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

Tesla (NASDAQ: TSLA) has been a fantastic stock for long-term investors, with returns exceeding 3,100% over the past decade. However, the company currently faces significant headwinds, as sales of its electric vehicles (EVs) are slowing, costs are rising, and it places big bets on unproven markets including robotics and autonomous vehicles (AVs).

It's no surprise, then, that many investors are trying to determine what to do with Tesla stock. Is it a good time to buy with its shares priced under $500, or is it too early to take a risk on the company transitioning toward future technologies when its EV business is slumping?

Here are three reasons why I believe it's best not to buy Tesla stock right now. 

1. Expenses are rising fast

Tesla CEO Elon Musk is transitioning his company toward an autonomous vehicle and robotics company. The idea is for Tesla to mass-produce its Optimus robots -- up to 1 million by 2030 -- and for the company to vastly expand its fledgling robotaxi service that's currently only in a handful of cities. It's worth noting Musk said in July the service would cover half the country by the end of the year, which is now, and it's nowhere near achieving this.

There's nothing wrong with Tesla focusing on these two opportunities, considering that AVs could eventually be worth $1.4 trillion by 2040, and humanoid robotics will be worth an estimated $5 trillion by 2050.

But to achieve its goals, Tesla is spending heavily, and it's likely to increase from here. The company's operating expenses rose by 50% to $3.4 billion in the third quarter, and research and development (R&D) costs jumped 57% to $1.6 billion. Management specifically said the operating cost increase was "driven by SG&A [selling, general, and administrative], AI and other R&D projects."

For Tesla to expand into nascent robotics and AV markets, additional billions of dollars will need to be spent at a time when the company's core business -- selling electric vehicles -- isn't doing so hot.

2. Tesla's core business is suffering

It's easy to get caught up in Tesla's big plans to be an autonomous vehicle and robotics company, but Tesla is still primarily an electric vehicle company right now. Unfortunately, business is not so good.

Tesla's net income fell 37% to $1.4 billion in the third quarter, leaving the company with significantly less money to reinvest in the business.

Things could be getting worse, too. Following the expiration of the federal EV tax credits, Tesla's vehicle sales fell below 40,000 in November -- its lowest monthly sales in years. Tesla's third-quarter results temporarily received a boost as customers rushed to take advantage before credits expired at the end of September, which helped lift Tesla's revenue 12% to $28 billion in the quarter.

However, the November vehicle sales numbers indicate that Tesla and other EV manufacturers have a significant problem on their hands. EVs often cost more than traditional gas-powered vehicles, and after years of inflation and high interest rates, and no more tax credits, there's less demand for EVs than in the recent past.

This would be a significant problem on its own for Tesla, but it's compounded by the fact that the company is spending so much to move into robotics and AVs.

3. Its stock is expensive

Even if Tesla somehow pulls off its transition to AVs and robotics and turns around its stumbling EV business, it doesn't eliminate the fact that investors are paying a high premium for a company as it makes risky moves.

Tesla's shares currently have a price-to-earnings ratio of 206, far above the tech sector's average P/E ratio of about 45.

This means Tesla's stock is already priced for perfection at a time of significant transition, falling profit, and increasing expenses. That's too risky for my liking, even if Tesla eventually achieves its goals. I think investors are better off not buying Tesla stock right now, at least waiting until the company can prove that it can reinvigorate sales and earnings from its electric vehicle business.

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

The post Should you buy Tesla while it's below $500? 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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Chris Neiger 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.

Nvidia (NASDAQ: NVDA) has been one of the biggest successes in artificial intelligence (AI) over the past five years, as the company's sales and earnings have skyrocketed due to demand for its AI processors. The increasing need for the company's semiconductors has fueled the company's share price rise, pushing Nvidia stock up more than 1,200% over the past five years. 

Spoiler alert: The next five years are unlikely to bring similar results. However, Nvidia and its shareholders are likely to still benefit significantly. Here's why: 

1. AI semiconductor demand is still very high

Before Nvidia reported its fiscal third-quarter results, investors were on edge. The market had been wondering if all the talk of an AI bubble was true.

It turns out, there's still plenty of demand for Nvidia's processors. The company's data center revenue rose 66% in the quarter to $51.2 billion. What's more, Nvidia's non-GAAP (adjusted) earnings per share popped 60% to $1.30, outpacing Wall Street's consensus estimate of $1.25.

While Nvidia's strong quarterly results didn't necessarily disprove that some parts of the AI market are overvalued, it certainly proved that demand for the company's semiconductors remains very high.

2. More spending is likely on the way

Nvidia's impressive third-quarter results are, of course, just a snapshot of what's happening with the company at the moment. However, it's also likely an indicator of what the company may continue to experience over the next few years.

Nvidia CEO Jensen Huang has said that tech companies will invest $3 trillion to $4 trillion over the next five years as they continue to build out their artificial intelligence infrastructure. And before you write this off as just another optimistic tech CEO pumping up his own company's opportunity, consider that Alphabet, Meta Platforms, Amazon, and Microsoft are collectively spending $380 billion in capital expenditures (capex) this year. Much of that spending is going to data center investments, and Alphabet's management has said it will "significantly increase" its spending next year.

Even if Huang's estimate turns out to be a little optimistic, the tech companies building AI have committed billions of dollars in new spending and could continue to do so for years.

3. A slowdown in spending won't spell doom for Nvidia

This might be an unpopular opinion, but I don't think slowing AI spending will be all doom and gloom for Nvidia. Yes, its share price could slide once tech companies scale back their initial AI investments. However, over the long term, I believe Nvidia's processors will continue to be in demand.

Consider that the company has 90% of the AI data center market for GPUs. The initial surge in building AI data centers with Nvidia's GPUs is what the company is experiencing now. But over time, tech companies will need to update their data centers and upgrade them with newer, more powerful processors.

This means that Nvidia has a longtail benefit from all of these data centers being built. When spending slows, it doesn't mean it will dry up completely. And as the leading provider of AI GPUs, Nvidia is likely to remain the go-to choice for future data center upgrades for years to come.

Nvidia is a buy-and-hold stock for the long term

There's certainly a lot of exuberance in the market for AI stocks right now, and some of it is unwarranted. Numerous AI companies lack impressive sales and are unprofitable, yet they are trading at very frothy valuations.

However, Nvidia is still experiencing significant growth in AI, and companies continue to invest substantial funds to stay competitive in this space. The result of this is that Nvidia stock could continue climbing over the next five years.

Don't expect the explosive gains from the past few years, but it's certainly too early to ignore this dominant AI company.

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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Chris Neiger 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, Meta Platforms, 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 Alphabet, Amazon, 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.

At the start of this year, Tesla (NASDAQ: TSLA) had a share price of $428, but as CEO Elon Musk spent more and more time working for the Trump administration running the Department of Government Efficiency (DOGE) and less time at his automotive company, Tesla's stock began faltering.

It's regained some momentum since Musk left Washington and returned his attention to Tesla, but the EV stock is still down about 20% this year, with a price per share of $325 as of June 16.

The recent pullback likely has some investors wondering whether now is a good time to buy Tesla. Here's a quick comparison of the company's pros and cons -- and why it's probably best to hold off on buying the stock right now.

Pros: Robotics and AVs could be huge

Musk often sets lofty goals for his companies that can sometimes seem (or are) outlandish. While Tesla can often miss deadlines for launches, there's no denying the company has succeeded in the electric vehicle market when most were saying it would fail.

That's why when Musk says Tesla's future is in robotics and autonomous vehicles, you should probably take him seriously. And there's plenty of money to be made from both.

