Investors looking for lucrative opportunities on the stock market have come to the right place. Technology stocks have significantly outperformed the broader market in recent years. For example, Technology Select Sector SPDR ETF has the return of S&P500 since 2019. Here are two stocks with near-term growth catalysts to buy now.

1. Dell Technologies

Dell Technologies (NYSE:DELL) is widely known as a PC brand, but is also a provider of storage, networking and AI solutions for data centers. Strong demand for AI servers has boosted Dell’s business this year, driving the stock to new highs. The momentum in Dell’s server business makes the stock an attractive buy right now after the recent decline.

Dell is still dependent on a sluggish PC market, where its client solutions group posted flat revenue growth in the first fiscal quarter of 2025, which ended May 3. That business accounts for the majority of Dell’s overall revenue, but its infrastructure group, including servers, posted a strong 22% year-over-year increase, pushing the company’s total revenue up 6% to $22 billion.

Dell’s strong AI server backlog suggests the company is just beginning to capitalize on this opportunity. The backlog increased about 31% quarter-over-quarter to $3.8 billion, showing that AI servers are quickly becoming a significant revenue generator.

The AI ​​server market is still in its infancy. Companies will continue to rapidly increase their investments in AI as most executives believe it provides a competitive advantage. In addition, Dell benefits from a strong tailwind as information technology spending continues to grow in proportion to the economy, which should benefit the entire company in the long term.

The reason for the share price drop last month is that a higher share of revenue from AI servers could put pressure on the company’s margins in the short term. Management expects adjusted earnings to rise by about 7% this year – less than the full-year revenue growth of about 8%. The important factor, however, is that AI infrastructure solutions will contribute to the company’s revenue and profit in the long term. For this reason, Wall Street analysts currently expect Dell’s earnings to grow by 12% annually in the coming years.

The prospect of double-digit earnings growth is more than enough to drive the stock price higher. With a forward price-to-earnings (P/E) ratio of 11, less than half the S&P 500 average, the shares look downright cheap.

The story continues

2. Netflix

Netflix (NASDAQ:NFLX) The stock has soared since its 2022 low. Subscriber growth has accelerated to a rate in the mid-teens as management ended password sharing and pushed more users to pay for a subscription. But investors are still underestimating Netflix’s margin expansion potential, earnings growth and pricing power as the company begins to release live-streamed content, particularly in sports.

With 277 million subscribers worldwide, Netflix has become a ubiquitous brand in digital entertainment because it knows what its customers want to watch. The company is working to retain those members by moving more and more into live streaming of content.

Last year Chris Rock: Selective outrage was well received by the audience, and that was just the beginning. The current live stream of The Roast of Tom Brady was the biggest hit so far, but later this year Netflix could break its live viewership record again when two NFL games are streamed on the service on Christmas.

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

Regardless of the impact a potential price increase has on revenue next year, Netflix’s entry into live streaming of sporting events would further cement its leadership position in digital entertainment and open up all sorts of opportunities to attract more subscribers in the long term.

According to Wall Street, Netflix’s earnings will grow 27% annually over the next few years. That’s more than enough to justify a P/E ratio of 37 for the stock. Even if the stock eventually settles at a lower P/E ratio, that strong earnings growth rate could double the stock price within five years.

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John Ballard does not own any stocks mentioned. The Motley Fool owns and recommends Jefferies Financial Group and Netflix. The Motley Fool has a disclosure policy.

“2 Top Tech Stocks to Buy in August” was originally published by The Motley Fool