Investing $1,000: Nvidia and Verizon Offer Compelling Options
When considering how to invest a $1,000 sum today, the options may feel limited. However, with commission-free trading and fractional shares available, it’s easier than ever to invest in high-value stocks. Traditional strategies suggest placing that amount in an S&P 500 index fund or ETF for steady returns. Yet, for those seeking greater growth or income potential, stocks like Nvidia (NASDAQ: NVDA) and Verizon Communications (NYSE: VZ) present attractive opportunities.
Where to invest $1,000 right now? Our analysts have identified the 10 best stocks to buy at this moment. Learn More »
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Nvidia: A Growth Stock Worth Considering
Over the last five years, Nvidia’s stock has skyrocketed nearly 2,040%. A $1,000 investment made five years ago would be worth over $21,300 today, largely due to its booming sales of data center GPUs used for artificial intelligence (AI) processing. Unlike traditional CPUs that handle data sequentially, GPUs can manage multiple data points simultaneously, making them ideal for advanced graphics, cryptocurrency mining, and data-heavy applications.
Currently, Nvidia dominates the market, providing over 98% of the world’s data center GPUs, a sector expected to continue growing as AI technology progresses. Analysts project that from fiscal 2024, which ended in January 2024, to fiscal 2027, Nvidia’s revenue and earnings per share (EPS) will rise at annual rates of 57% and 65%, respectively. Despite recent concerns like tighter export restrictions and antitrust probes, Nvidia remains a foundational stock for tapping into the AI opportunity.
Verizon: A High-Dividend Stock Option
Once regarded as a reliable blue-chip dividend stock, Verizon has experienced significant value erosion, dropping around a third over the past five years as it faced challenges in growing its wireless segment. Today, shares are trading at only nine times their projected earnings, and they offer a substantial forward dividend yield of 6.9%. In comparison, AT&T trades at a higher multiple of 12 times earnings but offers a smaller yield of 4.9%.
Historically, Verizon lagged in net wireless customer gains compared to AT&T due to competitive pricing strategies. However, in 2024, it surpassed expectations by more than doubling its net additions from the previous year. This success stemmed from localized marketing strategies, customizable plans, and boosted partnerships, particularly with Walmart. Moreover, Verizon’s Prepaid business benefited from its acquisition of TracFone, and it anticipates a 2%-2.8% rise in wireless revenue in 2025.
As customer growth resumes, Verizon’s retail churn rate has also improved, dropping from 1.67% in 2023 to 1.62% in 2024. Operating margins expanded across both business and consumer segments, leading to a 6% rise in free cash flow (FCF) to $19.8 billion, more than covering its $11.2 billion in dividends. Thus, investing $1,000 in Verizon could generate about $69 annually in dividends, making it a practical choice for income-focused investors.
Should You Buy Nvidia Stock Now?
Before committing to Nvidia, potential investors should consider that the Motley Fool Stock Advisor team recently chose a different set of stocks as their top recommendations, excluding Nvidia. The ten identified stocks have the potential for significant returns over the coming years.
Reflect on this: If you had invested $1,000 in Nvidia on April 15, 2005, based on their advice, your investment would have grown to a staggering $818,587!
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*Stock Advisor returns as of February 7, 2025
Leo Sun holds positions in Verizon Communications. The Motley Fool has positions in and recommends Nvidia and Walmart. The Motley Fool also recommends Verizon Communications. Please review the Motley Fool’s policy on disclosures for more details.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