Analysts from Morgan Stanley believe the humanoid robot market could be worth $5 trillion by 2035. Musk believes Tesla could grab 10% market share, and it's well on its way toward being a key player, with the goal of producing 5,000 of its Optimus bots this year and 50,000 next year.

Will it miss that goal? Probably. But the deadline isn't the point; it's that Tesla is moving steadily toward its robotics future.

This leads us to autonomous vehicles (AVs). Tesla was supposed to launch its Robotaxi service in Austin, Texas, this month, only to delay the launch. While it's easy to dismiss this as another Tesla deadline blunder, the bigger picture is that Tesla wants to both build its own autonomous vehicles and allow Tesla owners to rent out their vehicles for AV services.

Tesla is betting that its EVs will be able to tap into this massive $2 trillion (by 2030). While it's behind some competitors, namely Alphabet's Waymo, it's not a ridiculous thought that the leading EV company in the U.S. could carve out a niche in the still-nascent AV market as well.

Cons: Falling vehicle sales, unproven markets, and lack of focus

Despite Tesla's potential, serious concerns remain. First, Tesla is stumbling when it comes to its core business: selling electric vehicles. Automotive revenue tumbled 20% in the first quarter of 2025, and net income plunged 71% to just $0.12 per share.

The most likely reason was the significant brand damage done when Musk took a position at DOGE and aligning himself with some ideas that didn't sit well with existing and potential customers. It's difficult to predict if Tesla can rebuild its brand or how long it might take. That's obviously not good for sales or its stock price.

Additionally, its tarnished brand has occurred at a time when sales of EVs are stalling in the U.S. amid tariff concerns, rising prices, and a lack of EV charging infrastructure. What's more, rising EV competition abroad is chipping away at Tesla's dominance in foreign electric vehicle sales. Competitors like China-based BYD are outpacing Tesla in multiple markets, especially China.

If all of that weren't enough, Tesla betting its future on robotics and AVs is a bit of a gamble. These are two largely unproven markets, and there's no guarantee that even if Tesla succeeds in building the right technology, demand for its humanoid bots or self-driving cars will be there.

The verdict: Take a wait-and-see approach

If you're on the fence about buying Tesla, I think it's better to wait to see how the company's autonomous vehicle plans and robotics opportunities unfold. What's more, the Tesla brand needs some polishing, and Musk needs to prove he can focus on his company rather than politics.

Vehicle sales need to rebound, net income needs to grow, and Musk has to show he can stay focused on one thing at time before I'd feel comfortable buying Tesla stock right now. That doesn't mean it won't succeed at its AV and robotics ambitions, but the company has a lot to prove at the moment.

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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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended BYD Company. The Motley Fool Australia has recommended Alphabet. 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 tech giant Microsoft (NASDAQ: MSFT) spiked this week after the company reported better-than-expected revenue and earnings in its fiscal third quarter. The company's Azure cloud computing service and Microsoft 365 products are firing on all cylinders, which was welcome news to investors, many of whom have lost their appetite for some tech stocks as of late.

With the company's impressive quarterly results, Microsoft stock was up by 9.5% this week, according to data compiled by S&P Global Market Intelligence.

Cloud sales are spurring Microsoft's growth

Microsoft's sales were up 13% from the year-ago quarter to $70 billion, easily beating Wall Street's consensus estimate of $68.4 billion for the quarter. The company's earnings of $3.46 per share also topped estimates of $3.22, representing an 18% jump year over year.

One of the biggest standouts from the quarter was Microsoft's "Azure and other cloud services" revenue, which surged 33% from the year-ago quarter.

Microsoft CFO Amy Hood said on the earnings call:

We continue to see strong demand for our cloud and AI offerings, as they help customers drive productivity, increase efficiencies, and grow their businesses. And, again this quarter, revenue from our AI business was above expectations.

The company's Microsoft 365 software sales also experienced impressive growth, with its commercial sales rising 11% and consumer sales increasing by 12%.

What management is expecting in the current quarter

Microsoft said on the earnings call that it expects Azure revenue to continue growing in the fourth quarter, with sales expected to increase by 34%. And based on estimated revenue growth from each of Microsoft's segments, total revenue for the current quarter should increase by 14% from the year-ago quarter.

This strong outlook put many investors' fears to rest about whether the company could be impacted by a potential economic slowdown. Microsoft CEO Satya Nadella answered a question about how the company might handle a recession, saying:

... I think if you buy into the argument that software is the most malleable resource we have to fight any type of inflationary pressure or any type of growth pressure where you need to do more with less, I think we can be super helpful in that.

These positive comments and the company's strong third-quarter results have reassured Microsoft investors that the company is on the right track and may be able to weather a potential economic slump, should one occur.

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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Chris Neiger 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 Microsoft. 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 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.

There aren't many technology companies that can claim they've been a leader in artificial intelligence (AI), but Microsoft (NASDAQ: MSFT) can do so easily. The tech giant made early investments in OpenAI, giving it early access to ChatGPT, and has been quick to implement AI into its products and services.

But even with Microsoft's moves, the company's share price has tumbled about 9% over the past six months. A general sense of concern for the economy may be fueling the drop, but rising competition in the AI space from smaller AI companies, including DeepSeek, may be fueling pessimism that large tech companies will remain on top of the AI hill.

So what should investors think of Microsoft right now? I think there are a couple of compelling reasons why Microsoft stock is a buy.

Microsoft has successfully integrated AI into its cloud business

Microsoft's early move to integrate AI into its cloud offerings is already paying off. In the first quarter (which ended Jan. 29), Microsoft's Intelligent Cloud revenue jumped 20% to $24.1 billion, driven in part by a 33% jump in Azure cloud sales.

This is notable because Microsoft is the second-largest cloud infrastructure company, behind Amazon. Microsoft has been gaining on Amazon for years and now has 21% of the market, compared to Amazon's 30%.The cloud was important before artificial intelligence came along, but AI has vastly expanded its value. Goldman Sachs estimates global AI cloud revenue could reach $2 trillion just five years from now.

Microsoft CFO Amy Hood said on the earnings call that Azure's AI service jumped an impressive 157% from the year-ago quarter, saying the growth "was ahead of expectations even as demand continued to be higher than our available capacity."

All this should give potential investors an idea of just how successful Microsoft has been in integrating AI into its cloud services and how it's positioning itself to benefit from this segment for years to come.

Microsoft has a massive opportunity in the AI agentic era

In addition to Microsoft's current benefits from AI cloud computing, the company is tapping into the fast-growing AI agent space. AI agents can perform tasks with relative autonomy, like making reservations or fielding customer service calls, and Microsoft is already seeing the benefits.

More than 160,000 organizations have already used Microsoft's Copilot Studio to help build 400,000 AI agents in the first quarter alone, up more than 2X from the year-ago quarter.

That's helped Microsoft's 365 service grow, with Microsoft CEO Satya Nadella saying on the recent earnings call, "We are seeing accelerated customer adoption across all deal sizes as we win new Microsoft 365 Copilot customers and see the majority of existing enterprise customers come back to purchase more seats."

While we're still in the early innings of agentic AI, Nvidia CEO Jensen Huang believes it could be a "multitrillion-dollar opportunity." Microsoft considers its 365 Copilot platform the "UI for AI," meaning the user interface for how people interact with AI, and users' rapid adoption of Microsoft's platform for building AI agents shows just how well the company is tapping into this fast-growing, potentially lucrative space.

OK, but is Microsoft stock a buy based on all of this?

