The price of many cryptocurrencies has soared recently as some investors anticipate a more crypto-friendly approach under the new Trump administration. Although some cryptocurrencies offer the potential for significant gains, technology stocks can have as much potential, if not more, and are often more stable investments.
Here’s why you might want to bypass crypto and go for these three tech stocks: Nvidia(NASDAQ:NVDA), AppLovin(NASDAQ:APP)And Taiwan Semiconductor(NYSE:TSM) instead.
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Nvidia is one of the hottest tech stocks right now, thanks to the company’s dominance in artificial intelligence (AI) processors. Nvidia’s graphics processing units (GPUs) are used in approximately 70-95% of AI data centers, as their super processing power makes them the go-to choice for tech companies needing high-end processing .
This demand has fueled Nvidia’s top and bottom line growth, with sales up 94% to $35.1 billion in the third quarter (ended October 27) and non-GAAP (non-generally accepted accounting principles) earnings per share soared 119% to $0.81.
And there’s probably more where that came from. Nvidia CEO Jensen Huang estimates that companies expanding and modernizing their AI data centers could spend up to $2 trillion over the next five years. Nvidia won’t get all of that, of course, but the company’s early lead in AI processors means it will likely still have many years of AI growth ahead of it.
Just keep in mind that you’ll be paying a significant premium for Nvidia stock right now. The company’s stock has a forward price-to-earnings (P/E) ratio of 32.6 compared to S&P500Forward P/E ratio of around 24.
If you’re not familiar with what AppLovin does, all you need to know is that it’s an adtech platform that uses AI to allow businesses to place ads on connected TVs and mobile applications. The company’s stock had a very good year, with its price rising 715% over the past 12 months.
AppLovin’s third-quarter results (ending September 3) impressed investors, with sales up 39% to $1.2 billion and diluted earnings per share increasing 317% to $1.25. The company benefits from an expanding advertising space, which has become a $1 trillion market in 2024 (excluding political ads), a year earlier than expected.
Global advertising sales are expected to grow about 7.7% in the coming year, according to media investment firm GroupM. AppLovin is in a great position to benefit from ad spending in the coming years, given that 81% of digital ads will come from programmatic ad platforms like AppLovin by 2028, according to Statista.
AppLovin’s massive share price gains over the past year mean the company’s shares aren’t cheap. AppLovin’s forward P/E ratio is currently 47.6, a significant premium. But if you’re looking for a tech stock benefiting from the growing advertising market, there aren’t many better options than AppLovin.
Another tech company with huge potential is Taiwan Semiconductor (also called TSMC), the leading maker of artificial intelligence chips. The company holds approximately 90% of the market for the world’s most advanced processors.
This is a pretty impressive market position, and it’s even more astonishing when you consider that tech companies around the world are expected to significantly increase their spending on AI in the coming years. Goldman Sachs estimates that AI spending will reach $1 trillion over the next few years, and TSMC is already benefiting.
TSMC’s sales jumped 39% to $23.5 billion in the third quarter (ended September 30) and profits rose 54% to $1.94 per American depositary receipt (ADR). As tech companies try to get ahead of each other in the new AI race, TSMC’s lead in producing 3 nanometer (nm) chips (and soon 2 nm in 2025) means that tech giants will knock on the door of Taiwan Semiconductor to manufacture them.
Unlike other companies on this list, TSMC is relatively inexpensive. The company’s shares have a forward P/E ratio of 22.9, lower than the S&P 500 and well below that of Nvidia and AppLovin.
It is worth mentioning that there is no guarantee that these tech stocks will outperform specific cryptocurrency returns. However, given that each of them taps into the booming AI market and already has a lead in their respective markets, these tech stocks have great potential to continue growing in the years to come.
Have you ever felt like you missed the boat by buying the best performing stocks? Then you will want to hear this.
On rare occasions, our team of expert analysts issues a “Doubled” actions recommendation for businesses that they believe are on the verge of collapse. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Nvidia:If you invested $1,000 when we doubled down in 2009,you would have $355,269!*
Apple: If you invested $1,000 when we doubled down in 2008, you would have $48,404!*
Netflix: If you invested $1,000 when we doubled down in 2004, you would have $489,434!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
Chris Snow has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends AppLovin, Goldman Sachs Group, Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
