<div id="readability-page-1">While it's important for investors to keep a balanced portfolio, you can't afford to overlook tech stocks in this market. Tech stocks are the muscle behind U.S. markets these days, accounting for 34% of the makeup of the entire S&amp;P 500. They are also outperformers, as the tech-heavy Nasdaq Composite is outperforming both the S&amp;P 500 and the Dow Jones Industrial Average so far this year. The lesson here? You need to have tech stocks in your portfolio if you want to outperform the market. Tech stocks are immensely popular these days as companies are racing to train large language models (LLMs) to customize their platforms with generative artificial intelligence (AI) offerings in order to roll out new services and customer experiences before their competitors. The race to build AI products is far from over, and buying stocks that will be best positioned to capitalize on the trend is a smart way to invest right now. If you're looking for the best tech stocks for August, I'm recommending Nvidia (NVDA 0.66%), Alphabet (GOOG 0.82%) (GOOGL 0.75%), and Taiwan Semiconductor Manufacturing (TSM -0.52%). <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Mjc5MTYvZmluYW5jZS02OC5wbmcmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="455" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Mjc5MTYvZmluYW5jZS02OC5wbmcmdz03MDA"/>Image source: Getty Images. </div> <h2>Nvidia</h2> The unquestioned leader in tech stocks right now is chipmaker Nvidia. As the creator of the most advanced graphics processing units (GPUs) that top companies use to power their AI platforms, Nvidia has grown to be the most valuable publicly traded company in the world and was the first to crack the $4 trillion milestone. Nvidia's GPUs can be combined with other chips into clusters that can work faster and more powerfully, which is why they are so prized by companies building AI applications. Jon Peddie Research estimates that Nvidia has a staggering 92% of the GPU market. The company will report earnings for its second quarter of fiscal 2026 on Aug. 27, and analysts are expecting another blowout quarter. Of 66 analysts who cover Nvidia on Yahoo! Finance, 59 of them rank Nvidia as a buy or strong buy. <h2>Alphabet</h2> Alphabet already reported its quarterly earnings, and Wall Street was impressed. Revenue in Q2 was up 14% to 96.4 billion, while net income was up 19% to $28.19 billion. Alphabet's earnings per share also jumped to $2.31, a 22% gain from a year ago. The report was a welcome return to form for Alphabet, which has struggled so far in 2025 amid concerns that platforms such as ChatGPT would eat into the company's massive Google search business. There are also legal issues, as Alphabet is battling with the Justice Department over allegations that it has an illegal monopoly, and there are concerns that the company could be split up. But Alphabet has been able to put those concerns to rest, at least for now. Revenue from Google Cloud was particularly strong in the second quarter, rising 32% to $13.6 billion, as the company's Google AI platform is incorporated into its Chrome browser and Google search engine. Alphabet also saw strong growth in Google Search (revenue was up 11.7%) and Google Advertising (up 10.4%). Alphabet's stock also trades at a low 20.6 price-to-earnings ratio --incredibly attractive for a tech stock that continues to show strong growth. <h2>Taiwan Semiconductor Manufacturing</h2> This one goes hand-in-hand with Nvidia, really. If you believe in the growth story powering Nvidia's GPUs, then Taiwan Semiconductor, also known as TSMC, has the same kind of tailwinds. TSMC is a fabricator of GPUs -- it doesn't design them, but it is one of the biggest companies in the world that actually makes them for Nvidia and others. It's a rapidly growing field, as Mordor Intelligence says the GPU market will be $82.7 billion this year and explode to $352.5 billion by 2030. TSMC has an estimated 62% market share of the global foundry market, so it's going to benefit no matter which company has the lead in the GPU race over the next decade. Nvidia's major competitor, Advanced Micro Devices, is also a TSMC customer. TSMC is also growing its footprint in the U.S. rapidly, with plans to invest $165 billion in facilities in Arizona that should shield it from any tariff concerns in the future. TSMC's Q2 earnings included revenue of $30.07 billion, up 44.4% from a year ago. The company is projecting Q3 revenue even higher, to be between $31.8 billion and $33 billion. <h2>The bottom line</h2> Each of these companies is at the forefront of the explosive growth in AI, which is the dominant trend driving the stock market today. All of them would be excellent buys in August to capitalize on the market-driving power of tech stocks. </div>

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Investors should consider adding tech stocks to their portfolios, as they currently dominate the market, making up 34% of the S&P 500. Recommended stocks for August include Nvidia, which leads in GPU production with a 92% market share, Alphabet, which reported strong Q2 earnings, and Taiwan Semiconductor Manufacturing, a key player in GPU fabrication. These companies are well-positioned to benefit from the ongoing growth in AI technology, making them attractive investment options.

- Investors should not overlook tech stocks, which currently make up 34% of the S&P 500 and are outperforming other indices.  
- Key companies like Nvidia, Alphabet, and Taiwan Semiconductor Manufacturing are positioned to benefit from the ongoing AI boom, with Nvidia leading the GPU market and TSMC holding a significant share of the foundry market.  
- These stocks are recommended for August as they are expected to capitalize on the growth in AI and technology.  

3 Top Tech Stocks to Buy in August