As a leading cloud computing company that's rapidly expanding its AI offerings and a dominant services company that's successfully growing its AI agent tools, I think Microsoft is a compelling AI stock to buy right now.

The stock looks even more attractive considering it's down about 9% over the past six months. This is giving investors an opportunity to pick up Microsoft shares at a relative discount. The company's stock now has a forward price-to-earnings multiple of about 26.3, down from 33.6 at the beginning of the year.

Therefore, investors looking for a clear AI leader that's taking a breather in the market right now should consider starting a position in Microsoft before some of these AI tailwinds kick in.

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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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Goldman Sachs Group, 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 Amazon, 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.

Some investors are looking closely at the stocks they own and asking themselves if they could weather an economic slowdown. U.S. President Donald Trump's threats of tariffs against trading partners and recent comments by the Federal Reserve about uncertainty in the economy are sparking fears.

Amazon (NASDAQ: AMZN) investors aren't immune from the concerns. Amazon's stock has tumbled 8% since the beginning of the year. But is the sell-off an overreaction?

Let's consider some of the hurdles Amazon could face over the next 12 months, as well as some likely ways the company may continue growing.

The pessimistic outlook for Amazon

Some economists are concerned that President Trump's potential willingness to start trade wars could eventually tip the U.S. into a recession. J.P. Morgan recently changed its prediction on the probability of a recession occurring this year, from 30% likelihood to 40% currently.

Federal Reserve Chair Jerome Powell recently added some fuel to the recession fears fire when he said that economic "uncertainty is remarkably high." Consumer spending fell for the first time in nearly two years in January, indicating that Americans are pulling back on purchases.

Amazon's largest business by revenue is its North American e-commerce sales. That segment brought in $115.6 billion in sales in the fourth quarter, a 10% increase from the year-ago quarter. But consumer spending is moderating and consumer confidence is weakening, according to the Fed. If a full-blown recession or even a slowdown occurs, it could result in Americans tightening their belts further.

The optimistic view of Amazon

While there are legitimate concerns about consumer spending slowing this year, there's no guarantee it'll affect Amazon's top or bottom lines. Amazon is a resilient company, even during dismal economic times.

For example, the company's sales rose 29% during the 2008 financial crisis, and in the first year of the COVID pandemic, its revenue increased 22%. People can buy nearly anything they need on Amazon's marketplace. During downturns, customers may shift their spending habits on the platform, but not abandon it entirely.

Amazon holds a dominant e-commerce position, with about 40% market share. That easily outpaces its closest rival, Walmart, which has about 5% of the market. Americans aren't likely to stop buying goods online even during a recession, so this strong position gives Amazon the upper hand in riding out a slowdown.

And while I've focused mostly on Amazon's e-commerce business, the company makes half of its operating income from its cloud computing services, Amazon Web Services (AWS). This segment should help fuel Amazon's growth, because companies are ramping up artificial intelligence cloud computing spending.

Goldman Sachs estimates that global AI cloud computing sales will reach $2 trillion over the next five years, and Amazon is sure to benefit. The company holds 30% of the cloud market, with Microsoft in second place with 21%. Companies are locked in an AI race right now, and even a downturn is unlikely to stop them from spending to stay ahead of the competition.

The most likely scenario

I don't think Amazon is immune from a severe economic slowdown, but the company's dominant position in cloud computing and e-commerce can likely soften the blow if a recession occurs.

More importantly, long-term investors should remember that buying a stock means you have an optimistic outlook for the company for many years to come. Even if we get a slowdown, Amazon's shares are cheaper than they were just a few months ago.

Buying the stock now, at a discount, could prove to be a smart move even if there's more uncertainty down the road. Amazon's lead in cloud computing and e-commerce isn't going away anytime soon.

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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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of Motley Fool Money. Chris Neiger 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 Amazon, Goldman Sachs Group, JPMorgan Chase, Microsoft, and Walmart. 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 Amazon 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.

The artificial intelligence (AI) race is well underway, but many AI stocks have taken a breather over the past few months. AI processor company Nvidia (NASDAQ: NVDA) is no exception. The company's shares tumbled 10% since the beginning of the year as the Trump administration threatened tariffs against trading partners, sparking worries of an economic slowdown.

That's left many investors wondering where Nvidia is headed over the next year. Predicting where any company will be in 12 months is more of a thought experiment than an exact science.

As such, let's look at two scenarios: one in which Nvidia suffers under broader economic pressures, and the other in which it stays the course, continuing to ride the AI wave it's been on.

The pessimistic outlook for Nvidia

There are some darkening clouds on the U.S. economy's horizon. First, increasing tariff concerns are making companies very nervous. Many companies recently reported quarterly earnings, and some of them cited economic worries as a reason why they're forecasting slower growth for the upcoming quarters.

While inflation is still slowing, there are real concerns that as tariffs kick in they could send consumer prices higher. That's led some economists to start using the "R" word recently, with JPMorgan predicting a 40% chance of a recession this year.

Even fast-growing companies like Nvidia aren't immune to recessions, and if one materializes, the company's growth could hit the brakes. Nvidia's data center sales rose 93% in the fourth quarter to $35.6 billion, but that was slower than growth of 112% in the previous quarter. That's a minor slowdown, but some investors worry more could be on the way.

But it's not just the economy that has some investors worried. When China-based AI company DeepSeek revealed its chatbot several months ago, it left some tech experts wide-eyed. DeepSeek used a far less powerful Nvidia processor to train its model, seemingly throwing cold water on the idea that the most powerful processors are necessary for AI's growth.

While most tech companies seem committed to their data center spending, any more news that DeepSeek or other small AI start-ups can build comparable AI models for less might lead to large tech companies trying to do the same and spending less on Nvidia's most advanced processors.

Finally, another potential threat comes from the U.S. government's restriction on AI chip exports. The U.S. is trying to maintain the lead in AI, and part of the strategy is to prevent other countries from having the best chips. As mentioned, DeepSeek may have proved this theory to be incorrect, but applying the restrictions nevertheless could hurt Nvidia.

An estimated 56% of the company's revenue comes from outside the U.S., with 17% coming from China. President Donald Trump is continuing to enforce the chip export restrictions that former President Joe Biden put into place, and it's uncertain how much this could slow Nvidia's sales.

The optimistic outlook for Nvidia

Don't hit that sell button just yet. Despite legitimate concerns about tariffs, chip sales, and a generally pessimistic view of tech stocks right now, some massive trends could continue to fuel Nvidia's growth over the next year and beyond.

First, even with the DeepSeek fears, tech giants have not pivoted to cheaper processors, and they haven't backed off the gas of data center investments. In fact, over the past several months, many large tech companies committed to spending hundreds of billions of dollars to build new data centers. Alphabet and Meta Platforms alone have said their combined capital expenditures (capex) spending will reach $215 billion, a 45% jump from the previous year.

Similarly, Oracle, OpenAI, and SoftBank recently said they'll spend up to $500 billion over the next four years to build AI data centers in the U.S. in a joint venture titled Stargate. This spending seems to confirm Nvidia CEO Jensen Huang's estimate that tech companies could spend up to $2 trillion on data centers over the next five years.

Nvidia is perfectly positioned to continue to benefit from this spending, as the company holds an estimated 70% to 95% of the AI accelerator market for processors. That lead can't be quickly overcome by Nvidia's rivals.

