Nvidia, Microsoft, and Meta Lead AI Investment Opportunities in Tech Sector

The Best Stocks to Invest $50,000 in Right Now | The Motley Fool

These three fundamentally strong stocks can deliver impressive returns in the future. In the past couple of years, artificial intelligence (AI) emerged as one of the key investment themes on Wall Street. The frenzy surrounding AI is not without reason -- it presents a set of technological tools and innovations that transform entire industries and functional disciplines. Wall Street had to jump on this bandwagon, and subsequently, many AI-powered stocks soared to dizzying highs. Some of these stocks are still going strong and can generate impressive returns in the next few years, especially for investors with around $50,000 to spare now (which is not required for regular expenditures or contingencies). Here's what I consider a hypothetical $50,000 investment portfolio should look like. Chip giant Nvidia (NVDA 4.14%) will account for the biggest chunk or 40% ($20,000) of my hypothetical $50,000 investment portfolio. The company is the undisputed leader in the global AI market thanks to its focus on offering a complete end-to-end AI platform comprising technologically superior chips (graphics processing units or GPUs, data-center products, and DGX systems); software ecosystem (CUDA, a parallel computing platform); Nvidia AI Enterprise software and data-center specific accelerated-software solutions; advanced-networking components; and servers. Nvidia's stock soared 2,900% in the past five years (after adjusting for the 10:1 stock split in June 2024). Yet, the company still has the potential to grow even higher in 2025 mainly driven by the surging demand for its next-generation Blackwell platform, which is far outpacing supply. Nvidia expects to ramp up production of Blackwell systems and record billions of dollars in Blackwell revenues in the fourth quarter of fiscal 2025 (ending Jan. 31, 2025). Reports also indicate that these Blackwell systems sold out for the next 12 months, implying the company will enjoy solid pricing power. In the face of a tight Blackwell supply, Nvidia may continue to see robust demand for its Hopper chips from data center and enterprise AI segments in the coming quarters. Additionally, the company's software solutions are proving to be a major competitive edge, since they help boost the adoption and functioning of the company's hardware products. As the CUDA-compatible graphics processing unit (GPU)-installed base grows from millions to tens of millions in the AI market, Nvidia expects demand for Nvidia AI Enterprise software to grow significantly in the coming months. The company expects its software business to reach an annual run rate of $2 billion by the end of fiscal 2025, thus emerging as a major-revenue catalyst in the next few years. Considering the many tailwinds, Nvidia has lots of upside potential. Technology behemoth Microsoft (MSFT 0.15%) will make up 30% or $15,000 of my hypothetical $50,000 investment portfolio. Microsoft's partnership with ChatGPT developer OpenAI proved transformational and played a pivotal role in enabling the company to build AI-optimized hardware and software stacks rapidly. The demand for Microsoft's AI infrastructure, which includes Azure AI services (cloud-native suite of AI applications focused on areas such as data analysis, machine learning, and deep learning), CoPilots (AI agents integrated into various applications), and custom AI chips, has been far outpacing supply. The increasing adoption of AI services is also driving the usage of Microsoft's data services. The number of Azure AI customers using the company's data services grew by almost 50% year over year in the fiscal 2024 Q4 (ending June 30, 2024). Microsoft Fabric, the company's AI-powered next-generation data platform, had more than 14,000 paying customers at the end of the fourth quarter. Microsoft's Azure Arc service, a multicloud and on-premise management solution, was also adopted by nearly 36,000 customers at the end of quarter, up 90% on a year-over-year basis. Microsoft's Azure cloud-computing business is also a major growth catalyst. Azure is a key beneficiary of the ongoing migration of on-premise enterprise data to the cloud. Furthermore, the company's cloud-based data-integration service, Data Factory, enables clients to connect their on-premise data estate to Azure services and Fabric services even before full-data migration. Cybersecurity is another major growth avenue, with the company boasting a customer base of 1.2 million for its security offerings at the end of Q4. Over 800,000 large customers were using four or more of the company's security workloads, up 25% on a year-over-year basis. This implies that Microsoft's products are tightly integrated into many of their customers' operations, making it difficult for the latter to switch to competitors. Clearly, Microsoft has several growth drivers that can have a very positive impact on its financial and share-price performance in fiscal 2025. In summary, Microsoft may be a smart buy for astute investors. Social media giant Meta Platforms (META -0.23%) will account for the remaining 30% or $15,000 of my hypothetical $50,000 investment portfolio. Accounting for a 21.3% share of the U.S. digital-advertising spending, Meta demonstrated an exceptional ability to effectively monetize its Family of Apps (Facebook, WhatsApp, Instagram, and Messenger). This is evident based on the steady improvement in the cost per impression paid by advertisers for advertising on Facebook and Instagram since January 2024. Meta leverages multiple AI technologies to improve content recommendations across its social media applications, which in turn helps add new users and boost overall user engagement. The company also helps advertisers create more targeted advertisement campaigns with its AI-powered Advantage+ suite of solutions. All these initiatives translate into higher returns for advertisers, which increase the attractiveness of Meta's social media applications. Meta has nearly 3.2 billion people using at least one of its applications in the fiscal 2024 Q2 (ending June 30, 2024). The huge user base and broad geographical reach generated a powerful network effect since more users make the platform even more attractive for advertisers, who then offer additional avenues for user engagement. Subsequently, Meta enjoys significant pricing power for its digital assets. Furthermore, the user base gives the company access to more data, which helps it improve its content recommendation and ad-targeting algorithms. Meta's Reality Labs business is not yet profitable. However, the company views it as a solid long-term investment. Plus, based on the strength of its core digital-advertising business, Meta seems to be a smart pick now.

