Companies are pouring a staggering amount of money into digitalizing their businesses by bringing them into the cloud and harnessing the power of AI. According to an estimate by McKinsey, the world's economy will need to spend an eye-popping $6.7 trillion by 2030 on data centers to handle the growth in traditional and AI workloads. These data centers will require a tremendous amount of energy to support this surge in computing power.
The digitization investment megatrend will benefit technology companies and power suppliers. Two of the best stocks to invest in right now across those two sectors are Alphabet (GOOG -3.68%) (GOOGL -3.89%) and Brookfield Renewable (BEPC -1.20%) (BEP -1.89%). Here's what makes them worthy of a $1,000 investment right now.
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A dirt-cheap AI giant
There's a lot of talk that AI could disrupt Alphabet's immensely profitable Google search business. That weighed on the tech titan's valuation. It currently trades at a forward P/E ratio of 18.5 times. That's below the market averages (nearly 23 times for the S&P 500 index and about 29.5 times for the Nasdaq-100) and the other "Magnificent Seven" stocks:
GOOG PE Ratio (Forward) data by YCharts
Instead of being a drag on its business, AI is becoming an accelerator. Alphabet developed its own AI model (Gemini). CEO Sundar Pichai noted in the first-quarter earnings press release that its recently rolled out Gemini 2.5 is "achieving breakthroughs in performance and is an extraordinary foundation for our future innovation." Alphabet is integrating AI into search with AI overviews. Meanwhile, the company is seeing strong Google Cloud growth (28% revenue growth in the first quarter), partly driven by AI infrastructure and generative AI solutions. The company believes its unique full-stack approach to AI, which integrates it on the front end and back end, will empower it to be a leader in the AI age.
Given the company's reasonable valuation, Alphabet could generate robust returns in the coming years. Its strong growth in the past turned a $1,000 investment made 10 years ago into over $6,500 (20.6% annualized total return).
Powering the AI age
Brookfield Renewable is emerging as a key player in empowering tech companies by providing them with the energy they need to support their cloud and AI growth. For example, Brookfield signed a monster deal last year to support Microsoft's power needs. It plans to develop 10.5 gigawatts (GW) of new renewable energy capacity from 2026 to 2030 for the technology titan. That was almost 8 times larger than the biggest corporate power purchase agreement (PPA) ever signed.
Brookfield currently has about 74 GW of renewable energy projects in its advanced-stage pipeline. That should support about 10 GW of annual capacity deployments by 2027 as the company continues to ramp up its capabilities. These new projects should power 4% to 6% annual growth in the company's funds from operations (FFO) per share in the coming years.
On top of that, the company expects to benefit from rising power prices. While it typically signs long-term, fixed-rate PPAs (it locked up 90% of its capacity for an average of 14 years), most link rates to inflation (70% of its revenue). Meanwhile, renewable power prices rose faster than inflation, positioning Brookfield to ink even more lucrative PPAs as legacy agreements expire. Inflation escalation and margin enhancement activities should add another 4% to 7% to its annual FFO per share each year.
Brookfield also has a knack for completing accretive acquisitions. It recently closed its acquisition of French renewable energy developer Neoen and agreed to buy National Grid's commercial U.S. renewable energy platform. Acquisitions further enhance Brookfield's already healthy organic growth rate.
Add it up, and Brookfield expects to grow its FFO per share at a more than 10% annual rate over the next 10 years. That should support 5% to 9% annual dividend growth. With its payout already approaching 5%, Brookfield could generate total annual returns of around 15%. Brookfield could turn a $1,000 investment into $4,440 in about 10 years at that rate.
Cash in on this megatrend
Companies will pour a staggering amount of money into digitization over the next several years, which should benefit Alphabet and, by extension, Brookfield Renewable. That should enable them to grow at high rates for years to come, which should support strong investment returns. Because of that, they look like some of the best stocks to invest $1,000 in right now.
