2 Tech Stocks to Buy Hand Over Fist in September

Artificial intelligence (AI) has quickly become the dominant narrative in the technology industry as companies recognize the massive opportunity it creates, from enterprise productivity to cybersecurity.

Already, a handful of companies have emerged as leaders in AI technology, including the semiconductor company Broadcom (AVGO -10.36%) and leader in cyber security CrowdStrike (CRWD -3.91%). Here’s why these tech stocks might be worth buying right now.

Image source: Getty Images.

1. Broadcom

Broadcom has emerged as a leading AI company thanks to the company’s AI semiconductors and software. Investors who have followed the company for a while have likely noticed a shift toward AI chips lately — and it’s paying off in a big way.

Broadcom makes custom AI chips used by Alphabet and other technology companies that have become a popular option for companies stepping up their infrastructure needs to compete in the AI ​​market. At the same time, Broadcom’s acquisition of VMWare also boosted the company’s AI-related infrastructure software sales, which rose 200% year over year to $5.8 billion in the third quarter (which ended on August 4).

Broadcom’s total sales rose 47% in the most recent quarter to $13.1 billion, and non-GAAP net income of $6.1 billion was up about 33% year over year.

The company’s recent growth and emergence as a top AI tech stock has driven demand for its stock, which now trades at a forward price-to-earnings ratio of 27. While not cheap, it’s still relatively cheap compared to its tech rival. Nvidiawhich has a forward P/E of 42.

Investors may wonder if there’s room for Broadcom’s AI chip sales to continue growing; management thinks there is, as they estimate AI revenue to be $12 billion for fiscal 2024. With demand for AI chips just picking up, picking up the company’s stock could be a great long-term move.

2. CrowdStrike

CrowdStrike is a leader in cyber security, earning a top position because its Falcon platform provides businesses with comprehensive security solutions that are hard to match.

One of the reasons CrowdStrike has been able to fend off rivals is that it has imbued its security platform with artificial intelligence. Falcon has had AI capabilities for years, and the platform continues to get smarter as it is trained on over 2 trillion security events daily.

The company’s commitment to creating a leading cybersecurity platform has resulted in robust growth. Revenue in the second quarter (which ended July 31) rose 32% year-over-year to $963.9 million, and non-GAAP net income rose nearly 46% to $226.8 million. The growth in the quarter helped CrowdStrike’s free cash flow grow 44% from the year-ago quarter to $272 million.

Customers continue to expand their use of the CrowdStrike platform, with 65% of customers in the second quarter adopting five or more security modules on Falcon and 45% having six or more.

If there’s a downside to CrowdStrike, it’s that the company’s stock trades at a premium. The stock’s forward P/E ratio is 75, which is well above the cybersecurity industry average of about 22. But given CrowdStrike’s leadership in security and Falcon’s continuously improving artificial intelligence platform, i think i took over some of the shares in the company after 16 years. The percentage drop in the last three months could be a smart decision.