Additionally, Nvidia continues to innovate and release new products. The company's newest AI processor, the Blackwell lineup, has had the "fastest product ramp" in Nvidia's history, according to management. Blackwell sales accounted for $11 billion in sales in the fourth quarter, 31% of data center sales, showing that the company's latest processors continue to be a catalyst for growth.

And finally, consider just how big the artificial intelligence opportunity is. This isn't just a short-term trend -- companies of all sizes are reorienting themselves around it. Research from PwC estimates AI could generate $15.7 trillion of GDP globally just five years from now.

The point is that even if an economic slowdown materializes, it's highly unlikely it'll derail AI's growth. The technology is too big to ignore, and companies are too afraid of falling behind for them to back away from it in any significant way.

Which scenario is more likely?

While there are short-term concerns about the economy and tariffs, I think AI's long-term prospects will continue to fuel Nvidia's growth over the coming year and beyond.

That doesn't mean Nvidia's share price won't fall further as the market reacts to legitimate concerns, but tech companies are leaning so far into building advanced AI that Nvidia still likely has more room to grow.

Nvidia's CEO thinks future AI models will need 100 times more computing power than current ones do. Even if he's right by just a fraction of that amount, Nvidia's AI processors likely have plenty of bright days 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.

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

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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. JPMorgan Chase is an advertising partner of Motley Fool Money. Chris Neiger 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, JPMorgan Chase, Meta Platforms, Nvidia, and Oracle. The Motley Fool Australia has recommended Alphabet, 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.

Amazon's (NASDAQ: AMZN) share price is up 38% over the past three years, making its returns nearly identical to the S&P 500's over the same time frame. Beating the market is the long-term goal of many investors, so it's understandable why some may be wondering what's the best course to take with Amazon right now.

I think there are several compelling reasons why holding onto your Amazon stock if you have it or buying shares now could still be a great strategy. Here are three reasons to buy (or continue holding) Amazon stock in 2025.

AI cloud computing is just getting started

Some investors were disappointed by Amazon's recent fourth-quarter results, in which the company's Amazon Web Services (AWS) revenue of $28.79 billion slightly missed Wall Street's consensus estimate of $28.84 billion. Still, AWS sales were up 19% from the year-ago quarter and the segment accounted for 50% of Amazon's total operating income.

I think investors who reacted negatively missed the bigger picture with Amazon and its cloud opportunities. AWS is still the leading cloud provider, with 31% of the market share, ahead of Microsoft with 20%.

That puts Amazon in an amazing position to benefit as demand for artificial intelligence (AI) cloud computing grows. Companies are in a race to have the most capable AI services and Goldman Sachs estimates that AI cloud revenue could reach global sales of $2 trillion by 2030. As the undisputed leader in cloud computing, Amazon should be able to tap into the surge of AI cloud services.

Amazon still dominates e-commerce

While plenty of retailers have made strides in their e-commerce offerings, they still fall short of Amazon's dominance. The company has about 40% of the U.S. e-commerce market, compared to rival Walmart's 7%.

And the company continues to improve its platform and delivery network to make shopping even better for customers. Amazon delivered over 65% more items to its Prime members on the same day they ordered or overnight in the fourth quarter of 2024 compared to a year earlier. It also had a record-breaking Black Friday week and Cyber Monday event last year.

The result was that North American sales jumped 10% in the fourth quarter to $115.6 billion and operating income from the segment rose 43% to $9.3 billion.

E-commerce accounted for about 16% of all retail sales in the U.S. last year and will increase to 20% by 2028, according to eMarketer. With Amazon's leading position and more e-commerce growth on the way, the company is poised to benefit.

Advertising continues to be a winner

It's worth mentioning briefly that Amazon's advertising business continues to expand. Ad sales rose by 18% in the fourth quarter to $17.3 billion. To put that in perspective, Amazon had just $12.6 billion in annual ad sales in 2019.

Amazon will take about 15% of the digital advertising market this year, according to estimates from Statista, making the company an increasing threat to other online ad companies. Amazon's ad revenue topped $56 billion in 2024 and management says its ad revenue will have an annual revenue run rate of $69 billion this year.

While it's not Amazon's most important business, it's become a healthy addition to the company's growing dominance across new markets.

Is there a case to sell Amazon?

I don't think there's much of a case for selling Amazon stock right now. Of course, there are always legitimate financial reasons for selling a stock, like buying a home or paying for a child's tuition.

Amazon continues to benefit from its core e-commerce and cloud computing businesses and has increasing opportunities from smaller segments like advertising. Since the company is a clear leader in its respective markets, buying Amazon (or holding what you have) still looks like a smart move.

And while the stock isn't exactly cheap -- it trades at a forward price-to-earnings multiple of 32.3, compared to the S&P 500's 23.8 -- it's still relatively well-priced considering the company's long-term prospects.

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

The post Is Amazon a buy, sell, or hold in 2025? 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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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Goldman Sachs Group, Microsoft, and Walmart. 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 Amazon 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.

Technology companies of all shapes and sizes have bet their futures on artificial intelligence (AI). The shockwave felt by nearly everyone after the release of OpenAI's ChatGPT was the catalyst for the current AI land grab, and subsequent releases of its model, as well as other advanced models released by competitors, are fueling an all-out king-of-the-hill battle among tech giants.

Among the top contenders is semiconductor company Nvidia (NASDAQ: NVDA). Once an obscure name among more well-known tech companies, Nvidia has bolted to the top of many investors' buy lists and jockeys for the most valuable company title with Apple.

There's a risk of choosing Nvidia as a top AI stock for the next decade simply because it's been a big winner over the past few years. But there's also a risk in ignoring the company's clear advantages in the AI market and settling for lesser AI stocks.

Here's why I think Nvidia may go the distance over the next 10 years.

All the components to make a long-term AI leader

Nvidia designs some of the world's most advanced processors. It doesn't manufacture them (check out Taiwan Semiconductor if AI chip-making is your thing) but instead uses a fabless semiconductor model, designing chips that have become integral to the tech industry.

Nvidia's processors account for an estimated 70% to 95% of AI chips, giving the company a massive lead among competitors like Advanced Micro Devices. To stay a few steps ahead of its rivals, Nvidia continues to release new AI chips that tech companies are knocking down its doors to get their hands on.

For example, its Blackwell processor is the next iteration of its AI processor, and Nvidia's CFO, Colette Kress, said on a recent earnings call that the company is ramping up production to keep up.

"Blackwell demand is staggering, and we are racing to scale supply to meet the incredible demand customers are placing on us," Kress said. With its lead already well-established and the company continuing its history of releasing advanced AI processors that outpace rivals and satisfy customers, it's likely there are many more years ahead for Nvidia's growth.

A data centre market that's primed for growth

Having in-demand chips right now is one thing, but parlaying that opportunity into a years-long opportunity is quite another. That's why the massive data centre market is such an important factor for Nvidia.

Nvidia CEO Jensen Huang estimates that data centre spending will accelerate over the next few years as companies aim to dominate AI in cloud computing and develop AI models. Huang said a few months ago that technology companies could spend up to $2 trillion over the next five years as they try to race ahead of each other.

That's a huge number to get your head around, but the largest tech companies are already showing their hand with AI data centre spending. Consider that OpenAI, Oracle, and Softbank recently launched Stargate, a data centre infrastructure plan that involves spending up to $500 billion over the next few years.

And other tech leaders vying to be the king of the AI hill are doing the same. Microsoft just said on its latest earnings call that it would spend $80 billion this year alone on data centre infrastructure, and Meta CEO Mark Zuckerberg said his company is shelling out $65 billion this year. Alphabet, another key AI player, says it'll spend $75 billion this year on AI data centres.

