Putting $5,000 into a handful of stocks gives you a lot of potential for future gains if you find the right companies to invest in. Thankfully, plenty of fantastic tech stocks are tapping into growing trends that could be winners over the long term.
Here's why you should consider the following tech stocks already leading the way in artificial intelligence, cybersecurity, and cloud computing.
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Artificial intelligence (AI) has quickly become one of the most significant investing trends in decades. Technology companies of all shapes and sizes see the benefits of implementing AI into their existing platforms and services, spurring a massive increase in AI spending.
Goldman Sachs estimates that spending for generative AI will reach $1 trillion in the next few years, and leading AI chip designer Nvidia says AI data center spending will double over the next five years to $2 trillion.
Taiwan Semiconductor Manufacturing Company (NYSE: TSM), or TSMC, is perfectly positioned to tap into this growth thanks to its dominance in processor manufacturing. The company already has an estimated 90% of the market for advanced chip manufacturing, meaning that as AI spending ramps up, TSMC will likely see sales and earnings rise, too.
Indeed, the company is already growing at a healthy pace. Sales rose 39% to $23.5 billion in the third quarter (ended Sept. 30), and earnings increased by 54% to $1.94 per American depositary receipt (ADR).
With the AI market still in its early stages, putting some of your $5,000 toward TSMC could be a wise long-term move. And with the company's shares having a forward price-to-earnings ratio of just 23, matching the S&P 500's forward P/E, its shares are well priced.
Cyberattacks are a common part of life, but that doesn't make them any less painful. An estimated 90% of organizations experienced a cybersecurity breach over the past year, and the rise of AI will make future attacks more sophisticated.
That's the bad news. The good news is that very competent companies are working hard to protect digital data and personal information, and some of them, including Palo Alto Networks (NASDAQ: PANW), could also make great investments.
Palo Alto Networks has been a leader in cybersecurity firewalls for years, but has also expanded its offerings to include cloud security through its Prisma product and AI-based security with Cortex.
One of Palo Alto Networks' advantages comes from the size of its client base. The company has more than 80,000 enterprise customers and holds 22% of the security appliance vendor market, ahead of rivals Fortinet and Cisco.
The company's management is guiding for significant growth this year, with next-gen security annual recurring revenue to increase about 32% this year to $5.5 billion and total sales to rise 14% to $9.1 billion.
Investors will pay a premium for Palo Alto Networks' stock right now, with a forward P/E ratio of 54. Using a smaller portion of your $5,000 to buy these shares might be a smart way to start, and then add more if the stock pulls back.
You likely already know Amazon (NASDAQ: AMZN) for its substantial e-commerce dominance. The company has 40% of the U.S. e-commerce market, compared to Walmart's 7%, and North American sales rose 9% in the third quarter (ended Sept. 30) to $95.5 billion.
But it's the company's cloud computing business, Amazon Web Services (AWS), that's the most lucrative and fastest-growing. AWS' operating income increased nearly 50% in the third quarter to $10.4 billion.
That's significant because the global cloud computing market is estimated to reach $2 trillion by 2030, and Amazon is the clear leader. The company currently has an estimated 31% of the cloud computing market and its recent growth proves that it's likely to remain a leader for years.
Amazon has a forward P/E ratio of 35, only slightly more expensive than fellow cloud rival Microsoft at 32. Picking up some shares of Amazon now as cloud computing grows, thanks to rising AI demand, could be a smart bet.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Cisco Systems, Fortinet, Goldman Sachs Group, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, and Walmart. The Motley Fool recommends Palo Alto Networks and 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.