2 Top Tech Stocks to Buy in September

With the artificial intelligence (AI) market expected to triple in size through the end of the decade, investors who choose the right tech stocks should do very well. Statista projects the AI market to climb to $826 billion by 2030. Here are two stocks that will help you profit from this opportunity.

1. Nvidia

The rapid adoption of AI is driving phenomenal growth for leading AI chip supplier Nvidia (NVDA -1.92%). The stock soared over the last year, but Nvidia continues to see growing interest from enterprises using cutting-edge AI models and applications, which spells more revenue growth and new highs for the shares.

Data centers are still in the process of shifting from traditional computing using central processing units (CPUs) to accelerated computing for AI workloads using the far more powerful graphics processing units (GPUs). Nvidia’s data center revenue grew 154% year over year last quarter, driven by strong demand for GPUs and networking products.

Nvidia posted strong growth for many years, but the shift to AI has accelerated the company’s growth. Companies choose Nvidia because it is available in every cloud. Importantly, customers can access a library of software programming models to get the most out of the GPUs across a variety of use cases, whether for AI workloads or running 3D graphics. The added value is one reason why Nvidia generates high margins on these chips, which helped drive a year-over-year increase of 168% in earnings per share last quarter.

Management expects to see continued growth in the data center business in the near term, driven by its next-generation Blackwell AI computing platform and growing interest in generative AI software development. Analysts expect Nvidia to report earnings growth of 41% next year, which is enough to justify the stock’s forward price-to-earnings (P/E) ratio of 40.

2. ServiceNow

The growing interest in AI software is a huge opportunity for ServiceNow (NOW 0.52%). The stock is hitting new highs following the company’s latest financial results that showed strong demand for its AI-powered Now Assist software.

Companies are increasingly looking for ways to improve productivity, and that benefits ServiceNow. It helps companies build applications that simplify tasks and save time with automation. The company consistently grew its revenue at double-digit rates for several years, but a 23% year-over-year increase in subscription revenue last quarter shows a big opportunity ahead.

ServiceNow is having success closing large deals. Enterprises are clearly seeing value in ServiceNow’s software, particularly its AI-powered Now Assist, and how it can help them improve profitability. Demand for Now Assist is booming, with net new annual contract value doubling over the previous quarter. It’s been adopted by several companies, including Merck, Adobe, and Dell Technologies.

The stock trades at a high forward P/E of 64. But the high valuation reflects ServiceNow’s recurring revenue from subscriptions and expectations for profitable growth over the long term. The Wall Street consensus calls for earnings to grow 32% on an annualized basis over the next several years. The stock should be a long-term winner for shareholders.

John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Adobe, Merck, Nvidia, and ServiceNow. The Motley Fool has a disclosure policy.