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3 Tech Stocks I'd Buy Right Now

Many tech stocks rallied over the past eight years as the market surged to historic highs. As a result, investors who were sitting on the sidelines might be waiting for a pullback before buying tech stocks again. However, investors who wait too long could miss out on some big gains.

Instead of waiting for the next market downturn, I believe that investors should start a position in some high-growth stocks, then add more when a pullback occurs. Here are three tech stocks that I'd buy today -- AMD (NASDAQ: AMD), Baidu (NASDAQ: BIDU), and Amazon (NASDAQ: AMZN).

Source: Getty.

AMD

In early 2016, AMD shares traded at about $2, and NVIDIA and Intel were respectively crushing its GPU and CPU businesses. However, CEO Lisa Su eventually guided AMD toward an epic comeback.

First, AMD's EESC (Enterprise, Embedded, and Semi-Custom) business recovered on robust sales of the PS4 and Xbox One. New "VR ready" GPUs then helped it counter NVIDIA, and its new Ryzen CPU offered comparable performance as Intel's high-end CPUs at much lower prices. Today, AMD trades at about $14 -- and it could still have room to run.

AMD has posted four straight quarters of double-digit sales growth. Its Computing and Graphics (CPU and GPU) revenues surged 51% annually last quarter, easily offsetting a 5% dip in its EESC revenues and lifting its total revenues by 18%.

It posted a non-GAAP profit of $0.02 per share, compared to net losses in the previous two quarters. Analysts expect that growth to continue this year, with 18% sales growth and its first full-year non-GAAP profit in three years. Even after its massive rally, AMD remains surprisingly cheap at 2.8 times sales, compared to the industry average of 4.1 for semiconductor makers.

Baidu

Baidu, which owns the biggest search engine in China, was weighed down over the past year by a government crackdown on misleading ads and higher investments in its O2O (online-to-offline) ecosystem of services. A confusing swap of its Qunar shares for Ctrip shares further throttled its revenue growth.

Baidu's mobile app. Source: iTunes.

But Baidu proved the bears wrong last quarter, posting 14% year-over-year sales growth supported by the triple-digit growth of its "other services" category -- which includes its growing O2O ecosystem. For the current quarter, it expects its revenue growth to accelerate to 27%-30%.

Its adjusted EBITDA rose 41% to $886 million, crushing expectations of $631 million and allaying fears about runaway spending. Its earnings per ADS nearly surged 69% to $1.67, topping expectations by $0.16. For the full year, Wall Street expects Baidu's revenue and earnings to respectively rise 21% and 47%.

Baidu trades at 44 times earnings, which is slightly higher than the industry average of 38 for internet information providers. But it's still one of the easiest ways to invest in China's growing middle class and rising internet penetration rates.

Amazon

Amazon might seem pricey after its 40% rally this year, which boosted its price to over $1,000 per share. Its trailing multiple of 200 still defies gravity, and its mixed second quarter earnings also raised concerns about its spending habits.

Source: Amazon.

Amazon posted over 20% annual sales growth for nine straight quarters, and its revenue rose 25% to $38 billion last quarter, crushing expectations by $820 million on the double-digit growth of its North American and International marketplaces.

Earnings growth had also remained robust in recent quarters, thanks to the growth of its higher-margin AWS (Amazon Web Services) cloud platform business. But during the second quarter, Amazon's net income plunged 77% to $197 million, or $0.40 per share, missing estimates by more than a dollar. The company's moves into adjacent markets and the upcoming Whole Foods acquisition will further weigh down its earnings growth.

However, Amazon remains the 800-pound gorilla of both the e-commerce and cloud platform markets with Prime and AWS. Amazon also isn't expensive relative to its free cash flow, since its EV/FCF ratio has consistently declined even as the stock soared. This makes Amazon a must-own stock for any tech investor, even at these all-time highs.

But do your homework first...

I personally think AMD, Baidu, and Amazon will all rise over the next few years, but investors should understand the risks. AMD's future depends heavily on its ability to challenge NVIDIA and Intel with new chips, and both rivals will soon launch new GPUs and CPUs to counter AMD.

Baidu needs to hold its ground again Tencent's WeChat, the most popular messaging app in China. Amazon needs to ensure that AWS continues growing in the face of tougher competition from Microsoft's Azure. If these growing companies can overcome these near-term challenges, they could be great long-term buys.

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John Mackey, CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Leo Sun owns shares of Amazon, Tencent, and Baidu. The Motley Fool owns shares of and recommends Amazon, Baidu, and Nvidia. The Motley Fool owns shares of Whole Foods Market. The Motley Fool recommends Ctrip.com International and Intel. The Motley Fool has a disclosure policy.