Artificial intelligence is here to stay. With every new product that leverages AI to improve productivity or bring new capabilities, the skeptics’ case is weakening. Many tech stocks to buy will profit from this seismic shift in technology.
The main question in the AI race remains: Which companies will reap the benefits? Obviously, semiconductor companies providing chips to support AI and accelerated computing are already profiting. Alongside the chip producers, semiconductor equipment makers like ASML (NASDAQ:ASML) and foundries like Taiwan Semiconductor Manufacturing (NYSE:TSM) are also winners.
Makers of AI servers have also joined the AI boom. Indeed, Super Micro Computers (NASDAQ:SMCI) and Dell Technologies (NYSE:DELL) are among the best-performing tech stocks riding the demand for AI servers higher. However, when it comes to software, the environment has been murkier. There is a fear that AI could disrupt some SAAS companies and diminish their revenues.
Still, there are plenty of tech stocks to buy for the AI hype. These three stocks are bargains and present substantial upside as their AI dominance takes root.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is leading the AI revolution, with its graphic processing units enabling large language model training and inference. Despite the substantial gains over this year, it remains one of the tech stocks to buy for the AI hype. Its dominance in AI chips is almost unassailable, and the stock is a bargain based on historical multiples.
Once again, Nvidia has proven why it will continue to dominate the AI chip market with over 80% market share. Ahead of the COMPUTEX tech conference in Taipei, it unveiled its new AI chip architecture, Rubin. This comes after the announcement of the Blackwell architecture at its GTC conference in March.
At this rate of innovation, competitors like Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC) can barely catch up. Nvidia has stepped up to a one-year product cycle from its historical two to three years. Given its head start, it’s inconceivable that competition will catch up soon.
Lastly, earnings are growing faster, supporting the bullish case for the stock. Based on Bank of America estimates, NVDA stock trades at 46 times FY2025 EPS and 33 times FY2026 EPS. They maintain a $1,500 price target, presenting over 20% upside.
HP (HPQ)
After reporting earnings on May 30, HP (NYSE:HPQ) soared over 10%. It is a stealth AI play that the market hasn’t caught up to and presents substantial upside. AI PCs will be a growth tailwind, making it one of the best tech stocks to buy.
Looking at the Q2 results, the markets were pleased by the PC and print market recovery. However, the main catalyst going forward will be AI PCs. Canalys believes a major transition from normal to AI-capable PCs has begun. They expect AI-capable PC shipments to exceed 100 million units in 2025, accounting for over 50% of all PC shipments.
HP will tremendously benefit from the demand growth of its AI PC portfolio. In addition to AI-PCs, it’s also launching AI-enabled devices and accessories for gaming, room solutions and advanced workstation solutions. Management has stated that these products will have higher average selling prices and lean toward the premium segment.
Despite the upcoming AI products, HP is still one of the cheapest tech stocks to buy. The market isn’t appreciating the potential revenue upside. At 10 times forward earnings, HPQ stock is a bargain option to participate in the AI hype.
Salesforce (CRM)
Lately, investors have been dumping software stocks, leading to significant declines for the sector. Questions about how AI might disrupt SaaS have created uncertainty. Unfortunately, Salesforce (NYSE:CRM) hasn’t been spared, especially after it lowered Q2 guidance slightly. However, after a 20% selloff, CRM stock is now a cheap way to play AI.
In the application layer, Salesforce will emerge as an AI winner, making it one of the tech stocks to buy. Today, Salesforce is a top customer relationship management SaaS that serves most large enterprises. Its platform holds the largest repositories of front-office enterprise data and metadata. Moreover, everyday users on the platform are creating petabytes of data.
With AI, this treasure trove of data can become a valuable asset for enterprises. Salesforce hopes to help customers leverage AI to draw insights from their data. To this end, it has launched data cloud to power AI insights for customers. And with Einstein, it’s giving enterprises predictive capabilities and enabling them to create personalized customer experiences.
With these AI tailwinds, the post-earnings selloff was overdone even though management lowered Q2 fiscal 2025 guidance. If anything, management maintained their FY2025 guidance of 8% – 9% revenue growth. At 23 times FY2025 non-GAAP EPS guidance of $9.86 – $9.94, Salesforce is among the tech stocks to buy for an AI boost.
On the date of publication, Charles Munyi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