Naysayers will point out that smaller AI start-ups will spend far less and still develop advanced AI models without the need for Nvidia's most advanced processors. DeepSeek shed light on this recently when it released an impressive AI chatbot despite the company's limited resources.

But the long and short of it is that the world's biggest tech companies can't afford to not invest in the best data centres with the most advanced processors. There's too much at stake for them in the $15.7 trillion AI market (by 2030) for them to bootstrap their AI efforts. That bodes well for Nvidia and its AI processors in the coming years.

Nvidia comes out ahead no matter who wins the AI wars

Nvidia isn't the cheapest AI stock, with a forward price-to-earnings (P/E) ratio of 30.6. However, the company has proven that it's a unique leader in the AI processor segment and poised to benefit as tech companies duke it out for AI dominance.

There's no way to guarantee Nvidia's success over the next 10 years, but considering its current position in the market, its ability to continue to attract customers, and the all-out sprint tech companies are making to outpace each other in data centre prowess, Nvidia looks like one of the best AI stocks around.

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

The post Why Nvidia stock could be the best investment of the decade appeared first on The Motley Fool Australia.

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Chris Neiger has positions in Apple. 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. 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, Apple, Meta Platforms, Nvidia, Oracle, and Taiwan Semiconductor Manufacturing. The Motley Fool Australia has recommended Alphabet, 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.

The electric vehicle market is getting crowded as traditional automakers release new EV models and new start-ups expand their position in the market. The result has been a rise in EV sales, which jumped 7% in the U.S. last year.

But finding a long-term winner among EV stocks isn't exactly easy right now. The share prices of many companies have fallen over the past few years as investors have tried to figure out how quickly EVs might replace traditional autos.

That's left some people wondering whether established EV maker Tesla (NASDAQ: TSLA) or start-up Rivian (NASDAQ: RIVN) is a better buy. Here's the case for each.

The case for Tesla

The case for Tesla is pretty straightforward, considering the automaker is a leader in EVs. Tesla has 18% of the battery electric vehicle market, though competition among Chinese automakers and EV start-ups is rising.

Tesla's early lead in electric vehicle manufacturing continues to pay off, allowing it to weather rising material costs, component shortages, and other hiccups that derail smaller EV companies.

There are legitimate criticisms of Tesla, including that some of its model lineup is a little long in the tooth and a promised cheaper EV model has yet to materialise. Tesla CEO Elon Musk has said that a cheaper model could launch later this year, but details are sparse.

However, Tesla also has new growth opportunities in the pipeline. Musk recently debuted the company's Robotaxi, which will be part of an upcoming Tesla ride-hailing service. Some estimates put the global autonomous ride-hailing market at $480 billion by 2032, and big investments from Alphabet's Waymo and Nvidia indicate this space is heating up.

It's worth pointing out that Tesla recently reported disappointing fourth-quarter results. Its total sales rose just 2% to $25.7 billion, while automotive revenue declined 8% to $19.8 billion. Tesla said reduced average selling prices for its Model S, Model X, Model 3, and Model Y resulted in lower revenue in the quarter.

The case for Rivian

Rivian makes impressive EVs that have caught the attention of automakers and customers. The company's brand has topped Consumer Reports' list for owner satisfaction -- among all automakers, not just electric vehicle companies -- and both Volkswagen and Amazon have invested billions into Rivian.

Rivian's vehicle production fell 13.5% in 2024 to 49,476 vehicles, and deliveries rose by 3% to 51,579.But management recently said that some of the component shortages that limited production last year have been fixed.

Rivian expects its first gross profit in the fourth quarter (which will be reported on February 20). Rivian cut material costs for its lineup last year and re-engineered some of its production to lower expenses.

There's no denying that Rivian has a long road ahead. The company had a net loss of $1.1 billion in the third quarter, and production needs to ramp up to narrow the gap. But there are also bright spots for the company.

Rivian will launch its new, smaller R2 SUV in the first half of 2026, and a small R3 crossover vehicle is also on the way. The R2 will start at $45,000, much cheaper than the current starting price for its R1S, which is $75,900. This should expand Rivian's customer base, attracting far more customers with smaller budgets.

The company also recently started a joint venture with Volkswagen, allowing the established automaker to use electric architecture and in-vehicle technology for future vehicles. Rivian will receive up to $5.8 billion in investments, equity, and loans.

The partnership indicates that Rivian is more than just another EV start-up trying to carve out its niche; it's also attracting sizable investments from established automakers that see its potential.

The better EV stock depends on your goals

These two companies are in different chapters of their EV story. Tesla is well-established, profitable, and ahead of many competitors. Rivian, on the other hand, is just getting started. It's difficult to compare them directly.

I think there's a case for owning both, but they each require some compromises. For example, Tesla's share price gain of 100% over the past 12 months (as of this writing) means the stock's forward price-to-earnings ratio is a very pricey 115.

Meanwhile, Rivian is a very speculative EV investment as the company tries to increase production and fend off other EV start-ups. The company's success is anything but guaranteed, yet I think its strong brand, management's focus on cutting costs, and partnerships make for a compelling reason to own its stock (which I do).

In other words, if you're OK with paying a premium for an EV stock, then choose Tesla. But if you'd rather invest in an EV start-up with the potential to carve its own path in the electric vehicle market, Rivian is a great option.

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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Chris Neiger has positions in Rivian Automotive. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, 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, Amazon, and Tesla. The Motley Fool Australia has recommended Alphabet and Amazon. 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, the longtime CEO of Berkshire Hathaway, oversees a portfolio of investments worth nearly $292 billion. His success in the market over decades continues to captivate the attention of investors hoping to find winning stocks based on his picks.

While replicating Warren Buffett's success isn't possible, there are a handful of his investments that are no-brainer buys no matter what type of investments you're looking for. Here are two of them.

1. Amazon

Berkshire Hathaway added Amazon (NASDAQ: AMZN) to its portfolio in 2019 and currently owns 10 million of the company's shares. Two compelling reasons to buy Amazon right now are the company's dominance in the retail space and its lead in cloud computing.

Amazon holds 40% of U.S. e-commerce market share, far outpacing rival Walmart with just 7.4%, according to eMarketer.

Amazon's massive marketplace generated $95.5 billion in North American revenue in the third quarter (which ended Sept. 30), an increase of 11%. Even more impressive is that the company's total operating income spiked 55% to $15.3 billion.

Additionally, Amazon continues to benefit from its impressive cloud computing business. Amazon Web Services (AWS) sales rose 19% to $27.5 billion in the third quarter and there's likely more growth ahead. AWS is the leading cloud computing company with 31% of the market and Goldman Sachs estimates cloud computing will become a $2 trillion market by 2030, fueled by artificial intelligence (AI) growth.

While Amazon's stock isn't cheap, with a price-to-earnings (P/E) ratio of 45, the company's dominance in the U.S. e-commerce and cloud computing markets continues to make it a compelling investment opportunity.

2. Vanguard S&P 500 ETF

I know putting an exchange-traded fund (ETF) on this list might not be exactly what some readers were expecting. Still, the Vanguard S&P 500 ETF (NYSEMKT: VOO) deserves to be here for several reasons, most importantly because Warren Buffett recommends that most investors own an index fund.

S&P 500 index funds track the growth of the largest 500 publicly traded companies on U.S. stock exchanges. This means that the index fund benefits when the broader market is doing well, no matter what sector is growing. It's one of the easiest ways to invest.

"In my view, for most people, the best thing to do is to own the S&P 500 index fund," Buffett said at the Berkshire Hathaway 2020 annual meeting.

