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

The stock market is witnessing a technological arms race playing out in real time. Companies are racing to build the data centers and other infrastructure to support artificial intelligence (AI), which experts believe could create trillions of dollars in economic value over the coming decades.

Inside these data centers are massive clusters of chips, which work together to train and operate AI models. The AI chip conversation begins with Nvidia (NASDAQ: NVDA), the company that has dominated this market from the jump.

However, tech giant Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) has emerged as a potential competitor after successfully training its AI models with custom-built TPU chips it designed in-house.

Which AI chip stock is the better buy heading into 2026? 

Nvidia's AI dominance creates a high ceiling, but a lower floor

Thus far, developing AI has required massive quantities of chips. Nvidia's leadership in the AI chip market has translated to explosive revenue and profit growth for the company since early 2023. Some experts believe Nvidia's market share in the data center GPU chip space is as high as 92%.

As long as hyperscalers continue to build out this infrastructure, it's hard to see Nvidia's business slowing down anytime soon. In fact, Nvidia announced that it has booked $500 billion in orders for its Blackwell chips and their looming successor, Rubin, through the end of next year, with $150 billion of that already delivered.

This data center boom has been highly lucrative. Nvidia now has deep pockets to develop and prepare for emerging AI opportunities outside of data centers, such as autonomous vehicles and humanoid robotics. That said, data center chip sales have become nearly the entirety of Nvidia's business. If data center investments dry up, Nvidia would struggle to fill those holes, and the stock would likely collapse.

Alphabet's AI ecosystem makes it the safer bet

For as much money pouring into AI data centers as there is, the group of companies cutting the checks, the AI hyperscalers, is relatively small. Among them is Google's parent company, Alphabet. Rather than relying on Nvidia's chips to power its AI models, Alphabet has worked diligently to develop its own custom-built tensor processing units, or TPUs, designed specifically for Google Cloud's machine learning workloads.

Alphabet successfully trained its newest Gemini model on its TPUs. It went so well that the company is considering selling its TPUs to other AI hyperscalers, such as Meta Platforms. Alphabet probably won't challenge Nvidia's market leadership, but the TPU represents additional upside to Alphabet's complete AI ecosystem. It's icing on an already delicious cake.

The stock already has a high floor due to its lucrative advertising and cloud computing business segments. Even if Alphabet never sells its TPUs to another company, they still provide a crucial cost benefit, saving Alphabet from spending billions of dollars on third-party chips. At this point, it appears that Alphabet has a significantly higher floor than Nvidia.

The winner? It depends

Does that make Alphabet the better buy? Well, it sort of depends on the style of investor you are. If you want maximum upside, it's hard to beat Nvidia, which has proven to possess the foresight needed to dominate the AI opportunity from the beginning. Even if other companies begin encroaching on the data center market, Nvidia will likely remain a key player in the AI field, including future applications.

However, if you're looking for a business that is a bit more diversified and stable, Alphabet may be a better fit for you. The company has multiple established business units and still offers exposure to new industries, like autonomous driving and quantum computing, through its smaller divisions.

The good news? Both stocks trade at attractive valuations, based on the market's expectations for their future earnings growth.

NVDA PE Ratio data by YCharts

A higher anticipated growth rate accompanies Nvidia's higher price-to-earnings ratio, though things can change quickly if the AI investment cycle ends prematurely. 

Ultimately, it's hard to go wrong with either company as a buy-and-hold AI investment for 2026 and beyond.

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

The post Which AI chip stock is the better buy for 2026: Nvidia or Alphabet? 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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Justin Pope has positions in Alphabet. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Meta Platforms, and Nvidia. 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.

It looks like Buffett isn't the only leadership change at Berkshire Hathaway. Other notable changes include Todd Combs, one of Buffett's key managers, leaving the company to join JPMorgan Chase, and CFO Marc Hamburg announcing his retirement, effective June 2027.

These changes don't necessarily mean that Buffett's influence on Berkshire Hathaway's culture is fading. Still, it does drive home the point that change is inevitable, especially when an icon like Buffett steps down.

Berkshire Hathaway currently has $381.7 billion in cash on its balance sheet. 

Berkshire Hathaway could invest in tech stocks more than it has previously

It's widely known that Berkshire Hathaway hasn't invested very heavily in tech stocks over the years. Warren Buffett typically felt more comfortable in other market sectors, referencing what he called his circle of competence. Even Buffett's investment in Apple seemed more from the standpoint of a consumer products company than a tech stock.

Berkshire Hathaway's tech investments have increased as Buffett has given more authority to his staff in recent years. For example, when Berkshire finally invested in Amazon in 2019, Buffett noted that it wasn't he who bought the stock but one of his fund managers.

More recently, the company opened a nearly $5 billion stake in Alphabet, which, given Buffett's looming retirement, was probably not his investment either. It's hard to deny the importance of technology in modern society, and it's challenging to see how Berkshire Hathaway, at its colossal size, can avoid investing more of its capital in tech companies moving forward.

The company might finally pay a dividend

Buffett has consistently expressed his affinity for dividend stocks throughout his career. He has also been equally vocal about his disdain for the idea of Berkshire Hathaway paying one. Instead, Buffett has long preferred to retain Berkshire's profits and invest them in acquisitions or other opportunities.

It has not been easy to find places to invest all those profits in recent years. Berkshire Hathaway has been a net seller of stocks lately, and Buffett has pointed out the stock market's lofty valuation, as well as refrained from doing many share repurchases.

Now, as Buffett retires, he leaves his successor, Greg Abel, with a $381.7 billion question to tackle: What will the company do with all that cash? The pressure to take action will likely rise as the cash continues to accumulate.

Given the apparent lack of investment opportunities in today's market, a dividend just makes a ton of sense at this point. It could be something small and symbolic, even if it's just a way to share some of the company's profits with shareholders who are looking for reasons to hold the stock after Buffett steps down.

The stock has a higher floor but a lower ceiling

This leads into the final change, and that's the stock's upside moving forward. Berkshire Hathaway is a legendary stock because it has consistently outperformed the broader market for decades, transforming modest investments into substantial fortunes.

