This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

With Warren Buffett about to step down as the CEO of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), investors will surely be sad to see the Oracle of Omaha go.

Not only was Buffett a great CEO and investor who delivered outsize returns for Berkshire shareholders over six decades, but he also uniquely viewed the world, which was fascinating to observe when given the opportunity. Buffett also provided many important life lessons, whether in his annual letters to shareholders or in his occasional television appearances.

Naturally, as Buffett got older, many investors wondered if the 95-year-old was still as good as he used to be. After all, not many people work into their 90s, let alone run one of the largest conglomerates in the world. Luckily, there is an easy way to check.

If you'd invested $500 in Berkshire Class B shares a decade ago, here's how much you would have today.

Berkshire is a different company than it used to be

As Buffett tends to remind investors, Berkshire is quite different from how it used to be, mainly because it is now so large, with an equities portfolio exceeding $300 billion.

This makes it significantly harder for Buffett and his team to move in and out of positions so easily, and Berkshire rarely encounters opportunities large enough that it finds attractive. Still, Berkshire has managed to beat the broader benchmark S&P 500 Index over the past decade.

Data by YCharts.

As you can see above, $500 invested in Berkshire Class B shares a decade ago is now worth $1,868, representing a total return of 274% and just edging out the broader market. I consider this a success, given Berkshire's size and the market's strength over the past decade.

With so much of the S&P 500 currently dominated by high-flying artificial intelligence stocks, I'd also consider Berkshire's stock a safer investment to hold through the business cycle than the broader market. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Electric carmaker and robotaxi company Tesla (NASDAQ: TSLA) is one of the largest companies in the stock market, led by CEO Elon Musk, one of the most prolific tech founders of our time.  

Tesla is the first company to widely commercialize electric vehicles, which are viewed as a critical innovation in helping to wean the planet off of fossil fuels that have greatly contributed to global warming. While Tesla's core EV business has struggled due to rising competition and fewer government incentives, investors are now more focused and extremely excited about Tesla's autonomous ride-hailing fleet, full self-driving technology, and Optimus humanoid robots. 

This explains why the stock now trades at a massive valuation of around 200 times forward earnings. Investors believe Tesla is on the groundbreaking level of new industries with massive markets, and that Tesla will be able to gobble up market share with its first-mover advantage.

The bulls have been right so far

Tesla remains one of the most disputed battleground stocks on Wall Street. And while many, including myself, are skeptical about continuing to buy the stock at such a rich valuation, the bulls have prevailed so far.

TSLA data by YCharts

As you can see in the chart, $3,500 invested in Tesla at the end of 2013 is now worth nearly $174,000 for a total return of 4,869%. Meanwhile, the same $3,500 invested in the broader benchmark S&P 500 (SNPINDEX: ^GSPC) is only worth $13,320, which is still a strong return.

While Tesla's future is uncertain, the bulls have now been right for many years. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Warren Buffett's company, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), has consistently generated returns that far exceed those of the broader market over the six-plus decades that Buffett has led the company.

Between 1964 and 2024, Berkshire's stock generated compound annual gains of 19.9% and a total return of 5,502,284%. Meanwhile, the S&P 500 index generated compound annual gains of 10.4%, including dividends, and a total return of 39,054%.

A major part of Berkshire's success can be attributed to its massive $300 billion-plus equities portfolio. Berkshire invests the float it generates from premiums in its large insurance business into stocks that the company often likes to hold for many years, if not decades.

Buffett and Berkshire's top five holdings

Needless to say, investors are always interested in what stocks the Oracle of Omaha and his team are investing in. Here then are Berkshire's largest holdings at the end of the third quarter of the year, and the amount of the portfolio they represent:

1. Apple -- 21%
2. American Express -- 17.8%
3. Bank of America -- 9.8%
4. Coca-Cola -- 9.3%
5. Chevron -- 5.9%

All of Berkshire's top holdings are in world-renowned companies that have built sizable moats across various sectors. Berkshire first invested in Apple in 2016 and, at one point, had built the position to roughly 40% of Berkshire's portfolio. Since then, however, Berkshire has sold a majority of its position, and I wouldn't be surprised to see the large conglomerate exit Apple entirely over time.

Berkshire has owned American Express and Coca-Cola since the 1980s and 1990s, and these represent two of the company's longest-held investments, likely hand-picked by Buffett.

Buffett and Berkshire used to own many traditional banks, but Bank of America is now one of the few remaining in the portfolio. Chevron is one of several energy stocks and assets that Berkshire owns. Buffett and his team appear to have a high level of long-term conviction in U.S. oil and gas, despite the sector's recent struggles.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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• Market meltdown? Follow Warren Buffett's 5-step investing strategy

American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Berkshire Hathaway, and Chevron. The Motley Fool Australia has recommended Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Due to the strong performance of Berkshire Hathaway's stock over many decades and to its leader, the legendary Warren Buffett, investors are always excited to get a glimpse at Berkshire's recent portfolio moves each quarter. Large funds are required to disclose changes to their portfolio no later than 45 days after the end of each quarter.

Even with Buffett set to step down at the end of the year, Berkshire is one of the strongest companies in the world and has an extraordinary team of investors. In the third quarter, Berkshire sold more of its stake in Apple and piled into another "Magnificent Seven" stock that trades at a fraction of Tesla's valuation.

Berkshire continues to offload its largest position

In Q3, Berkshire sold another 15% of its Apple shares, reducing its position to 238.2 million shares, which were valued at $60.6 billion at the end of the quarter. Apple remains Berkshire's largest equity holding, consuming 21% of Berkshire's massive $309 billion equities portfolio.

It shouldn't surprise investors too much to see Berkshire continuing to pare its Apple position. As Buffett said back in 2020 when Berkshire dumped all of its airline stocks during the pandemic, "When we sell something, very often it's going to be our entire stake: We don't trim positions. That's just not the way we approach it any more than if we buy 100% of a business. We're going to sell it down to 90% or 80%."

Investors must also realize, if they haven't already, that due to Berkshire's size, the company cannot enter and exit positions as easily as a retail trader on Robinhood. Its positions are so large that it takes time to build positions to the desired size, and conversely, it takes time to offload positions. Since the start of 2023, Berkshire has now slashed its stake in Apple by 74%, indicating that the large conglomerate is preparing for a full exit.

It's tough to pinpoint exactly when Berkshire started to sour on the company, but Apple has faced issues this year due to tariffs and what many investors perceive to be a lack of an artificial intelligence (AI) strategy. The stock has recovered from its losses earlier this year and is now performing well. Who knows, perhaps the company's decision not to invest as much in AI infrastructure may prove prudent, but investors at Berkshire seem to have made up their minds.

Initiating on this cheaper "Magnificent Seven" name

Berkshire's significant move came from the initiation of a new position in Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL). The company purchased over 17.8 million shares, valued at more than $4.3 billion, at the end of Q3. The position consumes 1.6% of Berkshire's portfolio.

Alphabet has had an eventful year. Last year, a federal judge ruled that Google deployed monopolistic practices in its search and advertising business that violated antitrust law. The U.S. Department of Justice asked the courts to order Alphabet to divest its Google Chrome business as punishment. Chrome is a key component of Alphabet's large search business, and investors were concerned this might come to fruition.