Berkshire Hathaway's large portfolio even includes 43,000 shares of the Vanguard S&P 500 ETF. So, why is one of the world's most successful investors so bullish on S&P 500 index funds? Because they're hard to beat.

Data from Morningstar shows that over the past decade, just 29% of actively managed funds beat their passive-indexed peers. They're also cheap. The Vanguard S&P 500 ETF has a very low expense ratio of just 0.03%.

That means for every $10,000 invested, you'll pay just $3 in expense ratio fees. I can attest to the benefits of the Vanguard S&P 500 ETF, as it's been the largest percentage of my portfolio for years.

For investors looking to follow in Warren Buffett's footsteps, it might be better to follow his advice for most people: Buy an index fund now and hold it for years.

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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Chris Neiger has positions in Vanguard S&P 500 ETF. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, 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 Amazon, Berkshire Hathaway, Goldman Sachs Group, Vanguard S&P 500 ETF, and Walmart. The Motley Fool Australia has recommended Amazon 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.

What happened 

Tesla's (NASDAQ: TSLA) stock was rising this afternoon after Federal Reserve Chairman Jerome Powell said that smaller interest rate hikes will begin in December. 

That news caused market indices to jump -- with the S&P 500 gaining 2.3% and the Nasdaq Composite rising 3.4% -- and they took Tesla's share's along with them. 

The electric vehicle stock was up by 5.3% as of 3:34 p.m. EST. 

So what 

Speaking at the Brookings Institution today, Powell said that the Federal Reserve will likely begin smaller increases to the federal funds rate at its December meeting. 

Powell also said that the Fed's moves, including past interest rate hikes, will take time to slow inflation and that "it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down." 

Investors were very happy to hear that today, and they specifically latched onto Powell's comments when he said that "The time for moderating the pace of rate increases may come as soon as the December meeting." 

Growth stocks like Tesla have been especially vulnerable to the Fed's aggressive interest rate hikes as investors have worried that the Fed will end up pushing the U.S. economy into a recession. 

Tesla CEO Elon Musk has been concerned about exactly that and tweeted earlier today, before Powell's comments were published, about the potential for a recession: 

Trend is concerning. Fed needs to cut interest rates immediately. They are massively amplifying the probability of a severe recession.

-- Elon Musk (@elonmusk) November 30, 2022

Now what

While the Fed isn't cutting rates like Musk hoped, investors are happy to see that the severity of the increases will at least decrease.

But Powell also warned that the Fed has more work to do. "Despite some promising developments, we have a long way to go in restoring price stability," he said today. 

But with central bank officials now indicating that less aggressive interest rate increases could be on the horizon, many growth stock investors are celebrating the news today. 

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

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Chris Neiger 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.

What happened 

A handful of electric vehicle (EV) stocks hit the brakes Monday morning as the optimism that pervaded the market last week began to wane. 

Additionally, several pieces of negative news specific to the EV sector -- including a price target cut for Tesla (NASDAQ: TSLA) and a Barron's column that expressed scepticism about the futures of some EV companies -- contributed to the pessimistic mood shift. 

As of 11:22 a.m. ET, Tesla was trading down by 3.5%, Rivian Automotive (NASDAQ: RIVN) was off by 4.7%, and EV charging company ChargePoint Holdings (NYSE: CHPT) had lost 3.8%. 

So what 

Let's start with the issue that is likely the main concern putting pressure on EV stocks now: persistent inflation. 

Last week, the stock market rallied after the latest inflation report was better than economists had been expecting. In October, the Consumer Price Index increased 0.4% month over month and was up 7.7% year over year, less than the expected sequential increase of 0.6% and 7.9% annually.

That helped the market rally for its best week in nearly five months.

Investors were optimistic that potentially slowing inflation would encourage the Federal Reserve to ease back on its aggressive interest rate hikes. 

But storm clouds returned over the weekend after Federal Reserve Governor Christopher Waller indicated that investors were reading too much into the October inflation report. 

While Waller said the Fed may be at the point where it can consider shrinking the increments of its federal funds rate hikes, he also said that "we're not softening" and added: "Quit paying attention to the pace and start paying attention to where the endpoint is going to be. Until we get inflation down, that endpoint is still a ways out there."

Those comments rained on investors' parade and helped send EV stocks sliding Monday morning.

Adding to some of the EV pessimism was a column published by Barron's over the weekend that asserted that rising inflation and falling share prices could hurt many EV start-ups as they try to raise capital. 

Those concerns could especially be weighing on ChargePoint Holding and Rivian Monday as investors try to gauge how well EV companies will be able to navigate continued supply chain issues and rising costs. 

Finally, investors may also be reacting to Bank of America cutting its share price target for Tesla from $325 to $275. Analyst John Murphy wrote in a research note distributed Monday that supply chain issues will continue to be a problem for the company and the broader electric vehicle industry. 

Now what 

EV stocks have tumbled significantly over the past year -- Tesla fell 44%, Rivian tumbled 74%, and ChargePoint plunged by 51%. 

But Rivian showed in the third quarter that it can continue to increase its vehicle production -- output was up by 67% -- despite the headwinds. And the company still has $13.8 billion cash and cash equivalents on its books, enough to fund its operations through 2025. 

And Tesla's latest results were solid. It increased sales by 56% and earnings by 69% compared to the year-ago quarter, and vehicle production jumped 54% in Q3 to 365,923 vehicles.

ChargePoint investors will get a closer look at the company's financial picture on Dec. 1, when the company reports its results for its fiscal third quarter, which ended Oct. 31. 

But with inflation still high and investors concerned about the potential of a U.S. recession, it's likely that EV stocks could remain volatile in the short term.

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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Chris Neiger has no position in any of the stocks mentioned. Bank of America is an advertising partner of The Ascent, a Motley Fool company. 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.

What happened 

Chinese stocks were tumbling this morning after China's President Xi Jinping broke precedent over the weekend and secured a third term as the country's leader.

Xi's past government policies have been generally unfriendly toward technology companies, and investors are worried that policies enacted by the newly emboldened Xi could hamper tech stocks even further. 

As a result, the share prices of Tencent Music Entertainment (NYSE: TME) dropped 8.3%, the commercial freight platform company Full Truck Alliance (NYSE: YMM) plunged 9.5%, and online education company New Oriental Education and Technology (NYSE: EDU) plummeted 20.5% as of 11:17 a.m. ET. 

So what 

The strong reaction from investors today comes amid the Chinese government's stricter stance toward technology companies over the past few years. The most recent crackdown came just over the summer, when a large group of Chinese tech companies was fined for disclosure violations.

While many countries use governmental oversight of companies, China is particularly strict and enacted significant fines over the past couple of years for violations, including for data protection and antitrust rules. One particularly large fine was levied against Chinese e-commerce giant Alibaba last year for $2.8 billion.

The result of the Chinese tech crackdown has been billions of dollars worth of market value being wiped from tech companies based there. 

Tencent Music, Full Truck, and New Oriental investors are worried that with Xi having secured another term in power, the Chinese government will continue strict policies against companies, which will curb their growth. 

Those worries aren't unfounded, either. New Oriental cut 60,000 jobs at the beginning of this year as sales plunged in response to new rules about online tutoring. Last year the Chinese government put tight restrictions on online tutoring companies, essentially erasing most of the for-profit tutoring market, causing New Oriental's share price to fall 74% in just one month. 

