Buying stocks in growing companies is one of the best ways to make your money grow. The stock market has bad years, as investors were told in 2022, but over many decades, companies that grow consistently can produce compound returns that multiply a small amount into a significant amount.
Assuming you have some extra cash that you don’t need to pay bills or pay off debt, here are two excellent growth stocks you can buy for under $1,000.
1. Taiwanese semiconductor production
The semiconductor industry is a ripe field to watch for growth stocks. Every decade has seen new electronic devices emerge, driving demand for processors. But the increasing investment in large data centers to train artificial intelligence (AI) models will lead to record revenues for leading chipmakers like Taiwanese semiconductor production (NYSE:TSM).
TSMC, as it is also known, is the leading manufacturer of the most advanced chips. Its customers include leading semiconductor companies such as Nvidia, Intel, BroadcomAnd Advanced micro devices. The expertise in developing advanced chip technology has translated into a highly profitable business. Last year, TSMC generated $27 billion in net profit on $69 billion in revenue.
This is a particularly good time to buy shares, as TSMC is just emerging from a cyclical downturn in semiconductor demand. Despite recent weakness in smartphone chips, TSMC still posted 16% year-over-year revenue growth in the first quarter. The company is targeting 15% to 20% annual revenue growth through 2026 as the industry recovers.
An opportunity for TSMC is the exploding investment in data center infrastructure. The company is seeing strong demand for its most advanced 3-nanometer and 5nm chips, driven by AI-related applications. Management expects AI-related demand to grow at a 50% compound annual rate over the next five years.
Over the past 30 years, TSMC has grown revenue and earnings at an annual rate of 17%. That growth would have turned a $10,000 investment into $585,000 with dividend reinvestment over that three-decade period. The stock is up 70% in the past year, making it the S&P 500a return of 25% and is expected to continue to deliver better returns in the coming years.
2.Microsoft-
Software is another lucrative market to watch for long-term winners. Many people are familiar with Microsoft‘S (NASDAQ: MSFT) consumer products like Windows and Office, but it is a major player in cloud services, benefiting from growing demand for AI services. The stock has outpaced the broader market in the past year, rising 35%.
In cloud services, Microsoft continues to gain market share in the cloud computing market, where it currently ranks number 2, behind AmazonMicrosoft Cloud revenue grew 23% year-over-year last quarter, as revenue from customer cloud migrations accelerated.
Microsoft’s Azure cloud business is benefiting from new AI services launched over the past year. The number of Azure deals worth $100 million or more increased 80% year over year in the most recent quarter.
Meanwhile, Microsoft’s AI-powered Copilot tool is being widely adopted by enterprise customers. Companies are finding it incredibly valuable for accelerating employee workflows and making faster decisions. Nearly 60% of the Fortune 500 use Copilot for Microsoft 365.
Microsoft has been growing revenue and profits by double digits, and its innovation in AI software should continue that trend. If Microsoft can grow its profits at an annual rate in the low teens, as Wall Street analysts expect, investors should expect that growth to triple their investment over the next decade.
Should You Invest $1,000 in Taiwan Semiconductor Manufacturing Now?
Before you buy Taiwan Semiconductor Manufacturing stock, you should consider the following:
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Microsoft, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long Jan 2026 $395 calls on Microsoft and short Jan 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
2 No-Brainer Stocks to Buy Under $1,000 was originally published by The Motley Fool
