The Nasdaq Composite index has climbed over 30% in the last 12 months, primarily driven by tech stocks. The industry has surged as interest in budding sectors like artificial intelligence (AI) and cloud computing has skyrocketed. As a result, it could be worth making a hefty investment in the industry to potentially profit from its long-term development.
Regarding the stock market, it's always best to invest in a company's business rather than merely its stock. Prioritizing organizations that are home to consumer-favorite products or at least have a solid business model can keep your portfolio expanding for decades. Meanwhile, tech companies are known for their long-term gains, with many benefiting from the industry's ever-expanding and innovative nature.
So, are you planning to sink $50,000 into stocks? Here are two of the best stocks that money can buy (and are even worth buying with a smaller investment).
1. Intel
Intel (INTC 1.24%) has turned many heads over the last year as it has made significant changes to its business model after a challenging few years. The company's stock has lost 40% since 2021, brought down by poor market conditions, tumbling revenue, and shrinking market share in the central processing unit (CPU) sector.
However, Intel's recent headwinds are why now could be the best time to buy.
Data by YCharts
This chart shows that Intel is one of AI's best-valued stocks, with a lower forward price-to-earnings (P/E) ratio than some of the industry's most prominent players. Each of these companies either currently has or has announced a venture into the AI chip market, making them fierce competitors to Intel. Yet, a recent dip has potentially made Intel's shares a bargain compared to its peers, allowing your money to go further.
Last month, the company debuted its Gaudi 3 AI accelerator, a chip designed to outperform market leader Nvidia's AI graphics processing units (GPUs). Meanwhile, Intel is undergoing a major shift in its business model, transitioning into a foundry model, which will see it prioritize chip manufacturing.
On May 16, CEO Pat Gelsinger spoke about its coming plant in Ohio, saying, "I want our Columbus site here, Ohio One, to be the AI systems fab for the nation."
Intel is on a promising growth trajectory as it expands in AI and sets its sights on manufacturing. It's still early days for the company's restructuring, but recent earnings are promising. In the first quarter of 2024, Intel's AI and data center segment posted an operating income of $184 million, a considerable rise from the negative $69 million it reported the year before. Additionally, Intel Foundry operating income rose 8% during the quarter.
Intel has a lot of work ahead, but on its current growth path, it could see its stock skyrocket over the next decade. An investment of $25,000 would grant you roughly 817 shares in Intel, significantly more than it would in competitors Nvidia or AMD, making Intel's stock a screaming buy right now.
2. Alphabet
As the home of potent brands like YouTube, Android, and Google, Alphabet (GOOGL -1.76%) (GOOG -1.84%) has achieved a powerful position in tech. The company attracts billions of users to its services, which has seen its annual revenue and operating income soar 90% and 135% over the last five years.
Alphabet has utilized its vast user base to build a lucrative advertising business. In the first quarter of 2024, the company enjoyed a spike in ad revenue, with Google Services sales rising 14% year over year while operating income soared 28%.
However, all eyes have been on Alphabet's quickly expanding cloud business, Google Cloud. In its most recent quarter, the platform reported a 28% increase in revenue as operating income skyrocketed 371%. For reference, cloud giants Amazon and Microsoft saw their cloud revenue rise 17% and 21% in the same period.
Data by YCharts
Like Intel, Alphabet is the best-valued option among its rivals. All of the companies in this chart have pivoted large parts of their businesses to developing AI software and are in steep competition with each other. Meanwhile, Alphabet's lower forward P/E indicates its stock is trading at a far better value than its competitors.
A $25,000 investment would buy roughly 142 shares in Alphabet at its current price. The company's stock has climbed more than 200% over the last five years alone but could outperform that figure in the not-too-distant future as it continues to expand in AI and profit from its booming ad business.
