2 Top Stocks Down 40% to Buy With $1,000

Buying shares of competitively positioned companies that are experiencing robust growth for their products can put you on the road to financial freedom. Sometimes the market gives you the opportunity to buy quality stocks at big discounts that can set you up for outstanding results.

If you have $1,000 you don't need for at least five years, there are a few growth stocks that Wall Street is currently sleeping on that could deliver great returns over the next few years.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

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1. Reddit

Reddit (NYSE: RDDT) is a popular online platform that is built around discussion threads on an endless number of topics. Over 400 million people visit Reddit on a weekly basis. This has driven strong growth in the company's advertising revenue, which is the primary means it monetizes its platform.

The stock is down 39% from its recent highs. This can be attributed to two things. First, it was due for a correction after climbing to a high price-to-sales multiple of around 25. It now trades at a lower multiple of 19.

Second, Wall Street has been concerned about Alphabet's Google's launch of new artificial intelligence (AI) features in Search. Google's AI Overviews, for example, is taking content from Reddit and summarizing it in Google Search results. This could lead to less traffic going directly to Reddit's platform and limit its revenue growth prospects.

However, Reddit continued to report extremely strong growth in the first quarter. Revenue grew 61% year over year, with 108 million daily active users. Advertisers continue to invest in Reddit's platform, given the high engagement from these users, not to mention that many people visiting Reddit are researching a product to buy, making it more likely they will click on an ad.

All the discussions and comments across Reddit's communities are not only leading to strong advertising growth, but also opening up new growth opportunities. In fact, Reddit is starting to make a significant amount of money licensing its data to companies building AI models. Its "other" revenue grew 66% year over year in Q1, representing about 9% of its quarterly revenue.

This growth in data licensing signals a competitive advantage for Reddit not fully reflected in the stock price. This makes the stock a compelling buy after the recent dip.

2. Marvell Technology

There is substantial investment pouring into data center infrastructure (e.g., advanced chips and networking systems) to lay the groundwork for an AI-driven economy. Marvell Technology (NASDAQ: MRVL) is riding this wave, yet the stock is down 41% from its recent high, setting up a buying opportunity ahead of a potential bull run.

Marvell is a leader in supplying custom chip solutions and networking products for data centers. Its data center business totaled 76% of its revenue last quarter and also, coincidentally, grew 76% year over year.

The chipmaker has benefited greatly from its partnership with Amazon Web Services, the leading cloud services provider for enterprises. In late 2024, it signed a new five-year deal to supply AWS with custom AI chips and networking products, which are needed for faster data transfer in AI workloads.

Marvell also has a partnership with Nvidia to integrate its chips in Nvidia's NVLink Fusion. NVLink is a game-changing product that brings together custom chip solutions from multiple suppliers on a single platform. This could spell more demand for Marvell's accelerator processing units (XPUs).

These agreements with AWS and Nvidia significantly bolster Marvell's long-term prospects. The stock looks expensive, trading at high multiples of sales and earnings. But keep in mind that it is seeing margins improve from growing demand.

Adjusted earnings more than doubled year over year to $0.62 in the first quarter. Wall Street analysts expect 46% annualized earnings growth over the next few years, which could support significant upside in the stock.

Should you invest $1,000 in Reddit right now?

Before you buy stock in Reddit, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Reddit wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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*Stock Advisor returns as of June 23, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, and Nvidia. The Motley Fool recommends Marvell Technology. The Motley Fool has a disclosure policy.