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The Smartest Stocks to Buy With $1,000 in the Nasdaq Correction

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There are several ways to approach a market correction. One would be to resort to panic selling, which is usually a bad idea. Alternatively, investors can take the opportunity to buy shares of top companies on the dip. That’s the right move for those focused on the long game.

The tech-heavy Nasdaq Composite recently experienced a correction. It climbed out of it, but many stocks are still down by quite a bit and are worth buying and holding for the long haul.

For those with $1,000 to spare — that’s not saved for bills or a rainy day — let’s consider two excellent examples: Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

Amazon is down by 11% this year, perhaps partly because some investors think trade wars could affect the company’s financial results.

There is that possibility, but one of the great things about Amazon’s business is that it is diversified. It makes money from its e-commerce operations, advertising, and cloud business, and even has a hand in other industries like grocery shopping, pharmacy services, and video and music streaming.

That said, Amazon’s two most significant sources of revenue growth are advertising and cloud computing.

The company’s ad business hit an annual run rate of $69 billion in 2024, more than doubling in four years. Amazon Web Services (AWS), the company’s cloud business, is riding the wave of the artificial intelligence (AI) revolution, with an annual run rate of $115 billion. For context, Amazon’s net sales last year were $638 billion, an increase of 11% year over year.

Amazon sees a massive opportunity for generative AI, which the company’s CEO, Andy Jassy, called the “largest technology transformation since the cloud.” So, short-term problems might negatively impact Amazon’s performance. It wouldn’t be the first time, either. In 2022, the tech giant reported a rare annual net loss while struggling with economic challenges. But Amazon bounced back and has performed exceptionally well since.

AMZN Chart
AMZN data by YCharts

Expect the same this time around: Amazon’s leadership in several industries ripe for growth, strong moat from the network effect and high switching costs, innovative capabilities, and strong cash generation ability grant it enough flexibility to navigate difficult times and emerge in one piece and with still excellent prospects. That’s why the stock is a strong buy on the dip this year. Investors can get five shares of the company for $1,000.

Alphabet has been targeted by regulators in the U.S. and, earlier this year, in China for alleged anticompetitive practices. Though the company’s results remain strong, it’s a risk investors need to factor in when considering whether to buy the stock.

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