Technology stocks, especially those with a key role in the hot growth area of artificial intelligence (AI), have led gains in today’s bull market. The S&P 500 is heading for a 24% increase this year after rising in the double digits last year thanks to the momentum of these players. Investors have piled into these stocks as a way to get in early on a market that’s set to soar throughout the decade — today’s $200 billion AI market is forecast to reach $1 trillion by 2030.
This growth forecast and high demand for AI products and services mean it isn’t too late to invest in companies leading the AI revolution. They’ve already seen earnings take off, but this could continue well into the future. Let’s check out the best stocks to buy with $1,000 right now. (And by the way, with this amount, you could choose to invest in one of these players or all three.)
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Oracle (NYSE: ORCL) built its reputation as a database software provider, but in recent times, this tech giant has put a focus on cloud infrastructure — and serving AI customers. This shift has proven itself to be a very wise choice, as customers have flocked to Oracle, and revenue has taken off.
In the most recent quarter, the company’s cloud infrastructure revenue jumped 45% to $2.2 billion, and demand for cloud infrastructure continues to surpass supply. Oracle’s cloud database partnerships with Microsoft Azure, Alphabet‘s Google Cloud, and Amazon‘s (NASDAQ: AMZN) Amazon Web Services (AWS) make it easy for customers to access Oracle on any platform. Oracle expects cloud database revenue to represent a third major growth driver along with cloud infrastructure and strategic software-as-a-service.
A look at Oracle’s remaining performance obligations (RPO), or contract revenue that hasn’t yet been invoiced, is another reason to be optimistic about what’s ahead. Cloud RPO surged 80% and accounts for three-quarters of total RPO — and total RPO in the quarter climbed 52% to $99 billion.
On top of this, you also can count on this tech giant returning value to you as a shareholder through stock buybacks and dividends. Oracle repurchased $150 million worth of stock in the quarter and paid out more than $4 billion in dividends over the past year.
Amazon is both a user of AI and a seller of top AI products and services. As an e-commerce leader, Amazon has put AI into place across its fulfillment operations, helping with tasks such as efficiency in warehouses and figuring out the fastest delivery routes. All of this results in cost savings for Amazon, and a smooth delivery process encourages customers to keep coming back.
As for selling AI, this happens through the cloud services business. AWS, which is Amazon’s biggest profit driver, has gone all in on AI, offering a vast selection of products and services to customers. And this has helped AWS reach an annual revenue run rate of $110 billion. AWS sells premium chips, such as those of Nvidia (NASDAQ: NVDA), as well as its own chips developed for customers on a budget. And it even offers a fully managed system allowing users to access large language models and tailor them to their needs.
Amazon has established a track record of growth, increasing revenue and profit into the billions of dollars over the years. And after revamping its cost structure a couple of years ago, the company now is seeing return on invested capital and free cash flow taking off. All of this makes now a great time to get in on Amazon and benefit from growth over the long term.
AMZN Free Cash Flow data by YCharts
Nvidia shares have soared nearly 200% this year, but that doesn’t mean this stock has reached a plateau. The stock trades for about 51x forward earnings estimates, which isn’t cheap but remains reasonable considering the company’s long-term potential in the high-growth AI market.
This tech powerhouse sells the most sought-after graphics processing units (GPUs) on the planet, chips that power some of the most crucial AI tasks like the training and inferencing of large language models. Nvidia holds about 80% of the AI chip market, but the company’s strengths don’t stop there. Nvidia has built an AI empire, selling products and services that make it the “go to” destination for any customer aiming to launch an AI program.
All of this has helped Nvidia report triple-digit earnings growth in recent quarters, with earnings reaching record levels. And the company’s gross margin of more than 70% shows its high profitability on sales.
Importantly, Nvidia pledges to innovate on an annual basis, something that should help it maintain its lead in this increasingly competitive market. And Nvidia has a couple of big catalysts ahead: its quarterly earnings report on Nov. 20 and the launch of its new Blackwell architecture in the coming weeks.
So even after this year’s big gain, Nvidia still represents a great investment for the long term.
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
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Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $368,131!*
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Apple: if you invested $1,000 when we doubled down in 2008, you’d have $42,611!*
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Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $444,355!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of November 18, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon and Oracle. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The Best Stocks to Invest $1,000 In Right Now was originally published by The Motley Fool