Although artificial intelligence (AI) companies never really lost their place as the market’s leading names, their stocks have been out of favor for most of the past six months. Many stayed relatively flat during that period, while others lost ground. Still, it seems that the market is rotating back to them again. With that in mind, I think investors should position themselves to take advantage, as these stocks haven’t quite reached their full potential. If you’ve got $1,000 to invest now, these are the perfect three stocks to buy.
Image source: Getty Images.
Nvidia
Any AI investing list without Nvidia (NVDA +3.39%) is incomplete, in my opinion. Few companies are benefiting more from the AI build-out than Nvidia, and this trend has driven it to become the world’s largest company by a wide margin. Its graphics processing units (GPUs) are still the most popular computing option available in data centers, and that’s showing up in its results.
Today’s Change
(3.39%) $7.06
Current Price
$215.33
Key Data Points
Market Cap
$5.1T
Day’s Range
$207.40 – $215.69
52wk Range
$104.08 – $215.69
Volume
4.8M
Avg Vol
174M
Gross Margin
71.07%
Dividend Yield
0.02%
Last quarter, Nvidia posted 73% revenue growth, but it expects to grow at a 77% pace during its fiscal 2027 Q1. That’s particularly impressive considering its size. Trading at 24 times forward earnings and with a multiyear growth opportunity ahead, it’s the perfect stock to build an AI portfolio around.
Broadcom
Nvidia may be the market leader in AI chips, but Broadcom (AVGO 1.57%) is looking to change that. Broadcom partners with AI hyperscalers to design and build custom AI chips tailored for their workloads. These chips have better cost performance than GPUs, but are less flexible. If the workload changes, these chips no longer excel. However, many AI hyperscalers have reached a maturity level where they know what their computing workloads will look like. As a result, demand is rising for Broadcom’s application-specific integrated circuits (ASICs).
AVGO Revenue (TTM) data by YCharts.
In 2027, Broadcom expects its custom AI chip business to generate $100 billion or more in revenue. For reference, the company generated $68 billion as a whole over the past 12 months, and its AI semiconductor revenue was less than half of that total. That’s major growth for Broadcom, and I think investors need to take advantage of this pick before it’s too late.
Alphabet
One of Broadcom’s primary clients is Alphabet (GOOG +2.42%) (GOOGL +2.46%). The two have collaborated to create the Tensor Processing Unit (TPU), which is gaining popularity among AI hyperscalers. The TPU is one of the reasons Google’s AI models can be so much cheaper than alternatives while also maintaining impressive performance. Other companies, like Meta Platforms (META +0.65%), have started to use them as well. And one of the leading AI start-ups, Anthropic, uses TPUs (as well as rival AI chips) to train its Claude model.
Today’s Change
(2.46%) $8.47
Current Price
$352.87
Key Data Points
Market Cap
$4.2T
Day’s Range
$342.70 – $353.18
52wk Range
$147.84 – $353.18
Volume
991K
Avg Vol
32M
Gross Margin
59.68%
Dividend Yield
0.24%
All of this success shows up in the results from the Google Cloud segment. During its past quarter, the cloud computing division grew by 48% year over year, and with the way AI spending is trending, its growth rate will likely accelerate in Q1. Combine the impressive Google Cloud division with a strong legacy product (the Google Search engine) and a strong offering in the generative AI space, and you have a combination that looks primed to deliver market-crushing returns over the long haul. Alphabet is a solid and safe bet for the AI era, and investors shouldn’t miss it.
Keithen Drury has positions in Alphabet, Broadcom, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Broadcom, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