Ultimately, though, the courts did not compel Google to do this. Furthermore, the federal judge in its ruling stated that Google could continue the practice of paying companies, such as Apple, tens of billions of dollars to use Google as their default search engine on the Safari browser. Investors hailed the ruling as a win for the company.

Investors have also been concerned about how AI chatbots like ChatGPT may impact Google's search business but have since been more satisfied with the performance of Google's overviews and AI Mode, giving them greater confidence in Google's ability to retain its leading 90% market share of the search market.

Buffett and the team at Berkshire are value investors at their core, meaning they seek to invest in companies trading at a discount to what Berkshire views as their intrinsic value. While many are wary of the red-hot and highly valued AI sector, Alphabet has traded at the bottom of the group in terms of forward price-to-earnings, with a valuation that is a fraction of Tesla's.

GOOG PE Ratio (Forward) data by YCharts.

It's easy to see why Berkshire is intrigued with Alphabet. The stock is cheap compared to peers, and the company runs several industry-leading businesses with high growth potential aside from search, including YouTube, WayMo's autonomous vehicle fleet, Google Cloud, and even its own chip business.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Apple, Berkshire Hathaway, and Tesla. The Motley Fool Australia has recommended Alphabet, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The next time Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) reports earnings, Warren Buffett will not be the CEO. The Oracle of Omaha will step down from the position he's held for over six decades at the end of the year, passing the baton to Berkshire veteran Greg Abel. Buffett will stay on as chairman of the board of directors.

As Buffett prepares to pass the torch, Berkshire's actions, as shown in the company's recently reported third-quarter earnings, continue to suggest that Buffett and his team remain cautious when it comes to the stock market. With just a few months left in his tenure, Buffett's unspoken warning to investors is now at ear-shattering levels. 

Berkshire wants nothing to do with the stock market

Berkshire reported its third-quarter results on Nov. 1. The large conglomerate is still staying on the sidelines as the market continues its upward climb, in part thanks to two interest rate cuts by the Federal Reserve. Berkshire, on the other hand, continued to pile into cash, growing its cash and short-term investments in U.S. Treasury bills to over $377.5 billion.

The company was also a net seller of stocks during the quarter -- it purchased close to $6.4 billion of equities and sold about $12.5 billion. The company also announced a $9.7 billion deal last quarter to acquire Occidental Petroleum's petrochemical unit, which makes chemicals for water treatment, healthcare, and other commercial uses. That is Berkshire's largest acquisition in about three years.

It's important to understand that Berkshire's sheer size makes it difficult for Buffett and his team to find attractive investments since few companies are large enough to move the needle. But the extended lack of buying activity also shows that Berkshire finds very little attractive in today's market, which trades at elevated levels. Further supporting this idea is the fact Berkshire has not repurchased any of its own stock so far this year. That suggests management similarly finds Berkshire stock too expensive.

Meanwhile, there is the Buffett indicator, which was named after Buffett because he has said the metric is "probably the best single measure of where valuations stand at any given moment."

The Buffett indicator looks at the total market cap of the Wilshire 5000, representing the U.S. stock market, and compares it to U.S. gross domestic product (GDP). Recently, the Buffett indicator surpassed 220%, an all-time high. Historically, Buffett considered the market to be overvalued if the Buffett indicator traded over 100%, although it hasn't traded below this level since 2013.

Buffett's investment philosophy

Investors should not take Berkshire's lack of investment activity lightly. One of the reasons Berkshire stock has done so incredibly well for so many decades is because its leadership team has largely been able to sidestep huge market downturns. Buffett doesn't pretend to be all-knowing, but he invests with a long-term approach throughout the economic cycle. Just because the market has remained remarkably strong this year doesn't mean a downturn couldn't be waiting on the horizon.

It's also possible Berkshire is stockpiling cash to put Abel in a position of strength as he takes on the daunting task of filling the enormous shoes left by Buffett.

Despite Berkshire's cautious stance in this market, investors shouldn't necessarily follow Buffett to the sidelines. Remember, running one of the largest portfolios and conglomerates in the world is quite different from running one's own retirement portfolio. Berkshire might be sounding the alarm bells, but long-term investors don't have to panic.

However, concerned investors can certainly take actions to reduce their risk exposure. For example, they might choose to hold more cash, reduce the concentration in their holdings by purchasing an equal-weight S&P 500 fund, or seek out stability in high-quality dividend stocks.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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More reading

• Market meltdown? Follow Warren Buffett's 5-step investing strategy

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Occidental Petroleum. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Key Points

• All of the "Magnificent Seven" stocks now have market caps of at least $1 trillion.
• Despite these companies' massive sizes, many Wall Street analysts think some of their shares have meaningful upside.
• The key for the hyperscalers is whether or not they will be able to monetize their large AI investments.

Despite periods of turmoil in the stock market this year, most of the "Magnificent Seven" stocks have stayed hot. Those tech-focused megacaps have histories of generating strong earnings and free cash flows, and they're all investing heavily in artificial intelligence (AI). Many investors expect them to be the primary beneficiaries of the AI revolution, which helps explain why their market caps have all now surpassed $1 trillion.

Despite their sheer size, some Wall Street analysts still foresee their shares making big moves upward. According to certain analysts, these two Magnificent Seven stocks could rise by 31% and 19%, respectively, over the next year.

Microsoft: Reaping the rewards of AI investment

There was a time when investors had questions about Microsoft's (NASDAQ: MSFT) investments in artificial intelligence. But recent quarters have largely put those doubts to rest, and Microsoft's stock has risen about 20% so far this year. In the company's fiscal 2025 fourth quarter (which ended June 30), Microsoft's Azure and other cloud services division, which houses a lot of its AI offerings, generated astounding revenue growth of 39% year over year.

"Cloud and AI is the driving force of business transformation across every industry and sector," said CEO Satya Nadella in Microsoft's latest earnings release.

Following the earnings release, Truist Securities analyst Joel P. Fishbein Jr. issued a research report, maintaining a buy rating on Microsoft and raising his price target on the stock to $675, forecasting a gain of about 31% over the next 12 months. Fishbein thinks the tech giant will continue to see strong growth from its cloud business, as well as tailwinds in the broader AI ecosystem. "Sustained strong cloud growth at scale & growing AI demand capture can lead to at least low teens double-digit rev, profit & CF (cash flow) growth over an extended period, while consistently returning cash via divs/repurchases," he wrote.

Microsoft has been able to monetize AI by integrating AI models from OpenAI and charging clients that use these templates. Additionally, Microsoft sells its Azure clients enterprise AI tools through Azure Foundry that allow them to build and implement AI chat, conversational AI, and AI agents, among other tools. Further growth is likely as AI begins to spread to more parts of the economy and different types of businesses across sectors.

Though it can be hard to gauge how much more room for growth a company with a more than $3 trillion market cap might have, I don't have any issue recommending Microsoft to long-term investors. In addition to AI, the company has a tremendous slate of businesses, including its popular suite of office productivity software, its traditional cloud business, video games, and social media platforms. Plus, Microsoft is one of the only companies with a debt rating higher than the U.S. government.

Alphabet: Overcoming challenges all year

It's been a tremendously volatile year for Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL). Toward the end of 2024, a federal judge sided with the Department of Justice in a lawsuit, agreeing that the Google parent had employed monopolistic practices to protect its domination of the search engine space, as well as in its digital advertising practices.

