If You Buy 2 Tech Stocks This Year, Make Them These

2026-03-17 18:09:52

With technology stocks on average down about 5% year to date (based on the benchmark S&P 500 Information Technology Sector index), this is an opportune time to invest in the sector, as some great tech stocks are trading at a discount.

Here are two that should be at the top of your list.

Image source: Getty Images.

Nvidia

If you have the ability to add shares of Nvidia (NVDA +0.11%) to your portfolio at their current valuation, you should jump all over that opportunity.

Nvidia is down about 1.6% year to date, but that’s more due to the larger tech sector sell-off than it is due to anything company specific.

The dominance of Nvidia in the graphics processing unit (GPU) market remains fully intact, and most of those chips are going into AI data centers. In its fiscal 2026 fourth quarter, the chipmaker made about $62.3 billion in revenue from data center sales alone – about 91% of its total revenue.

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NASDAQ: NVDA

Nvidia

Today’s Change

(0.11%) $0.20

Current Price

$183.42

Key Data Points

Market Cap

$4.5T

Day’s Range

$181.69 - $185.40

52wk Range

$86.62 - $212.19

Volume

4.2M

Avg Vol

177M

Gross Margin

71.07%

Dividend Yield

0.02%

According to research from The Motley Fool, that single quarter’s worth of data center revenue was more than its leading rivals Broadcom (AVGO 1.23%), AMD (AMD 0.08%), and Intel (INTC 3.48%) made from their data center businesses in their last full years, combined.

Overall, according to analysis from The Motley Fool, Nvidia has an 86% share of the AI chip market.

Nvidia’s revenue grew 73% year over year to $68 billion last quarter, and in the current quarter, management projects another 15% increase to $78 billion. The company also had a staggering $500 billion backlog as of the third quarter of last year, to be executed by the end of calendar 2026.

Analysts expect 70% revenue growth and 73% earnings growth this fiscal year, which would exceed the growth rates of 65% and 60%, respectively, last fiscal year.

Wall Street analysts are almost entirely in agreement that Nvidia is a buy. Their median price target of $265 per share means that they expect it to deliver about 45% upside over the next 12 months. Trading at just 22 times forward earnings, which is below the tech-heavy Nasdaq-100’s ratio, Nvidia stock is just too cheap and too good to ignore.

Microsoft

Microsoft (MSFT 0.17%) has been the clear laggard among “Magnificent Seven” stocks this year. The stock is down about 17% year to date and roughly 22% over the past six months.

Unlike Nvidia, the struggles for Microsoft go beyond valuation and the broader AI and tech sector sell-off. There are concerns that are specific to Microsoft – mainly around its AI spending and cloud computing growth rates.

Specifically, Microsoft informed investors that it planned to spend more on AI in 2026 than it did in 2025, which was a record year for capital expenditures. Moreover, it’s expecting slightly slower growth for Azure AI cloud computing revenue in 2026.

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NASDAQ: MSFT

Microsoft

Today’s Change

(-0.17%) $-0.68

Current Price

$399.27

Key Data Points

Market Cap

$3.0T

Day’s Range

$397.77 - $404.40

52wk Range

$344.79 - $555.45

Volume

855K

Avg Vol

34M

Gross Margin

68.59%

Dividend Yield

0.87%

The other thing that investors are concerned about is the company’s reliance on OpenAI. Microsoft has a massive $625 billion backlog in AI sales, but OpenAI accounts for about 45% of that, management said on the most recent earnings call. After new reports surfaced that OpenAI is expected to lose money again in 2026 and won’t be profitable until 2029, concerns intensified that the chatbot leader may not be able to fully meet its Microsoft contracts.

I think these concerns are all overblown. While OpenAI’s burn rate (the amount of money it’s spending) is higher than anticipated, its revenue growth has also been faster than expected. In 2025, OpenAI’s top line grew by a staggering 233% to about $20 billion. By 2029, it expects $125 billion in revenue. That would be a compound annual growth rate of about 58%.

So, the revenue growth for OpenAI remains robust. Plus, Microsoft continues to sign new deals to expand its customer base and reduce its reliance on OpenAI.

What makes Microsoft particularly attractive is its relatively low valuation. Trading at just 25 times earnings and 24 times forward earnings, it’s a great buy.

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