Stocks to buy

Tech stocks enjoyed a blistering rally in this year’s first half. After getting pummeled throughout 2022 as interest rates moved higher, tech stocks have come roaring back, with many share prices having more than doubled over the last six months. The tech-laden Nasdaq index advanced 33% in the first half of 2023, its best start to a year since 1983.

Expectations that the U.S. Federal Reserve is nearing the end of its rate hike cycle have partially fueled the current rally. The hype surrounding all things artificial intelligence (AI) has played an even bigger part. In fact, the emergence of chatbots and the disruptive potential of AI has caused the biggest earthquake in tech stocks since the emergence of social media more than a decade ago.

With economic conditions increasingly favorable and excitement around AI continuing, the rally in tech securities can be expected to continue in this year’s second half. Here are three high-potential tech stocks to make your “get rich” dreams come true.

Nvidia (NVDA)

Microchip and semiconductor company Nvidia (NASDAQ:NVDA) has staged a comeback for the ages this year. Fueled by the growing use of its chips and semiconductors in artificial intelligence (AI) applications, NVDA stock has rallied 275% from its 52-week low last October, with nearly 200% of that gain coming in the first six months of this year. Nvidia’s share price over the last five years has increased nearly 600%, proving it is a high-potential tech stock.

The rally in NVDA stock has pushed the company’s market capitalization above $1 trillion, putting it in rarefied air among the world’s largest technology companies and officially making it a mega-cap tech stock. With the hype surrounding AI not showing any signs of cooling, Nvidia’s stock can be expected to continue its bull run. At the end of May this year, the company unveiled a host of new products designed to power AI applications, including a new supercomputer, “DGX GH200,” that will aid companies in creating successors to chatbots like ChatGPT.

Microsoft (MSFT)

While its rally this year hasn’t been as strong as that of Nvidia, fellow tech giant Microsoft (NASDAQ:MSFT) has also had a good run, posting a 42% year-to-date gain. Through five years, MSFT stock is up over 235%. Like Nvidia, Microsoft has benefitted from enthusiasm surrounding AI. In fact, Microsoft is one of the U.S. companies most invested in artificial intelligence due to its relationship with ChatGPT creator OpenAI.

In January, Microsoft announced it was investing $10 billion in privately held OpenAI. A few months later, the company unveiled plans to integrate ChatGPT into its Bing search engine, making it the first company to add AI to online queries. Rival tech companies around the world have scrambled to catch up. Going forward, Microsoft plans to insert AI into many of its products, including its Xbox video game titles. Speaking of video games, the company’s $68 billion acquisition of Activision Blizzard (NASDAQ:ATVI) is inching toward approval.

Alphabet (GOOG/GOOGL)

Another tech stock that has gained from expectations around its AI offerings is Alphabet (NASDAQ:GOOG/NASDAQ:GOOGL). Google’s parent company was left flatfooted by the introduction last fall of ChatGPT and Microsoft’s integration of the technology. But Alphabet has quickly caught up, introducing its own chatbot called Bard and several other AI products. Analysts and investors have applauded the moves, lifting GOOGL stock by 35% so far in 2023. In the last five years, Alphabet’s stock has risen 112%.

Alphabet’s internal AI research center, called DeepMind, is second to none and home to the world’s leading experts on AI. Beyond artificial intelligence, Alphabet also has several successful business units to drive its earnings for many years to come, including the Pixel smartphone and, of course, its online search and accompanying ad revenue. While online advertisements have slowed over the past year as the economy has decelerated, Alphabet still earned an eye-popping $225 billion from online ads in 2022.

On the date of publication, Joel Baglole held long positions in NVDA, MSFT and GOOGL. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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