Full Truck Alliance and Tencent Music have faced their own hurdles with the Chinese government. Last year, the government opened up a cybersecurity probe into Full Truck. When that happens, companies aren't allowed to add new users. Also, last year, Tencent Music was ordered by the Chinese government to give up its exclusive music licensing rights, a huge blow to the largest music streaming service in China. 

Now what 

While there's been some recent hope that China will back away from some of its strict policies toward tech companies, the general sentiment among investors right now is worry. 

China is still implementing its zero-COVID policy, which continues to bring companies and parts of the country to a standstill. That will likely continue to cause parts of the Chinese economy to slow down. Additionally, reports show that the current crop of political leaders in China, led by Xi, is not exactly pro-business. 

Tencent Music, Full Truck, and New Oriental investors may want to proceed with caution with these stocks and likely prepare for more volatility as investors anticipate China's strict approach toward technology companies to continue.     

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

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended New Oriental Education & Technology Group. 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.

What happened

Shares of Apple (NASDAQ: AAPL) tumbled today after a Bloomberg report said that the company is walking back plans to boost iPhone production.

This news worried Apple shareholders, sending the tech stock down by 1.27% as of market close.

So what

Apple had originally told its suppliers to prepare for increased production as it anticipated higher demand for its latest iPhone 14 models. But some of that demand for Apple's entry-level iPhone 14 models never materialized, according to sources speaking to Bloomberg.

Now, Apple is expected to cut back on its production by about 6 million phones. That would put the company's production of its latest models at about 90 million units in the second half of this year, which is about the same number of new iPhones it produced over the same period last year.

The pullback in iPhone production is apparently the result of higher-than-expected demand for the iPhone 14 Pro/Max models and lower-than-expected demand for Apple's entry-level iPhone 14 models.

Now what

While Apple investors are reacting strongly to this news today, they should also keep in mind that in early August, a separate Bloomberg article said that Apple was asking its suppliers to produce 90 million units of its new models. So while the company was recently anticipating a surge of demand that didn't happen, it doesn't change what the company had originally expected a little more than a month ago.

Apple shareholders may be extra cautious about this news as the Federal Reserve continues to hike interest rates at an aggressive pace and investors worry that the Fed's move could end up tipping the economy into a recession.

But long-term investors should keep in mind that a temporary pullback in iPhone production isn't a good reason to dump Apple's stock. 

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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Chris Neiger has positions in Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. 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.

Tesla (NASDAQ: TSLA) piqued many people's interest recently when the company filed a form with Texas' Comptroller's Office indicating the electric vehicle maker's interest in building a battery-grade lithium hydroxide refinery.

So far history has shown that it's best not to bet against Tesla's big ideas, so what could the company gain from owning its own battery materials refinery along the Gulf Coast? Only the potential to lower the price of its expensive batteries.

What Tesla is proposing 

Tesla said in the official form that it's considering building a plant that could convert "raw ore material into a usable state for battery production."

The refinery would create battery-grade lithium hydroxide that could then be "packaged and shipped by truck and rail to various Tesla battery manufacturing sites supporting the necessary supply chain for large-scale and electric vehicle batteries."

In short, Tesla is proposing entering the battery materials refinery space, a move that would add to the company's current battery manufacturing capabilities. 

The company said that it could start building the plant as early as the end of this year, with an estimated timeframe for having it operational by the fourth quarter of 2024.

It's worth mentioning that none of what Tesla is proposing is a done deal. The company's official filing for property tax relief for the project is one of the very first steps in the project. Tesla is also exploring an alternative site in Louisiana. 

But with battery costs ballooning over the past couple of years and supply chain shortages constantly causing headaches for the auto industry, Tesla's latest idea could be yet another step toward improving its vehicle production costs. 

How it could help Tesla stay ahead of EV rivals 

Supply chain problems and increasing demand for electric vehicles have pushed up the cost of battery materials, particularly lithium. Battery-grade lithium prices have spiked more than 400% since 2021. 

And demand isn't slowing down. The latest data from McKinsey estimates that global demand for lithium will increase from 500,000 metric tonnes in 2021 to up to 4 million metric tonnes by 2030. 

While Tesla can't control this massive increase in lithium demand, it is trying to control some of the production costs that go into making batteries.

How much Tesla could save still isn't clear, but Tesla is willing to at least entertain the idea of spending a proposed $365 million to build a refinery in order to save on costs down the road. 

A bold move to own more of the supply chain 

There's nothing set in stone about Tesla's new refinery proposal, but it could be the beginning of Tesla moving even further up the supply chain line in battery-making. 

With lithium demand expected to soar over the next decade, Tesla could secure more control over its battery manufacturing with its own refinery. And in the coming years, that could potentially give the company an advantage in the EV space. 

If Tesla can eventually lower some of its battery costs, then it could improve its already-strong profit margins (currently at 13%). That means that while most traditional automakers are still trying to figure out how to catch up to Tesla's enviable margins, Tesla is trying to figure out how to keep expanding them. 

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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Chris Neiger 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.

What happened 

Shares of electric-vehicle (EV) stocks were sinking today after a new report showed that Tesla's (NASDAQ: TSLA) vehicle deliveries in China tumbled 64% in July. Nio (NYSE: NIO) -- which is based in China -- may be reacting negatively to that news, along with new data that showed the company continues to lag behind its rival in China.

Additionally, Lucid Group (NASDAQ: LCID) may be losing some ground after Ford announced today that it's raising the price of its F-150 Lightning pickup truck due to rising material costs. 

In the nascent EV industry, any dramatic news for one automaker can often affect the share price of other automotive companies, which appears to be the case today. As a result, Tesla was down 2.2%, Nio had fallen 4.6%, and Lucid was down 6.6% at the end of the trading day. 

So what 

News data released today by the China Passenger Car Association (CPCA) showed that Tesla's July vehicle deliveries were 28,217, down significantly from 77,938 in June.  

Lucid investors are already on edge right now after the company had to raise its own vehicle prices beginning in June due to rising costs. Additionally, just last week, the company slashed its production guidance for the full year. Lucid now estimates it will produce between 6,000 to 7,000 vehicles this year, down from the previous guidance range of 12,000 to 14,000. 

While the CPCA didn't mention why Tesla's China sales fell, Tesla had been working on upgrading the plant during the month in order to boost production, according to Bloomberg. This could eventually help production increase by 33%. That didn't seem to appease Tesla investors though, who aren't ready to hear about any production delays in China after they'd seen lengthy shutdowns of Tesla's Shanghai factory due to China's strict zero-Covid policy. 

Nio investors appeared a bit jittery about the news, as well, but they may have been focusing on other CPCA data showing that rival BYD remains the uncontested EV leader in the country. BYD delivered 163,042 cars in July, while Nio delivered just 10,052.  

Finally, Lucid's shares were likely reacting to the fact that Ford raised the price for its all-electric F-150 Lightning because of "significant material cost increases and other factors." The price bump means that customers will pay between $6,000 to $8,500 more for the truck, depending on the model.

With another EV maker raising its prices, Lucid investors are likely taking this as a cue that the broader EV industry is feeling the effects of rising inflation and higher material costs. 

Now what 

EV investors have been on a rollercoaster ride lately after the Senate passed the Inflation Reduction Act. The new bill, which could be passed by the House and signed by President Biden as early as this week, provides expanded tax credits for both new and used EV purchases. 

While that news gave some EV stocks a temporary lift, today's drop shows just how volatile these stocks are right now as investors try to assess the impact of inflation and rising material costs for the industry. All of this means that Tesla, Nio, and Lucid investors can likely expect more share-price swings in the near term.

