Artificial Intelligence is transforming industries and how! We’ve seen some of the biggest tech companies emerge as pioneers in the field and this has taken the market valuation to new highs.

The companies that are developing products and services for AI applications will see immense growth soon. The recent quarterly results of several tech companies highlighted the potential that AI has and this AI boom will take the valuation of tech companies to new highs.

Nvidia (NASDAQ:NVDA) recently joined the trillion-dollar club and the stock is up over 200% year to date. Its market cap surged after the company reported results. 

The market capitalization of a company reflects the size of the company and several companies have seen the market cap hit new highs over the past month.

Naturally, it is easier for a large-cap stock to reach a higher market cap as compared to a small-cap stock. So, if you are looking for stocks that have the ability to hit a new high in the market cap, you need to ensure that the company has strong fundamentals and a high growth potential. With higher earnings and revenue, we can see soaring tech stock valuations. 

With that in mind, let’s take a look at the three top tech stocks to watch as the market cap hits new highs.

Microsoft (MSFT)

One of the top tech stocks with high market cap to keep your eyes on is Microsoft (NASDAQ:MSFT). The tech dinosaur has been around for as long as I can remember.

While the company already has a market cap of $2.5 trillion, there is no stopping its expansion. The company is set for success with this investment in OpenAI and its integration across the infrastructure.

This is one company that already holds a strong market share and a dominant position in the industry. However, when it comes to AI, this is only the beginning. 

It is not the one to let any opportunities pass by and it has adopted AI as fast as it could. Microsoft has integrated AI into its Bing search engine.

It aims to capture a large share of the search engine from Alphabet (NASDAQ:GOOG) in the near future and this could mean a significant amount of revenue generation. Even one percent of the market share can bring billions to the business. 

Microsoft is one of the top tech stocks with new highs. MSFT stock is trading at $338 today and is up 41% year to date. The stock has gone from $222 in Jan to $338 today and I am certain that it will end this year on a high note.

Besides AI, Microsoft is also set to benefit from the cloud computing business, Azure. It generated $75.3 billion in 2022 and $22.1 billion in the recent quarter, which was up 16%. The company enjoys a dividend yield of 0.80% and announced a quarterly dividend of $0.68. 

It holds a solid position in the market and the segment generates maximum revenue for the company.

Tesla (TSLA)

Next on the top tech stocks to watch list is Tesla (NASDAQ:TSLA). The EV maker enjoys a market cap of $850 billion and there’s more to come.

TSLA stock is trading at $274 today and is up 99% in the past six months. The stock is up 153% year to date and 45% in the past month. Nothing can stop the momentum of this stock. 

The recent rally in the stock is due to the company’s agreements with General Motors (NYSE:GM) and Ford (NYSE:F). Even Rivian Automotive (NASDAQ:RIVN) announced that it will allow Rivian drivers to access Tesla’s Supercharger network across North America.

Other EV makers could soon join the network. By opening up its charging networks for other automakers, the company is solidifying its position in the industry as an EV leader. Besides growing the EV lineup and increasing sales, Tesla also enjoys a full $7,500 federal tax credit on all the variants of Model 3s. 

Tesla’s long-term goal is to produce 20 million vehicles annually and while it is relentlessly working towards reducing costs, if this ambitious goal becomes a reality, it could take Tesla to new highs. The stock has already doubled since the start of the year but there is room for more. 

One reason to bet on Tesla is its approach toward expansion and innovation. With a leader like Elon Musk, this tech company can go places. He is always improving the quality and brings the latest technology to the forefront.

The company has the potential to become a leader in the AI space which could double the price of the stock. The company already enjoys a dominant position in the electric vehicle industry and with the recent collaborations, it is strengthening its position further.

Nvidia (NVDA)

Already in the trillion-dollar club, all of us have witnessed the rise of Nvidia. The company reported blowout first quarter results and this led to a massive surge in the market cap.

NVDA stock is trading at $438 today and is up over 200% year to date. It is hitting new 52-week highs every week and there’s no stopping its momentum. I’ve said it in the past and I’ll say it again, buy NVDA stock in every dip but if you missed the opportunity, NVDA still remains one of the high value tech stocks to own. 

Once known for gaming, Nvidia has become a popular name in the AI space now. It has the best technology in the industry right now which can also change gaming forever.

It recently announced the Avatar Cloud Engine (ACE) which is an AI-based solution for game developers. This technology will be used to build 3D graphics and applications. Besides the data center business, the gaming segment could pick up and generate strong revenues for the company in the near future. 

Nvidia’s rally will continue throughout the second half of the year and its position in the industry is only going to strengthen.

The company is set to make the most of the AI boom and has chips that can run AI applications and its demand is soaring. Its cloud business has also shown tremendous growth and the company will continue to grow its market share in the years to come which makes it one of the top tech stocks to watch. 

On the date of publication, Vandita Jadeja did not have (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.