This year, advancements in artificial intelligence position tech companies at the forefront of innovation, ready to capitalize on AI-driven productivity. These trends are boosting demand and benefiting the sector, with the IT hardware market projected to grow at a 7.9% CAGR, reaching $191.03 billion by 2029, driven by corporate investments in technology to enhance productivity.

Therefore, it could be wise to consider tech giants: Apple Inc. (AAPL), NVIDIA Corporation (NVDA), and Meta Platforms, Inc. (META) despite their premium valuations.

Similarly, the tech sector is thriving, fueled by major investments and strategic partnerships in advanced chip manufacturing, accelerating innovation. With the industry's shift toward digitization and automation, demand for high-performance computing is surging. Consequently, the global semiconductor market is projected to reach $2.06 trillion by 2032, growing at a robust 14.9% CAGR.

Therefore, despite high P/E ratios, the abovementioned tech stocks which continue to lead in market growth, profitability, and long-term potential, could be attractive investment opportunities. Let’s assess the fundamentals of the tech stocks.

Apple Inc. (AAPL)

AAPL designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company offers the iPhone, the Mac, the iPad, and wearables, home, and accessories including AirPods, Apple TV, Apple Watch, Beats products, and HomePod.

In terms of forward non-GAAP P/E, AAPL’s 30.10x is 27% higher than the 23.71x industry average. Its 3.02x forward non-GAAP PEG is 68% higher than the 1.80x industry average. Similarly, its 23x forward EV/EBITDA is 59.7% higher than the 14.40x industry average.

For the fiscal fourth quarter ended September 28, 2024, AAPL’s total net sales increased 6.1% from the previous year to $94.93 billion. Its operating income rose 9.7% year-over-year to $29.59 billion. However, the company’s net income and EPS were $14.74 billion and $0.97, representing decreases of 35.8% and 33.6% from the same quarter last year, respectively.

Street expects AAPL’s EPS for the quarter ending December 31, 2024, to increase 7.9% year-over-year to $2.35. Its revenue for the same quarter is expected to grow 4% year-over-year to $124.41 billion. AAPL surpassed the Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 25.8% to close the last trading session at $222.23.

AAPL’s POWR Ratings reflect mixed prospects. It has an overall rating of C, translating to a Neutral in our proprietary system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has a C grade for Growth, Momentum, and Stability. Within the Technology - Hardware industry, AAPL is ranked #24 out of 41 stocks. To see the additional grades of AAPL for Value, Sentiment, and Quality, click here.

NVIDIA Corporation (NVDA)

NVDA provides graphics, computing, and networking solutions internationally. It operates in three segments: Graphics, Compute & Networking. The company's products are used in gaming, professional visualization, data center, and automotive markets.

In terms of forward non-GAAP P/E, NVDA’s 47.83x is 101.8% higher than the 23.71x industry average. Its 39.94x forward EV/EBIT is 101.8% higher than the 19.79x industry average. However, its 1.35x forward EV/Sales is 25% lower than the 1.80x industry average.

NVDA’s revenue for the second quarter which ended on July 28, 2024, increased 122.4% year-over-year to $30.04 billion. The company’s non-GAAP operating income increased 156.4% year-over-year to $19.94 billion.

In addition, NVDA’s non-GAAP net income and non-GAAP net income per share came in at $16.95 billion and $0.68, representing increases of 151.5% and 151.9% from the year-ago values, respectively.

For the quarter ended October 31, 2024, NVDA’s EPS and revenue are expected to increase 84.5% and 81.8% year-over-year to $0.74 and $32.94 billion, respectively. NVDA surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 208.5% to close the last trading session at $138.86.

NVDA’s uncertain prospects are reflected in its POWR Ratings. It has an overall rating of C, which translates to a Neutral in our proprietary rating system.

It has a C grade for Growth and Momentum. Within the Semiconductor & Wireless Chip industry, it is ranked #42 out of 91 stocks. To access additional grades for NVDA’s Value, Stability, Sentiment, and Quality ratings, click here.

Meta Platforms, Inc. (META)

META engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. It operates in two segments, Family of Apps and Reality Labs.

In terms of forward non-GAAP P/E, DELL’s 24.91x is 81.6% higher than the 13.72x industry average. Its 14.17x forward EV/EBITDA is 80.8% higher than the 7.83x industry average. On the other hand, its 1.18x forward non-GAAP PEG is 19.8% lower than the 1.47x industry average.

META’s revenue for the third quarter ended September 30, 2024, increased 18.9% year-over-year to $40.59 billion. Its income from operations grew 26.2% from the previous year’s quarter to $17.35 billion. For the same period, the company’s net income amounted to $15.69 billion, or $6.03 per share, up 35.4% and 37.4%, respectively, over the prior-year quarter.

Analysts expect META’s EPS and revenue for the quarter ending December 31, 2024, to increase 26.1% and 17.1% year-over-year to $6.72 and $46.96 billion, respectively. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 81.1% to close the last trading session at $569.82.

META’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.

It is ranked #17 out of 52 stocks in the A-rated Internet industry. It has an A grade for Sentiment and Quality. Click here to see META’s Growth, Value, Momentum, and Stability ratings.

What To Do Next?

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AAPL shares were trading at $222.91 per share on Tuesday afternoon, up $0.90 (+0.41%). Year-to-date, AAPL has gained 16.22%, versus a 22.30% rise in the benchmark S&P 500 index during the same period.

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.

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