Investing $50,000: The Best Stock Options Right Now

Receiving a sudden inheritance of $50,000 can be an exciting opportunity. If you don’t have immediate expenses to cover, you might be considering how to invest that money wisely, hoping to grow it over time. Instead of putting all your funds into a single stock, a more prudent strategy would be to diversify across several well-chosen stocks. The goal is to select stocks that are not only reasonably priced but also positioned for significant growth, potentially outperforming major market indices like the S&P 500 over the next five to ten years.

If you have $50,000 ready for investment, there are promising opportunities out there. Particularly, recent fluctuations in the technology sector have revealed several attractive buying options. As technology continues to transform our lives, investing in leading companies in this space could be a strong long-term strategy.

Here are three tech stocks to consider for investing your newfound $50,000—they show strong growth potential and appealing valuations.

Nvidia

Nvidia (NVDA) shares experienced a downturn earlier this year due to competition from a Chinese AI firm that introduced a cost-effective AI software model. However, concerns about this model's production costs have arisen, as major tech companies have no intentions of reducing their AI infrastructure investments. On the contrary, it appears that spending in AI infrastructure will likely continue to grow.

Major tech players are significantly increasing their capital expenditure budgets. For instance, Microsoft has allocated $80 billion for data center development this year, with approximately half of that going toward servers. Similarly, Meta Platforms has boosted its capex budget to between $60 billion and $65 billion, while Alphabet (GOOGL) is raising its capex from $52.5 billion to $75 billion.

Nvidia remains a leader in providing graphics processing units (GPUs) essential for training AI models and executing inference tasks. It possesses a considerable competitive advantage due to its CUDA software platform that facilitates chip programming for various AI applications.

The stock is currently attractively priced, trading at a forward price-to-earnings (P/E) ratio below 23 times projected 2025 earnings and a price/earnings-to-growth (PEG) ratio under 0.5, indicating that it is undervalued.

Alphabet

The sell-off following Alphabet's Q4 earnings announcement in February created a valuable buying opportunity for an already undervalued megacap tech stock. The company reported solid results, particularly with its Search, YouTube, and Google Cloud segments, even though its cloud unit faced some growth constraints.

Despite these limitations, Alphabet is actively investing in expanding its cloud capacity, resulting in a substantial profitability boost, with Google Cloud's operating income increasing by 142% in the last quarter. The company has also developed custom AI chips, known as TPUs (tensor processing units), to enhance efficiency and reduce costs in its cloud services.

Investors in Alphabet gain access to five leading businesses, each generating over $30 billion in annual revenues. These include Search, YouTube ads, Google Cloud, subscriptions, and a third-party ad network, along with emerging ventures like its Waymo robotaxi service and advancements in quantum computing. Additionally, Alphabet is heavily investing in its Gemini 2.0 AI model, aiming to integrate AI capabilities throughout its operations.

Moreover, Alphabet stock is attractively priced at only 21 times earnings based on 2025 analyst expectations.

GitLab

GitLab (GTLB) is a less conventional, yet promising investment opportunity. This company operates a fast-growing DevSecOps platform, offering tools for developers to create secure software. GitLab is benefitting significantly from the AI surge, with increased demand for its AI-enabled features, like GitLab Duo, which assists programmers by providing coding suggestions. Its GitLab Duo Workflow functions as an independent AI agent to help with project planning and optimization.

GitLab has consistently grown its revenue between 30% to 40% in the past six quarters. It has seen a 16% year-over-year increase in customers, and existing customers are spending more. The company recently reported a net revenue retention rate of 124%, surpassing the rates seen in other growth-focused tech companies.

Despite its strong financial performance and gross margins nearing 90%, GitLab's stock price has remained stagnant over the past year. The best way to assess its value as a software-as-a-service (SaaS) company is to look at its price-to-sales (P/S) ratio, which is currently at 10 times projected 2025 sales estimates. This figure is favorable for a company with such robust growth rates. In contrast, other similar companies may have significantly higher P/S multiples despite lower growth rates.

GitLab presents an appealing option among high-growth stocks, with ample opportunities ahead.

Investing, Stocks, Technology