Anyone can grow their money in the stock market. A smart way to get started is to buy shares of top companies that millions, if not billions, of people depend on every day.
If you have less than $1,000 to invest, two outstanding businesses that you can buy one share each of right now are Google parent Alphabet (GOOG 1.68%) (GOOGL 1.66%) and Facebook owner Meta Platforms (META 2.52%). Here's why these stocks should deliver excellent returns for many years.
1. Alphabet (Google)
Google is ranked the third most valuable brand in the world, according to Brand Finance. Gmail, YouTube, and Google Maps are widely used services, almost serving as daily utilities for many people. This allowed the parent company, Alphabet, to haul in $72 billion in advertising revenue last year.
Alphabet has excellent growth prospects. Its growing ad revenue translates to a steady stream of free cash flow that management can reinvest in technology like artificial intelligence (AI) that makes these products more useful for people. Over the last year, Alphabet generated a whopping $72 billion of free cash flow.
NASDAQ: GOOGL
Key Data Points
Google's Gemini AI model is leading to new features that make the company's products better. For example, AI Overviews is leading to increased usage of Google Search. Higher engagement can have a significant effect on its ability to grow advertising revenue.
Gemini was trailing OpenAI's ChatGPT and other AI models over a year ago, but it caught up. Gemini 2.0 is currently the top-ranked model in the closely watched Chatbot Arena leaderboard. Management sees a lot of opportunities in AI. This is most evident in Google Cloud, where revenue grew 30% year over year in the fourth quarter. Importantly, the cloud business continues to see improving margins, with operating income more than doubling year over year to $2.1 billion.
The value of Google's apps and the momentum the company is seeing in AI services point to a bright future. It's a solid stock that investors can build a well-diversified portfolio around. Investors can currently buy shares at a reasonable valuation of 21 times the consensus 2025 earnings estimate.
2. Meta Platforms
Meta Platforms finished 2024 with over 3.3 billion people using its social media apps every day, including Instagram, Threads, and Facebook. It's in a strong position similar to Alphabet's, where its massive user base is ultimately driving higher ad spending across these services and creating excellent returns for shareholders.
NASDAQ: META
Key Data Points
Revenue grew 22% in 2024 to $164 billion. This comes as the company continued to roll out Meta AI, a personalized search assistant, across its social media platforms. It's experiencing engagement trends similar to Google's, which helped increase the number of ad impressions and average price per ad in 2024.
The company says that Meta AI has over 700 million monthly active users, up from 500 million in the previous quarter. Management expects this personalized assistant to hit 1 billion users this year. Meta's Ray-Ban AI glasses have also been a hit, and management is optimistic about the long-term sales opportunity with the product.
Meta is clearly positioning itself at the front of the AI adoption curve, and it's got the resources to keep innovating. It is investing heavily in data centers and technology and plans to spend upwards of $65 billion in capital expenditures this year, with a portion being allocated to generative AI initiatives.
The stock continues to move higher and could hit more new highs in 2025. Analysts expect Meta's earnings to grow at an annualized rate of 17% in the coming years, but investors can still buy shares at a reasonable forward earnings multiple of 28.