But with a $1 trillion market cap, Berkshire Hathaway's massive size is likely to work against it. Buffett himself predicted in his last shareholder letter that a handful of other stocks would outperform Berkshire Hathaway in the future.

The good news is that Berkshire Hathaway is a highly diversified juggernaut. Its subsidiaries and investments span the economy, including energy, manufacturing, insurance, and railroads, among others, and that's before getting into the cash reserves and additional billions of dollars worth of blue chip stocks the company owns.

If nothing else, investors can buy and hold Berkshire Hathaway, knowing that Buffett built the company to last seemingly forever.

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

The post A new leadership group is emerging at Berkshire Hathaway. Here are some changes that could be in store for Warren Buffett's massive holding company. 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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JPMorgan Chase is an advertising partner of Motley Fool Money. Justin Pope has positions in Alphabet. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, Berkshire Hathaway, and JPMorgan Chase. The Motley Fool Australia has recommended Alphabet, Amazon, 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.

It seems the artificial intelligence (AI) race has escalated once again following President Donald Trump's announcement that he has issued an executive order to launch Project Genesis. The administration compared its significance to the famous Manhattan Project, the World War 2 initiative to develop the atomic bomb. 

Project Genesis aims to develop an artificial intelligence platform utilizing supercomputers and data from various government agencies to accelerate America's efforts in advanced manufacturing, national security, and other key areas. While it's still early and the executive order didn't detail any specific funding, a federal AI initiative makes it all the more likely that the leading technology companies will continue to benefit from strong AI tailwinds that have made them such lucrative investments over the past few years.

Here are the top AI stocks to buy right now. 

1. Alphabet

Google's parent company Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) surged recently following the release of its well-received AI model, Gemini 3. Notably, Alphabet trained Gemini 3 on its own Tensor Processing Unit (TPU) chips, which are purpose-built for its machine-learning workloads. Alphabet's TPUs have gained enough attention that Meta Platforms is reportedly considering implementing them in its data centers.

Alphabet's stock has soared over the past few weeks as the market recognized that it owns all the components of an AI ecosystem, including data centers, AI models, a cloud platform, and vast amounts of user data to train its models. Despite the stock's hot momentum, it's still trading at a reasonable price/earnings-to-growth ratio (PEG) of 1.8, a solid buying point for long-term investors today.

2. Nvidia

As the current leader in AI chip technology, Nvidia (NASDAQ: NVDA) has enjoyed a significant market share in the data center chip market, estimated to be as high as 92%. The company probably doesn't like seeing reports that its customers (Meta Platforms) are looking at other chips. However, Project Genesis is the latest signal that the AI market will ultimately be massive, perhaps too large for any single company to supply all the chips.

Nvidia's cutting-edge graphics processing units (GPUs) and CUDA programming arguably make it the fundamental AI company, as virtually every AI hyperscaler is using its chips. Nvidia will also likely receive numerous opportunities as the government ramps up its AI plans.

Eventually, Nvidia could expand beyond data centers into other AI applications, such as robotics and autonomous driving. It already has its eyes on both industries.

3. Taiwan Semiconductor

Which company is fabricating all of these AI chips? It's probably Taiwan Semiconductor (NYSE: TSM), the world's leading foundry (a company that manufactures chips). Taiwan Semiconductor's advanced manufacturing technology and capacity to produce mass quantities of high-end chips have enabled it to increase its market share in the AI era.

Today, Taiwan Semiconductor accounts for approximately 71% of the global foundry services market, measured as revenue share. Considering AI's thirst for computing power and the fact that all chip roads essentially lead to Taiwan Semiconductor, it's basically the ultimate pick-and-shovel AI play. The stock's PEG ratio of 1 is enticing for buyers.

4. Amazon

E-commerce giant Amazon (NASDAQ: AMZN) is a sneaky AI stock because it also operates the world's largest cloud computing platform in Amazon Web Services (AWS). AI, like most software today, runs in the cloud, giving Amazon a front-row seat to the AI growth opportunity. It has also developed a close partnership with Anthropic, one of the leading AI developers and a potential benefactor of Project Genesis.

Amazon and Anthropic just launched one of the world's largest AI chip clusters, which will have nearly 1 million of Amazon's custom AI chips by the end of this year. It could be a preview of what's to come as the government invests in AI infrastructure.

Much of this AI demand could flow to AWS, producing a windfall for Amazon. The stock is attractively priced now, with a PEG ratio below 1.6.

5. Microsoft

Diversified tech-giant Microsoft (NASDAQ: MSFT) operates Azure, the world's second-leading cloud computing platform. However, investors may want to own Microsoft for its close ties with OpenAI, the leading AI developer behind ChatGPT. Many view OpenAI as an AI pioneer, so it's hard to see Project Genesis not producing opportunities for OpenAI along the way.

Microsoft is tied to OpenAI through 2032 via a newly announced agreement, and the two companies are pooling their knowledge and resources to develop custom AI chips. Microsoft's large size and diverse businesses probably make it the slow-and-steady name on this list.

That may not be a bad thing, considering how unpredictable the AI boom has already proven to be. The company's PEG ratio of 1.8 is a reasonable valuation to pay for the stock.

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

The post What are the 5 top artificial intelligence (AI) stocks to buy right now? 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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Justin Pope has positions in Alphabet. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. 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.

Every investor dreams of finding the next big idea, the life-changing investment that can turn a modest portfolio into a fortune.

Many on Wall Street continue to dream big as society enters a new era, one of artificial intelligence (AI) and the excitement and hefty investments that have come with it. But thus far, many of today's top AI stocks are familiar faces.

Don't be surprised at this. Even further, it seems that AI won't usher in a new wave of giant technology companies. Instead, the same leading tech stocks -- a group known as the "Magnificent Seven" -- will likely remain the face of AI for the foreseeable future.

Here is why, and how that may impact your portfolio. 

Don't underestimate competitive moats

In medieval times, royal families would protect their castles by digging large moats to create a barrier of water and space between themselves and anyone who threatened them.