The Best Stocks to Invest $50,000 in Right Now | The Motley Fool

For most people, $50,000 is a nice sum of money. In fact, you can buy a pretty nice car with that amount. However, instead of spending it, the best move over the long term would be to invest. And when it comes to investing, technology stocks are one of the first places long-term investors should look. As technology, like artificial intelligence (AI), continues to transform the world we live in, technology companies have become the biggest stock market winners. Let's look at two top tech stocks investors can buy today that are riding the AI wave. One is the leader on the hardware side, while the other is the leader on the software side. While investing $50,000 in these names would be nice, you can, of course, start with any amount. No company has been a bigger winner from AI than Nvidia (NVDA 0.78%), and there doesn't appear to be anything on the horizon that will stop its momentum. The company's graphic processing units (GPUs) have become the backbone of the AI infrastructure buildout, and the company recently called demand for its newest Blackwell chips "insane." Nvidia has been able to take a more than 80% market share in the GPU space through its chips' strong performance, but more importantly through its CUDA software platform. Long before AI was the next big thing, CUDA became the standard platform on which developers learned to program GPUs. This created a wide moat around its booming GPU business. Meanwhile, AI infrastructure is currently seeing no letup in demand, as major tech companies pile money into the space to develop more sophisticated AI models. As AI models advance, they need more computing power for training, and that power comes from Nvidia's GPUs. For example, Alphabet has said its new Llama 4 large language model (LLM) would need 10 times the compute power of its predecessor, while xAI's Grok 3 LLM used 5 times the number of GPUs as Grok 2. The large tech companies investing in AI infrastructure have all indicated that their spending will continue to ramp up, with Oracle saying it sees no end to AI infrastructure spending over the next five to 10 years. This all benefits Nvidia. Despite the stock's strong performance, it is still attractively priced, trading a forward price-to-earnings ratio (P/E) of under 35 based on next year's analyst estimate and a price/earnings-to-growth ratio (PEG) of about 0.9. A PEG under 1 is generally viewed as undervalued, and growth stocks often carry PEGs well above 1. Another company riding the AI wave is Microsoft (MSFT 0.35%), which was one of the first large tech companies to go all-in on the technology when it made a large investment in and formed a partnership with OpenAI. Thus far, its Azure cloud computing unit has been the company's biggest AI beneficiary, as organizations turn to its platform to create their own AI solutions. This is a consumption-based business where users are only charged for the resources they use, and so far, usage has been very strong. This can been seen in the company's results, with Azure growing revenue around 29% to 30% the past few quarters. Cloud computing isn't the only area the company is looking at AI to help power growth. Its GitHub Developer platform as been another big AI winner, as customers turned to its AI assistant, Copilot, which can make suggestions as developers type and even complete coding tasks. However, the next big opportunity for the company could be with its Microsoft 365 Copilot. The company recently introduced a number of improved Copilots for Microsoft 365, which it will use to help lure organizations to its Microsoft 365 Copilot add-on. With these new features, users will be able to do things like work with the programming language Python in Excel through only natural language, pull in data from different types of sources with Word Copilot, and create presentations using only natural language with Copilot for Powerpoint. At the cost of $30 a month per user for its Microsoft 365 Copilot add-on, this is a huge potential growth opportunity for Microsoft, as its 365 Copilot costs more than many of its subscriptions to Microsoft 365. To purchase the Microsoft Copilot, users are required to have a separate license to a qualifying plan, which can range from as little as $4.75 per user per month for its basic business plan without Teams to $22 per user per month for its premium business subscription with Teams, which also includes cybersecurity and identity management features. Some enterprise plans with more features can cost more. Microsoft has proven to be an adaptive and innovative company, which has helped it grow to be one of the largest companies in the world. It is these attributes, along with the AI opportunity in front of it, that make it a great long-term investment.

