July’s 3 Hottest Tech Stocks To Buy

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Determining the “best” stock to buy in a particular sector is a difficult exercise, particularly because there are simply so many options for investors to choose from with very different business models and long-term growth outlooks. In the tech sector, this reality is even more complex, with one of the widest arrays of investing options out there.

And while most investor attention is being paid to how tech companies are utilizing artificial intelligence (AI) technology to grow their cash flows, it’s also true that many top players in the tech sector have strong underlying businesses which provide ample reason to own these stocks over the long-term, even if the AI trend doesn’t play out as expected.

Here are three such stocks I think are worth considering on the basis of their core businesses alone, with AI really being a sweetener to their offerings.

Taiwan Semiconductor Manufacturing Company (TSM)

One of the top chip makers I don’t think gets enough attention from investors is Taiwan Semiconductor Manufacturing Company (NYSE:TSM). The fast-growing advanced chip manufacturing player has lagged behind rival Nvidia (NASDAQ:NVDA) in terms of returns for some time, and there’s good reason why Nvidia continues to steal most of the limelight from other players in this sector. Nvidia is the dominant force in AI chip production, and that’s probably not going to change any time soon.

That said, this incredibly fast-growing space is one that provides plenty of room for other players to thrive. And as the chart above shows, TSM stock has been no slouch in this department, providing returns of around 250% over the past five years.

Yes, those aren’t the 1,400%+ returns Nvidia has provided over the same time frame. But Taiwan Semi’s role as a central player in the AI infrastructure buildout should continue to provide long-term growth for a company that dominates the 5nm and 3nm nodes (90% market share in both markets).

As the world shifts toward ever-smaller and ever-faster chips, demand for Taiwan Semi’s core products may take a hit. But I’m of the view that in terms of the best bang for one’s buck is concerned, Taiwan Semi’s strong market share in these existing markets should provide solid growth, particularly as companies look for cost-effective ways to grow their core businesses. 

Alphabet (GOOG)

Another leading tech giant with significant AI-related upside I think is worth considering is Alphabet (NASDAQ:GOOG). 

Yes, Alphabet is a major player in the world of AI, with its Gemini AI model continuing to grow at a faster rate than many other leading AI peers. And with AI-enabled cloud solutions supporting the company’s Google Cloud business (a key cash flow driver of the tech giant), this is a stock with its own set of AI growth considerations to think about right now. 

That said, the company’s core search business remains strong, and Alphabet continues to be a leader in the digital advertising space. These are two markets which continue to provide very steady and robust cash flow growth, which provides Alphabet with some of the deepest pockets to reach into for its future investments in AI technology.

Thus, as far as companies with rock-solid core businesses that may benefit from the rise of AI are concerned, Alphabet ought to remain a top option in the minds of most growth investors right now. 

Zscaler (ZS)

Zscaler (NASDAQ:ZS) is a top cybersecurity player that’s seen some significant volatility of late. Depending on the time period a given investor has put capital to work in ZS stock, they may be up or down. Indeed, this is one of those “peak and valley” stocks that really outperforms during up markets, and can sell off significantly when things turn sour. 

Now, ZS stock is still up more than 130% over the past five years, and I think similar upside is likely over the next five years as companies continue to focus more intently on their cybersecurity needs. As many Wall Street analysts will point out, cybersecurity spending is one of those budget line items that’s likely to be last to be cut. That’s because the risk of a major cyber event can outweigh the effective security Zscaler and its competitors provide.

With one of the most robust cybersecurity platforms among its pers, with threat protection, secure access functionality, and data loss prevention, I think Zscaler has plenty of market share growth upside which is worth considering, given the recent debacles that have hit some of its peers.

With a growing total addressable market and non-GAAP operating margin expansion, this is a stock that does look poised for more upside over the long-term. Zscaler is a stock I’ve got on my watch list, and will consider adding on significant dips down the road (which do seem likely to come, depending on market sentiment). 

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