That concept applies to investing today. Often, companies that lead their fields over time begin to entrench themselves. Their sustained success creates hurdles that competitors find difficult to breach, much like a moat protecting a castle. These competitive moats come in various forms.

For example, a social media app becomes stronger as more people use it, a classic example of the network effect. The leading food, beverage, and household goods companies have brand moats; their products aren't necessarily unique in form or function, but consumers are willing to pay more for those specific goods due to the name associated with them.

Moats aren't invincible. Some companies have seen their competitive moats crumble due to poor business decisions or industry disruption. But if you look at any stock that has performed well over a long time horizon, you'll almost assuredly spot at least one moat in action.

Competitive moats in AI are already forming

Experts believe that AI will grow into a multitrillion-dollar industry. It's exciting, to say the least. But much of AI's benefit, at least this early in the game, lies in enhancing existing applications and industries rather than blazing new trails. Even ChatGPT is arguably an evolution of the search engine.

Most of everything that involves AI today falls into two primary categories: infrastructure and consumer-facing products. In infrastructure, you have cloud computing and semiconductor hardware inside the data centers that power AI. Then you have the consumer-facing side, which includes large language models and chatbots, as well as emerging technologies such as self-driving vehicles.

For those who don't know, the Magnificent Seven includes:

1. Apple
2. Alphabet
3. Amazon
4. Meta Platforms
5. Nvidia
6. Microsoft
7. Tesla

Well, guess what? These companies already dominate virtually everything listed above. Apple (iPhone) and Alphabet (Android) control the smartphone market, the most obvious personal device to apply AI to. Amazon, Microsoft, and Alphabet combine for roughly 63% of the global cloud market. Nvidia rules the data center AI chip market, with some estimates placing its market share as high as 92%.

What about generative AI for advertising and social media? Yep, Meta Platforms owns almost every notable social media app aside from X and TikTok, and half of the Magnificent Seven have digital ad businesses that each rake in tens of billions in revenue. Looking further into the future, Tesla and Amazon are already deep into developing humanoid robotics. 

In total, these companies have a combined market cap of more than $22 trillion and generated over $2.1 trillion in revenue in the past 12 months alone. They have virtually unmatched financial resources relative to almost any competitor you can imagine.

These companies have built multitrillion-dollar empires on numerous competitive moats across their existing businesses and are leveraging those moats to create new ones in AI.

There will be exceptions, but it's probably best to keep things simple

There will always be opportunities for innovative companies to disrupt the status quo. OpenAI did so with ChatGPT and has become one of the world's most valuable companies in relatively short order.

However, those instances are few and far between. AI enthusiasm has created a strong bull market in the technology sector, and that will probably end at some point, taking many speculative AI stocks, often with little to no revenue, out with the tide.

Instead, most investors are likely best served by keeping things simple. While the Magnificent Seven stocks are probably too large to make anyone wealthy overnight and could easily suffer a severe decline if the AI boom unwinds, the reality is that these companies have an overwhelming long-term advantage in AI.

Their widespread dominance, fortress-like balance sheets, and enormous revenue streams make them the no-brainer stocks to own in these early years of the AI era. 

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

The post Why AI won't create a new batch of tech giants — It will cement the old ones 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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Justin Pope 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, 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.

There were likely many investors who hadn't heard of, or at least weren't familiar with, Nvidia (NASDAQ: NVDA) five years ago.

Then came ChatGPT in late 2022, and the market rally around artificial intelligence (AI) from 2023 onward put the GPU chip company squarely on the map. Nvidia has come to dominate the market for chips used in AI data centers, unleashing life-changing investment returns in the process.

Nvidia stock has returned 1,500% over just the past five years.

It's rarely too late to invest in a great business, but can buying Nvidia right now still set you up for life? Here is what you need to know.

Nvidia's AI boom isn't over

AI is a bit of an arms race in the technology world. Companies are spending billions to build vast data centers housing thousands of servers and computer chips that work together to train and operate increasingly advanced AI models quickly, and at a growing scale.

Nvidia dominates this market, with an estimated 92% market share. Why so high? Nvidia planted the seeds for its dominance years ago; its CUDA programming language optimizes its GPU chips, which already excel at handling heavy workloads, for AI.

That one-two punch of high-end hardware and efficient software took the AI chip market by storm. Even if competitors start to make some headway, the broader AI opportunity is growing so rapidly that Nvidia continues to pile up chip sales at breakneck speed.

Research from McKinsey estimates that global data center spending for AI will exceed $5 trillion over the next five years alone, as companies continue to invest in infrastructure to support a world increasingly adopting AI. That doesn't even begin to scratch the surface of adjacent AI opportunities, including those that require localized computing resources, such as humanoid robotics or autonomous vehicles.

In other words, AI won't live in data centers forever. Nvidia already has its eyes on the future with hardware and software ecosystems in motion for developers across these early-stage market segments.

Fortune seekers face an uphill battle

So, while it's one thing to say that Nvidia could sustain its massive AI sales from these past several years, it's another thing to anticipate enough incremental growth on top of that to make the stock a life-changing investment from its current valuation.

The company recently made headlines as the first company to attain a $4 trillion market capitalization. For a stock that has risen 1,500% over the past five years, it wouldn't seem unrealistic for Nvidia's price to double at some point. But even that would push Nvidia's value to $8 trillion.

Huge numbers eventually start to succumb to gravitational effects. At $8 trillion, Nvidia would be roughly one-eighth of the total value of all U.S. stocks. It would be almost as large as the combined value of every publicly traded Chinese company, and larger than the stock market of every other country.

So, when you start projecting such a large company to double, triple, or grow enough to set you up for life, the numbers quickly go to eye-popping levels.

Can buying Nvidia today set you up for life? Here's your answer

To be clear, Nvidia's business doesn't appear to have peaked, and there could easily be some solid investment upside left. Shares still trade at roughly 39 times 2025 earnings estimates, which is a reasonable valuation for a company that analysts anticipate will grow earnings by an average of 28% annually over the next three to five years.