The Best Stocks to Invest $1,000 in Right Now | The Motley Fool

These stocks fit most budgets and have tremendous long-term upside from current prices. Deciding which stocks to buy is a big decision for any investor, but choosing when to buy can be just as hard. Nobody wants to buy a stock and immediately see their investment turn red on a loss. Yet, it's a reality investors must face. The truth is that nobody can time the markets. Sure, you might get lucky once or twice, but the better strategy is to think about companies that can grow over time and buy the stocks when they are reasonably valued or cheap. The market has had a fantastic year, so most of the best companies seem expensive. That said, there are some exceptions. You can buy these three winning stocks at a reasonable price right now. The best part? You can buy a share of each for less than $1,000 all-in. Here they are: AI chip company Nvidia (NVDA 0.78%) keeps going up. The stock has risen more than 500% in just the past three years. Yet, there's still an argument for buying it today. The company has dominated the rapidly growing market for powerful chips used in data centers to train and operate artificial intelligence (AI) models. Nvidia has enjoyed jaw-dropping top and bottom line growth since early last year, which has fueled the stock's returns. Nvidia is reporting hot demand for Blackwell, its next-generation successor to the H100 series chip that has sold hand-over-fist for most of the past two years. The continued demand for Nvidia's AI chips has analysts estimating the company will grow its earnings by an average of 41% annually for the next three to five years as AI investments continue across the economy. The stock trades at a forward P/E of 48, which Nvidia's anticipated earnings growth justifies paying. Investors should look for warning signs of competitive pressure on Nvidia's near-monopoly on AI chips. Assuming Nvidia stays dominant, it's hard not to like the stock here. Social media giant Meta Platforms (META -0.08%) is becoming a potential AI juggernaut thanks to its co-founder and CEO Mark Zuckerberg, who has made AI a top priority. Not only has Meta developed and integrated AI into its business, including AI tools for digital ads (Meta's core business), but the company has open-sourced Llama, its large language model, and stockpiled AI chips to create top-of-the-market computing capabilities. The great thing about Meta is that AI is arguably secondary to the company's fantastic core business. Its family of social media apps, Facebook, Instagram, WhatsApp, and Threads, has 3.27 billion daily active users, an audience that forms the basis to sell billions of dollars of advertising. Meta stock trades at 27 times its estimated 2024 earnings, and analysts believe the company will grow earnings by 19% annually over the next several years. That's a solid price for a great business with additional upside if it can further monetize its AI ambitions. Cybersecurity company SentinelOne (S 1.31%) uses AI technology to protect customers autonomously from threats and malicious actors. Cutting-edge technology is a competitive advantage in security, and SentinelOne has repeatedly stood out in third-party evaluations. That has helped drive strong revenue growth, with sales growing by 33% year over year in Q2, among the fastest growth rates in its peer group. SentinelOne recently secured a blockbuster partnership with Lenovo to integrate its security platform into new personal computer shipments. This partnership should add fuel to SentinelOne's already strong growth momentum. SentinelOne isn't profitable yet, which the market has seemingly held against it, given that the stock trades at a lower enterprise value-to-revenue multiple than its peers. However, SentinelOne's financials are rapidly improving as revenue grows, and the company has a stockpile of cash and zero debt on its balance sheet. It could be a matter of time before SentinelOne's growth and improving fundamentals earn more love from Wall Street. This is an opportunity to buy the stock before then.

