Key Points
-
The tech sector has been a market outperformer, and getting even more nuanced can produce higher returns.
-
Nvidia’s AI chips are essential for tech giants, and there’s more to come in the agentic AI and robotics eras.
-
Microsoft’s improving fundamentals and declining stock price create an opportunity for long-term investors.
- 10 stocks we like better than Nvidia ›
The tech sector has been one of the hottest for growth investors, as it has a long history of outperforming the S&P 500. For instance, the State Street Technology Select Sector SPDR ETF has delivered roughly 140% in gains over the past five years, while the S&P 500 hasn’t even doubled over the same stretch. Investors can get more nuanced in the tech industry with funds like the iShares Semiconductor ETF, which has almost quadrupled over the past five years.
But the performance of the broader tech industry compared to indexes explains why many investors prefer hunting for good picks in this sector. You can start your search with these promising tech stocks if you have $1,000 ready to invest.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Image source: Getty Images.
1. Nvidia
Nvidia (NASDAQ: NVDA) is the largest AI chipmaker, and the competition isn’t close. The company generates more revenue in a quarter than most of its competitors earn in an entire year. Even after years of strong growth, Nvidia still has the pedal to the metal.
The AI leader reported 85% year-over-year revenue growth in its fiscal 2027 first quarter, and its Q2 FY27 guidance implies more than 10% sequential growth.
It isn’t just AI models like ChatGPT that need all those chips. Nvidia CEO Jensen Huang told shareholders that agentic AI is just getting started and is “scaling rapidly across companies and industries.” Grand View Research projects a meaningful 46.2% CAGR for the enterprise agentic AI market through 2030.
Physical robots can usher in the next wave of growth for Nvidia, and the company is already prepared for that opportunity. Halos for Robotics, Nvidia’s full-stack, open robotics safety system, was recently touted as the first of its kind in a June press release. Nvidia intends to be the catalyst behind every AI innovation, which can position the stock for meaningful long-term growth.
2. Microsoft
Microsoft (NASDAQ: MSFT) is another AI winner, but a 21% decline over the past year doesn’t match up with its fundamental gains. The drop has resulted in a 23 P/E ratio as profits and sales continue to surge.
The tech giant recently delivered 18% year-over-year revenue growth in its fiscal 2026 third quarter. Operating income rose 20% year over year, with Microsoft Cloud doing the heavy lifting. Microsoft CEO Satya Nadella also touted the company’s AI business surpassing $37 billion in annual recurring revenue, more than doubling year over year.
Total cloud revenue reached $54.5 billion, up 29% year over year. That’s almost two-thirds of the company’s total revenue. As the cloud platform continues to gain market share, Microsoft’s overall revenue growth rates should continue to accelerate.
The AI tailwind should extend for multiple years, and Microsoft has positioned itself well. Just because some investors are selling their shares doesn’t make Microsoft a bad investment. The mismatch between Microsoft’s declining stock price and strengthening fundamentals presents a buying opportunity.
Should you buy stock in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $409,970!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,200,223!*
Now, it’s worth noting Stock Advisor’s total average return is 916% — a market-crushing outperformance compared to 210% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of July 7, 2026.
Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft, Nvidia, and iShares Trust – iShares Semiconductor ETF. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