That said, Nvidia is likely too large now to replicate its past investment returns. Low-double-digit annualized returns seem more realistic, making Nvidia a fantastic addition to a diversified portfolio, just not the life-altering stock it has been to this point.

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

The post Could buying Nvidia today set you up for life? 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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Justin Pope 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.

Elon Musk and Tesla (NASDAQ: TSLA) rolled out their long-awaited Robotaxi autonomous ride-hailing service recently in Austin, Texas. The company has launched with a small fleet that operates within a limited area, with the hope of expanding rapidly, marking a significant milestone as Tesla seeks to gain ground on Alphabet's Waymo.

Tesla stock is up approximately 42% from lows hit in early April. Shares had momentum throughout much of June, but have started to fade since Robotaxi officially hit the streets (down around 9%).

Can Tesla stock hold on to its recent gains, or are shares (down roughly 21% year to date) likely to continue lower? Here is what you need to know.

Robotaxi launches, but it's been a bumpy ride

Tesla's Robotaxi launch came with a lot of hype. Elon Musk mentioned a couple of years ago that Tesla's value hinged on autonomous driving, and some of Wall Street's biggest names have pegged sky-high price targets on the stock because of Rototaxi. So, Robotaxi's recent launch is a big deal.

However, there is some fine print associated with Tesla's early autonomous ride-hailing offerings.

For instance, Robotaxis technically drive themselves, but come with a human Tesla employee in the passenger seat to intervene as needed. Robotaxis are also limited to a defined map, avoid complex intersections, and won't operate in inclement weather.

In the first week since its launch, and despite the restricted use parameters, incidents have already been reported on social media of Robotaxis making mistakes, such as driving in the wrong lane or slamming on their brakes for no apparent reason. It seems Robotaxi isn't as refined as investors hoped, which could help explain why Tesla stock has cooled this past week.

Tesla's sales momentum remains a problem

The immediate problem for Tesla and investors is that if Robotaxi underwhelms, the narrative shifts back to Tesla's actual electric vehicle (EV) business. After all, selling vehicles is still the company's core function.

Tesla's sales have dramatically slumped. Some of the drop is likely tied to the fallout from Elon Musk's efforts in government, which began before last year's election. Politics can be a no-win situation because, regardless of which side you fall on, you're bound to alienate the side that disagrees with you.

The company delivered 336,681 vehicles in Q1 2025, representing a nearly 13% decline from the previous year. Tesla's sales slump may not be entirely due to political blowback; consumers have struggled amid higher interest rates, inflation, and worries about the economy going forward. The vandalism of vehicles and sales centers and the protests that dominated news headlines earlier this year offer some further proof that politics played some role in the slowdown. It also doesn't help that Tesla's Cybertruck has not been well-received by car enthusiasts.

Is there a catalyst to keep Tesla stock on track?

The good news is that things can improve in the coming months. Elon Musk has mostly pulled back from the political scene (at least for the moment), and Robotaxi could still improve its technology as the pilot program progresses.

On the other hand, it's unclear whether the damage to Tesla's brand is permanent, or if not, how long the stench will linger. Additionally, Robotaxi may struggle to expand, at least in the near term, if Tesla's self-driving technology is further behind schedule than hoped.

Data by YCharts.

Tesla's declining sales have weighed on the business, as earnings are also declining, which in turn is ratcheting up the stock's valuation. Tesla's price-to-earnings ratio, currently an excessive 177, could begin dragging the share price down further if the market loses confidence that earnings will rebound anytime soon.

Investors may not have much to hang their hat on until sales rebound or Robotaxi improves. Therefore, Tesla seems more likely to resume its post-election downtrend than to recapture the gains it enjoyed leading up to the Robotaxi launch. It could be wise to stay on the sidelines for now and revisit Tesla once there are more signs of progress.

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

The post Elon Musk rolls out Robotaxi Fleet in Austin. Will Tesla's stock gains stick? 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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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Justin Pope 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 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.

In the grand scheme of things, modern technology is only now beginning to hit its stride. The internet is only a few decades old.

Technological innovation has accelerated significantly since the early 2000s, with the internet playing a pivotal role in paving the way for cloud computing. Now, artificial intelligence (AI) is emerging as the next growth frontier for investors. The companies leading the way have grown to immense size and scale, garnering the nickname the "Magnificent Seven."

The exciting part is that it appears there is still a massive runway ahead for future innovation and the continuation of ongoing trends. Three companies stand out to me. They have become juggernauts and could be unstoppable technology leaders well into the future.

Here are the three monster stocks you should consider investing in for the long term.

Today's AI chip leader is a heavy favorite for the future, too

Nvidia (NASDAQ: NVDA) has had a huge impact since the push to build artificial intelligence infrastructure went into overdrive in late 2022. Companies continue to race to build massive data centers with thousands of the company's GPU accelerator chips. It started with Nvidia's Hopper microarchitecture and has since evolved into Blackwell. According to IoT Analytics Research, Nvidia owns an estimated 92% of the AI data center GPU market.

While data center spending continues to rip and roar in 2025, it's wise to think about AI's next innings. There is a good chance that computing resources will expand beyond data centers to localized areas where they can power new technologies, such as humanoid robotics or autonomous vehicles. Nvidia already has its eyes on these opportunities, fleshing out an ecosystem of hardware and developer tools that will entice companies to build on its platform.

Many of the companies building all these data centers continue to struggle with capacity constraints, so it doesn't seem that Nvidia's business will slow anytime soon. The stock's price-to-earnings (P/E) ratio is 47 today. That may seem like a lot, but considering analysts estimate Nvidia will grow earnings by nearly 29% annualized over the long term, the reigning AI leader should continue to deliver for investors over the coming years.

AI could take this cloud giant's profits to new heights

Amazon (NASDAQ: AMZN) isn't necessarily known as an AI company, but it's poised to be arguably the biggest beneficiary of AI innovation. That's for two reasons. First, Amazon operates the world's leading cloud platform, Amazon Web Services (AWS). AI technology primarily runs on the cloud, so AI applications are directly driving growth in Amazon's cloud business. AWS also happens to be the company's most profitable business unit.

