Three tech companies showing greater promise than any digital currency available.
The cost of numerous cryptocurrencies has soared recently with some investors expecting a more welcoming stance towards crypto from the incoming Trump administration. While some cryptos promise substantial returns, equities in tech companies can offer just as much, if not more, potential and are generally more stable investments.
Here's why you might want to overlook crypto and consider investing in these three tech stocks instead: Nvidia (NVDA -2.09%), AppLovin (APP -3.33%), and Taiwan Semiconductor (TSM -0.70%) instead.
1. Nvidia leads in AI processing
Nvidia is one of the most sought-after tech stocks today due to the company's dominance in AI processing. Nvidia's graphics processing units (GPUs) are utilized in around 70% to 95% of AI data centers due to their superior processing power, making them the preferred choice for tech companies requiring high-end processing.
This demand has fueled Nvidia's financial growth, with sales increasing 94% to $35.1 billion in the third quarter (Oct. 27 end) and non-GAAP (non-generally accepted accounting principles) earnings per share surging 119% to $0.81.
With tech companies accelerating and upgrading their AI data centers, there's a potential for companies to invest up to $2 trillion over the next five years. While Nvidia won't secure all of this investment, its early lead in AI processing means it's likely to continue expanding in the AI market for several years.
It's vital to remember that Nvidia shares are relatively expensive. The company's shares have a forward price-to-earnings (P/E) ratio of 32.6 compared to the S&P 500's forward P/E ratio of around 24.
2. AppLovin is capturing an expanding ad market
If you're unfamiliar with AppLovin, it's an adtech platform using AI to allow companies to place ads on connected TVs and mobile apps. AppLovin's stock has had a remarkable year, with its price rising 715% over the past 12 months.
AppLovin's third-quarter (Sept. 3 end) results impressed investors, with sales climbing 39% to $1.2 billion and diluted earnings per share increasing an astonishing 317% to $1.25. The company profits from an expanding advertising space, which became a $1 trillion market in 2024—one year ahead of initial estimates.
Global ad sales are expected to grow by an estimated 7.7% in the upcoming year, according to media investment company GroupM. With 81% of digital ads coming from programmatic ad platforms like AppLovin's by 2028, according to Statista, the company is in an excellent position to benefit from ad spending in the coming years.
AppLovin's massive share price gains over the past year have driven its stock value up. AppLovin's forward P/E ratio is currently 47.6, a substantial premium. But if you're looking for a tech stock that profits from the escalating advertising market, there aren't many better options than AppLovin.
3. Taiwan Semiconductor is a leading chip manufacturer
Another tech company with significant potential is Taiwan Semiconductor (also known as TSMC), the world's foremost maker of AI chips. TSMC holds an estimated 90% of the market for the most advanced processors.
Gaining such a significant share in the market is impressive, considering tech companies worldwide are expected to significantly increase their AI spending in the coming years. Goldman Sachs estimates AI spending to reach $1 trillion in the near future, and TSMC is already experiencing the benefits.
TSMC's sales surged 39% to $23.5 billion in the third quarter (Sept. 30 end), and earnings increased 54% to $1.94 per American depositary receipt (ADR). As tech companies strive to outpace each other in the new AI race, TSMC's dominance in producing 3-nanometer (nm) chips (and forthcoming 2nm in 2025) means the tech giants will be knocking on TSMC's door for their chip needs.
In contrast to the other companies on this list, TSMC is quite affordable. The company's shares have a forward P/E ratio of 22.9, lower than the S&P 500's and far below Nvidia's and AppLovin's.
While there's no guarantee these tech stocks will surpass any specific crypto returns, each company is tapping into the booming AI market and already has a strong position in their respective markets, providing significant potential for future growth.
- Instead of investing in volatile cryptocurrencies, consider allocation of funds towards Nvidia, as the company's dominance in AI processing and high-end graphics processing units makes it a lucrative option for those interested in the technology sector and financial growth.
- When it comes to investing money, one could also consider AppLovin, an adtech platform leveraging AI to place ads on connected TVs and mobile apps, which has seen impressive sales growth and is poised to benefit from the expanding digital advertising market.
