Making $1 million from a single investment is no easy task unless you've already got $900,000 ready to invest. When investors dream of becoming millionaires, they often have grand visions of a stock that rises 100 times in value and turns a small investment into a huge winner. While those examples do exist, they're quite rare.
Instead, investors should focus on stocks that can crush the market and accelerate their timeline to becoming millionaires. With this mindset shift, you can pinpoint great companies with an excellent shot at outperformance and increase your satisfaction through consistent success.
I've got two surefire stocks that are well on their way to beating the broader market and would make excellent additions to any investor's portfolio.
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Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (TSM 3.16%) (TSMC) is potentially the most neutral way to play the AI arms race. It is the chip fabricator for many big tech companies, including the all-important Nvidia. Its technology is second to none, and two new chip generations are already slated for launch in late 2025 and 2026.
Because TSMC is a supplier to nearly every company involved in AI, it has unparalleled vision into the future because chip orders are placed years in advance. For example, its existing Arizona facility has already sold out chip production through 2027, which is part of why it has announced an additional $100 billion in production facilities to be built in the U.S.
NYSE: TSM
Key Data Points
Over the next five years, TSMC's management expects AI-related revenue to grow at a jaw-dropping 45% compound annual growth rate (CAGR). Companywide, it expects revenue to increase at nearly a 20% CAGR, which is far higher than the broader market usually grows (around 10% per year).
To top things off, TSMC's stock isn't all that expensive, trading for 21.2 times forward earnings, versus the S&P 500's (^GSPC 0.49%) 22.1 times forward earnings.
TSM PE Ratio (Forward) data by YCharts
When you combine market-crushing growth with cheaper-than-market prices, you've got a recipe for a stock that can dramatically outperform the broader market. That's why I'm confident that TSMC will crush the market over the next few years.
Alphabet
Alphabet (GOOG 0.29%) (GOOGL 0.15%) may be more controversial as a market-beating stock pick, as it has a decent number of rising headwinds. However, Alphabet has dealt with headwinds in the past and is well equipped to weather this storm.
One of the biggest fears is that Alphabet's primary business, Google Search, will be replaced by AI. However, Google has already incorporated AI search overviews and is launching an AI search mode. While there will be some users who defect to other options, Google is doing the right things to stay relevant in the search game. Furthermore, generative AI has been around for nearly three years, and Google Search still grew at a 10% pace in Q1. Although the market may think Google is in trouble, its results certainly don't back that thesis up.
NASDAQ: GOOGL
Key Data Points
Despite all of the fears surrounding Alphabet (including an economic slowdown and potential government breakup), the company just keeps posting excellent quarter after excellent quarter. Overall revenue was up 12% for Alphabet in Q1, and diluted earnings per share increased 49%. If any other company delivered results like that, investors would be ecstatic. But because it's Alphabet, the market isn't bullish on the stock.
This opens up an incredible investment opportunity, as the stock trades for a mere 18 times forward earnings.
GOOGL PE Ratio (Forward) data by YCharts
Alphabet isn't dead yet, and its results showcase that. Time will tell if Alphabet defends its territory from AI upstarts, but if it does, it will likely produce massive returns because of its relative undervaluation and steady results.
