Finding Good Stocks to Invest In: Two Opportunities That Stand Out

When building an investment portfolio, finding good stocks to invest in requires looking beyond near-term market volatility. While the S&P 500 continues to test record levels amid various geopolitical and macroeconomic uncertainties, the real opportunity for investors lies in identifying companies with sustainable competitive advantages and multi-year growth trajectories. If you’re willing to commit capital for several years, two names deserve serious consideration: Broadcom and IBM.

Broadcom: Riding the AI Infrastructure Wave

Broadcom has positioned itself as a critical infrastructure player in the AI expansion. Beyond its traditional wireless chips and networking equipment, the company has built a dominant position in custom AI accelerator chips—processors specifically designed to handle artificial intelligence workloads more efficiently and cost-effectively than general-purpose data center GPUs from competitors like Nvidia.

This strategic focus is delivering remarkable results. During fiscal 2025 (ended November 2025), Broadcom’s AI chip division generated $20 billion in revenue—a 65% surge compared to the prior year. This segment now represents 31% of the company’s total revenue and has more than offset weaker performance in traditional chip lines and infrastructure software. The company also fortified its infrastructure software portfolio through key acquisitions, most notably cloud computing giant VMware.

Looking ahead, Broadcom’s trajectory appears equally compelling. Wall Street expects the company’s revenue and earnings per share to climb 52% and 51%, respectively, in fiscal 2026 as the AI opportunity matures and non-AI segments recover. Yet despite these growth expectations, the stock trades at a reasonable 32 times forward earnings—an attractive entry point for a business demonstrating such explosive expansion potential.

IBM: Reinventing Through Hybrid Cloud and AI

IBM’s transformation offers a different but equally valuable story for investors seeking good stocks to invest in. After enduring a decade of declining revenues, the company underwent a strategic overhaul when Arvind Krishna became CEO in 2020. The turning point came through a two-part strategy: spinning off its sluggish infrastructure services business (now Kyndryl) and doubling down on hybrid cloud solutions and AI capabilities.

Rather than competing directly with public cloud giants like Amazon, IBM adopted a differentiated approach. By leveraging Red Hat—which it acquired in 2019—the company created open-source applications that seamlessly bridge on-premises private clouds and public cloud platforms. This “hybrid” model resonated with large enterprises unwilling to migrate all operations to the public cloud, while also serving organizations running multi-cloud environments.

IBM’s operational momentum is accelerating. In 2025, the company achieved 8% revenue growth and 12% adjusted earnings growth. Analysts forecast continued progress with 5% revenue growth and 7% earnings growth anticipated for 2026. At just 21 times forward earnings, IBM appears reasonably priced relative to its growth profile and presents meaningful upside potential as market recognition of its cloud transformation broadens.

Making Your Selection: What the Data Reveals

Evaluating good stocks to invest in comes down to identifying companies with defensible market positions, clear growth catalysts, and attractive valuations. Both Broadcom and IBM satisfy these criteria, albeit with different risk-reward profiles.

Broadcom appeals to investors with higher risk tolerance who believe the AI infrastructure cycle will sustain explosive growth over multiple years. IBM attracts those seeking steadier, more predictable growth tied to enterprise cloud migration trends.

Historical perspective reinforces the value of patient, disciplined stock selection. Motley Fool’s Stock Advisor team has consistently identified transformative investments—Netflix recommended in December 2004 would have delivered $420,595 on a $1,000 initial investment; Nvidia recommended in April 2005 would have generated $1,152,356 on the same capital. While past results don’t guarantee future performance, this track record underscores how identifying good stocks to invest in during favorable structural environments can generate exceptional wealth over time.

The investment environment today resembles those previous inflection points. Whether you’re drawn to Broadcom’s AI dominance or IBM’s cloud reinvention—or allocate capital to both—the key is focusing on fundamentals rather than short-term noise. With a multi-year investment horizon, you position yourself to benefit from the substantial growth these companies are still in the early stages of capturing.