2 Top Tech Stocks to Buy in August

Investors looking for profitable opportunities in the stock market look to the right corner. Tech stocks have significantly outperformed the broader market in recent years. For example, the Technology Select Sector SPDR ETF almost doubled the yield S&P 500 of 2019. Here are two short-term growth catalyst stocks you should be buying right now.

1. Dell Technologies

Dell Technologies (DELL 2.78%) is widely known as a PC brand, but is also a provider of storage, networking and artificial intelligence (AI) solutions for data centers. Strong demand for AI servers has fueled Dell’s business this year and driven the stock to new highs. The momentum in Dell’s server business makes the stock a compelling buy right now after the recent pullback.

Dell is still dependent on a sluggish PC market, where its customer solutions group posted steady revenue growth in the fiscal first quarter of 2025, which ended May 3. That business accounts for the bulk of Dell’s total revenue, but its infrastructure group, including servers, posted robust 22 percent year-over-year growth that lifted the company’s total revenue 6 percent to $22 billion of dollars.

Dell’s strong backlog of AI server orders suggests it’s only just beginning to capitalize on this opportunity. Backorders rose about 31% from the previous quarter to $3.8 billion, showing that AI servers are rapidly expanding into a significant revenue contributor.

The AI ​​server market is still in its infancy. Companies will continue to rapidly increase their investment in AI as most leaders believe it provides a competitive advantage. Additionally, Dell is serving a headwind as IT spending continues to grow in line with the economy, which should benefit its entire business over the long term.

The reason the stock has fallen over the past month is that a higher sales mix coming from AI servers may put pressure on the company’s margins in the short term. Management expects adjusted earnings to rise about 7% this year — less than full-year revenue growth of about 8%. But the important factor is that AI infrastructure solutions will be a long-term benefit to the company’s revenue and profits. That’s why Wall Street analysts are currently calling for Dell’s earnings to grow at an annual rate of 12% over the next few years.

Prospects for double-digit earnings growth are more than enough to fuel the stock higher. The stock looks downright cheap at a forward price-to-earnings (P/E) ratio of 11, which is less than half the S&P 500 average.

2. Netflix

Netflix (NFLX -0.32%) the stock has rallied since hitting a low in 2022. Subscriber growth accelerated to a mid-teens rate as management ended password sharing and pushed more users to pay for a subscription. But investors are still underestimating the potential for Netflix’s margin expansion, earnings growth and pricing power as it begins to roll out live streaming content, particularly in sports.

Netflix has become a ubiquitous digital entertainment brand with 277 million subscribers worldwide because it knows what its customers want to watch. The company is honing its ability to retain these members, and that’s why it’s diving deeper into live content streaming.

Last year’s Chris Rock: Selective outrage it was well received by viewers and that was just the beginning. The recent live stream of Tom Brady’s steak was its biggest hit to date, but later this year, Netflix may break its live viewership record again, with two NFL games scheduled to air on the service on Christmas Day.

At least one Wall Street analyst thinks live sports could be a catalyst for Netflix stock. Jefferies analyst James Heaney believes a strong content slate could lead to the first price increase for the standard plan in over two years.

Regardless of the impact a potential price increase has on revenue next year, Netflix’s jump into live sports streaming would further strengthen its lead in digital entertainment and open up all sorts of opportunities to attract more subscribers over the long term. long.

The consensus on Wall Street has Netflix’s earnings growing at a 27% annual rate over the next few years. That’s more than enough to justify paying a forward P/E of 37 for the stock. Even if the stock eventually settles to a lower P/E, that strong earnings growth rate could double the stock price within five years.