A $1,000 investment might not seem like much in the stock market today. But with commission-free and fractional trades, it's now easier than ever to build up positions in stocks that are trading at a few hundred or thousand dollars per share.
For conservative investors, it might be smarter to simply invest $1,000 in an S&P 500 index fund or exchange-traded ETF to keep pace with the market. But if you're looking for a bit more growth or income, you should consider investing that $1,000 into the chipmaker Nvidia (NASDAQ:NVDA) or the telecom giant Verizon Communications (NYSE:VZ). Here's why.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
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The growth stock: Nvidia
Nvidia's stock has soared nearly 2,040% over the past five years. Most of that rally -- which would have turned a modest $1,000 investment into more than $21,300 -- was driven by its surging sales of data center GPUs for processing artificial intelligence (AI) tasks. Unlike CPUs, which process single pieces of data individually, GPUs can process a wide range of integers and floating point numbers simultaneously through scalar processing.
That makes them well-suited for rendering demanding graphics, mining smaller cryptocurrencies, and processing large amounts of data for AI applications. Nvidia now supplies more than 98% of the world's data center GPUs, and that market should continue to grow as generative AI applications continue to evolve and expand.
From fiscal 2024 (which ended in January 2024) to fiscal 2027, analysts expect Nvidia's revenue and EPS to grow at a compound annual growth rate (CAGR) of 57% and 65%, respectively. Those growth rates are explosive, yet Nvidia's stock still looks reasonably valued at 31 times forward earnings.
Its valuations might be compressed by some near-term concerns regarding tighter export curbs, higher tariffs, and potential antitrust probes, but it will keep selling the best picks and shovels for the AI gold rush. So even if you missed out on Nvidia's historic rally over the past few years, it's still a good idea to park some cash in this bellwether of the booming AI industry.
The dividend stock: Verizon
Verizon was once considered a stable blue chip dividend stock, but it lost about a third of its value over the past five years as it struggled to expand its core wireless business. But after that steep decline, the telecom giant's stock trades at just nine times forward earnings and pays a high forward dividend yield of 6.9%. By comparison, AT&T trades at 12 times forward earnings and pays a lower forward yield of 4.9%.
Verizon traded at a discount to AT&T over the past few years because it was gaining wireless customers at a slower clip and relying more heavily on discounts to stay competitive. But in 2024, Verizon more than doubled its postpaid phone net additions compared to 2023. It achieved that acceleration by localizing its incentives and marketing campaigns, expanding its customizable "myPlans", and growing its distribution business with Walmart. It also expanded its prepaid business by acquiring TracFone. It expects its wireless revenue to rise another 2%-2.8% in 2025.
As Verizon gained more customers again, its wireless retail churn rate declined from 1.67% in 2023 to 1.62% in 2024. The operating margins of its consumer and business segments expanded for the full year, while its free cash flow (FCF) rose 6% to $19.8 billion and easily covered its $11.2 billion in dividend payments. In short, Verizon is a good way to earn some income as interest rates gradually decline. A simple $1,000 investment in Verizon would net an extra $69 in extra dividends every year.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $346,349!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,160!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $554,176!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of February 3, 2025
Leo Sun has positions in Verizon Communications. The Motley Fool has positions in and recommends Nvidia and Walmart. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
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