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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Chris Neiger 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 Nio Inc. and 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.

What happened 

The stock of Tesla (NASDAQ: TSLA) jumped today after Canaccord analyst George Gianarikas raised his price target for the electric vehicle company's shares and after the Senate passed the Inflation Reduction Act, which could give some electric vehicle (EV) sales a boost.

The EV stock jumped by 3.7% as of 1:22 p.m. ET on Monday

So what

Gianarikas raised his price target for Tesla's shares to $881, up from his previous price target of $815, and kept a buy rating on the stock today. 

The analyst believes that Tesla has a built-in advantage over other EV makers because of the company's lead in manufacturing, its ability to procure EV materials, as well as its autonomous vehicle technology, according to TheFly.com. 

Gianarikas acknowledged that there are concerns for the EV industry right now, but he believes that Tesla's current position, along with the company's moves into energy storage and solar, will help keep it ahead of its competition.

Investors were also optimistic about Tesla today after the Senate passed the Inflation Reduction Act yesterday. Among other things, the legislation extends federal tax credits of $7,500 for EVs and removes the previous tax credit cap when an automaker reaches 200,000 EVs sold. 

The bill also adds a new tax credit of $4,000 for consumers who buy a used electric vehicle. 

While not all of Tesla's vehicles will qualify for the credit (some are too expensive), it's possible that some consumers could still benefit when buying the company's lower-priced models.

Now what 

Today's gains add to Tesla's recent share price trajectory; they have risen 22% over the past month. 

While Tesla investors no doubt are celebrating these gains, they should also keep a close eye on any new data about rising inflation, a slowing economy, or an increase in EV materials costs, all of which could hurt consumer demand. 

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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• Why ASX investors dumped IVV ETF last month

Chris Neiger 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.

Last month Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) executed a 20-for-1 stock split. In the months leading up to it as well as in the weeks that followed, there has been increased investor discussion about the tech giant. One of the questions being asked is whether Google's parent company is still a good long-term option for investors? 

I think it could be a good bet over the long haul -- the technology company is experiencing solid growth from its core business, and its stock is trading at a better price than in the recent past thanks to 2022's tech stock sell-off. Let's take a closer look at why investors should consider buying Alphabet's stock right now. 

Alphabet's advertising strength

Alphabet's total revenue increased by 13% in the most recent quarter (reported on July 26) to $69.7 billion. And while that was slower than pandemic-induced revenue growth in 2021, the company is still a revenue-generating machine in a fast-growing ad market. 

The bulk of Alphabet's sales come from Google's advertising business (which includes Google Search, YouTube ads, and the Google Network). In the second quarter sales from this segment grew by 11.5% year over year to $56.3 billion. 

This growth looks even better when you consider that Alphabet has more opportunities to expand in the digital ad market. Some estimates put the global advertising market size at $876 billion in 2026, up from $602 billion this year. 

Alphabet is already a leader in the digital advertising space -- it takes the top spot ahead of Meta Platforms, Alibaba, and Amazon in the U.S. -- and as the market continues to expand, Alphabet has the potential to expand right along with it. 

Alphabet shares are trading at a discount right now 

You may have noticed that the stock market has been a bit volatile lately, and tech stocks, in particular, have suffered. The tech-heavy Nasdaq Composite index is down 19.5% year-to-date, and Alphabet's shares have fallen roughly the same amount.  

While that drop isn't great in the short-term, for long-term investors it's providing an opportunity to buy Alphabet's stock at a relative discount. The chart below shows Alphabet's price-to-earnings over the past several years, with Alphabet's most recent P/E ratio much lower than in the recent past. 

GOOGL PE Ratio data by YCharts.

When buying a stock, getting it at a relative discount is obviously preferable. With the tech sector down right now and Alphabet's shares down along with it, investors can snatch up Alphabet shares at a discount.

Alphabet has money to weather an economic storm

It's important to point out that if the U.S. economy does enter a significant downtown, investors won't have to worry about Alphabet's ability to push through it. 

Alphabet has a highly profitable business that generated $12.6 billion in free cash flow in the most recent quarter, and $65 billion over the trailing 12 months. The company's balance sheet is also in very solid shape, with Alphabet ending the quarter with $125 billion in cash and investments. 

While no company is immune to downturns, this cash would allow Alphabet to continue to paying its debts while also being able to invest in its products and services. 

Don't forget this is a long-term play

Over the past month or so the tech sector has had a bit of a resurgence, along with Alphabet's stock. And while that's good to see, don't forget that buying shares of Alphabet and holding onto them for at least five years (or more!) is where long-term investing really pays off. 

There will likely be some more share price volatility as investors process new economic data and investors continue to process news about inflation and a potential economic slowdown. 

But with Alphabet already in a very strong position in the advertising space and the company's shares cheaper than they've been in years, this tech stock looks like it could still be a long-term winner. 

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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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, 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.  Chris Neiger 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 (A shares) and Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). 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.

What happened 

Shares of several electric vehicle stocks rose Monday morning as the broader market climbed higher.

Two reports indicated that the Federal Reserve may not hike its benchmark interest rate as sharply as had been previously anticipated. That sparked some optimism in the market. Meanwhile, two analysts offered positive comments about Tesla (NASDAQ: TSLA), which not only gave its stock a lift, but by association likely helped push Rivian Automotive (NASDAQ: RIVN) and Nio (NYSE: NIO) higher as well.  

As of 12:15 p.m. ET, Tesla was up by 3.5%, Rivian had gained 4.8%, and Nio was up by 4.5%.

So what 

Over the weekend, a Wall Street Journal article and Goldman Sachs' chief economist both said that it's likely that the Fed will deliver a 75-basis-point hike to the federal funds rate later this month, rather than the 100-basis-point hike that some economists have been expecting.  

While a 75-basis-point increase would still be significant, investors are currently looking for any positive news they can find. Those bits of news were likely what drove both the S&P 500  and the tech-heavy Nasdaq Composite higher Monday morning. 

With these indices making gains, it's not surprising that Tesla, Rivian, and Nio are climbing. But they also got a lift because a Barclays analyst raised his price target for Tesla's stock from $370 to $380 and Deutsche Bank analyst Emmanuel Rosner added the EV maker to the institution's "short-term Catalyst Call Buy List."

Tesla will report its latest quarterly financial results on July 20 and Rosner believes the automaker's margins will be better than analysts' consensus expectation. He also thinks that Tesla will be able to maintain its goal of increasing vehicle deliveries by 50% in 2022 as production ramps up in the second half of the year. 

With Tesla's share price down significantly this year, Rosner said that there's "a compelling opportunity to accumulate the stock" right now.

Tesla's stock rose on all of this news, and Rivian and Nio likely got swept upward in the momentum. Additionally, Rivian investors may have been optimistic after Rosner kept his buy rating for that stock, though he lowered its price target from $69 to $46 -- still about 45% higher than where it closed Friday.

Now what 

Investors will get a clearer picture of how Tesla is doing when the company reports its second-quarter earnings in just a couple of days, and they'll see how Rivian and Nio are doing when they report their results, likely on Aug. 11. Until then, investors are latching onto the positive sentiment in the market and the fact that two analysts are bullish on Tesla right now. 

But with the market still volatile and the U.S. continuing to grapple with high inflation and concerns about a slowing economy, long-term investors should anticipate more share price swings in the near term. 

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

The post Why Tesla stock popped today 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.

More reading

• Why ASX investors dumped IVV ETF last month

Chris Neiger 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 Goldman Sachs, Nio Inc., and 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.