The less obvious opportunity is how AI may shape Amazon's core e-commerce business over the next decade and beyond. Humanoid robotics and smart drones could be game changers for Amazon's fulfillment network, enabling automated order picking at distribution centers and potentially even autonomous deliveries. The company is already working to train robots to deliver packages.

Amazon's e-commerce sales are already massive, reaching a whopping $387 billion in North America alone last year. Each basis point of margin improvement would be tremendous for the company's bottom line. Today, the stock's P/E ratio is 35, a reasonable price tag for a business that Wall Street expects will grow earnings by over 15% annually over the long term.

This social media behemoth continues to create new growth opportunities

Meta Platforms (NASDAQ: META) continues to win in social media. Over 3.4 billion people log into its social media apps each day, including Facebook, Instagram, WhatsApp, and Threads. Meta Platforms generated $41.3 billion in advertising revenue last quarter, and remarkably, Meta isn't fully monetizing its apps. The company recently announced it will begin placing ads in status updates and channel pages on WhatsApp, its popular messenger app with over 3 billion monthly users.

It's likely to continue growing Meta's core advertising business, which generates the immense cash profits CEO Mark Zuckerberg is using to continue building out AI hardware and software. The company recently announced a massive $14.3 billion investment for a 49% stake in Scale AI, a company that helps prepare data for AI model training. Additionally, Meta is unveiling new smart glasses through partnerships with Oakley and Prada, adding to the company's existing lineup alongside Ray-Ban.

Meta's social media dominance makes the stock a strong buy at 27 times earnings, and an anticipated 18% annualized earnings growth rate. Investors should look for AI to play an increasingly meaningful role in Meta's success as these investments, new products, and strategic decisions begin to bear fruit.

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. 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. Justin Pope 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, Meta Platforms, and Nvidia. The Motley Fool Australia has recommended Amazon, 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 world is on the verge of one of the most significant technological leaps of our lifetime. Over the coming years, computers utilizing quantum mechanics will have exponentially higher capabilities than even the cutting-edge supercomputers of today.

I'm talking about quantum computing. Research from the Boston Consulting Group estimates that the quantum computing market will be worth $90 billion to $170 billion by 2040.

Naturally, investors have already begun positioning themselves for quantum computing's arrival. However, while there have been some notable upstart quantum computing stocks, they remain extremely speculative because the market opportunity is still so small.

Instead, consider these three stocks as great buys right now, in quantum computing's early years. They all give investors direct exposure to quantum computing, but aren't the all-or-nothing bets that some investors may regret going with.

1. Microsoft is a do-it-all technology winner with quantum computing exposure

It's hard to imagine Microsoft (NASDAQ: MSFT) not being in the thick of a generational leap in computing technology. Sure enough, the tech giant is deep into its efforts to develop quantum technology. Earlier this year, the company broke scientific ground when it unveiled Majorana 1, the world's first quantum chip powered by a topological core -- a new state of matter.

Microsoft's Azure is the world's second-leading cloud platform, and the company is already deeply involved in developing artificial intelligence (AI) models and other software. That means Microsoft could benefit by creating and selling quantum computing technology, as well as by deploying it throughout its existing businesses. Someday, it could be Microsoft's quantum computers powering its cloud data centers.

Investors won't get rich overnight with Microsoft, which already has a staggering $3.5 trillion market cap. Despite its size, analysts estimate that Microsoft will grow its earnings by 15% annually over the next three to five years. The company also pays dividends and has increased its payout for 23 consecutive years. Microsoft is an outstanding do-it-all blue chip technology stock to buy and hold for exposure to quantum computing with minimal risk of disaster.

2. IBM is a quantum computing stock for dividend investors

International Business Machines (NYSE: IBM), or IBM for short, is no longer as dominant as it was in the 1980s and 1990s. But to its credit, it has emerged as a strong contender in quantum computing. IBM began offering cloud-based access to its quantum computers nearly a decade ago and continues to develop improved iterations of these systems.

It has more than 13 quantum computer systems in the field today with at least 100 qubits, and has booked approximately $1 billion in cumulative quantum business since launch. That puts IBM far ahead of companies like IonQ, which has barely monetized its business, with just $43 million in annual revenue.

IBM has arguably built a solid foundation for the future as a hybrid cloud solutions company with expertise in AI and quantum technology, where it can work closely with enterprise clients. It's also an excellent dividend stock. IBM yields a solid 2.5% at its current price, and management has raised the dividend for 29 consecutive years.

3. This ETF gives investors diverse exposure to quantum computing and AI

Many experts believe that practical quantum computers may still be five to 10 years away. Given how early it is and how much things can change for companies between now and then, investors would be wise to consider an exchange-traded fund (ETF), giving them broad exposure to quantum computing. The Defiance Quantum ETF (NASDAQ: QTUM) does just that. It's an ETF focused on companies developing and using quantum and AI technology.

It has 73 holdings in all, including the following top positions:

Data source: Defiance Quantum ETF prospectus.

Another significant aspect of this ETF is that it includes non-U.S. companies, providing investors with even greater diversification in a highly speculative field. Non-U.S. companies may not list on the major U.S. stock market exchanges or may report in foreign currencies and languages, making it difficult for most individual investors to follow them.

As with many new industries, there will be some companies that emerge as huge winners in quantum computing that many people didn't see coming. By casting a wide net with this ETF, you will most likely own a piece of 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.

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

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Justin Pope 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 International Business Machines, Microsoft, and Palantir Technologies. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alibaba Group and 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.

Heavy is the head that wears the crown. Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), the parent of Google, and Meta Platforms (NASDAQ: META), formerly known as Facebook, are facing antitrust litigation regarding the ways they have maintained their dominance in internet search and social media.

Investors generally dislike uncertainty, and amid a macroeconomic environment that has become far less predictable over the past few months, the entire market has become increasingly volatile. Between that and the company-specific risks they face, Alphabet had fallen by 27% from its high and Meta Platforms had lost 32%, as of April 22.