The Justice Department then asked U.S. District Judge Amit Mehta to make Alphabet divest itself of its Google Chrome unit, a key element of the company's search business, which drives over half of Alphabet's revenue. But recently, Judge Mehta ruled that the company would not have to do this.

Furthermore, Mehta said Alphabet can continue to pay distributors like Apple to make Google the default search engine on their web browsers. Alphabet reportedly paid Apple over $20 billion in 2022 to make it the default engine on the Safari browser, which is installed standard on all iPhones. However, Mehta said that exclusive contracts will not be allowed and that Google would have to share some of its search data with rivals. Overall, investors considered this a positive outcome for Alphabet.

Many were also concerned earlier this year that AI chatbots like OpenAI's ChatGPT might significantly cut into Google's search business. However, the AI Overviews results powered by Google Gemini that now top the responses to most Google search queries appear to be making progress and meeting the needs of consumers. Evercore ISI analyst Mark Mahaney said the judge's ruling had removed a clear overhang on the stock, which will allow investors to focus on the company's fundamentals.

"What we see is a Core Catalyst, with Google Search revenue growth likely to remain DD% [double digit] for the foreseeable future," Mahaney wrote in a research note. While generative AI  will undoubtedly continue to provide competition, Mahaney believes Google's ability to innovate will keep its search engine competitive and allow the company to continue to generate solid growth. His new 12-month price target on Alphabet stock is $300, implying about 19% upside from current levels.

I largely agree with Mahaney, although I think investors should monitor competition from the likes of ChatGPT. But Alphabet also has many other strong and growing businesses, among them its cloud business, YouTube, its Waymo self-driving vehicle unit, and even its own AI chip design business. Even after its big run-up, Alphabet still trades at about 24 times forward earnings. Given that the company's relevance is unlikely to fade any time soon, at that level, it looks like a good long-term buy.  

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Apple, Microsoft, and Truist Financial. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Apple, and Microsoft. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Key Points

• Nvidia is the largest company in the world by market cap.
• Palantir's stock has been on a phenomenal run in recent years.
• Wall Street analysts see massive potential in both companies.

Few stocks have benefited more from the artificial intelligence (AI) revolution or generated better gains for shareholders than Nvidia (NASDAQ: NVDA) and Palantir (NASDAQ: PLTR). Nvidia is now the largest company in the world by market cap and is viewed as the ultimate pick-and-shovel play for the AI revolution. Meanwhile, many investors have come to believe that AI decision-making company Palantir has unlimited potential, and for most of the year, its stock has been on a tear.

While the market undoubtedly loves both of these stocks, Wall Street analysts covering one are pretty much unanimous in saying it's a buy, while those covering the other largely think it's overvalued.

Nvidia: The world's biggest company could get bigger

Surging sales and profits, combined with the hype around AI, have catapulted Nvidia to a roughly $4.27 trillion market cap (as of Sept. 2). With such a high valuation, some wonder how much higher Nvidia can keep going because at the end of the day, the law of large numbers suggests that beyond a certain point, growth rates invariably begin to plateau. Perhaps that's why the company's strong fiscal 2026 second-quarter earnings failed to give a lift to the stock.

But if you ask professional Wall Street analysts, Nvidia is indeed likely to keep moving higher over the next year. Of the 38 analysts who have issued research reports on Nvidia over the past three months, 34 rate the stock a buy, three call it a hold, and only one says sell, according to TipRanks. Their average one-year price target points to another 20% upside for the stock.

Nvidia currently trades at around 39 times forward earnings. That's certainly not cheap, especially for a company of its size, but by no means the most ridiculous multiple we've seen in the world of AI, especially when you consider that the chipmaker is still growing extremely fast. In fiscal Q2, Nvidia reported 61% growth in diluted earnings per share and 56% growth in revenue. Meanwhile, management is guiding for revenue to grow from the $46.74 billion it reported in the second quarter to about $54 billion in the third.

Keep in mind that for much of this year, the company has not been able to sell the H20 chips it designed specifically for the Chinese market. Those less powerful chips were previously acceptable to export to China even under the trade restrictions set by the U.S. government, but earlier in 2025, President Donald Trump blocked their export too. However, in August, Trump agreed to allow Nvidia to sell the chips to China again -- but the U.S. government gets 15% of the revenues from those sales.

Nvidia management has said the company could sell about $2 billion to $5 billion worth of chips to Chinese businesses in the current quarter if geopolitical tensions ease. Furthermore, CEO Jensen Huang estimates that business in China would have been a $50 billion opportunity in 2025, had it not been for geopolitical tensions. Huang also thinks the opportunity in China will grow by 50% next year.

"I'm feeling more bullish," Wedbush analyst Dan Ives recently told TheStreet. "Because when you factor even in the China numbers, this is really just the start of an acceleration for Nvidia across the board."

Palantir: Even great companies can have overvalued stocks

Palantir has been a darling of the market in recent years. The company leverages AI to help government agencies and companies gather, manipulate, and analyze data in ways that have never been possible before. The platform can also recommend certain actions based on the data and discuss some of the potential repercussions of taking such actions. Palantir's stock has more than doubled this year and is up by more than 1,600% in the past five years.

It's likely for this reason that some Wall Street analysts think the stock has run too far, too fast. Of the 20 Wall Street analysts who have issued research reports on Palantir over the past three months, five have buy ratings on the stock, 13 call it a hold, and two say sell, according to TipRanks. Their average one-year price target for Palantir implies that the stock is fairly valued at its current level.

Palantir has certainly demonstrated strong growth. In the second quarter, revenue grew 48% year over year, while diluted earnings per share more than doubled. However, trading around 242 times forward earnings, the company's valuation premium is simply stunning.

Citron Research's Andrew Left, a famous short-seller, said he is a fan of the company and its CEO, Alex Karp, but that the valuation has clearly gotten out of hand.

"It's a wonderful company, but if this was the greatest company that was ever created and we gave it the same multiples, let's say Nvidia in 2023, the stock still can get cut by two-thirds, and that would be like 35 times sales," he said in an interview on Fox Business last month.

Some investors still may want to add the stock to their portfolios to increase their exposure to the AI space. If you're one of them, I would recommend either using a dollar-cost averaging approach, which would smooth out your cost basis over time, or waiting for a better entry point to buy. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia and Palantir Technologies. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

For the last couple of years, it's been easy to group the "Magnificent Seven" together. These massive companies have become the dominant tech players and have taken advantage of artificial intelligence (AI) like no other group of companies in the market.

But once President Donald Trump took office and enacted sweeping tariffs, the group began to diverge based on how tariffs impacted their supply chains and the types of products and services they sold.

Microsoft (NASDAQ: MSFT) has been one of the strongest, most resilient performers in the group. Is it time to double down on Microsoft stock today?

Riding Azure's momentum

While all the companies in the Magnificent Seven operate in the tech sector, most of them have been able to develop diversified revenue streams. Microsoft has many unique tech businesses, including cloud services, Microsoft Office 365 products, gaming, LinkedIn, search and advertising, and more.

Luckily for Microsoft, many of these businesses are services the company provides and therefore are less impacted by tariffs, which likely explains its strong performance in 2025 (as of June 3).

MSFT data by YCharts.

But a big reason for the company's strong performance is Azure, which falls under the company's cloud services and products category. Azure and other cloud services revenue in the company's third fiscal quarter of 2025 (quarter ended March 31, 2025) grew 35% year over year.

