That tech stocks have been the driving force behind the two-year bull market is no surprise. It was the Magnificent Seven stocks that represented most of the S&P 500’s 24% gains last year. Most of those companies are repeating their performance in 2024, if not quite to the same degree.

However, after hitting a new record high two weeks ago, the benchmark index started to peel back from those gains. Mostly, it was the result of investors selling off some of the top tech stocks and rotating into small-cap names. 

Yet it remains that tech stocks are pushing stock earnings higher. According to FactSet (NYSE:FDS), of all 11 stock sectors, technology is reporting the highest earnings growth rates in the second quarter. And it is semiconductors with 25% growth and software at 12% that are responsible for the lion’s share of the gains.

If we drill down into individual stocks, Nvidia (NASDAQ:NVDA) is unsurprisingly the largest contributor to year-over-year growth. It is expected to report earnings of 64 cents per share, a 137% increase over the 27 cents per share it notched last year.

Exclude the AI chipmaker, though, and tech stocks are suddenly seeing much more mundane increases. Yet the three top tech stocks below represent excellent opportunities to buy right now.

Microsoft (MSFT)

Microsoft (NASDAQ:MSFT) just reported fiscal 2024 fourth-quarter results. While it beat Wall Street estimates for revenue and earnings, certain segments came up a little short. Unfortunately, they are the most important to Microsoft’s future growth, and that has some investors worried. They shouldn’t be.

The software giant, which is now also a leading artificial intelligence stock, saw revenue of $64.7 billion, up 16% in currency adjusted dollars. Its Azure cloud services, which has quickly transformed into one of the biggest drivers of Microsoft’s business, was up 30% on an adjusted basis. The freak-out by the market is because last year segment sales grew 31%.

Similarly, its enterprise software operations were up 12% year-over-year versus a 13% increase last year. But the sky is not falling.

Although Azure is second to Amazon’s (NASDAQ:AMZN) AWS cloud business, it has several key advantages. Because Microsoft offers hybrid cloud hosting, it allows clients to choose whether they want to keep data on-premises or in the cloud. It also lets them choose which data and how fast they migrate it to the cloud. 

Microsoft stock is down 11% from its recent all-time high but investors should view that as a buying opportunity.

Advanced Micro Devices (AMD)

Semiconductor stock Advanced Micro Devices (NASDAQ:AMD) also just reported earnings and apparently all a chipmaker needs these days is AI. Despite overall growth slowing and gaming revenue tumbling 59% from last year, AMD’s data center segment that houses the AI business witnessed 115% growth.

Yet this is what investors have been expecting and waiting for all along. The chipmaker was behind Nvidia in developing AI chips. It basically started from nothing a year ago but has been making up for lost time. 

Its AI accelerators outperform Nvidia’s standard data center chips, and though AMD’s rival is continually advancing the technology to improve speed and efficiency, AMD’s chips have the benefit of being cheaper.

That seems to be resonating with customers. Data center revenue climbed to $2.8 billion on the steep ramp in Instinct MI300 GPU shipments. Strong growth in fourth-generation EPYC CPUs also helped push sales up. CEO Lisa Su said, “The rapid advances in generative AI are driving demand for more compute in every market.”

This is not a one-off event. AMD hinted at it in the first quarter but the market sold off AMD stock. That didn’t happen this time as shares rose 4% but with a huge runway in front of it, this chipmaker is one to buy now.

Texas Instruments (TXN)

Amidst all the hoopla over AI, analog integrated circuits are often forgotten about. Yet they remain integral to the workings of virtually all computers and electronic devices. Texas Instruments (NYSE:TXN) remains one of the leading analog IC manufacturers. An inventory glut following the pandemic slowed business growth and caused sales to slow, but that is coming to an end.

Second-quarter sales fell 16% year-over-year but were up 4% sequentially. Texas Instruments told investors earlier this year business would improve going forward and it is beginning to play out. Semiconductors are a cyclical industry but over time revenue tends to grow. We are entering an upcycle now.

Because analog chips are used for uploading and downloading audio, video and image files, they are found in smartphones, digital camera, appliances and automobiles. Its their ubiquity, but under-the-radar nature, that makes them an attractive long-term investment.

TXN stock has generated returns of more than 450% to investors over the past decade. Shares are up 20% year-to-date but there is plenty more long-term upside potential.

On the date of publication, Rich Duprey 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.

On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.