2 Bargain Stocks For Investors on a Budget

Key Points

• Cheap stocks are hard to find these days, but you don't have to break the bank to get a good deal on two tech stocks.

• Taiwan Semiconductor is the leading manufacturer of AI processors and holds 90% of the advanced semiconductor market.

• Alphabet just received a favorable antitrust ruling, has lots of potential from AI, and its shares are cheaper than some of its rivals.

• 10 stocks we like better than Alphabet ›

The latest Motley Fool research shows that the median balance for Americans' accounts, including checking, savings, money market accounts, etc., is about $8,000. But not all budgets are alike, and 55% of Americans say they wouldn't be able to handle a $400 emergency expense.

For those who are in a position to invest, the good news is that there are stocks available at relative bargains. One common way to measure a stock's value is the price-to-earnings (P/E) ratio, which compares a company's stock price to its earnings to show whether it's reasonably priced compared with peers.

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Two such stocks that look like relative bargains based on their P/E ratios -- and have share prices well under the $400 emergency expense figure -- are Taiwan Semiconductor (NYSE: TSM) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). Here's why both stocks are a good buy right now.

Image source: Getty Images.

1. Taiwan Semiconductor is a well-priced AI stock

Taiwan Semiconductor may not have the same name recognition as Nvidia or Microsoft, but the company is still one of the most important AI players. Taiwan Semiconductor, often called TSMC, is the leading manufacturer of artificial intelligence processors and holds about 90% of the advanced processor manufacturing market.

When the big tech companies need AI processors made, TSMC is most often the one manufacturing them. That has given the company's sales and earnings an enormous lift, with revenue rising nearly 39% in Q2 to $31 billion and earnings popping 61% to $2.47 per American depositary receipt (ADR).

There's likely more growth ahead for TSMC as artificial intelligence companies continue to invest in new data centers that need advanced processors. Nvidia CEO Jensen Huang said recently that "A new industrial revolution has started. The AI race is on. We see $3 trillion to $4 trillion in AI infrastructure spend by the end of the decade." That's fantastic news for TSMC, and management says the current demand will lead to the company's AI revenue doubling this year.

Topping all this off is the fact that Taiwan Semiconductor is still well-priced, with a P/E ratio of just 25, on par with both the broader semiconductor industry and the S&P 500's average P/E ratio.

2. Alphabet still has several key areas of growth

Alphabet just received a mostly favorable antitrust ruling, with the judge deciding the tech giant doesn't need to divest its popular Chrome browser or ubiquitous Android operating system. That was especially good news as the company faces increasing competition in the search space from AI companies, including OpenAI and Perplexity.

With that ruling out of the way, investors can now focus on some of the company's largest growth opportunities, including AI and cloud computing. Alphabet's Gemini chatbot already has an estimated 400 million monthly active users, and the company has transitioned many of its advertisers to its AI-powered ad platform, with 2 million already using it -- up 50% from the year-ago quarter.

Alphabet is also tapping into the expanding AI cloud computing market, which will be worth an estimated $2 trillion by 2030. The company's Google Cloud is the third-largest cloud provider after Amazon and Microsoft, but it's made significant gains over the past few years and now has 13% market share. Sales from the segment jumped 32% in Q2 to $13.6 billion, and Alphabet's management said that cloud deals worth $250 million or more doubled in the quarter.

Just like TSMC, Alphabet's shares look like a relative bargain right now. Alphabet's P/E ratio is just under 23, making it cheaper than many of its rivals, including Microsoft stock, which has a price-to-earnings ratio of 37.

For investors looking for bargain stocks, I think Alphabet and Taiwan Semiconductor may be two of the best right now. If you've only got enough money to invest in one, I'd choose TSMC because of its leading position in AI semiconductor manufacturing.

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. 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.