With the stock market having calmed down and settled into a more normal trading pattern, now might be a good time to start investing in some great tech stocks. $1,000 is a great starting point to begin accumulating shares, and then if the market dips again, you have room to add more.
Let's look at two terrific tech stocks to start buying now with a $1,000 investment.
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Nvidia continues to benefit from the growth of AI
Chip giant Nvidia (NVDA -1.38%) remains the best-positioned company to continue to benefit from the artificial intelligence (AI) buildout. Its graphics processing units (GPUs) have become the backbone of AI infrastructure, providing the computing power needed to run AI workloads.
The company's dominance in the GPU space can be seen in its over 80% market share. While the company's chips are top-notch, what has really set it apart and created a wide moat is its CUDA software platform. It created the free software platform to allow developers to be able to program its chips for purposes beyond their original intent of helping speed up graphics rendering in video games. Since then, it has built a collection of libraries and tools on top of its platform called CUDA X that helps bolster the performance of its chips for AI tasks.
The company sees demand for its GPUs coming from multiple areas. The biggest is in the cloud computing space, where the big three providers are aggressively building out data centers to keep up with the demand stemming from customers looking to customize AI models and run AI workloads on their systems. In addition, companies that build foundation AI models, such as Meta Platforms and xAI, have also been building out data centers, while OpenAI is part of the Stargate Project, a consortium that plans to spend $500 billion on data centers over the next few years.
Enterprises have also started to increase their on-premise data center spending as they look to deploy hybrid cloud models for AI. At the same time, countries have also begun to invest in AI infrastructure. For example, on his trip to the Middle East, U.S. President Donald Trump announced a big AI infrastructure investment from Saudi Arabia.
When looking at risks, the biggest one Nvidia faces is if AI infrastructure spending begins to slow. The company does not have a recurring revenue stream like a software company, so it relies on increased demand for its chips. Right now, though, it appears that AI infrastructure spending is poised to continue to ramp up.
Meanwhile, the stock is attractively valued, with a forward price-to-earnings ratio (P/E) of under 31 times this year's analyst estimates and a 0.6 price/earnings-to-growth ratio (PEG), with numbers below 1 considered undervalued.
Alphabet looks to benefit from its agentic AI efforts
One tech stock that has been tossed in the bargain bin this year is Alphabet (GOOGL -1.06%) (GOOG -0.95%). While the company has continued to post strong revenue and earnings growth, investors remain concerned that AI is going to disrupt its main search business.
Alphabet's Google search engine has a dominant position in search, with an approximate 90% global market share. However, there is no doubt that AI chatbots are gaining momentum and beginning to become more mainstream. While they have their flaws, there are many things that these AI chatbots do well, and they can answer more complex questions better than a search.
But Google Search doesn't make much money from searches involving things like helping students with a biology paper or helping someone design a workout routine. Historically, it has only served ads on about 20% of its queries and makes money from searches with a commercial intent.
As such, when the company recently introduced its new AI Mode for search, it came with clear ways to improve upon inquiries with commercial intent. This included agentic capabilities, where it can search across platforms to present you with the best ticket prices from sites like Ticketmaster and StubHub for a concert or sporting event. Need to research a summer camp for your child with specific criteria and distance from your home? It can do that. It also has a Shop by AI Mode that can find items based on your description, let you try on outfits virtually using an uploaded photo of yourself, and even track prices for items you are interested in.
In addition to its often-overlooked strength in AI, Alphabet has some big advantages that tend to get ignored. Between its Android smartphone operating system, Chrome browser, and revenue-sharing deal with Apple to be the exclusive search engine for Safari, the company is the default search engine on most devices connected to the internet. It also has the world's largest advertising network, and its reach in local markets around the globe is difficult to replicate.
As such, in what is ultimately a two-sided marketplace of consumers and advertisers, Google has been able to entrench itself on both sides. So, despite the inroads that Perplexity and ChatGPT have made, Google still has a solid moat.
With a forward P/E of only 17.5 times, Alphabet stock is cheap. Investors also get a lot more than Alphabet's search business. They get its fast-growing cloud computing business, a rapidly expanding robotaxi business in Waymo, and the most watched video streaming service in the world with YouTube.
