The words innovative and tech stocks go hand-in-hand. Throughout the modern era leading organizations have consistently invested the newest machines and gadgets that have revolutionized our lives. Consider the TV, the automobile, the computer, and the cell phone. Those innovations have strong associations with companies and their stocks. Every year incremental and breakthrough innovation occurs. The process never stops and 2023 is no different.

Generative AI looks to be a breakthrough innovation that promises, or threatens, to change our lives. But it is far from the only innovation happening now and it should lead investors to reflect on innovation in business. Business innovation is visible in obvious and not so obvious ways across tech companies. 

ASML (ASML)

ASML (NASDAQ:ASML) is a tech stock and semiconductor firm based in the Netherlands. It does outsource chip production as fabless chip companies do. Nor does it operate a foundry producing said semiconductors. It doesn’t package and ship chips from within hermetically sealed rooms. 

Instead, it does something which no other firm in the world can do: It makes the machinery that semiconductor foundries use to make chips out of silicon wafers. 

Those foundry companies provide fabless chip companies – those without fabrication ability – with custom designed leading-edge chips. And ASML’s Extreme Ultraviolet Lithography (EUV) machines are the only ones available. 

They’re double-decker-bus sized machines that cost hundreds of millions of dollars each. That makes them prohibitively expensive to replicate and is one reason ASML holds a monopoly position over the chip industry. 

In 2023, it isn’t so much about watching ASML for some breakthrough innovation but rather for continued dominance and opportunity for strong returns. The company built its massive, sustainable advantage through innovative ownership over the technology necessary across its industry. 

For ASML, innovation is about maintaining a low profile while dominating its field. The firm boasts that it is the most important tech company you’ve never heard of.  

Block (SQ)

Block (NYSE:SQ) is an innovative stock in the payments space to be sure. The best way to describe the company is to say that it continues to offer the most relevant payment options to people. 

It made its name as Square, a payments firm rooted in ecommerce solutions for business owners. In 2021, the company changed its name to Block, acknowledging new business lines. 

Those blocks include Cash App and other business lines that diversify its fintech offerings. 

Block remains one of the leading innovative forces in the fintech/payments space. It built Square into a major force and then did the same with Cash App. 

Both businesses were cutting-edge offerings in their respective niches. And both currently account for significant portions of Block’s sales. 

Of course, Block is also making inroads into innovative spaces in fintech including buy-now-pay-later(BNPL). The company purchased Afterpay and added it to Square in 2022. Square merchants now offer BNPL services through Afterpay breaking purchases into smaller, interest-free chunks.

Nvidia (NVDA)

Nvidia (NASDAQ:NVDA) will remain among the most prominent tech stocks throughout 2023. The company that invented Graphical Processing Units (GPU) has grown into a gaming, chips, and data center giant. More recently, it has become inseparable from the rapidly growing AI industry. 

The firm’s H100 graphics cards are required to train and deploy AI software and are in short demand. Those chips are fetching between $36k to $46k through retailers and eBay. Nvidia’s H100 chips are the newest chip from Nvidia and are proving integral to generative AI and large language models like ChatGPT. 

Nvidia’s A100 chips were the predecessor to its H100 chips and were foundational to the construction of ChatGPT and other generative AI applications. 

Nvidia is closely associated with the gaming industry which has seen sagging revenues. Nvidia is looking to give that business a shot in the arm and just began shipping a mid-range gaming graphics chip with improved AI features. Nvidia’s close association with AI innovation has caused its market capitalization to rise rapidly this year and looks likely to continue. 

On the date of publication, Alex Sirois 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.