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Why Microsoft and Alphabet Outshine Nvidia in 2024 Why Microsoft and Alphabet Outshine Nvidia in 2024

The Tech Sector in 2023 and Beyond

Investors in tech stocks experienced a rollercoaster ride in 2023, as the Nasdaq-100 Technology Sector index surged 67% after a 40% slump the previous year. The pacing growth of budding industries like artificial intelligence (AI) and cloud computing continued to fuel excitement among investors, making 2024 an opportune time to capitalize on the tech sector.

Steering Clear of Nvidia

Undoubtedly, Nvidia hogged the limelight with its AI chip market domination, achieving an impressive 224% stock surge year over year. However, investors looking for more value and promising long-term prospects may need to look beyond this chipmaker giant.

1. Why Microsoft is a Strong Contender

Microsoft (NASDAQ: MSFT) outshone Apple last week as the world’s most valuable company, with a market cap nearing $2.9 trillion. The tech behemoth, home to globally renowned brands such as Windows, Office, Xbox, LinkedIn, and Azure, boasts a user base in the billions across these platforms. The rapid growth in Microsoft’s stock and an annual revenue upsurge of 68% over the past five years speaks volumes about its financial vitality and potential. Compared to Nvidia, Microsoft is a significantly more attractive investment with lower valuation metrics across the board.

2. The Alphabet Advantage

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) may have lingered in the shadows of cloud giants like Microsoft and Amazon in the past but has made significant strides with anticipated AI model, Gemini. With a steadily rising stock and exceptional revenue and operating income growth, Alphabet’s dominance in digital advertising is significant. The company’s stock stands as a much more appealing investment than Nvidia, with substantially lower forward P/E, P/FCF, and P/S ratios, indicating promising future potential in the tech landscape.

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Where to invest $1,000 right now

Experts have heralded Microsoft as one of the ten best stocks for investors to buy right now. Data revealed by the Motley Fool Stock Advisor confirms the tremendous value propositions offered by these two tech titans.

*Stock Advisor returns as of January 8, 2024