If you've got $1,000 ready to invest in the stock market, I can think of few better companies to buy right now than these three below. All three offer a combination of growth and value -- and with the recent market sell-off, these shares have seldom traded at this cheap a price tag.
I think Nvidia (NVDA +1.30%), Microsoft (MSFT 1.13%), and Broadcom (AVGO +2.03%) are among the best stock picks in the market. Let's take a closer look at each one.
Image source: Getty Images.
Each is benefiting massively from the AI arms race
Nvidia and Broadcom are clearly huge beneficiaries of the massive AI spending going on. Both of these companies make computing units for artificial intelligence (AI) companies, with each taking a different approach. Nvidia makes general-purpose GPUs, which can be tasked with training AI models from nearly any data type or delivering inference in numerous ways. Nvidia's products have been the industry standard since the AI buildout began in 2023, and its leadership position has gone unchallenged.
Broadcom isn't taking Nvidia head-on. Instead, it's developing a custom AI chip specifically designed for an end user's workload. These are highly specialized units that thrive in applications they are designed for but fail in ones they aren't. As a result, Broadcom's custom AI chips won't replace GPUs entirely but can supplement Nvidia's GPUs in a cost-effective manner.
NASDAQ: AVGO
Key Data Points
Both companies are expected to undergo massive growth this year, as their products are in high demand. The average Wall Street analyst projects that Nvidia's revenue will rise 71% this year. For Broadcom, that number is a bit smaller at 64%, mainly because Broadcom has other business units that aren't growing as fast as its custom AI chips. Each of these stocks is slated for monster growth over the next few years, making them smart buys now.
Microsoft isn't growing nearly as fast as these two, but it's integrating AI into its legacy products that are deployed by businesses and consumers around the globe. Microsoft's primary exposure to AI revenue is through its cloud computing division, Azure. Azure has delivered on its growth and saw its revenue rise 39% during its most recent quarter. This helps boost Microsoft's growth overall, and with a $625 billion backlog, it's likely that this outsized growth will persist for some time.
NASDAQ: MSFT
Key Data Points
Microsoft is still growing revenue at a 17% pace, making it a strong performer despite its large size. Microsoft is a stalwart, and while it's not growing as fast as Nvidia or Broadcom, it's still a worthwhile buy -- especially when you can buy the stock for as cheaply as you can right now.
Now is the perfect time to scoop up these three stocks
Microsoft's valuation has now reached a point seldom seen over the past decade.
MSFT PE Ratio data by YCharts
When you value the stock using forward earnings, it's an even cheaper price tag. Microsoft is trading at the lowest valuation in its recent history, and I believe right now is an excellent time to buy shares, as deals like this don't come around often. Likewise, Nvidia and Broadcom are each reasonably priced for their growth.
NVDA PE Ratio (Forward) data by YCharts
With Nvidia trading for a modest 21.2 times forward earnings and Broadcom trading at 28 times forward earnings, each of these stocks is the cheapest they have been in some time. However, the growth thesis behind these two stocks is as strong now as it ever was before, which I think gives investors the green light to load up on these two stocks as well.
All three companies are leaders in the AI investing space. It's not often you can buy leaders at a discount, but that's exactly what the market is giving investors.
