2 Leading Technology Stocks to Buy in 2024 and Beyond

The hot topic in the tech stock world is undoubtedly artificial intelligence (AI). AI-related news seems unavoidable, with almost every company trying to show shareholders where they are using AI to improve their business. We may be in the midst of an AI hype cycle right now, but it seems like the technology is here to stay, and it could make a big difference in society.

As an investor, the trick is to differentiate between companies that have a carry of AI business and those that have a pretense of it. Here are two tech stocks that have had a nice headwind from the AI boom and are worth buying today or holding for the long haul.

1. ASML

For a company that plays an integral role in the production of semiconductors.ASML (NASDAQ resonance code: ASML)Possibly the most important company you've never heard of, ASML Artech is located in the Netherlands and produces the photolithography machines required for semiconductor production. When it comes to the Extreme Ultraviolet Lithography (EUV) machines required for state-of-the-art chips, ASML is the only company in the world that manufactures and sells these ultra-precise machines.

The boom in demand for AI chips has been a tailwind for ASML as you see companies buying and designing more chips for AI applications, and the manufacturing plants that make those chips are using ASML machines. Demand is so high that the company has a $42 billion backlog of orders lined up. This has helped the company maintain revenue even as the chip industry as a whole has been in a cyclical downturn.

The demand for semiconductors is likely to increase as society becomes more digitized and the development of large-scale linguistic models for artificial intelligence is driven. Additionally, the desire to manufacture semiconductors nearshore in the U.S. will lead to the construction of new manufacturing facilities. All of this means new lithography machines and more business for ASML.

2. CrowdStrike

Before it became the talk of Wall Street.CrowdStrike (NASDAQ: CRWD)Already making waves as the first cloud-native AI microsoft-enabled cybersecurity company, CrowdStrike's business has two unique features that set it apart from its industry peers.

First, it was built to work in the cloud, which gives it an advantage over traditional systems that had to move on once the cloud became prevalent. Secondly, it uses artificial intelligence to detect hypochondriacs and protect all customers from the start.

In short, CrowdStrike's Falcon platform uses artificial intelligence to process trillions of bits of information to detect and prevent security breaches. Then, where a breach is detected anywhere in its customer base, the system learns and shares that learning with all CrowdStrike customers to protect all customers.

This networking effect is very powerful and is one of the reasons for the company's success in expanding its customer base and getting existing customers to increase their spending over the long term. In fiscal year 2024 (ending December 2023), CrowdStrike doubled the number of transactions with customers who purchased eight or more modules, which the company calls products. Nearly two-thirds of customers used five or more modules. It is obvious that customers see the value of the CrowdStrike product suite.

CrowdStrike has been generating positive cash flow for some time, but has only recently begun to be profitable on a GAAP basis.FY2024 was a turning point in earnings. Compared to FY2023, FY2024 operating income increased by 86%, earnings per share increased by 101%, and free cash flow increased by 39%.

Leading Artificial Intelligence

There will be many ways to invest in AI in the coming years. Most headlines are driven by chip companies and giant tech firms that are creating large-scale language models and developing next-generation AI applications.

ASML and CrowdStrike, on the other hand, offer investors strong companies that are not only leaders in their respective industries, but also have rational connections to AI. These two companies would be great investments even without the AI tailwinds, but those tailwinds will benefit both companies in 2024 and beyond.

Should you invest $1,000 in ASML now?

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Jeff Santoro owns shares of ASML and CrowdStrike. the Motley Fool owns shares of recommended ASML and CrowdStrike. the Motley Fool has a disclosure policy.

Two Leading Tech Stocks to Buy for 2024 and Beyond was originally published by The Motley Fool.