Azure is the foundation of Microsoft's artificial intelligence offerings and business. Launched in 2010, Azure started as a cloud computing network of data centers that companies could run their business on instead of maintaining their own infrastructure.

Since then, Azure has branched out to offer numerous other products, including in artificial intelligence. Through a partnership with OpenAI, Azure provides AI models that developers and businesses can leverage to build their own AI applications. Microsoft has also integrated AI tools from Azure into its own applications, such as Microsoft 365 Copilot, to automate repetitive tasks and improve efficiency.

Many investors questioned Microsoft's significant capital expenditures (capex) on AI over the last two to three years, wondering when they would see a payoff, which has now started to play out. Interestingly, on the company's most recent earnings call, Microsoft CFO Amy Hood pointed out that it's getting harder to separate AI-related revenue from non-AI-related revenue, as the two are starting to feed off of one another.

Evercore analyst Kirk Materne raised his price target on Microsoft from $500 to $515 in late May and maintained a buy rating on the company. Materne said that not only is Microsoft all in on AI, but the more traditional cloud business also still has plenty of runway, considering only around 20% of information technology workloads run in the cloud today -- a number Materne thinks could eventually increase to 80%. And AI tools could be a way to bring more businesses onto the cloud. Materne estimates that Microsoft's AI revenue could reach upwards of $110 billion by fiscal year 2028.

Time to double down?

There are several reasons to double down on Microsoft. For one, it is arguably the company least impacted by tariffs in the Magnificent Seven. As Morningstar points out, the company "has minimal risk exposure to retail, advertising spending, cyclical hardware, or physical supply chains." This should make it more resilient as the trade war continues to play out.

Microsoft's cloud and AI business is also starting to thrive. The company is reaping benefits from all the capex spending and is well-positioned to further grow revenue as the digital transformation of the business world continues to progress. Finally, Microsoft is one of just a few companies in the world to hold the highest possible credit rating from both Moody's and S&P Global. This makes it a source of stability throughout the economic cycle.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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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. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Moody’s, Nvidia, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The ongoing tariff saga has hit most stocks particularly hard this year, and for the first time in two-plus years, even big tech hasn't been immune. The Roundhill Magnificent Seven ETF, an exchange-traded fund that tracks "Magnificent Seven" stocks, is down close to 18% this year. While uncertainty is at an all-time high, investors are also circling the wagons and looking at stocks that are as cheap as they have been in six months or more.

Many investors remain bullish on artificial intelligence (AI) and believe few stocks will benefit more than those in the Magnificent Seven. Two of those stocks, Apple (NASDAQ: AAPL) and Meta Platforms (NASDAQ: META), are of interest after falling roughly 17% and 13%, respectively, this year (as of April 15). Here's the one with more upside, according to Wall Street analysts.

Apple: 18% upside

The consumer tech giant Apple found itself firmly in the crosshairs of President Donald Trump's tariffs after the administration announced higher rates on many countries, including China, where Apple makes many of its popular products. Apple reportedly makes over 80% of its products in China and generates significant revenue from sales in the country. Wedbush analyst Dan Ives estimates that the cost of an iPhone could rise as high as $3,500 if made in the U.S. He also said it would cost Apple $30 billion over three years to shift just 10% of its supply chain to the U.S.

Trump paused the initial tariff rates but left higher rates in place on China, actually boosting those to 145%. However, investors have received more messaging from the White House that suggests the administration is more open to reaching some kind of trade deal with China. The president then exempted smartphones and other electronics made in China from tariffs, although he has said that they won't be exempt permanently.

In a recent research note, Ives stated that his base case is that Apple's earnings in 2025 and 2026 will decline by 10%, although they could be cut 15% to 20% in a worst-case scenario, assuming no trade deal happens with China. Still, Ives is long-term bullish on Apple, as are most on Wall Street. Of the 33 analysts who have issued research notes on the company over the past three months, 17 have a buy rating on the stock, 13 say hold, and three sell. The average price target of roughly $238 implies about 18% from current levels.

Although 145% tariffs on China are still in place, the recent temporary exemption on electronics seems like a path to an eventual permanent exemption for Apple's products. Apple got an exemption from tariffs during Trump's first term, and the company has already said it plans to spend $500 billion in the U.S. over the next four years. The company has one of the most iconic brands in the world, a fortress balance sheet, and will benefit from deploying AI into its product set. The stock trades just under 28 times forward earnings, not far from its five-year average. More near-term pain may come, but long term, I suspect the company and stock will be fine.

Meta Platforms: 39% upside

On a positive note, Meta doesn't make and sell tangible products like Apple, so it doesn't have nearly as much to worry about from a supply chain perspective. However, many economists believe tariffs could lead to an economic slowdown, which would impact Meta, as the company generates a lot of money from advertising.

Ad budgets can get hit hard in a recession. But another positive twist for Meta is that it is considered a valuable source of ad spend for companies, so it may prove more resilient than most because companies may prioritize their spending on Meta ads over many other sources. According to Barrons, Morningstar Analyst Malik Khan said, "The allocations also shift during a period of macro uncertainty. You want to actually focus more on high return-on-ad-spend platforms, which Meta certainly is."

Over the last three months, 46 research analysts have issued research reports on Meta, with 42 rating the company a buy, three saying it's a hold, and one a sell. The average price target of roughly $726 implies about 39% upside. Meta had a lot going for the company even before the tariff drama began to play out, largely because investors began to see it as one of the main beneficiaries of AI. While all companies in the Magnificent Seven are investing heavily in AI, the benefits for some have not been so easy to grasp.

But for Meta, the benefits are clear. Conrad van Tienhoven, a portfolio manager at Riverpark Capital, said in February that he views the company as the largest beneficiary of AI behind Nvidia. According to the Financial Post, Tienhoven said, "Meta spent the money on AI solutions that have had an immediate impact on how it targets and measures ads, the outcome of which has been faster growth and a higher average revenue per user."

There are many more ways that AI can benefit the advertising space, whether through better data analysis and insights or the automation of ad buying and spending. Meta also trades right around its five-year forward price-to-earnings ratio, at roughly 20.8 times forward earnings.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Meta Platforms, and Nvidia. The Motley Fool Australia has recommended Apple, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Shares of electric vehicle (EV) maker Tesla (NASDAQ: TSLA) were trading about 7% lower as of 1:03 p.m. ET Monday. That sell-off came as tensions between the U.S. and China continued to escalate and as investors looked ahead to Tesla's first-quarter earnings report, which is due out after the market closes Tuesday.

Musk will face the music

U.S. stocks broadly fell on Monday morning after China's government warned that it will retaliate against any countries that partner with the U.S. on trade in ways that hurt China economically. In addition, market watchers pointed to President Donald Trump's tariff policies and his latest social media tirades against Federal Reserve Chair Jerome Powell as drivers of Wall Street's slide.

However, when it comes to Tesla specifically, investors are focused on the company's upcoming earnings report. The EV maker has already revealed that its deliveries were weak in the first quarter, but after months of controversial actions by CEO Elon Musk in his public sector role, the Q1 earnings call will provide analysts the opportunity to pose questions to him on topics ranging from Tesla's struggling EV business to its new initiatives. It's also possible they'll ask him about his involvement with the Department of Government Efficiency (DOGE) and Trump's tariffs.

