Two Technology Stocks Worth Considering for Investment

In the past decade, technology stocks have played a crucial role in the stock market's growth. Currently, eight of the largest companies in the S&P 500 are technology or tech-related firms. As technology continues to evolve and shape our lives, it seems likely that tech stocks will remain a key driver for market gains in the coming years.

Here, we will explore two technology stocks that stand out as solid investment opportunities.

Nvidia

Nvidia (NVDA) has established itself as the leader in the field of artificial intelligence (AI) infrastructure. The company's graphic processing units (GPUs) are essential for training AI models and running data processes. Nvidia commands a remarkable market share of nearly 90% in the fast-growing GPU market.

This impressive dominance is largely due to Nvidia's CUDA software platform, which was initially developed to allow developers to use its chips beyond their original design of enhancing graphics performance in video games. CUDA has become a standard tool for programming GPUs. Over the years, Nvidia has expanded its offerings with CUDA X, which includes a suite of GPU-accelerated tools and libraries designed for AI.

As one of the biggest beneficiaries of the AI boom, Nvidia is on track for its second consecutive year of huge revenue growth. Since AI is still in its early stages, Nvidia has ample opportunity for future expansion. The demand for computing power from AI models is rising, with new models needing significantly more GPU resources than before. For instance, Meta Platforms' latest Llama AI model requires ten times as many GPUs for training compared to its predecessor.

Nvidia's biggest client, Microsoft, announced plans to invest an impressive $80 billion in AI data centers this year. Currently, there is no indication that this trend of increasing investment in AI infrastructure will slow down, which bodes well for Nvidia. Moreover, despite its stellar performance in recent years, Nvidia stock remains reasonably valued, trading at a forward price-to-earnings (P/E) ratio below 31 and a price-to-earnings-to-growth (PEG) ratio under 1, often a sign of an undervalued stock.

Considering its favorable valuation and vast growth potential, Nvidia is a compelling investment choice.

Amazon

Amazon (AMZN) is widely recognized for its e-commerce platform, but the company's most profitable segment is its Amazon Web Services (AWS) cloud computing division. In the past year, AWS generated an operating income of $36.4 billion, significantly higher than the $24.3 billion from Amazon's other businesses.

Amazon pioneered the infrastructure-as-a-service model back in 2006. Prior to AWS, the company began constructing e-commerce frameworks for various partners, including major retailers like Target. However, Amazon faced challenges related to costs and scalability. AWS emerged as a solution, providing businesses of all sizes access to data centers without needing the resources to manage their own.

Today, AWS holds over 30% of the global cloud computing market, making it the largest provider. The rise of cloud computing has coincided with the increasing demand for AI. Companies are increasingly turning to the cloud to develop their own AI models, and Amazon is facilitating this with tools like Bedrock and SageMaker. Bedrock allows customers to access a range of foundational AI models, including those from prominent companies such as Anthropic and Meta Platforms.

Additionally, SageMaker helps businesses build and train custom AI applications. Amazon has even developed its own AI chips tailored for training and executing AI tasks.

Beyond cloud services, Amazon utilizes AI to enhance its e-commerce and logistics systems. This includes improved product recommendations and AI-assisted listings for sellers, as well as AI-driven optimization for logistics and inventory management.

Throughout its history, Amazon has demonstrated remarkable innovation and flexibility. The company is unafraid to make significant investments to drive both its cloud and e-commerce sectors forward, paving the way for long-term success. Currently, Amazon stock is reasonably priced, trading at a forward P/E ratio below 30 and a PEG ratio under 1.1.

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