The potential outcomes of the cases against those companies could include regulators forcing them to sell or spin off key business assets. That said, shying away from these top artificial intelligence (AI) companies now could prove to be a mistake for investors.

Here's why investors may want to buy this dip on Alphabet and Meta Platforms.

Technology empires may shrink

Alphabet and Meta Platforms are among the world's most powerful technology leaders. Each generates billions of dollars in annual ad revenue from its core businesses. Alphabet dominates the internet with its Google search engine and software ecosystem, while Meta's social media apps, including Facebook, Instagram, WhatsApp, and Threads, collectively reach 3.35 billion daily active users.

However, antitrust regulators have stepped in due to those companies' strangleholds on their respective niches within the tech sector.

Alphabet has already lost two antitrust cases, one involving Google Search and another relating to its anticompetitive practices in online advertising. Now, Alphabet and regulators will argue in court, and judges will determine what actions Alphabet may need to take to remedy its violations. Alphabet may be ordered to sell its Chrome web browser, or to cease paying Apple the billions of dollars a year it spends in the deal that has made Google the default search engine on iPhones' Safari web browser.

Meanwhile, the Federal Trade Commission's antitrust case against Meta Platforms over its aggressive tactics to either acquire rivals like Instagram and WhatsApp or eliminate them is just starting. If the company loses, some speculate that it may be ordered to spin off or sell those apps.

Antitrust remedies might not be that bitter

The idea of a breakup is scary, but investors could be overreacting to the headlines. Both companies have layered multiple products and services to build technology ecosystems with powerful network effects.

Suppose the courts blocked Alphabet from paying Apple for search engine placement on its Safari web browser.

Now, Alphabet decided it was worth paying tens of billions a year to make Google the default search engine in Apple's Safari browser. Still, it is unlikely that Google Search would collapse if that arrangement were to end. Safari is just one of Google's many distribution channels, and has only a 17.5% share of the world's web browser market.

Google's Chrome is the global leader, with a 66% share. Even if Alphabet were to sell or spin off Chrome, it is tightly integrated with Google's productivity apps, such as Gmail and others. In other words, it would be difficult to eliminate the network effects Alphabet benefits from unless regulators dismantle the company. That seems unlikely given how complicated it would be. Meanwhile, the Chrome unit on its own could struggle to generate revenue without its Google connection, as it's a free product.

The situation around Meta is a little trickier because there aren't as many layers to its ecosystem. If it had to sell Instagram, WhatsApp, or both, that would be a sizable blow to its empire. The good news is that while Meta has leveraged its family of apps to boost each other, such as by letting users cross-post from Instagram and Facebook to Threads, the big three apps -- Facebook, Instagram, and WhatsApp -- still function independently of each other.

Therefore, Meta losing one wouldn't necessarily diminish the others. A spinoff would leave Meta smaller, but could also unlock shareholder value if an independent, publicly traded Instagram or WhatsApp thrives.

The antitrust risks are real, but investors shouldn't panic. There is no rush to act, especially when each company's AI efforts might create new core businesses down the road.

Both of these AI stocks are better bargains now

The AI trend could someday be the more important catalyst for both companies, and that seems unlikely to change regardless of how things turn out with these antitrust cases. Experts such as those at PwC believe AI technology could create a multitrillion-dollar economic opportunity over the next decade and beyond.

Alphabet's AI opportunities include:

• AI-fueled growth in the cloud;
• An expanding autonomous ride-hailing business in Waymo;
• Quantum computing development;
• Competitive AI models (Gemini) for consumers and enterprises.

Meta doesn't own a public cloud platform, but it does have:

• A broadening hardware business with Meta Quest headsets and AI smart glasses;
• An open-source AI model (Llama) with over 1 billion downloads;
• AI integrations throughout its social media apps and existing ad business.

The dips in these stocks have left them trading at reasonably compelling valuations. Alphabet trades at a price/earnings-to-growth (PEG) ratio of just 1.2, and Meta's is 1.4. True, the generally agreed upon view is that a stock is fairly valued with a PEG ratio of 1, and lower is better. And sure, there are some potential risks to be wary about with both of these tech giants. But would an investor be better off buying shares of Walmart, a mature business trading at almost 40 times earnings and at a PEG ratio of 5.1? I don't expect Walmart's stock to outperform either Alphabet or Meta Platforms over the next five years unless there is a dramatic decline in the tech companies' growth and competitive advantages.

GOOGL PE Ratio data by YCharts.

It can be easy to get overanxious about investment risks when the markets are already shaky. However, in the cases of Meta Platforms and Alphabet, it's way too early to panic about what these antitrust cases could mean, and even aggressive court-mandated remedies could benefit shareholders. With that in mind, I'd recommend tuning out the noise and taking a long-term view on two of the world's most powerful technology companies.

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. Justin Pope 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, Meta Platforms, and Walmart. The Motley Fool Australia has recommended Alphabet, Apple, and Meta Platforms. 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 sudden and sharp stock market sell-off following the Trump administration's tariff announcements on April 2 is hitting the world's largest technology companies. Apple (NASDAQ: AAPL), Microsoft, Amazon, Alphabet (Google), Meta Platforms (Facebook), Nvidia, and Tesla -- a group known as the "Magnificent Seven" stocks -- have plunged from their highs.

Of these seven tech giants, Apple has suffered the sharpest decline thus far in response to the Trump tariffs.

Is the stock's decline warranted? How might tariffs impact Apple and its beloved iOS products? Most importantly, should investors buy the dip or wait this out?

Here's what you need to know.

Apple faces significant tariff risks

The Trump administration's announced tariff plan, barring changes, will have far-reaching effects on the world's economy and manufacturing landscape. President Donald Trump's plan applies a 10% unilateral tariff on U.S. imports, which began on April 5. Additionally, the government will, starting April 9, apply incremental "reciprocal tariffs" on imports from countries the administration deems to have mistreated the United States in trade.