Wedbush analyst Dan Ives, a longtime Tesla bull, said on Monday that Musk faces a "code red situation" if he doesn't start to distance himself from Trump and DOGE. In a recent research note, Ives wrote that Tesla could face "potentially 15%-20% permanent demand destruction ... due to the brand damage Musk has created with DOGE."

Questions about the EV business

On Tesla, Musk will need to reassure investors about the core EV business, which seems to be losing traction in China and Europe, as well as longer-term catalysts for the company like cheaper models, full self-driving, and robotics, hopes for which seem to be propping up the stock and justifying its nosebleed valuation.

Many traders still believe that Tesla will be a generational artificial intelligence company and that it will continue to change the world. Those things could eventually prove to be true, but I prefer to avoid stocks that aren't trading based on their fundamentals, especially when their core businesses appear to be losing steam.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Shares of the consumer tech giant Apple (NASDAQ: AAPL) had blasted over 11% higher, as of 1:55 p.m. ET Wednesday, after President Donald Trump announced a 90-day pause on higher tariff rates for most countries and a universal 10% tariff base during the pause, citing progress on negotiations, according to CNBC. The rebound follows one of Apple's worst four-day stretches of trading since 2000.

It's all about tariffs

President Trump's surprising tariff announcements last week sent Apple shares into freefall. Shares sunk over 18.5%, shedding some $770 billion of its market cap at the trough of the fall. Apple is believed to be one of the worst-positioned stocks in the "Magnificent Seven" due to all the revenue it generates and products it makes in countries like China that have been looking at steep tariffs.

While some countries will see a 90-day reprieve, Trump said he would leave high tariffs in place on China and actually raised them to 125% due to the "lack of respect that China has shown to the World's Markets." The U.S. government also had a successful Treasury auction, alleviating some near-term debt concerns and sending stocks positive.

Goldman Sachs Managing Director Sung Cho also recently appeared on CNBC and essentially called the sell-off of Apple an overreaction. Cho believes investors are underestimating the company's pricing power, fortress balance sheet, and "flexibility in its supply chain."

Still one of the biggest and brightest

If the trade war with China is long-lasting, Apple still has many challenges ahead to navigate. However, this recent news at least gives investors some confidence that Trump is willing to negotiate. Given its strong brand power and balance sheet, I think you can buy Apple stock on a long-term investing horizon.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple and Goldman Sachs Group. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Shares of Tesla (NASDAQ: TSLA) traded close to 6% lower as of 10:31 a.m. ET Monday, but had traded as much as 10.5% down before broader market volatility set in, causing volatile swings in shares. Longtime bull Dan Ives, an analyst at Wedbush, slashed his price target on the electric carmaker by 43%, while maintaining a buy rating.

"Brand crisis tornado"

Ives, who formerly had the highest price target on Wall Street, lowered his expectations on Tesla's stock from $550 per share to $315, which still implies significant upside from current levels, although shares of Tesla are off some 42% this year.

Ives did not hold back on the reason for the lower price target, writing, "Musk-created brand crisis + Trump tariffs = perfect storm for Tesla." All year, investors have been concerned about Tesla CEO Elon Musk and his involvement in the Department of Government Efficiency (DOGE), a new government team created by President Donald Trump to eradicate government waste. Tesla's first-quarter deliveries of 337,000 came in far worse than Wall Street's estimates, which had already been revised lower, only adding fuel to the narrative.

"Tesla has essentially become a political symbol globally, and that is a very bad thing for the future of this disruptive tech stalwart and the brand crisis tornado that has now turned into an F5 tornado," Ives wrote in his report. "We now estimate Tesla has lost/destroyed at least 10% of its future customer base globally based on self-created brand issues."

Ives also pointed out that Trump's tariffs will lead to higher costs for Tesla on car parts that it imports into the U.S. It could also make it harder for Tesla to compete in China, where EV company BYD already appears to have taken significant market share.

Still expensive

After such a strong rally following Trump's election win, shares of Tesla have fully retraced and are now down from Election Night. The company's core EV business is struggling and the valuation hinges on Tesla's soon-to-be-launched full self-driving and robotics divisions. Even after the intense recent sell-off, Tesla still trades at close to 90 times forward earnings. I don't want anything that expensive in this kind of market.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended BYD Company. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Shares of Apple, Nvidia, and Microsoft have exploded in recent years, as investors poured money into stocks that were best positioned to take advantage of the rise in artificial intelligence (AI). These three stocks grew so popular that their combined market capitalization now exceeds $9.2 trillion (as of March 25).

Yet, as massive as these three names are, they pale in comparison to a hard asset that has done quite well in recent years -- and some analysts think the party has only just begun. According to one Wall Street strategist, this hard asset could eventually be worth $40 trillion.

Hedging a looming debt crisis

Gold has historically had an inverse relationship with the U.S. dollar. That's why many investors have been surprised to see it absolutely rip, despite the strength of U.S. dollar during the two-plus-year bull market. Incredibly, the price of gold has even outpaced the broader benchmark S&P 500 and has now surpassed a $20 trillion market cap.

GLD data by YCharts.

Like other economic indicators, gold doesn't always move in a straight line and is often viewed by investors as a flight to safety during uncertain times. In recent years, investors have grown increasingly concerned about the ballooning U.S. debt, which now exceeds $36 trillion. The U.S. government is also running a fiscal deficit, where spending during a fiscal year exceeds revenue.

In fiscal 2024, the U.S. government had a fiscal deficit of $1.83 trillion. One immediate issue from the debt is that the government must make annual interest payments that now consume about 13% of the budget. This is concerning to investors who buy the debt in the form of U.S. Treasury bonds. Some worry investors may eventually demand higher yields on Treasuries to account for the riskier fiscal situation, a scenario that may have a very sobering effect on the market.

And it's this issue that has led Luke Gromen, the founder and president of the market research firm Forest For the Trees, to believe that all roads lead to gold. Gromen elaborated on his thoughts in a recent On The Tape podcast hosted by Danny Moses of The Big Short fame: "Once sovereign debt, in particular sovereign debt of the global reserve currency issuer in this case the United States, gets so high that the math very obviously ... lays out the fact that the United States ... cannot nominally pay the interest and entitlements on their debt ... without printing money then you have to [say] what's the point of holding a sovereign bond if [the United States government] can't not default without printing money. Gold's going to go up regardless of what inflation does."

Central banks seem to have recognized this a while ago. According to Gromen, central banks have net sold $400 billion of U.S. Treasuries since 2014, while purchasing $600 billion of gold. Gromen also said that while Americans may not recognize a situation like this, if you talk to someone following financial markets in Argentina and Brazil, they would easily see what's happening. "Hey what's it mean when gold goes up even though your interest rates are going up fast? They go, 'Oh you're moving toward a debt crisis,'" he explained.

Can gold continue to surge?

At over a $20 trillion market cap, the price of gold per ounce is around $3,040 (as of March 25). Gromen thinks this trade is still in the early innings. In years past, other market watchers told him there would be zombies on Earth before gold hit $3,000 an ounce, but it's happened and he thinks the world will continue to be OK if gold hits $4,000 per ounce or $5,000 or $6,000. At $6,000 per ounce, gold would have a roughly $40 trillion market cap.

