Information technology companies have been on a tear all year. The Technology Select Sector SPDR Fund (NYSEARCA:XLK) is the benchmark fund representing U.S. tech companies. In the last year, the fund has risen by 53%. For comparison, the SPDR S&P 500 ETF (NYSEARCA:SPY), a fund that helps represent the stock market as a whole, has only seen an increase within the same period of 25% growth. This is one illustration of how tech companies have been one of the hottest industries in the recent market, so it’s no wonder tech stocks are catching investor interest.
This massive surge of returns in the technology industry is primarily due to the generative artificial intelligence (AI) boom. Companies that manufacture semiconductors, operate cloud-based platforms, and provide cyber security capabilities and data center products have particularly experienced the positive effects of the boom.
Below, I discuss three tech companies that are outpacing a growing industry. Specifically, these companies have seen massive returns due to the AI boom along with a bright future for investors looking for companies in the tech sector.
Salesforce (CRM)
Salesforce (NYSE:CRM) is a leading customer management services company headquartered in San Fransisco. In response to the boom, the company has taken a significant step to utilize generative AI to improve its business operations. Their services include data analytics, future forecast projections, and advanced trend models. Some of Salesforce’s products include: MuleSoft, an integration tool that focuses on automation prompts; Slack, a leading platform for productivity; and Tableau, a customer service analytics platform.
On Nov. 29, Salesforce released its third-quarter earnings results for 2023. The report stated that total revenue grew by 11% while net income rose nearly six-fold year-over-year. This overall increase in sales for the company has resulted from the recent boom in generative AI stocks, its growing subscriber base, and its extensive share buyback program.
Notably, Salesforce has seen its share price nearly double within the year, rising by 96%. And the trend seems likely to continue. Salesforce is still expected to continue to grow even with its surge in share price so far this year, making this a must-buy stock.
SentinelOne (S)
SentinelOne (NYSE:S) is a cybersecurity company that provides AI-related threat protection through their Singularity platform. Specifically, the platform is a generative AI model that enables users access to an integrated security platform that protects against cyber security threats found through cloud-based software, mobile devices, and other internet-enabled platforms. The company is based out of Mountain View, California.
On Dec. 5, SentinelOne released its earnings results for the third quarter of the fiscal year 2024. While the report stated that net loss shrank by 29%, its total revenue increased by 42% year-over-year. Additionally, their stock price has more than doubled in the past year, primarily due to growing investor sentiment and recent earnings results that were greater than expected.
The company is garnering significant interest with their new Purple AI platform. Though currently in the beta stage, this software provides AI-enabled cyber security protection, which may be a key growth factor for the company going forward.
UiPath (PATH)
Rounding out the list of must-buy stocks is New York City based UiPath (NYSE:PATH) which provides AI-enabled autonomous solutions. They specialize in integrated software that helps businesses with various analytics duties. They work with several industries, including healthcare, finance, information technology, and government organizations.
Over the past year, UiPath has seen its share price more than double. The accelerated growth is due to the company’s growing integration of AI-enabled solutions for user interface management.
Their most recent earnings report released on Nov. 30 stated that their total revenue rose by 24%. Additionally, net loss shrank by 45%. In my opinion, the future looks bright for PATH and its investors.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.