America imports far more than it exports, so these plans signal a massive change to the country's existing trade policies and could increase prices for U.S. consumers.

If the announced reciprocal rates go into effect, they'll dramatically affect Apple, whose supply chain is almost entirely outside the United States; its manufacturing occurs in China, India, Japan, South Korea, Taiwan, and Vietnam. Here are the announced reciprocal tariff rates for those countries:

• China: 34%
• India: 26%
• Japan: 24%
• South Korea: 25%
• Taiwan: 32%
• Vietnam: 46%

Beyond that, Apple sources most of its hardware components from foreign countries as well. Due to tariffs, an iPhone could cost as much as 43% more. Apple will either have to eat some or all of those costs, or pass them on to U.S. consumers, likely hurting sales.

It doesn't help that Apple was already due for a drop

The tariffs are a clear downward catalyst for Apple stock, but they're not the only one. There is a strong argument that Apple has bungled its first crack at artificial intelligence (AI) thus far. It integrated AI features into Siri and iOS late last year, dubbing them Apple Intelligence. However, that hasn't ignited iPhone sales as hoped, and the lukewarm reception led the company to shuffle its internal AI leadership.

The situation doesn't exactly inspire confidence. Plus, Apple stock entered the year trading at a price-to-earnings (P/E) ratio of more than 40, although analysts had been steadily lowering their estimates of long-term earnings growth since early 2022:

AAPL PE Ratio data by YCharts.

Multibillionaire Warren Buffett, CEO of Berkshire Hathaway, spent most of the past year selling down his company's massive stake in Apple. It remains Berkshire's largest position, but Buffett, famous for his eye for valuations, clearly saw trouble that long preceded the recent tariff shock.

Tariffs were the match that ignited Apple's decline, but the kindling was dry, and a decline was probably imminent.

Is it time to consider buying Apple?

Apple is widely regarded as one of the world's most preeminent companies and is a fine addition to any long-term portfolio. Unfortunately, it's probably way too soon to buy shares right now. The stock still trades at 30 times earnings, and the company's future growth could implode if tariffs squeeze profits or sink demand for new iPhones.

I think Apple will figure something out here. Just weeks ago, it announced a plan to invest $500 billion in the United States, which may help it negotiate some relief from the announced tariff rates.

Still, Apple is arguably too expensive for its lackluster growth, and that's before factoring in any tariff impacts. You may want to reevaluate once the tariff dust settles and the stock trades at a P/E closer to 20, which would more appropriately reflect its growth. Until then, Apple is still not ready to bite into.

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. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Justin Pope 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, Berkshire Hathaway, Meta Platforms, Microsoft, 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, Berkshire Hathaway, 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 S&P 500 index is market-cap-weighted, meaning companies that do well slowly make up more of the index over time. In recent years, a group of prominent technology companies dubbed the "Magnificent Seven" have dominated headlines and increasingly influenced the broader market.

A research article by The Motley Fool notes that the Magnificent Seven stocks -- Apple, Microsoft, Amazon, Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Facebook parent Meta Platforms, Nvidia, and Tesla -- accounted for approximately 12.3% of the S&P 500 in 2015, but that had increased to 35.4% at the end of 2024.

Alphabet, in particular, has been an AI leader among the group, with multiple pieces of its business benefiting from growth opportunities in artificial intelligence (AI). But in recent weeks, market turbulence has knocked the stock down roughly 20% off its all-time high.

Should investors buy this dip, or should they avoid Alphabet? Here is what you need to know.

AI hasn't meaningfully threatened Alphabet's golden goose

Digital advertising on Google Search has been Alphabet's highly profitable core business for years. People worldwide use Google for roughly 90% of their internet searches. Some worry that large language models, like ChatGPT, could take search traffic away from Google Search because these models can summarize information in response to queries rather than simply present page links.

Alphabet has integrated its large language model and AI summaries into Google, but some fear this shift to AI models could reduce advertising revenue. Thus far, this isn't apparent in the numbers. Google Search generated $42.6 billion in revenue in Q4 2022, right before ChatGPT became popular in early 2023. Google Search revenue was $54 billion in Q4 2024. In other words, revenue grew nearly 27% over two years. That doesn't look like a business feeling pressure or disruption from AI.

That could still change, but it seems that Google Search's demise due to AI is grossly exaggerated for now.

The company has immense growth potential outside of advertising

Meanwhile, Alphabet has multiple long-term growth catalysts centered around AI innovation.

Google Cloud is the world's third-leading cloud computing platform -- trailing No. 1 and No. 2 at about 12% of the market -- and is poised to benefit from increased demand as businesses use AI applications through the cloud. Google Cloud's Q4 2024 revenue was approximately $12 billion, a 30% increase year over year. Alphabet noted on the earnings call with analysts that capacity constraints have bottlenecked Google Cloud's growth.

The market seems worried that management is ramping up data center investments in 2025, but it's arguably money well spent if the demand is there. Analysts at Goldman Sachs believe AI will drive 22% annualized growth in cloud revenue through 2030, taking the market to $2 trillion.

Alphabet offers cloud-based AI products, including large language models, speech-to-text, and language technology, and tools to build and deploy virtual agents. It also recently announced its agreement to buy Wiz for $32 billion in cash to bolster its cloud security offerings.

Lastly, the market could be overlooking Alphabet's leadership in autonomous driving. Tesla may get attention for its efforts to launch a self-driving fleet, but Alphabet's Waymo is already there and rapidly expanding its footprint. Waymo provides autonomous rides in several U.S. cities and ramped up from 150,000 weekly rides at the end of 2024 to 200,000 by the end of February 2025:

Google (excluding Cloud) contributed $84 billion to Alphabet's $96 billion total revenue in Q4 2024. Opportunities in the cloud and autonomous driving haven't moved the needle much yet, but could become a bigger story over the next decade and beyond.

Alphabet's recent slide creates a compelling buying opportunity

Considering Alphabet stock is down 20% off its high while the Nasdaq Composite is down just 12% in that one-year span, market sentiment toward the stock seems lukewarm at best right now. The superpower for long-term investors is the ability to buy high-quality companies when prices fall and hold them while earnings grow, eventually lifting the stock.