A key factor in Gromen's bullish outlook is his assessment that the Trump administration's pursuit of a weaker dollar to repatriate businesses aligns with policies that would raise gold prices.

While I am no expert on gold, I think it's fair to say that the country's fiscal situation is a concern that is not going to have an easy fix. If the situation worsens or simply remains at the status quo, I suspect gold will remain an attractive asset. It's certainly not a bad idea for investors to think about allocating some of their portfolio to this hard asset, so they are somewhat hedged against a worsening fiscal situation or some kind of debt crisis.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

In 2022, the yield curve, which maps yields on U.S. Treasury bonds of different maturities, became inverted, meaning short-term Treasuries had higher yields than longer-dated ones. This inversion carried on for 783 consecutive days, the longest in history.

An inverted yield curve has foreshadowed many recessions throughout history, so when a recession didn't materialize after this unprecedented inversion, many investors and market strategists were surprised. But that doesn't mean the U.S. economy is out of the woods just yet. Recent economic data has started to show cracks in the economy, and uncertainty around policy under President Trump's administration has made things even murkier.

It's understandable to see investors concerned about a recession. But in uncertain times, investors should always heed the advice of Warren Buffett, one of the greatest investors ever, and "keep your head."

Is there about to be a recession?

Despite soaring consumer prices, the economy has seemed unbreakable, with historically low unemployment and high consumer demand. Even the Federal Reserve's intense interest rate hiking campaign has struggled to put a lid on the economy and rein in inflation.

However, recent data has begun to show some weakness. The Federal Reserve Bank of Atlanta's gross domestic product model sharply revised first-quarter GDP estimates lower to -1.8% ( as of March 18). Earlier in the quarter, estimates had called for 2.3% growth. The unemployment rate also ticked up to 4.1% in February as the economy added fewer jobs than expected.

Perhaps most notable is consumer sentiment, which has seemingly fallen off a cliff this year. The University of Michigan's Survey of Consumers in March had a reading of 57.9, far lower than expected and the lowest level seen since November of 2022. Consumers expect to see a higher rate of inflation over a one-year and five-year time horizon.

Some of these concerns stem from President Donald Trump's potential tariff policies, which many economists believe would lead to higher inflation over time, although inflation did ease in February. Fed Chair Jerome Powell suggested during a press conference that if inflation increases but economic growth decreases, the two may end up canceling one another out.

Other investors are more worried about stagflation, a scenario in which economic growth moderates but consumer prices remain elevated or rise and unemployment rises. Some suggest the economy is still on solid footing.

"Keep your head"

Buffett got the phrase "keep your head" from a poem written by Rudyard Kipling called "If," specifically referencing one part:

If you can keep your head when all about you are losing theirs... If you can wait and not be tired by waiting... If you can think -- and not make thoughts your aim... If you can trust yourself when all men doubt you... Yours is the Earth and everything that's in it.

Buffett specifically tells investors to stay calm when the stock market turns volatile and unpredictable. There's no better time to heed this advice than after the broader benchmark S&P 500 recently flirted with correction territory at a blazing-fast speed.

The Oracle of Omaha (as he is sometimes called) has always maintained that while investors can never predict what will happen to the market in the short term, history has shown that patience has paid off handsomely for those investors who can stomach the tough times and keep their wits. This may simply mean holding onto stocks in your portfolio with strong balance sheets and a thesis that is still intact or taking advantage of a sell-off to buy stocks at more attractive valuations.

Now, this doesn't mean holding stocks blindly or pouring money that you can't afford to invest into the market. Stick to your investing fundamentals. Don't buy stocks at nosebleed valuations, and don't ignore new information that might put your thesis at risk. In many past instances, a recession has meant that most stocks will have a bad quarter or two. Investors who can block out the noise and stay patient, like Buffett, have been compensated quite well for their time and patience.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

With the tech-heavy Nasdaq Composite down over 8% this year, investors are starting to look for opportunities. Some of the most popular stocks like those in the "Magnificent Seven" haven't been on sale for more than two years, and perhaps their valuations are now more favorable.

Few stocks have been more popular than the artificial intelligence chip king Nvidia (NASDAQ: NVDA) and the electric carmaker Tesla (NASDAQ: TSLA), which are down 13% and 38%, respectively, this year. Per usual, Wall Street analysts are on top of these names and have been updating their views and price targets since both stocks have declined. Certain analysts say to buy one of them and sell the other. Let's take a look.

Tesla has become a battleground stock

Shares of Tesla absolutely flew following President Donald Trump's election victory in early November, for no obvious reason other than CEO Elon Musk's close ties to the president and an easier regulatory environment. However, this year the stock has been hit hard by the broader market sell-off as well as concerns about Tesla deliveries in the first quarter.

Tesla quickly turned into a battleground stock, as investors grapple with upcoming catalysts related to the company's robotaxi and robot initiatives versus its expensive valuation. Tesla trades at about 86 times forward earnings and analysts on average expect to see earnings grow by 17%, according to data provided by Visible Alpha. Wall Street analysts are split on whether or not to buy the stock. Of the 36 analysts who have issued a research report, 12 say to buy the stock, 13 say hold, and 11 say sell. The average price target implies 41% upside.

JMorgan Chase analyst Ryan Brinkman is the low on the Street and has concerns about Musk's involvement in government affairs and working alongside Trump. "Mr. Musk's work with the Department of Government Efficiency has proven controversial domestically, and while as many members of the political right may be pleased as those on the left are displeased, the effect on Tesla sales seems nevertheless negative," he wrote in a research note on March 12.

Investors will be razor-focused on Tesla's first-quarter earnings to see how the numbers shake out. The stock could move dramatically one way or the other but stocks that trade at such high valuations could be vulnerable on a big miss or weak guidance.

Analysts say Nvidia is an overarching buy

While investors are torn on Tesla, they are near unanimous on rating Nvidia a buy. Of the 42 analysts who have issued research reports on the company over the last three months, 39 assign the stock a buy rating, while three say hold. The average price target implies nearly 50% upside.

The emergence of DeepSeek earlier this year, a Chinese start-up that allegedly managed to create a similar chatbot as ChatGPT at a far lower cost and with older Nvidia chips, sent the stock and the broader AI sector for a loop. Investors wondered whether the industry would need the same chip technology and computing power as initially believed. Furthermore, Nvidia is potentially dealing with more strict export restrictions on its chips, as both former President Joe Biden's administration and the Trump administration have sought to prevent China from gaining certain artificial intelligence capabilities.

However, Nvidia CEO Jensen Huang continues to brush off threats from DeepSeek, suggesting that the technological innovation will mean more demand for Nvidia's products and not less because the more data AI has the smarter the algorithms become. At a recent conference, Huang said that spending on data centers could reach $1 trillion. Analysts seemed to have liked what they heard. " ... Nvidia is continuing to deepen its competitive moat in a $1 trillion-plus infrastructure/services total addressable market," Bank of America analyst Vivek Arya said in a research note following the conference.

Nvidia now trades at 26 times forward earnings, down from peaks of over 50 in recent months. Analysts on average expect the company to grow earnings by about 48% in its fiscal year 2026. While I'm not the biggest buyer of AI stocks, this setup looks a lot more favorable than in the past.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bank of America, JPMorgan Chase, Nvidia, and Tesla. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

It's not too often that 94-year-old Warren Buffett comments on political matters. After all, doing so is unlikely to create shareholder value for Buffett's company Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). However, any time Buffett has something to say on the state of markets, the economy, or politics, you know the world will be listening because Buffett is one of the most influential investors of all time.