The Smartest Growth Stock to Buy With $500 Right Now | The Motley Fool

Nvidia stock may seem expensive, but the company has a moat that will foster much more growth. You don't need to be wealthy to start investing in the stock market. An investment even as small as $500 can grow into something substantial, given the right choice of stock and enough time to allow for the growth to occur. It is, in fact, one of the best ways to build wealth and prepare for a long retirement. Investing does involve risk, though, and it's smart to have a diversified portfolio with a mix of higher-risk growth stocks and stable, dividend-paying companies. How much concentration on higher-growth, higher-risk stocks is right for your portfolio depends on many things. Age, life situations, and appetite for risk are all factors. But here's why Nvidia (NVDA 0.78%) is one growth stock that deserves a place in most anyone's portfolio, even if $500 is all you have to invest with at the moment. Investors who have watched Nvidia's explosive growth -- and soaring stock price -- may have thought they missed out on a great investment. After all, the stock was recently trading at a price-to-earnings (P/E) ratio of over 60. That's with the stock trading near its all-time high after tripling over the last year. Nvidia's market cap is now at about $3.2 trillion. While sales of about $56 billion in the first half of this fiscal year were 170% higher year over year, that still results in a price-to-sales (P/S) ratio of almost 35. That's astoundingly high for a large, established company like Nvidia. The law of large numbers almost certainly means that revenue growth rates will decline. The company itself sees only about 8% sequential growth in the current quarter ending in late October. But Nvidia has several growth levers still available to pull. Investors with enough risk tolerance to stomach a potentially volatile stock price should still consider investing in this growth stock. Here's why even just a $500 investment in Nvidia stock still makes sense. Nvidia hasn't been resting on its laurels even as demand for its artificial intelligence (AI) products and solutions far outpaces supply. The company has just started shipping its new Blackwell GPUs (graphics processing units) in volume. It has already announced its next GPU platform, called Rubin, will follow Blackwell as it seeks to update its products annually with more powerful and efficient chips. Competitors aren't sitting still either, though. With such strong demand, there will be room for others to absorb sales to help supply the AI server stacks quickly filling expanding data center construction. But Nvidia has something that is going to keep customers attached to its AI infrastructure. Nvidia CEO Jensen Huang recently explained why he sees a lengthy pipeline for future business growth. In an interview with podcaster Brad Gerstner, Huang described how the company is very focused on making sure its products are compatible throughout the installed base of its AI infrastructure. Nvidia's CUDA (compute unified device architecture) software platform helps developers broaden applications on different types of GPU-accelerated embedded systems. It is the basis of the GPU computing ecosystem. That platform ensures that Nvidia's products aren't becoming obsolete even as it releases its newest chips. While newer, more powerful GPUs like Blackwell and then Rubin are used for training, the older gear is perfect for AI inference, for instance. Large-scale data center managers, or hyperscalers, get locked in with CUDA. In the interview, Huang discussed how compute power is still important, but it's not everything. He likened it to a flywheel where it takes AI to compile data to teach more AI. He summarized Nvidia's approach this way: Training is just one step. ... You really want to create a system that accelerates every single step of that. ... Our perspective manifests itself into the product. ... We accelerate everything. That entire thing [flywheel] is CUDA accelerated. The process of expanding artificial intelligence use cases makes for a long runway for Nvidia's growing array of products. And as a first mover in the AI space, its products and platforms are becoming entrenched with customers. As previously mentioned, the stock isn't cheap. And it likely will remain volatile. Investors who can look beyond the short-term fluctuations and have a years- or decades-long holding period shouldn't fear they've missed out on Nvidia. It remains a growth stock to own in at least a portion of almost any portfolio.