Even with the market nearing all-time highs, there are still affordable stocks that long-term investors might want to consider. Here are two that could be worth a look for those thinking about a $1,000 investment.
Nvidia (NASDAQ:NVDA) has transformed from a stock that some viewed as overvalued to being among the cheaper major artificial intelligence (AI) stocks. According to projected analyst earnings for the fiscal year 2027 (ending in January), Nvidia’s forward price-to-earnings (P/E) ratio stands at roughly 24.5 times. However, when factoring in another year of growth, that ratio is expected to fall to around 19 times.
That valuation might seem quite low given the company’s significant revenue growth—62% just last quarter—and the opportunities still ahead. Nvidia is at the forefront of AI technology, with graphics processing units (GPUs) serving as the main chips for AI workloads. There’s a current surge in AI infrastructure spending, and even if the trend slows down, recent policies suggest the momentum will continue, especially with major companies announcing their capital expenditures for the year. This could mean substantial profits for Nvidia.
Interestingly, chip manufacturer Taiwan Semiconductor Manufacturing is also expanding its production capacity to meet long-term demand for AI chips. They’ve engaged in discussions with various customers to confirm that the demand is sustainable, which bodes well for Nvidia, making its stock seem like a solid investment at the moment.
Shifting focus to semiconductor stocks, Micron Technology (NASDAQ:MU) stands out as incredibly affordable, despite its stock showing strong performance. Micron’s forward P/E ratio is projected to be 11 times for the fiscal year 2026, slightly above the consensus of 8.5 times for 2027. This lower valuation is primarily due to the cyclical nature of the memory market, but as the demand for AI infrastructure grows—which necessitates large memory capacities—it appears the market may be undergoing a significant growth transformation.
Micron ranks as one of the top three DRAM manufacturers and must utilize a specialized form of DRAM, known as high-bandwidth memory (HBM), to optimize GPU performance. As AI infrastructure spending escalates, so too does the demand for HBM, but it’s noteworthy that the wafer capacity for HBM exceeds that of regular DRAM by over three times, which might lead to supply shortages and rising prices.
Even as Micron increases its production capacity, demand is likely to continue outpacing supply in the coming years, making its stock quite appealing. The company is projected to maintain strong growth and healthy gross margins in the next few years.
However, before diving into Nvidia stock, it’s worth considering that some analysts have identified other stocks that may also represent strong investment opportunities. In fact, Nvidia wasn’t even included among those top picks. It’s crucial to weigh all options and discuss broader trends in the stock market before making decisions.
Ultimately, while Nvidia and Micron present affordable options in the current market context, prospective investors should still do their due diligence and consider various aspects before committing their money.
