The stock market is full of endless opportunities, and even beginners can make significant returns with the right investment strategy. If you have $50,000 to invest, you might feel like it’s a substantial amount of money, enough to make a meaningful investment. The good news is that with the advent of fractional shares, any amount of money can now get you started in the market. Whether you have $50 or $50,000, you can begin your investment journey.
So, which stocks should you be paying attention to right now? According to recent analysis, Nvidia, Taiwan Semiconductor Manufacturing (TSMC), and Alphabet (Google’s parent company) are some of the most promising stocks to watch.
Nvidia is well-known as a leader in the artificial intelligence (AI) space, with its graphics processing units (GPUs) powering many AI technologies. These GPUs play a crucial role not only in gaming but also in AI computations. While AI applications have already made significant strides, the computing power required to fully realize the potential of AI in a business-first world is still lacking. Nvidia’s GPUs will be at the heart of achieving this reality.
Nvidia's future, especially in AI-driven growth, seems just beginning. For example, the company’s new generation of GPU processors is not only meeting current AI demands but is also capable of handling more complex algorithms in the future. Let’s take the story of Jack, a tech investor, as an example. Jack first recognized Nvidia’s potential in 2017 when the stock price was around $100. As AI technology continued to evolve, Jack’s investment grew in value. Today, Nvidia’s stock price has surpassed $160, and in the next few years, it’s expected to rise even further.
However, despite Nvidia’s success, its stock is not cheap. With a price-to-earnings (P/E) ratio of 37, it’s one of the more expensive stocks on the market. That said, given the company’s potential for huge growth in the coming years, the current price might not seem as expensive in hindsight.
Another stock worth watching is Taiwan Semiconductor Manufacturing Company (TSMC). TSMC is the world’s largest semiconductor foundry, and many major tech companies, including Nvidia, rely on it to produce chips. TSMC has established its market leadership through strong yields and continuous innovation. The company is also mitigating geopolitical risks by investing $165 billion to build new production plants in the U.S.
Let’s look at the story of Tom, a tech entrepreneur based in Silicon Valley. Tom understands the importance of semiconductors in modern technology. In 2023, he bought TSMC stock and has plans to increase his holdings in the coming years. Based on his analysis, he believes TSMC has immense growth potential, especially after its expansion into the U.S. This will help the company scale its production capacity and market share.
While TSMC’s stock price is currently slightly above the market average, the company’s continuous innovation and strong earnings growth make it a solid investment. TSMC’s projected compound annual growth rate for the next five years is close to 20%, far exceeding the broader market’s expected 10% growth.
Lastly, let’s discuss Alphabet—Google’s parent company. While Google dominates the search engine and advertising sectors, many investors are concerned that generative AI could displace traditional search engines. However, Alphabet has already integrated AI technologies into its search engine, such as the Google Search Summary feature, which enhances the user experience and competes with generative AI.
Take Mary, a digital marketing expert from New York, for instance. She has long relied on Google for her ad campaigns, but as AI technology evolves, she’s been paying closer attention to how Google is incorporating AI into search advertising. Despite concerns about Alphabet’s future, Mary believes that Alphabet’s investments in AI will help it maintain its lead.
Alphabet’s financial performance is also impressive. Recently, the company’s revenue grew by 12%, and its diluted earnings per share increased by 49%. While market concerns about its future are exaggerated, I believe Alphabet’s stock is severely undervalued, and it’s likely to return to at least the market average multiple in the near future. For that reason, it presents an excellent buying opportunity today.
For investors, understanding a stock’s valuation is far more important than simply looking at its price. For instance, Nvidia’s stock is currently priced at around $160, TSMC is at $230, and Alphabet is at $180. If you only consider the dollar figures, Nvidia might appear to be the “cheapest.” But when we dive into their P/E ratios, Nvidia is actually the most expensive.
Nvidia’s P/E ratio of 37 means it’s priced higher than many other stocks, but given its expected growth in the coming years, today’s stock price could look much more reasonable. In contrast, TSMC’s P/E ratio is in line with the market average, and Alphabet is currently undervalued, offering a significant upside potential.
Whether you’re a beginner looking to enter the stock market or a seasoned investor, Nvidia, TSMC, and Alphabet are undoubtedly stocks to keep an eye on. While each stock has different valuations and growth prospects, all three are key players in the AI race. For those looking to invest $50,000 into the future, these three stocks are well worth considering.