Even though the market recovered substantially from its lows during April, plenty of stocks are still at appealing valuations right now. The economy hasn’t been impacted by tariffs so far, and demand for AI-related products hasn’t slowed a bit. If you’ve got $1,000 to deploy, I think you will be incredibly happy with the price you’ve bought these stocks at three to five years down the road.
Nvidia (NVDA -2.20%), Taiwan Semiconductor Manufacturing (TSM -2.04%), and Alphabet (GOOG -0.70%) (GOOGL -0.66%) are at the top of my shopping list right now. Each of these investments brings something different to the table and creates a balanced approach to AI.
Image source: Getty Images.
Nvidia
Of these three, Nvidia represents the growth option. Nvidia’s graphics processing units (GPUs) are the go-to computing device for nearly every AI hyperscaler. As a result, Nvidia’s revenue boomed over the past few years and is still rapidly growing. In Q1 FY 2026 (ending April 28), its revenue rose 69% year over year to $44 billion, and revenue is projected to rise to $45 billion in Q2, indicating 50% growth. Although that’s impressive, growth could be further bolstered by a trade deal with China that allows Nvidia to sell its chips there again or a significant AI buildout in Europe, which appears to be gaining steam recently.
The stock isn’t cheap at 33 times forward earnings, but that’s the price you must pay to own a stock posting market-leading growth.
We’ve only scratched the surface of the computing power necessary to run an economy assisted by AI, which will boost Nvidia’s growth over the long run. There’s still plenty of growth ahead for Nvidia, and the demand signals it’s sending to Taiwan Semiconductor Manufacturing back that up.
Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (TSMC) is a critical supplier to Nvidia, as Nvidia doesn’t have the facilities to manufacture its own chips. So it outsources that work to a chip foundry like TSMC — the world’s top semiconductor foundry, boasting cutting-edge technology and best-in-class execution. Nearly all of the big tech companies are customers of TSMC in one way or another, and its neutral position in the chip world gives it a great view into the future, as chip orders are often placed years in advance.
This allows TSMC’s management to make accurately forecast its revenue. The most recent estimate the company gave investors when laying out guidance for 2025 was that its expects its AI-related to revenue to grow at a 45% compound annual growth rate (CAGR) over the next five years, which will help bolster overall revenue growth of a 20% CAGR over that same time frame.
That’s monster growth, although it will likely be slower than Nvidia’s growth because TSMC also has a significant chunk of its business tied up in areas outside AI.
TSMC’s stock trades for a reasonable 22.5 times forward earnings, making it a balanced choice between growth and valuation.
Alphabet
Alphabet isn’t considered a growth company, although maybe it should be if you’re only looking at profit growth. Alphabet, the parent company of Google, is invested in AI so that its advertising business can continue to maintain its dominance. There is a deep fear in the market that traditional search could be replaced by individuals only using generative AI to perform searches, but Google already bridged that gap by offering AI search overviews at the top of its Google search. This hybrid approach could be a winning development, leaving Google at the top of this critical space.
However, the market doesn’t buy this argument and has given Alphabet a steep discount to other big tech stocks.
GOOGL PE Ratio (Forward) data by YCharts
At 18.3 times forward earnings, Alphabet is far cheaper than the broader market, as measured by the S&P 500. The S&P 500 trades for 22.5 times forward earnings, so this deep discount makes Alphabet a value stock.
However, if you look at its earnings growth, it doesn’t seem like much of a value stock. In Q1, Alphabet’s revenue rose 12% year over year, and its diluted earnings per share increased 49% year over year. That’s growth stock performance from a value company, making Alphabet a clear no-brainer buy, especially if it can navigate the huge transition going on between AI and search.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
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