In the ever-expanding landscape of artificial intelligence (AI), two tech giants, Nvidia and Meta Platforms, are leading the charge with impressive stock market rallies. As the Nasdaq-100 Technology Sector index soared 7% in the first two months of 2024, driven by AI stocks, Nvidia and Meta Platforms have stood out with gains of 233% and 181% respectively, propelling the index to new heights.

Nvidia, the dominant force in the AI chip market, recently released its fiscal 2024 fourth-quarter results, smashing expectations. The company reported record quarterly revenue of $22.1 billion, a remarkable 265% increase from the previous year. To meet the strong demand for its flagship H100 AI graphics processing unit (GPU), Nvidia partnered with Taiwan Semiconductor Manufacturing (TSMC) to ramp up production. As TSMC expands its chip-on-wafer-on-substrate (CoWoS) manufacturing capacity, Nvidia anticipates improved supply, although it expects demand to outpace supply for its GPUs.

Furthermore, Nvidia is set to launch its next-generation H200 AI GPU in the second quarter of 2024. This chip, with a more advanced 3-nanometer (nm) chipmaking process and enhanced memory bandwidth and capacity, is expected to nearly double the inference performance of its predecessor. With Gartner estimating that Nvidia controlled 90% of the $53 billion AI chip market in 2023, the company seems well-positioned to maintain its market share, driving its expected revenue growth of 83% to $110 billion in fiscal 2025.

Meta Platforms, known for its integration of generative AI into its advertising tools, is also primed for success. By leveraging AI, Meta aims to improve ad targeting and generate greater returns for advertisers. The company's Ads Manager platform allows advertisers to create multiple backgrounds for campaigns based on product images and even generate ad texts. By using generative AI, Meta believes it can maximize productivity, personalization, and performance for advertisers, potentially helping them save valuable time and increase their returns on ad spending.

As a testament to its potential, Meta's 2023 revenue increased by 16% to $134.9 billion, outpacing the 10.7% growth in digital ad spending. Analysts forecast a 17.3% increase in Meta's revenue to $158.2 billion in 2024, surpassing the projected growth of digital ad spending. With the global digital ad market expected to reach an estimated $1.5 trillion in 2030, Meta's focus on AI positions it for long-term growth.

Investors are taking note of the immense potential these two tech giants offer. Nvidia's stock trading at 33 times forward earnings, lower than the Nasdaq-100's 34 times multiple, presents an enticing opportunity. Similarly, Meta Platforms trades at an attractive 24 times forward earnings, projected to experience a 34% jump in earnings per share in 2024 and an annual growth rate of 26% over the next five years.

As the Nasdaq-100 and AI stocks continue to soar, the proliferation of AI in various industries, particularly the AI chip market and digital advertising, will likely play a significant role in driving growth for Nvidia and Meta Platforms. With their strong market positions and promising future prospects, both companies appear poised to further boost the Nasdaq-100 and deliver substantial returns to investors in the coming years.