The Best Stock to Invest $1,000 in Right Now

Stocks across tech have declined over the last month, as recent economic reports have made Wall Street fearful of a looming recession. A new jobs report revealed the U.S. labor market added 114,000 jobs in July, significantly lower than expected and the 179,000 reported in June. The figures caused a sell-off in the stock market, with tech companies experiencing some of the worst declines.

However, history suggests a sell-off isn't a time to panic, but, more often, a time to bulk up your portfolio with some of the world's fastest-growing companies. The 20 biggest tech companies are collectively worth more than $20 trillion, yet maintain massive growth potential thanks to budding industries like artificial intelligence (AI) and cloud computing.

So, here is one of the best stocks to invest $1,000 in right now. However, even a smaller investment could go far in the hands of this tech giant.

Advanced Micro Devices is on a recovery path that you won't want to miss

Advanced Micro Devices (NASDAQ: AMD) has seen its stock price tumble 24% in the last 30 days. The dip has brought its shares down about 9% year to date, significantly lower than its biggest rival, Nvidia , which has delivered stock growth of 112%.

AMD had a challenging start to 2024 after falling behind in AI last year and scrambling to catch up. Heavy investment in artificial intelligence , alongside dwindling sales in its gaming division, hasn't enthused stockholders. However, its latest quarterly earnings suggest the company is in the middle of a recovery that could massively pay off in the coming years. Meanwhile, recent stock declines are an opportunity to invest at a value compared to its potential.

AMD reported its second quarter of 2024 earnings on July 30. Revenue rose 9% year over year to $6 billion, beating analysts' estimates by $120 million. The quarter brought record growth in the company's data center segment, which posted a revenue increase of 115% thanks to soaring AI graphics processing unit (GPU) sales . A spike in central processing unit (CPUs) sales also boosted revenue in its client segment by 49% year over year.

Gaming remained a sore point for the quarter, with revenue falling 59%. However, AMD's shift to AI seemed to make the decline inconsequential for now. Despite weakness in gaming, total operating income for the period still skyrocketed by 647% while gross margins improved to 49%.

Over the last year, AMD has worked tirelessly to advance its AI technology and catch Nvidia, and recent earnings finally show that work is paying off. AMD AI chips are attracting prominent organizations, bringing on Microsoft 's Azure, Amazon Web Services, and Alphabet 's Google Cloud as clients.

AMD's market cap is currently about $217 billion. Considering Nvidia's market cap was $359 billion at the start of 2023 and is now $2.5 trillion, AMD could see major gains over the next year, even if it doesn't quite reach that height.

An improved valuation

For much of this year, AMD's stock price has appeared too expensive compared to its earnings. However, a glowing Q2 2024 has improved its valuation and made its stock worth considering again.

Data by YCharts

Recent earnings and a dip in its stock have brought AMD's forward price-to-earnings (P/E) ratio and price-to-sales (P/S) ratio below its 12-month averages for the metrics, suggesting now is one of the best times in months to invest.

Moreover, AMD's forward P/E of about 40 is not far off Nvidia's forward P/E of 39. AMD's P/S is also well below Nvidia's position of 33 for the metric, which potentially makes it a better value than its biggest chip competitor.

AMD's quarterly free cash flow has increased 81% since Jan. 1, further highlighting the positive trajectory of its business. As a result, AMD's stock is a no-brainer for investing $1,000 right now and holding long-term.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, and Nvidia. 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 .