There's a lot of news causing the market instability right now. Inflation is at a 40-year high, interest rate hikes are coming from the Federal Reserve, conflict is rising in Europe, and oil prices were spiking. There's a lot for investors to be concerned about.
But instability in the market doesn't mean investors should shy away from putting their money into stocks. In fact, with the broader market down more than 9% year to date, now could actually be a good time to buy shares of fantastic companies at a discount.
But with so many stocks out there, which are the best to put $1,000 toward? Let's take a closer look at two great stocks that could be great buys right now.
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Upstart Holdings: Just beginning to tap into loan markets
Upstart Holdings (UPST -0.48%) is still a new name to many investors, but the company is making some big moves in the nascent artificial intelligence (AI) loan-origination market.
Upstart's platform allows people to apply for personal and automotive loans online and uses AI to help determine which loans get approval and to help people get the best rates.
Is this actually good for borrowers? Absolutely. Upstart says that its personal loan rates are an average of 10% lower than using traditional lenders, and the company has higher approval rates compared to traditional lending practices.
It's also super easy for customers to apply for a loan, with 70% of all loans on its platform being completely automated.
It's easy to see why Upstart is good for customers, but how do lenders view the platform? Considering that Upstart has 75% fewer defaults from loans originated on its platform (compared to the same approval rates from major banks), they should love it.
And here's the good news for Upstart investors: The company makes 94% of its sales from charging fees to lenders, which means Upstart isn't taking on the risk of the loans.
But that's not the only great thing about this company. Upstart is also tapping into two huge markets. The company estimates its total addressable market (TAM) in personal loans is $84 billion, and its TAM for auto loans is $635 billion.
I won't sugarcoat the company's double-digit percentage share price drop over the past three months. It stings. But investors should keep in mind that the broader market -- across nearly every sector -- has taken a hit lately.
The fact is that Upstart is just beginning to tap into the massive auto lending and personal loan market, and the company is still in the early stages of its AI loan-origination business. If you look past some of the short-term market volatility right now and put $1,000 into Upstart, it's likely that you could see sizable gains over the long term.
Nvidia: Poised to see even more growth from new sources
Nvidia (NVDA -3.52%) is one of the leading semiconductor companies, specializing in graphics processing units (GPUs). The company's processors have long been a staple in the gaming industry, and that's where Nvidia still makes most of its money.
Gaming revenue has more than doubled over the past two years, and the company could be poised to see even more growth. That's because companies like Meta Platforms and Microsoft are pursuing the next evolution in internet gaming, called the metaverse.
The metaverse will be an online place where people can spend their time, as an avatar, hanging out with friends and shopping in a virtual environment. While still in infancy, the metaverse will require massive amounts of high-end graphics computing, which Nvidia is particularly adept at.
But what if the metaverse goes bust? No matter. Nvidia has plenty of other irons in the fire. For one, the company's data center business has exploded over the past few years as companies need more AI processing. Nvidia's data center revenue is up 185% over the past two years, and as cloud computing and AI needs become more complex, Nvidia's data center segment will benefit.
Nvidia's stock has slid 20% over the past three months, just as other stocks have tumbled, but let me put that drop into perspective for just a second. Nvidia's share price is still up tenfold over the S&P 500's gains over the past 12 months -- rising 70% over that time.
So while the current market volatility may make you hesitant to put $1,000 toward Nvidia, that could end up being a mistake as this company taps into the growing AI and metaverse trends and as this incredibly profitable company -- with net income that more than doubled in 2022 -- continues its lead in the semiconductor market.
