Despite 2025 being a volatile year, the market has performed well so far. The major indexes are trading in record territory. This might discourage investors who are looking to put some more money to work, as they might believe that they'd be better off waiting for a dip.
That might sound like a smart strategy, but in practice, time in the market usually beats trying to time the market. Moreover, there are always some reasonably priced opportunities -- and sometimes, they include some of the biggest and most dominant companies out there.
In my view, these two megacaps are the best stocks investors can buy with $1,000 right now.
Image source: Getty Images.
Alphabet's playing a leading role in the AI revolution
Alphabet (GOOGL 2.20%) (GOOG 2.04%) is best known for Google Search, its crown jewel segment that raked in revenues of $54.2 billion in Q2 alone and that commands 90% of the search market. But the company is much more than that. In 2023, CEO Sundar Pichai said that six of Alphabet's products and services are used by 2 billion people each. That showcases its tremendous reach and adoption.
The monster success of OpenAI's ChatGPT and other artificial intelligence (AI) chatbots gave the market reasons to be concerned about the future of Google Search's competitive position. But these worries now seem to have been overblown. Google Search posted an 11.8% year-over-year revenue gain last quarter, and management is boasting about the huge early success of its AI Mode feature.
Nvidia deservedly gets a large share of the attention in AI. But it's worth pointing out that Alphabet is also working on its own AI chips. Additionally, the business has a booming cloud platform that's generating rising profits. Demand is strong, with companies like PayPal, Wayfair, Target, and Mattel leveraging its AI tools.
Moreover, Alphabet's Gemini LLMs are being used to improve the user experience of all the products and services the company owns. Advertisers also benefit from AI. "Over 2 million advertisers now use Google's AI-powered asset generation tools to run ads," said Philipp Schindler, chief business officer of Google.
This AI stock has soared by 228% in the past five years, and the company carries a market cap of $3 trillion. But its shares still trade at a compelling forward price-to-earnings (P/E) ratio of 23.1 -- a good deal for such an excellent company.
Meta is strengthening its network effects
Meta Platforms (META 0.27%) is another stock to add to the portfolio today. Its family of apps combined had 3.48 billion daily active users during the second quarter, a gargantuan figure. And that was up by 6% year over year.
These apps benefit from a powerful network effect. For Meta, the best outcome is not only growing the user base, but getting people to spend more time on these apps. That's where it's getting a lot out of AI, which it's using to personalize content recommendations. It's also giving users AI tools to find information or generate text and images.
"Advancements in our recommendation systems have improved quality so much that it has led to a 5% increase in time spent on Facebook and 6% on Instagram just this quarter," founder and CEO Mark Zuckerberg said on the Q2 earnings call.
Meta generated 98% of its revenue in Q2 from advertising activities. Unsurprisingly, the business is focused on finding more ways to monetize all the engagement on its platform. Again, AI is coming into the picture, helping advertisers be more creative and effective, creating ads that are driving higher conversions.
During the Q1 earnings call, Zuckerberg said that should AI continue to improve ad capabilities, in the future, advertising will be a "meaningfully larger share of global GDP than it is today. That view implies big revenue upside.
In the past five years, Meta's stock has risen by 171%. It sports a market cap of $1.8 trillion, and at a forward P/E ratio of 25.2, its valuation is reasonable. Taking advantage of that would be a smart move.
