If you're going to invest big, it's often a good idea to invest in industry leaders that have solid growth still in front of them. Let's look at a few technology industry leaders that still trade at reasonable valuations, and that should continue to be long-term winners thanks to their wide moats and histories of adaptability and innovation.
Nvidia
Nvidia (NVDA -2.09%) is the leading designer of the graphic processing units (GPUs) that are powering the artificial intelligence (AI) infrastructure build-out. GPUs were originally designed to speed up graphics rendering in video games and animation, but the company later created its CUDA software platform, which allows customers to program those chips for other tasks. More recently, it added various developer tools and libraries for things such as AI and high-performance computing. This combination of software and hardware helped create the wide moat the company enjoys today.
GPUs have become the backbone of AI infrastructure because they are built for parallel processing -- handling certain types of massive calculations that are easily divided into thousands of smaller calculations that can be solved simultaneously -- and those are precisely the sorts of workloads that AI software creates. For those specialized tasks, GPUs are much faster than other chips. (Central processing units, by contrast, are better and faster at handling computational tasks that have to be dealt with sequentially.) As AI models become more complex, it takes more computing power to efficiently train and power them, which is contributing to the ongoing demand for GPUs.
As such, Nvidia's sales continue to grow as companies race to develop better and better AI models, and more growth lies ahead for it as the AI-related capital expenditure (capex) budgets of its largest customers are set to rise in 2025.
Microsoft
Microsoft (MSFT -1.73%) established itself as the clear leader in the software productivity space with popular programs such as Word, Excel, and PowerPoint. Meanwhile, the company has proven to be adaptable, first moving its software suite to a bundled software-as-a-service offering, and later becoming one of the first companies to embrace AI through its large investment in OpenAI. It also has the second-largest cloud computing operation in Azure.
Today, the company is nicely benefiting from its early AI investments. Revenues from Azure are growing quickly -- they jumped by 33% year over year last quarter -- as it helps customers create their own AI agents. AI also helped power growth for its GitHub service, which helps programmers write code more quickly.
The biggest opportunity for Microsoft, though, will be increasing the adoption of its Microsoft 365 AI Copilots. These can already do great things such as allowing users to use Python within Excel just through natural language prompts, and the tools are still improving. Adding a Copilot subscription to a Microsoft 365 subscription is currently $30 per month per user for enterprise customers, and considering the number of 365 users out there, that's a sizable market.
Amazon
Amazon (AMZN -1.45%) is the both the world's largest e-commerce company and its largest cloud computing infrastructure company. It transformed the retail landscape by creating one of the world's most advanced logistics and warehousing platforms, selling its own goods and also serving as a third-party marketplace.
Its Amazon Web Services unit was originally developed to serve Amazon's own IT platform needs. Today, the cloud computing unit is its most profitable and fastest-growing business. The company leaned into AI with the unit, with its Bedrock and Sagemaker services helping drive results. Bedrock offers foundational AI models from both Amazon and other AI companies, while SageMaker helps customers develop AI applications.
Amazon is both adaptable and innovative, and the company is not afraid to spend heavily in pursuit of growth. These qualities have made it a long-term winner.
Image source: Getty Images.
Alphabet
Alphabet (GOOGL -1.45%) (GOOG -1.55%) is the dominant player in search with Google. It also owns a top streaming video service (YouTube) and a top digital ad network, and its Google Cloud unit is the No. 3 cloud computing infrastructure provider by market share. The company has also taken the lead in newer fields such as quantum computing and self-driving vehicles.
The company is a great combination of leading businesses and emerging businesses with huge opportunities. Alphabet has recently been showing off its innovative prowess, delivering a notable break-through in quantum computing as well as debuting an impressive AI video generation tool, Veo 2, that looks to be vastly superior to OpenAI's Sora video generation tool, which was introduced just a few weeks earlier.
Alphabet's cloud computing business has lately been the fastest grower of the big three in the space, and recently hit a big profitability inflection point: Its profits are now growing much more quickly than its revenues. Meanwhile, the company has a big opportunity at the intersection of AI and search. Google only serves ads with the results of about 20% of its searches, but it will have an opportunity to attach new ad forms to its AI Overviews to eventually begin to monetize this traffic.
Alphabet's strong ability to innovate makes it a solid stock to own, despite the potential that the company could soon be hit with antitrust penalties.
