The Smartest Growth Stocks to Invest $1,000 in As Investors Rotate Out of Tech
The Nasdaq Composite index has shed more than 5% of its value in 2026, as investors have been moving out of this sector despite positive earnings news from key technology players. However, the rotation from technology into other sectors has created a terrific opportunity for savvy investors to buy some top stocks on the cheap.…
The Nasdaq Composite index has shed more than 5% of its value in 2026, as investors have been moving out of this sector despite positive earnings news from key technology players.
However, the rotation from technology into other sectors has created a terrific opportunity for savvy investors to buy some top stocks on the cheap. Morningstar notes that the highest percentage of undervalued stocks is in the tech sector. That’s not surprising, as the combination of strong earnings growth and tepid stock price performance has brought tech stocks to attractive valuations.
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That’s why if you have $1,000 in disposable cash right now after meeting expenses, clearing high-interest loans, and saving enough for a rainy day, you can buy attractively valued tech stocks such as Nvidia(NASDAQ: NVDA) and Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL), either individually or combined. Let’s see why these companies could be smart long-term investments amid the tech downturn.
Image source: Nvidia.
Nvidia has been one of the biggest beneficiaries of the AI revolution since the end of 2022, but it looks as if investors’ appetite for this terrific growth stock may be fading. Nvidia is down nearly 5% this year. Investors decided to overlook the outstanding growth and guidance it delivered in February. However, ignoring Nvidia’s solid earnings execution amid AI fatigue seems like a major investment mistake.
The company clearly has the numbers on its side, as the following chart suggests.
NVDA Revenue (Quarterly) data by YCharts.
Additionally, Nvidia’s growth profile is set to improve this year, driven by the rapid adoption of agentic AI and physical AI solutions. CFO Colette Kress remarked on the February earnings call: “Agentic and physical AI applications built on increasingly smarter and multimodal models are beginning to drive our financial performance.”
Nvidia notes that companies like Meta Platforms and Anthropic are investing big in compute capacity to power agentic AI systems. The good news for Nvidia investors is that 60% of brands are expected to deploy agentic AI solutions in marketing by 2028, according to Gartner. Meanwhile, IDC notes that companies that don’t integrate AI agents and generative AI solutions could witness a 15% loss in productivity by next year.
Meanwhile, the physical AI market is poised to grow by 10x between 2026 and 2032, driven by the integration of AI into humanoid robots deployed in factories, supply chain operations, and healthcare. Nvidia notes that these applications will drive greater demand for computing infrastructure, which is why analysts have become bullish on the company’s growth prospects.
NVDA EPS Estimates for Current Fiscal Year data by YCharts. EPS = earnings per share.
With the stock trading at just around 22 times forward earnings, it is a no-brainer buy right now, especially considering that its 12-month median price target of $265 points to a 49% jump from current levels.
If you’re looking for an AI stock that can help you capitalize on a trillion-dollar market, look no further than Alphabet. The “Magnificent Seven” company has been using AI to boost its advertising business. A Goldman Sachs estimate puts the size of the digital ad market at $1.4 trillion by the end of the decade, up from a range of $488 billion to $650 billion in 2024.
Alphabet has $403 billion in trailing 12-month revenue, and its growth rate has started to pick up due to AI.
GOOG Revenue (Quarterly) data by YCharts.
That trend is likely to continue, given the large end market in which it operates. Throw in Alphabet’s opportunities in cloud computing and custom AI processors, and the tech giant could become a much bigger company in the long run. All this makes Alphabet a top tech stock to buy following its 5% drop this year, especially considering that it trades at about 26 times forward earnings.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Goldman Sachs Group, Meta Platforms, and Nvidia. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.
The Smartest Growth Stocks to Invest $1,000 in As Investors Rotate Out of Tech was originally published by The Motley Fool
