and lower costs in its logistics and warehouse operations. This is helping increase margins and boost profitability. Given its opportunities, Amazon looks like a strong buy at current levels.
3. Meta Platforms
The social media and messaging company Meta Platforms (NASDAQ: META) is using AI to drive strong revenue growth. It developed its own proprietary Llama model, which it is using to boost user engagement on its social media platforms. This, in turn, is leading to more ad inventory.
It also developed AI tools that let advertisers create better campaigns and improve targeting, which is resulting in more effective ads and higher prices for them. These dynamics could be seen last quarter, when ad revenue rose 16% on the back of a 5% increase in ad impressions and a 10% jump in average price per ad.
What is most exciting about the Meta story, though, are two emerging opportunities. It just started serving ads on its popular WhatsApp messaging app, which has 3 billion monthly users. In addition, it is building out a new social media platform, Threads, on which it is also just beginning to display ads. Together, this is a huge monetization opportunity for the company.
4. Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (NYSE: TSM) is the No. 1 semiconductor contract manufacturer in the world. Today, most leading chip companies, like Nvidia, just design chips and hire out companies like TSMC to make them.
In order for a foundry to be profitable, it needs technological expertise, high utilization rates at its factories, and large scale. As rivals struggled with this, TSMC has become the go-to maker of advanced chips and a vital partner to leading AI chipmakers. This has also allowed it to raise prices, which is expanding its gross margins.
Today, TSMC works closely with leading AI chipmakers to expand capacity to meet rising demand. As AI infrastructure spending continues to grow, the company is set to be a strong long-term winner.
5. Netflix
The video streamer Netflix (NASDAQ: NFLX) has a big opportunity as it turns to advertising. Today, Netflix generates most of its revenue from subscriptions, but its lower-priced ad-supported tiers are beginning to see strong momentum. And it added more live programs, such as WWE Monday Night Raw, which also show advertising.
On the back end, the company introduced its adtech platform in the U.S. and Canada earlier this year, with plans to expand it to 10 more markets by year-end. It's also rolling out new targeting and measurement tools, with plans to layer in machine-learning ad optimization and new ad formats over time.
Revenue from advertising is expected to double this year, but the bigger story is the foundation it's building for even more growth in 2026 and beyond.
Ad sales should become a much larger part of Netflix's revenue stream in the years ahead as it builds out its ad-supported tiers. That should bode well for its stock.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
