The stock market has experienced turbulent shifts due to events like the COVID-19 pandemic and the evolution of AI, transforming the landscape of investments. Notably, the Nasdaq Composite index endured a 33% decline in 2022, only to surge by 43% the following year.

However, recent market stability emerges amidst declining inflation and a tech-driven recovery, creating a prime opportunity to allocate a significant portion of your portfolio to the burgeoning tech sector for sustained growth.

Investing in Nvidia: The Powerhouse of Innovation

Nvidia, a ubiquitous presence in the realm of AI, has witnessed an exceptional ascent, with its stock skyrocketing by an impressive 260% since March last year. The company’s dominance in AI chips, capturing an estimated 90% market share, mirrors its unparalleled growth trajectory.

The surge in AI service demand propelled the sales of graphics processing units (GPU), essential for AI model training, solidifying Nvidia’s standing as a premier chip manufacturer. In its latest quarterly report (Q4 2024 ending in January), the company observed a remarkable 265% revenue surge, reaching $22 billion, while operating income surged by a phenomenal 983% to nearly $14 billion. This remarkable growth, fueled by a 409% spike in data center revenue, underscores the surging interest in AI GPU sales.

Nvidia holds immense potential in the flourishing AI market, with earnings-per-share (EPS) forecasts painting a promising picture. Projections suggest Nvidia’s earnings may exceed $34 per share in the next two fiscal years. A calculation based on a forward price-to-earnings ratio (P/E) of 35 forecasts a stock price of $1,197. Looking ahead, this forecast signals a potential 39% stock appreciation by fiscal 2027, cementing Nvidia as an irresistible investment prospect.

Advanced Micro Devices: A Rising Competitor in the AI Landscape

Similar to Nvidia, Advanced Micro Devices (AMD) is poised to benefit significantly from the AI boom. Despite slightly delayed entry into the AI sector, AMD is strategically positioning itself to garner a share of the $200 billion industry, envisaging substantial long-term gains.

In a bold move last December, the company unveiled the MI300X AI GPU, directly challenging Nvidia’s offerings and garnering the attention of tech behemoths like Microsoft and Meta Platforms as clients. Furthermore, AMD’s strategic focus on AI-powered PCs is anticipated to drive substantial growth, establishing AI integration as a pivotal catalyst.

EPS forecasts suggest a notable growth trajectory for AMD, with estimated earnings per share nearing $7 in the upcoming two fiscal years. A projection based on AMD’s forward P/E of 58 hints at a stock price of $403, indicating a potential doubling in stock value within the specified timeframe.

Amazon: A Multifaceted Tech Titan

Amazon, having evolved from a humble online bookstore into a conglomerate spanning diverse industries, stands as a foresighted tech giant with an extensive market footprint. From dominating global e-commerce to leading the cloud market and diversifying into areas like space satellites, grocery, gaming, and consumer tech, Amazon’s expansive reach is unparalleled.

With e-commerce poised to hit $3.6 trillion by 2024, growing at a CAGR of 10% until 2028, Amazon is primed to leverage this segment’s continual growth for sustained profitability. However, the true growth catalyst for Amazon lies in its AWS cloud platform. In Q4 2023, AWS revenue surged by 13%, reaching $24 billion and contributing 54% to the company’s operating income, despite generating the lowest revenue share among its segments.

Furthermore, AWS serves as a key player in the AI landscape, equipped to tap into the generative AI market through its vast cloud data centers. EPS estimates suggest Amazon’s earnings may hit nearly $7 per share by fiscal 2026. Considering Amazon’s forward P/E of 42, this indicates a projected stock price of $294, translating to a 68% surge in stock value over the next two fiscal years.