Tech stocks have been on a remarkable rally lately, largely fueled by investors capitalizing on the artificial intelligence (AI) hype. To a rather large extent, this trend is being fueled by Nvidia (NASDAQ:NVDA). Its explosive results in recent quarters have set the stage for a broader tech boom. As artificial intelligence (AI) continues to reshape our world, the appeal of tech stocks grows stronger.

However, identifying stocks that still have room to rally in this landscape can be a tough challenge. The following three stocks are not only set to benefit from the ongoing sector dynamics. But also, they are trading at fair valuations, suggesting strong prospects moving forward.

Adobe (ADBE)

Creative software giant Adobe (NASDAQ:ADBE) has seen its shares plummet lately. Concerns have arisen about AI-generated video and editing tools possibly disrupting its subscription business model. Investors have been wary, stressing that the advancement of automated content creation may undercut Adobe’s core offerings.

However, Adobe is not sitting idle. The company is making robust AI advancements, particularly through its innovative Adobe Firefly initiative. Its generative AI tools suite, Adobe Firefly, is designed to enhance creative workflows and integrate seamlessly with Adobe’s existing products. Moreover, Adobe’s extensive library of assets provides a significant competitive edge, as these resources are critical for training AI models.

Overall, given its strong foundation and proactive approach to AI integration, Adobe is well-positioned to compete in this evolving landscape. Finally, at a forward P/E of 25.3X, Adobe is trading at one of the lowest multiples in its recent history. Thus, ADBE stock appears to offer both upside potential and a wide margin of safety.

Oracle (ORCL)

Oracle (NYSE:ORCL) is well-known for its cash-cow legacy database, which constitutes its core business. While its database technology might be thought ancient in today’s tech world, it has long been the backbone of many enterprises, praised for its reliability and scalability. To this day, its availability and security features are unmatched in the industry.

However, the real excitement in Oracle’s investment case lies in its recent advancements in the cloud space. The company has been making notable strides to compete with industry giants, like Amazon’s (NASDAQ:AMZN) Amazon Web Services (AWS), Microsoft’s (NASDAQ:MSFT) Azure, and Alphabet’s (NASDAQ:GOOGL, NASDAQ:GOOG) Google Cloud.

Notably, Oracle has recently invested heavily in expanding its cloud offerings, focusing on areas such as autonomous databases, cloud-native applications and AI-driven analytics. This has led to a re-acceleration in revenues, which have grown at a compound annual growth rate (CAGR) of 8.5% over the past three years. Given that revenues had flattened prior to the rollout of these cloud offerings, Oracle’s investment case has been revitalized.

Ultimately, at a forward P/E of just under 21.0X, Oracle remains reasonably valued for those looking for profitable growth, especially in the current environment of inflated multiples within the tech sector.

Taiwan Semiconductor Manufacturing (TSM)

Taiwan Semiconductor Manufacturing (NYSE:TSM) remains a highly essential player in the semiconductor industry. TSM is the largest independent semiconductor foundry globally, supplying chips to a vast array of industries.

And, TSM’s importance cannot be overstated as semiconductor tech continuously advances. Thus, the demand for more powerful and energy-efficient chips surges. Its cutting-edge manufacturing processes enable the production of high-performance chips that drive innovation across various sectors. Nobody else can fulfill this role except TSM.

While the tech world has its eyes glued on Nvidia, it’s crucial to recognize that Nvidia relies heavily on TSM’s fabrication capabilities to bring its chips to life. Undoubtedly, TSM is poised to continue reaping substantial benefits from the current sector dynamics, particularly owing to its monopolistic position in the industry.

Finally, TSM stock trades at a reasonable valuation, given its underlying growth prospects. At a forward P/E of 21.4X, the stock is attractively priced, given its growth prospects and irreplaceable role in the semiconductor industry.

On the date of publication, Nikolaos Sismanis 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.