Additionally, because he has been investing for well over six decades and has been through multiple market cycles, Buffett has seen it all. Recently, during a rare interview with the CBS News show Sunday Morning, Buffett made his feelings about tariffs known, and he didn't hold back. Buffett issued a stark warning to President Donald Trump on the impact of tariffs that couldn't be any clearer.

Buffett calls tariffs "an act of war..."

The Trump administration last week removed a temporary pause on an earlier declaration and implemented 25% tariffs on Canadian and Mexican imports and an additional 10% tariff on Chinese imports (there was already a 10% tariff in place), starting a trade war that has resulted in retaliatory tariffs by those three countries. However, shortly after implementing the tariffs, Trump on March 6 once again paused Canadian and Mexican tariffs on imports covered under the United States-Mexico-Canada Free Trade Agreement.

Trump has now gone back and forth on tariffs multiple times, confusing investors on whether he plans to use them as a temporary bargaining chip in his deal-making efforts or actually follow through with the measures for a sustained period of time. The market has struggled to price in this uncertainty. In his recent interview, Buffett briefly touched on tariffs and called them "an act of war to some degree," saying that the U.S. has had a lot of experience with tariffs and that over time they become a tax on goods. "I mean the tooth fairy doesn't pay them," he said.

Buffett also said that prices will be higher 10 years from now and 30 years from now, although this may have simply been a reference to the fact that consumer prices tend to rise over time due to inflation. While Buffett didn't mention Trump by name and avoided questions about Trump's bringing Elon Musk into his administration, his words could not have been more clear about tariffs and their impact on consumer prices.

Americans have felt the impact of higher prices on their pocketbooks in recent years as inflation surged during the COVID-19 pandemic and has only recently gotten back to more normal levels. Trump made campaign promises to bring down consumer prices once he took office and some in his administration (including Trump) have said that tariffs will not lead to higher prices. However, U.S. Treasury Secretary Scott Bessent recently said that "access to cheap goods is not the essence of the American dream," while Trump himself has acknowledged that there could be some near-term economic pain related to his actions.

Trump has also seemed reluctant to implement tariffs, delaying tariffs on Mexico and Canada on multiple occasions now, making it somewhat unclear what he hopes to achieve with his actions.

Confirming suspicions about Berkshire's inactivity

Berkshire Hathaway kept its investment activity surprisingly low in 2024. While the markets showed enthusiasm for all things artificial intelligence and helped push the S&P 500 to new highs on close to 60 occasions during the year, Berkshire sold off many more stocks than it bought and didn't repurchase as much of its own stock compared to years past, and it stockpiled a staggering amount of cash. Many suspected Buffett and Berkshire, which have been quite good at getting to the sidelines before market downturns, were sending investors a warning.

Buffett and Berkshire also remained disciplined during election time. They once again bought very few stocks in the fourth quarter and didn't try to time the election trade. Stocks melted up but then quickly gave back those gains, as investors grew concerned about weakening consumer sentiment and the impact of tariffs.

Nobody needs to guess how Buffett feels about tariffs now. The Oracle of Omaha just made it clear that he thinks what Trump is doing could lead to higher consumer prices and therefore higher inflation, especially if the tariffs and trade war are sustained.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Warren Buffett just issued a stark warning to President Trump about the impact of tariffs. It couldn't be any clearer. appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

When you've been on a run like Nvidia (NASDAQ: NVDA) has over the past few years, it's almost always because investors see massive growth ahead. For a company positioned as the picks-and-shovels play for the entire artificial intelligence (AI) industry, many still think the sky is the limit for the AI chip king.

However, one Wall Street analyst thinks that may no longer be the case and is downgrading Nvidia from a buy rating to a hold with no price target listed.

Supply will catch up with demand

While Summit Insights analyst Kinngai Chan expects Nvidia to keep beating consensus estimates in future earnings reports, especially after strong fiscal 2025 fourth-quarter results, he's concerned "NVDA's outperformance and growth could decelerate into 2HFY26 as supply of NVDA's GPUs catches up to industry demand."

Chan also pointed out a larger contraction in margins than expected due to the company increasing production of its next-generation Blackwell chips. The emergence of DeepSeek, a powerful AI chatbot that was supposedly built at a fraction of the cost of popular names like ChatGPT also seems to be on Chan's mind. He noted that more efficient AI training and the ability to develop AI programs with less advanced computing will adversely impact Nvidia on a medium- to long-term basis.

Chan makes some good points here. While industry leaders usually find ways to adapt to new challenges, there is still a lot investors don't know about AI and its potential obstacles. There could be near-term risks from the Trump administration potentially following through with more intense export controls on chips, so caution is warranted with Nvidia, as well as with other large AI stocks that have seen their valuations soar.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Warren Buffett is widely regarded as the best investor of all time. Over six decades, Berkshire Hathaway's stock has crushed the broader market, and a big part of that can be attributed to the stock-picking abilities of Buffett and the team at Berkshire.

Naturally, investors watch every move the 94-year-old and Berkshire make, hoping to glean valuable insights they can apply to their own portfolios. But what many retail investors fail to recognize is that while they may not have the same brilliance as Buffett, they actually have an advantage over him. In fact, Buffett just told you what that advantage is in his recently published annual letter to shareholders.

Berkshire Hathaway is effectively too big

In this year's letter to shareholders, Buffett discussed a variety of topics including his and Berkshire's mistakes, the company's performance in 2024, Berkshire's astounding $26.8 billion tax bill, and a unique acquisition Berkshire conducted in 2005 of an RV manufacturer.

However, Buffett largely avoided discussing the current state of the stock market or economy, something investors were curious about, considering Berkshire made so many moves suggesting the market is trading at elevated and perhaps unattractive levels. Berkshire was a net seller of stocks in 2024 by a wide margin. The company hoarded cash and amassed a stockpile of roughly $334 billion at the end of the fourth quarter, a truly staggering number.

Berkshire also sold big chunks of some of its largest positions including Apple and Bank of America. While Buffett and Berkshire likely view the market as overvalued, they also opined on how the sheer size of Berkshire can make it difficult for the company to be agile:

With marketable equities, it is easier to change course when I make a mistake. Berkshire's present size, it should be underscored, diminishes this valuable option. We can't come and go on a dime. Sometimes a year or more is required to establish or divest an investment. Additionally, with ownership of minority positions we can't change management if that action is needed or control what is done with capital flows if we are unhappy with the decisions being made.

This helps to explain why Berkshire often doesn't completely exit a large stake at one time or why Buffett may not buy a stock that retail investors view as so obviously cheap. The company doesn't own too many small-cap stocks and there are probably a lot of stocks that Berkshire finds attractive but that wouldn't make any sense for the company to invest in. In the letter, Buffett noted, "Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities."

Investors who follow Buffett and Berkshire should recognize that Berkshire is a much different animal than the typical retail investor or even hedge fund because its portfolio is valued at an astronomical $296 billion (as of Feb. 26).

