If you’re a long-term investor, bear markets are an excellent opportunity to buy. With the market indiscriminately punishing stocks, there are deals available for those who have the patience to wait out heightened volatility. It’s tougher to purchase and hold during periods like 2022 than it appears, but the return can be significant once the bear market ends and the next bull market begins.
If you have $50,000 to invest, I believe Alphabet (GOOGL 0.14%), and Nvidia (NVDA 0.82%) are good stocks to purchase right now. Here’s why I’m enthusiastic about it.
Alphabet: A boring name but serious market-beating potential
I’m a big fan of the old Google parent Alphabet. If you’re searching for a firm to begin constructing a portfolio, Alphabet is as good as it gets. It’s taking advantage of several secular growth trends (digital advertising, online video content consumption through YouTube, and also cloud computing via Google Cloud), so this could be a long-term success story.
Alphabet, on the other hand, is extremely lucrative. This is the sort of company that should recover rapidly from the present bear market. Interest rates and inflation are rising, but Google’s profit margins provide a lot of room for error. So does $125 billion in short-term and net cash assets, which Alphabet is using to buy back shares.
Alphabet’s ability to invest in its Waymo subsidiary, for example, comes from its technological and financial superiority. Self-driving vehicles may have a significant impact on the global economy, and Waymo is at the forefront of this cutting-edge technology. Alphabet is a bargain right now — especially when considering the long-term potential — trading at just 22 times trailing 12-month free cash flow.
Nvidia: The top platform for building AI
I am of the opinion that Nvidia will be the next company to join the $1 trillion club: a select group of corporations (including Alphabet) with a market value of at the least $1 trillion. The semiconductor giant, presently worth $445 billion, is already almost halfway there.
Nvidia’s GPUs, long the province of high-end video game PCs, is now being utilized in data centers to create and run AI software. Artificial intelligence is still in its infancy; it is only just now approaching that usefulness/cost point at which it becomes appealing to numerous sectors. Outside of GPUs, Nvidia has introduced new processor types to address other elements of the modern business data center.
The company’s impressive hardware isn’t the only thing that draws investors. Nvidia is also in early development of a cloud-based software firm, which shows how committed it is to this market. AI software won’t just help Nvidia maintain its growth momentum; it will also improve profit margins. This is a pricey stock with 57 times trailing 12-month free money flow, but if you are searching for a way to bet on the AI sector, this is definitely one to consider investing in.
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