Although the market is hovering around all-time highs, there are still plenty of reasons to continue buying stocks. Given the large impact artificial intelligence (AI) is having on our lives, I believe that the tech sector is one of the best places to look for investments, as the market opportunity here is massive.
I've got three stocks that look like no-brainer buys right now, and investors would be wise to invest in them while they're still cheap.
Taiwan Semiconductor
Taiwan Semiconductor (NYSE: TSM) is the company that has directly influenced much of the AI development behind the scenes. TSMC is a chip fabrication company that produces chips for some of the world's top tech companies, like Nvidia and Apple. As a result, many of the AI innovations we see today directly result from Taiwan Semi's best-in-class chip production capabilities.
TSMC's management sees a huge and growing market for its chips. AI-related chips are projected to boost revenue at a 45% compound annual growth rate (CAGR) over the next five years. Companywide, management expects its revenue growth rate to be around a 20% CAGR. That's massive growth, considering TSMC's already massive size.
However, the market still prices the stock fairly cheaply, as you can see below. Priced at a mere 21 times forward earnings, the shares look like a massive bargain, and investors should scoop up shares while they're cheap.
Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL) is another competitor in the AI arms race. It is making massive investments to continue building out its AI computing capacity. This is critical, as Alphabet provides computing power for itself and many other clients.
Its cloud computing division, Google Cloud, is a big reason why Alphabet is going to spend around $75 billion on capital expenditures this year, as it must build out the computing capacity before the demand is there. Otherwise, potential customers will go elsewhere. Considering that AI computing is a generational growth opportunity for Alphabet to capture market share, this investment is table stakes at the cloud computing table, but with how early we are in AI adoption, this is a surefire bet.
However, Wall Street wasn't impressed by this projection, as they'd rather have results now instead of years down the road. As a result, Alphabet shares have dropped more than 10% from their all-time high. However, the stock also trades for a cheap price tag with a forward P/E of 20. Considering that the S&P 500 trades for 22.6 times forward earnings, this is a decent discount to the market.
Sales like this don't come around often, but when they do, investors should consider taking advantage of them.
Arista Networks
Last is Arista Networks (NYSE: ANET). Arista specializes in networking solutions for data centers and has built several massive relationships with the biggest computing companies, with Meta Platforms and Microsoft making up 15% and 20% of Arista's total revenue, respectively. When this relationship is good, there are no issues with concentration. However, Meta and Microsoft could go elsewhere and cause a massive chunk of revenue to disappear, which would hurt Arista.
This is exactly what happened after Arista reported Q4 results, as Meta's total spending dropped from 2023 to 2024. However, the company still grew its revenue overall in 2024, so this isn't that much of a red flag -- especially considering that 2025 looks strong.
Management is guiding for $8.2 billion in revenue for 2025, which is a 17% growth rate. Considering that Arista had $7 billion in revenue (up 19.5%) in 2024, this seems like a fairly strong growth trajectory, and investors shouldn't be too concerned with it.
However, the stock dropped tremendously following Arista's announcement, and it now sits nearly 30% off its all-time highs. The stock isn't terribly cheap at 37 times forward earnings, but it's a best-in-class company that doesn't go on sale too often. As a result, investors should consider scooping some shares up.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keithen Drury has positions in Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Apple, Arista Networks, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
