If you have some extra money to invest in the stock market, now could be a good time to put some money to work. The S&P500 The index has returned 42% since bottoming in 2022. The average duration of a new bull market is about five years, so buying shares of quality growth stocks could deliver significant returns in the coming years.
Companies involved in the development of artificial intelligence (AI), including leading semiconductor companies that provide computer hardware for training AI models, are ripe for the harvest. Here are two leaders in this growing opportunity that could significantly grow your savings for years to come.
1. Advanced micro devices
Advanced micro devices (NASDAQ: AMD) has become a popular option for investors interested in semiconductor stocks, but the company has performed at a high level over the past decade. Its continued innovation and focus on serving the booming data center market make it a no-brainer stock to buy today.
AMD makes chips for consumer PCs, gaming consoles and cloud computing markets, but the data center sector is where the momentum is currently. According to the Dell’Oro Group, semiconductor spending in data centers is expected to grow 25% annually through 2028, and AMD is already capturing a good portion of that spending increase. Data center revenue rose 80% year-on-year in the first quarter.
After a strong start to the year, management has raised full-year expectations for data center revenue. This came after the new MI300 graphics processing unit (GPU), designed for AI workloads, became the fastest growing product in company history, indicating massive pent-up demand.
While its data center business continues to show excellent long-term growth prospects, AMD is also seeing strong demand for its central processing units (CPUs). Customer segment revenue, including sales of Ryzen desktop processors, doubled year over year to $1.4 billion last quarter. It is also seeing significant revenue increases as it ramps up its fourth-generation EPYC CPUs for servers.
AMD’s new MI300 should continue to experience strong demand as there haven’t been enough GPUs to meet AI demand over the past year. The company also expects the next generation of EPYC processors to deliver substantial performance improvements and further gain market share Intel.
Now is a good time to consider buying the stock. AMD shares are down about 30% from their previous high, even as Wall Street analysts are raising their growth estimates and now expect the company’s profits to grow 43% annually over the next few years. The stock price is currently $160.67, making it very affordable for someone with less than $1,000 to purchase one share.
2. Metaplatforms
Facebook and Instagram owner Metaplatforms (NASDAQ: META) has made a solid recovery over the past year. The stock hit new highs earlier this year as ad revenue accelerated following a weak ad spending environment in 2022. The stock could be poised for more gains as the company benefits from the rollout of Meta AI across its suite of apps.
Meta is a no-brainer because it has over 3.2 billion daily active users that it can monetize through ads. Revenue rose 27% year over year to $36 billion in the first quarter, but tighter controls on operating costs fueled a more impressive 117% rise in net profit to $12.4 billion.
Meta AI contributes more to those impressive financial results. Based on Meta’s latest Llama 3 major language model, Meta AI significantly improves content recommendations and ad performance, which in turn drives greater user engagement and ad spend by brands.
Importantly, the value of the company’s broad user reach led to a 6% year-over-year increase in price per ad, reflecting solid advertising demand. Although it’s only a quarter, the latest results show how the company can continue to drive growth by investing in more advanced AI models.
Encouragingly, Meta Platforms recently initiated its first-ever dividend, with the quarterly payment currently set at $0.50 per share. This reflects a financially healthy company with great prospects and sufficient resources to invest in the future while rewarding shareholders.
The stock is trading at a reasonable valuation of 25 times expected earnings this year. That’s very attractive for a company that analysts believe will deliver 18% annualized earnings growth over the long term. Meta’s stock price hovers around $500, so $1,000 could easily buy one share of Advanced Micro Devices and Meta Platforms.
Should you invest €1,000 in advanced micro-devices now?
Consider the following before buying shares in Advanced Micro Devices:
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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. John Ballard holds positions in advanced microdevices and metaplatforms. The Motley Fool holds positions in and recommends advanced microdevices and metaplatforms. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls to Intel and short August 2024 $35 calls to Intel. The Motley Fool has a disclosure policy.
2 No-Brainer Stocks to Buy Now for Under $1,000 was originally published by The Motley Fool
