Warren Buffett once famously said, “Be fearful when others are greedy, and greedy when others are fearful.” With that in mind, here are three technology stocks investors should invest in while others have become fearful.
1. Alphabet
alphabet (NASDAQ:GOOGL) The company’s shares have been sold off recently due to concerns about increasing competition in the search space and a court ruling that the company’s Google search engine is a monopoly.
Although Alphabet was found guilty of antitrust violations, it will likely take some time for a final resolution of the court ruling and the remedies taken to be implemented. It would not be surprising if that dragged on until 2026. The court ruling focused primarily on the company’s payments to smartphone makers to be the exclusive default search engine of their mobile devices, so there will likely be changes to those agreements.
Meanwhile, investors are concerned about the financial impact that artificial intelligence (AI) will have on Google’s business model and the impact that AI-powered search engines from companies like OpenAI and Perplexity will have on the company.
Both problems seem more than manageable. First, Alphabet has started to innovate in the search space, not only through artificial intelligence but also with features like visual search and circle search. The former allows users to perform a search using the smartphone’s camera, while the latter allows users to circle or even scribble on an image or text to get more information on a topic without having to leave an app.
Given the data Alphabet has collected over decades, a brand synonymous with internet search, a business that generates huge cash flows, and new monetization opportunities through AI, it won’t be easy for a loss-making, underperforming competitor to seriously threaten Google’s dominance in search. While the court ruling will likely make it easier for users to switch default search engines, the company has about two years to make sure not many people want to do so by continuing to extend its technological lead in search.
With a price-earnings ratio (P/E) of less than 19, the stock is a bargain given the growth opportunities it offers.
2. Taiwanese semiconductor manufacturing
Shares of Taiwanese semiconductor manufacturing company (NYSE:TSM)TSMC for short, experienced a sell-off at the beginning of the summer when there was talk of stricter export restrictions on semiconductors to China and presidential candidate Donald Trump claimed that Taiwan had taken 100 percent of the chip business from the USA and therefore had to pay for its own military.
While there are certainly geopolitical risks when it comes to investing in TSMC, these risks are likely overstated given Taiwan’s importance to chip manufacturing and the chaos a disruption would cause. As the world’s leading semiconductor contract manufacturer, the company should continue to benefit handsomely from building out AI infrastructure.
The company’s revenue increased nearly 33% year over year to $20.8 billion in the second quarter. The company recently reported that it had its best sales month ever in July, with a 45% increase in revenue. The company has expanded its production to meet high demand and is expected to increase prices on some smaller nodes by as much as 10% next year. This should lead to very nice growth next year.
With a P/E ratio of 20 (based on analyst estimates for 2025), the stock is too cheap to ignore given its growth prospects.
3. Nvidia
After a strong run NVIDIA (NASDAQ: NVDA) have pulled back on concerns that the stock has risen too quickly and that there could be delays in deliveries of the latest Blackwell chip. The latter is probably true, but demand for the chips is so high that it will likely have minimal impact on results as customers continue to buy the current generation Hopper chips instead.
Although there are some concerns that spending on AI infrastructure may decline, comments from major companies involved in AI deployment all point to higher investments in the future. For now, customers are not worried about over-deploying capacity, but rather under-deploying. At the same time, the more advanced large language models (LLMs) become, the more compute power they will require.
For example, Meta-platforms recently stated that its Llama 4 LLM would likely require ten times the processing power to train compared to Llama 3. This means many more graphics processing units (GPUs) from Nvidia will be needed.
With demand showing no signs of abating, Nvidia stock looks cheap, with a price-to-earnings ratio below 30 of next year’s expected value. That seems like a good time to buy on the dip.
Should you invest $1,000 in Alphabet now?
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Geoffrey Seiler has positions at Alphabet. The Motley Fool has positions at and recommends Alphabet, Meta Platforms, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
The best stocks to invest $50,000 in now was originally published by The Motley Fool.
