If you have $1,000 to put away as an investment today, the choices could be overwhelming. There are many great market-beating stocks out there. If you're looking for reliable, low-risk stocks that could deliver outstanding returns over time, I recommend Taiwan Semiconductor (TSM -1.89%) and Amazon (AMZN -0.31%).
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1. Taiwan Semiconductor: Benefiting from AI development
Taiwan Semiconductor, or TMSC, manufactures semiconductors, usually interchangeable with chips, for most of the big companies you know and love. Indeed, 85% of semiconductor prototypes were created with Taiwan Semiconductor's platform.
Today, it's enjoying incredible demand for chips that power artificial intelligence (AI), and because the company works with so many clients, it benefits from their growth. Client Nvidia, for example, continues to report robust sales, and the partnership with TSMC means it grows along with Nvidia.
Revenue has increased at a compound annual growth rate (CAGR) of 18.2% since TSMC went public in 1994, and its current goal is to bring that closer to 20% through 2029. The company also plans to keep gross margin at 53% or above and return on equity to be at least 25%. In the 2025 first quarter, revenue increased 35%, and gross margin was 58.8%, well within its active ambitions.
In the short term, though, TSMC is expecting that to contract as it moves more manufacturing capabilities overseas. The company is investing $100 billion in an Arizona facility that should help it serve U.S. customers better, as well as create local manufacturing that will avoid trade wars.
However, as TSMC gets that set up, it's expecting a negative impact to the gross margin. Long term, it expects U.S. operations to meet client demand better and lead to reduced costs.
It's for good reason. Great companies often need to expand to manage soaring demand, and that's where TSMC is holding today. On the first-quarter earnings call, management reiterated that it expects demand to double in 2025, driven by data centers focused on AI training and inference. As new models drive down costs, it's expecting greater efficiency and more AI development, adoption, and usage. All of that will require TSMC's products, and it sees robust long-term opportunities.
TSMC stock is feeling some pressure today due to the tariff situation, but it's a longtime market-beater with plenty of long-term potential. Plus, it pays a growing dividend.
Image source: Amazon.
2. Amazon: Driving AI development
AI is Amazon's biggest growth driver today as well, and Amazon is investing more than $100 billion this year in its generative AI business to stay on top of the industry. It offers a vast array of tools through its Amazon Web Services (AWS) cloud business to developers and small businesses, with all sorts of solutions to fit every need and budget, in typical Amazon style.
Since Amazon wants to compete on price, and using chips for inference can become expensive for developers, the company is investing in its own chips in addition to offering the use of technology from leading chipmakers. But it also offers a managed service called Bedrock for easy creation of AI apps at an affordable price.
Amazon has launched more than 1,000 AI applications across its business, and it's not just on the cloud. It's implementing AI solutions in fulfillment, advertising, streaming, and more. These solutions help it get products delivered to customers faster and advertisers reach their target customers more accurately.
"If you believe your mission is to make customers' lives easier and better every day, and you believe that every customer experience will be reinvented with AI, you're going to invest very aggressively in AI, and that's what we're doing," CEO Andy Jassy said during the first-quarter earnings call.
AWS is the leading global cloud computing company, with 30% of the market, versus 21% for the second spot, Microsoft. These investments will keep Amazon in the top position.
Amazon is also the leading U.S. e-commerce retailer, with about 40% of the market. Although AWS is its most profitable venture, accounting for 63% of operating income in the first quarter, e-commerce is still Amazon's core revenue maker, with about $94 billion in sales for online stores and third-party sales. It's also no slouch in streaming, which it offers as part of the Prime membership package, and now that the company owns MGM Studios, it's one of the major film producers. Advertising is its fastest-growing business today, with sales up 18% year over year in the first quarter, a tremendous growth driver for the whole business.
With its diversified revenue streams and varied growth drivers, Amazon offers years of stable growth for the long-term investor.
