Investing $1,000 in the Stock Market: Two Stocks Worth Considering
1. Broadcom: A long-term winner in AI
While chip stocks like Nvidia and Advanced Micro Devices have received more attention in the AI race, Broadcom (NASDAQ: AVGO) has quietly been making strides in this space. The company specializes in networking and connectivity solutions that are expected to play a crucial role in the AI boom.
In the most recent quarter, Broadcom’s revenue growth was modest at 4% year over year to $9.3 billion. However, the company noted a growing demand for networking components for generative AI. In the fourth quarter of fiscal 2023, generative AI revenue accounted for close to $1.5 billion or about 20% of its semiconductor revenue.
Looking ahead to fiscal 2024, Broadcom anticipates that networking revenue growth will accelerate to 30%, with generative AI representing more than 25% of its semiconductor revenue. Additionally, the company boasts strong profitability, with a 65% margin in the fourth quarter. CEO Hock Tan is known for running a lean operation, and the stock trades at a reasonable price-to-earnings ratio of 29.
2. The Trade Desk: Leading the digital advertising transition
While AI may be the most critical growth trend in the stock market, digital advertising has also experienced significant growth. The Trade Desk (NASDAQ: TTD) is leading the way as an independent ad tech platform.
After a slowdown during the 2022 bear market, there are signs that digital ad spending is rebounding. The Trade Desk is well-positioned to capitalize on this next advertising boom. Its Unified ID 2.0 (UID2) protocol is the leading candidate to replace third-party cookies on Google Chrome, which are expected to disappear later this year. The company has also launched its own AI platform, Kokai, which enhances measurement data, user interface, and return on investment by optimizing ad impressions.
Trade Desk has shown strong growth in a challenging industry, and the stock is currently trading at a discount due to weak guidance in its previous earnings report. However, the company looks poised for a strong 2024 as the digital advertising industry recovers.
Important Note: The Motley Fool Stock Advisor team, a trusted source for stock recommendations, did not include The Trade Desk among their top 10 stocks to buy. Nonetheless, the team has a track record of delivering impressive returns and offers valuable guidance and stock picks each month.
Conclusion
While investing in the stock market carries inherent risks, considering these two stocks could potentially lead to significant returns. It’s essential to do thorough research and consult with a financial advisor before making any investment decisions.
Analyst comment
Positive news: Investing $1,000 in the stock market could potentially grow into $1 million, especially in the AI bull market. Two stocks worth considering are Broadcom, expected to see growth in generative AI revenue, and The Trade Desk, well-positioned in the digital advertising industry with its innovative technology and strong growth potential.
As an analyst: With the growing demand for AI and digital advertising, investing in Broadcom and The Trade Desk could lead to significant returns. However, thorough research and consulting a financial advisor are essential due to inherent market risks.
