Businesses are investing unprecedented amounts into digitizing operations by transitioning to the cloud and leveraging AI capabilities. McKinsey estimates that by 2030, global spending on data centers will reach an astounding $6.7 trillion to accommodate the increase in traditional and AI workloads. This expansion will demand significant energy resources to power the enhanced computing capabilities.
The ongoing shift towards digitization presents lucrative opportunities for technology firms and energy providers. Among the most promising stocks to consider are Alphabet and Brookfield Renewable. Here’s why investing $1,000 in these companies now might be a smart move.
A Budget-Friendly AI Leader
Concerns about AI potentially disrupting Alphabet’s highly lucrative Google search division have affected its valuation, which currently stands at a forward P/E ratio of 18.5. This is notably lower than the market averages, which hover around 23 for the S&P 500 and approximately 29.5 for the Nasdaq-100.
Rather than hindering its growth, AI is proving to be an asset for Alphabet. The company has developed its own AI model, Gemini, which has shown remarkable performance and is set to drive future innovations. Alphabet is integrating AI into its search engine and has reported impressive growth in Google Cloud services, bolstered by AI-driven infrastructure. With its comprehensive approach to AI, Alphabet is well-positioned to lead in the evolving digital landscape.
Fueling the AI Revolution
Brookfield Renewable is establishing itself as a critical energy supplier for tech firms, ensuring they have the power required for cloud and AI developments. Last year, Brookfield inked a massive deal with Microsoft to support its energy needs, promising 10.5 gigawatts of new renewable energy capacity by 2030—almost eight times larger than the largest previous corporate power purchase agreement.
The company is advancing 74 GW of renewable energy projects, projected to enable about 10 GW of annual capacity by 2027. This growth is expected to bolster the company’s funds from operations (FFO) per share by 4% to 6% annually. Moreover, as power prices continue to rise, Brookfield’s long-term contracts—70% of which are linked to inflation—position it well for further profitability.
Capitalize on This Major Trend
The surge in digitalization investments in the coming years will favor both Alphabet and Brookfield Renewable. This anticipated growth trajectory should translate into substantial returns for investors. As a result, these stocks emerge as top candidates for where to invest $1,000 today.
Suzanne Frey, an executive at Alphabet, serves on The Motley Fool’s board of directors. Randi Zuckerberg, a former market development director at Facebook and sister of Meta’s CEO, is also a board member. John Mackey, ex-CEO of Whole Foods Market (an Amazon subsidiary), is another board member. Matt DiLallo holds shares in Alphabet, Amazon, Apple, Brookfield Renewable, and more, and holds options on Apple. The Motley Fool recommends several tech companies, including Alphabet and Brookfield Renewable. For a full disclosure, visit The Motley Fool’s disclosure policy.
