10 Best Tech Stocks for the Next 5 Years

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2. Nvidia (NASDAQ:NVDA)

Market Cap: $4,934.48 billion

Number of Hedge Fund Holders: 285

Nvidia designs the processors that train and run most large artificial intelligence models, and it now sells them as complete data center systems. Investors like it because orders keep growing as customers expand their AI computing capacity.

In its fiscal second quarter, revenue reached $96.2 billion, up 106% from a year earlier. Data Center revenue was $89.0 billion, up 117%. Data Center is the engine, accounting for nearly all of the company’s revenue. Chief Executive Officer Jensen Huang said the build-out of AI computing capacity is moving at top speed. For the fiscal third quarter, Nvidia expects revenue of $108.0 billion, plus or minus 2%, and that outlook assumes no Data Center compute revenue from China.

The next product cycle is already underway. Vera Rubin, its newest platform, is now in full production. Nvidia also returned about $26.0 billion to shareholders in the quarter through share repurchases and dividends, and earnings per share grew 95.27% a year over the past five years. Our look at how Nvidia is using its AI growth to expand into autonomous driving covers one place that growth could go next.

1. Apple (NASDAQ:AAPL)

Market Cap: $5,032.07 billion

Number of Hedge Fund Holders: 169

Apple makes the iPhone, Mac, iPad and Apple Watch, and it sells the services that run on them, such as the App Store, iCloud and Apple Pay. The appeal is a loop: every device sold adds to an installed base that keeps paying for services.

Apple’s fiscal third quarter showed that loop working. Revenue was $109.4 billion, up 16 percent from a year earlier, and iPhone, Mac and Services each set a June-quarter record. Services alone brought in $30,739 million. Chief Financial Officer Kevan Parekh said the installed base of active devices reached a new all-time high across every major product category and geographic segment, and Tim Cook called it Apple’s strongest June quarter ever.

The record rests on a long earnings climb. Over the past five years, earnings per share grew 17.91% a year, and Apple earned a 33.17% operating margin over the past 12 months. New hardware keeps the base growing, with a 14-inch MacBook Pro and a new iMac, both built on its M6 chip, introduced recently. Our analysis of whether Apple’s valuation is running ahead of its growth looks at how much of that strength investors already price in.

While we acknowledge the risk and potential of AAPL as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than AAPL that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock.

READ NEXT: Billionaire Ken Fisher and Jim Cramer Still Like Apple (AAPL). Should You? and Nvidia vs. Microsoft: Is NVDA’s Explosive Growth Being Undervalued?

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