Retail investors should also remember that Buffett owns and operates several businesses spanning the insurance, railroad, mortgage, and energy spaces. Buffett noted that Berkshire increased its stake in Berkshire Hathaway Energy from 92% to 100% last year, a move that cost Berkshire $3.9 billion, nearly 75% of which was paid in cash and the remainder through Berkshire class B shares.

If you look at Berkshire's equity portfolio, only 13 equity holdings are currently valued above $4 billion, so while Berkshire didn't buy a ton of stocks, it was still investing in other ways.

Your advantage

Retail investors manage far less money than Berkshire, but they don't have to answer to shareholders, and they often only invest what they can afford to lose. Retail investors can be much more agile than Buffett. They can buy micro-cap stocks and go in and out of positions quicker. When they make a mistake, they can flee a stock quickly and look for opportunities elsewhere. All of this is a luxury Buffett and Berkshire don't always have.

There's a lot to learn from Buffett including being a patient investor and trying to find stocks you can hold forever. But even Buffett has acknowledged that most regular investors will have a different mindset. For instance, Buffett doesn't believe in diversity within his portfolio but acknowledges that retail investors who don't have enough time to do their homework on stocks should just buy mutual funds or exchange-traded funds.

Just because you see Berkshire selling a stock or not buying a stock doesn't mean you can't take those actions -- just make sure to do your own research. Buffett's investing philosophy may serve as an important guide, but it doesn't need to be the law.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post You have an advantage over Warren Buffett. He just told you what it is. appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bank of America is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Bank of America, and Berkshire Hathaway. The Motley Fool Australia has recommended Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Things can change in a hurry. After Tesla (NASDAQ: TSLA) saw its stock price explode following President Donald Trump's victory in early November, much of that rally has now been erased, a trend that continued this week. Shares of the electric car maker had fallen more than 16% for the week so far as of market close on Thursday.

Blame Europe

The big culprit hurting the stock this week is coming from Europe. According to the trade organisation Acea, sales of Teslas in January declined by 45% across the European Union and United Kingdom. This happened while the regions saw electric car sales increase significantly.

Meanwhile, investors are bracing for Q1 sales to be the lowest seen since late 2022. Check out the graph below of the stock's recent moves.

TSLA data by YCharts

Some surmise that the price drop could be attributed to investors taking gains after the incredible rally, while some think Tesla CEO Elon Musk's political actions in recent months have hurt the brand.

BBC recently cited an unnamed former senior director of Tesla's Europe, Middle East and Asia division as saying that politics is "definitely one of the reasons for the decline," but that there are also a "cumulative number of things that are piling up a domino effect."

Tesla shares' valuation rose too far too fast

It's hard to know the leading factor impacting the stock right now, but I think it's simply a case of the valuation running too far too fast. After the epic post-election run, Tesla's valuation peaked at nearly 194 times forward earnings estimates, well ahead of peers in the "Magnificent Seven." This makes the stock much more susceptible to pullbacks, even on minor bad news. I'm still sceptical of tech and AI valuations, given some of the challenges ahead.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The emergence of a small Chinese artificial intelligence (AI) company called DeepSeek initially put a giant hole in the U.S. stock market. Tech stocks -- particularly those connected to the AI trend -- got crushed, and GPU king Nvidia (NASDAQ: NVDA) lost roughly $600 billion of its market cap in a single day as investors grew concerned about the company's moat, and whether AI software could be trained and powered at lower costs with less powerful chips.

Now the big question that analysts and investors are grappling with is how serious a threat DeepSeek actually is to the AI sector's status quo. Some think that the company may have invested more money and used higher-quality chips to develop the DeepSeek R1 large language model than it's letting on, while others think its claims are legitimate. Some also think DeepSeek's innovations could prove a net positive for other AI companies long term. After the recent sell-off, would investors be better served to buy the dip on Nvidia or Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG)?

DeepSeek's arrival is hurting Nvidia now, but could help it long term

The big reason Nvidia got hit so hard by DeepSeek is that the Chinese company allegedly managed to create a chatbot with capabilities rivaling ChatGPT, but at a fraction of the cost. DeepSeek says it trained its model for just $5.6 million and used older Nvidia chips to do it. Meanwhile, OpenAI has spent more than $100 million to train certain ChatGPT models.

Nvidia issued a statement on January 27 that seemingly praised DeepSeek and said that the chips used to build its model were "fully export control compliant." The chipmaker also said DeepSeek shows why its chips are needed and that they will be needed in the future. One group of analysts seemed to concur. Cantor analyst C.J. Muse called the sell-off a complete overreaction:

We think this view is farthest from the truth and that the announcement is actually very bullish with AGI (artificial general intelligence) seemingly closer to reality and Jevons Paradox (what happens when improved efficiency actually boosts demand, causing resources to be used up more quickly overall) almost certainly leading to the AI industry wanting more compute, not less.

Muse also noted that there are some doubts about what chips DeepSeek actually used, but he ultimately believes the innovation is bringing the world closer to an artificial general intelligence and will ultimately lead to more widespread use of AI. However, there is also a camp that is concerned DeepSeek is starting to shrink Nvidia's incredible moat, which has supported its 75% operating profit margins.

Analysts at BMO said while there are still a lot of questions, the current information available suggests that DeepSeek likely used servers with 50% to 75% less power intensity than servers that use Nvidia's most recent GPUs. No analysts have outright said they were putting a sell rating on Nvidia stock yet, but the backdrop remains uncertain.

Alphabet: Facing similar threats but in a different place

Alphabet faces a similar threat from DeepSeek. However, its stock didn't sell off as hard, largely because it's in a different place than Nvidia. For one thing, its stock didn't perform nearly as well in 2024.

GOOGL data by YCharts.

Alphabet has been dealing with its own issues, notably including a Department of Justice lawsuit that accused the company of using monopolistic practices to dominate the digital ad space and employing pricing methods that essentially made it the only shop in town. A federal judge agreed with Justice. The department then submitted a filing that some view as asking the judge to force Alphabet to break itself up and sell its Chrome browser. While many suspect a breakup plan won't actually come to fruition, it would adversely impact the company if it did.

Additionally, while investors have priced more and more potential into Nvidia's stock, Alphabet's stock price may not fully reflect its AI strengths and opportunities. The company actually builds AI data center chips of its own, for example, and its DeepMind unit is similar to OpenAI. Yet according to D.A. Davidson analyst Gil Luria, these divisions -- potentially worth multiple hundreds of billions of dollars -- are not adequately priced into the stock. Luria still has a hold rating on Alphabet, but would become more optimistic about it if management makes more of an effort to unlock value.

Which should you buy?

As things stand, I don't foresee impending doom for Nvidia. I think the magnitude of the DeepSeek-driven sell-off also had to do with the fact that Nvidia had been trading at an elevated valuation, making it more vulnerable to a correction. Even after the sell-off, the stock still trades at about 41 times forward earnings, which may end up looking like a discount someday. For now, though, I'd recommend buying Alphabet over the AI chip king. Alphabet is still dealing with the overhang of the Justice Department lawsuit, but I don't expect it to have to sell its Chrome browser. Furthermore, the stock only trades at about 22 times forward earnings, and that price may not be giving the company any credit for its AI businesses.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Nvidia vs. Alphabet: Which artificial intelligence (AI) stock should you buy after the emergence of China's DeepSeek? appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Bram Berkowitz has no position in any of the stocks mentioned. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet and Nvidia. The Motley Fool Australia has recommended Alphabet and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.