Remember, business performance eventually has the loudest say in how stocks perform. Alphabet seems to have a bright future, and analysts estimate the company will grow earnings by an average of 16% annually over the long term. Meanwhile, the stock's price-to-earnings ratio (20) values it at a PEG ratio of 1.25, which fits my parameters of excellent value for expected growth.

Alphabet is a great deal today, barring something going very wrong in the business.

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

The post This artificial intelligence (AI) stock is a "Magnificent Seven" leader. But is it a buy? 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. 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. Justin Pope 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, Goldman Sachs Group, Meta Platforms, Microsoft, 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.

At this point, most investors interested in artificial intelligence (AI) know the critical role Nvidia's (NASDAQ: NVDA) AI accelerator chips have played. The resulting growth spurt has propelled the company and its stock to staggering heights. If you're reading this, you're probably wondering whether Nvidia's AI tailwinds can continue and whether the stock is still buyable after soaring over 800% since early 2023.

Yes, the cat's out of the bag on Nvidia and AI. Today, the stock trades over 50 times trailing-12-month earnings, so buyers are banking on the future rather than the past.

What might the future hold for Nvidia? I researched the company's growth prospects to determine whether the stock is a buy today.

Peering into Nvidia's leadership in AI chips amid massive market expansion

Nvidia rose to prominence in AI thanks to its Hopper AI accelerator chip architecture, which became the gold standard for training today's AI models. According to industry estimates, the company owns between 70% and 95% of the market. Owning that much of the market means that future growth depends on market expansion because there's little room to gain additional business from competitors. On the other hand, it means Nvidia risks ceding market share to other chip companies.

However, the market is growing so fast that it could realistically offset any modest market share losses. The global AI chip industry was estimated at $123 billion in 2024 and could grow to $311 billion by 2029. Nvidia's trailing-12-month revenue was $113 billion, most of which came from AI data centre sales. The company could lose market share and double its revenue over the next five years.

The underlying factors driving AI chip growth seem pretty intact. AI will need more (and better) chips to train and operate more intelligent models, and increased demand for AI services will require additional computing resources to create the capacity to accommodate that demand.

Blackwell looks like a successful continuation of AI momentum

Nvidia has begun transitioning to Blackwell, the successor to Hopper. The new architecture represents significant breakthroughs in performance and, arguably more importantly, efficiency. The chip has 208 billion transistors, up from 80 billion on the H100. The B200 can achieve up to 20 petaflops of computing power (like horsepower for computing) versus four for the H100.

The B200 will deliver three times faster large-model training than the H100 and 15 times the AI inference performance. It's also 25 times more energy efficient, translating to a significantly lower cost of ownership. This is a key point because companies investing billions of dollars in AI data centres need to monetise these investments over time. Low operating costs can be very helpful.

Blackwell has already shown signs of rampant demand. A few months back, Nvidia announced that it had sold out its entire Blackwell capacity for 2025. The lack of Blackwell supply should also continue trickling down to ongoing Hopper sales, as some companies may opt to build with Hopper chips rather than wait 12 months or longer for chips.

Is Nvidia a buy?

Assuming the prominent companies building up AI data centres, known as hyperscalers, continue investing in AI infrastructure, Nvidia's growth prospects look fantastic.

Analysts estimate Nvidia will grow earnings by an average of 38% annually over the next three to five years, which makes sense within the broader growth forecast for the AI chip market. There doesn't seem to be much reason to doubt the growth forecast until competition shows tangible evidence of eating into Nvidia's business. So far, Blackwell looks like a smashing success.

I like using the PEG ratio to weigh a stock's valuation versus its growth rate. Typically, I'll buy high-quality stocks up to a PEG ratio of 2.0 to 2.5, and Nvidia's (PEG ratio of 1.4) falls comfortably below that threshold. I'd much rather buy Nvidia here than a similarly priced retail stock like Costco, which has much slower growth.

So yes, Nvidia is a buy in my book.

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

The post Is Nvidia a buy? appeared first on The Motley Fool Australia.

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Justin Pope 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 Costco Wholesale and 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.

Artificial intelligence (AI) has taken over Wall Street. It's been the stock market's hottest topic since early last year, but the hype is warranted.

Experts at Statista estimate the AI industry will be worth approximately $184 billion this year, and it should grow to over $826 billion by 2030, a nearly 30% annual growth rate.

Those same experts pegged machine learning as the most significant contributor to AI's growth. Machine learning gives AI a sense of intelligence, allowing it to analyse vast amounts of data for trends and patterns.

Some prominent growth stocks have the opportunity to create significant life-changing wealth for long-term investors. Remember: AI is likely still in its early chapters, so don't assume you're too late.

Consider these two potential millionaire-making AI stocks to buy and hold for the long term:

1. CrowdStrike Holdings

Cybersecurity isn't a new industry, but cyberattacks have become increasingly sophisticated and cause millions of dollars in damages. The increased stakes have created opportunities for next-generation security from companies like CrowdStrike Holdings (NASDAQ: CRWD). The company's Falcon XDR platform operates in the cloud, using machine learning to look for potential cyberthreats.

If you're familiar with CrowdStrike, you may know it issued a faulty update over the summer that caused a global IT outage. It may take a few quarters to confirm that this embarrassing incident won't hamper the company's growth, but so far, so good. Management is guiding for just over $3.9 billion in revenue for its full fiscal year, representing 27% growth from the prior year.

The company specialises in end-point security but has steadily expanded its platform. Management believes its total addressable market will increase to $250 billion by 2029. In other words, CrowdStrike still only owns about 1.5% of its long-term market.

And the business is already highly profitable. It has generated $1.1 billion in free cash flow over the past four quarters, which has swelled its balance sheet to about $3.5 billion in cash (net of debt). Those are the ingredients for a business that will eventually boost shareholder returns by gobbling up stock with share repurchases.

The stock isn't cheap; shares trade at a clear premium to its industry peers, as measured by enterprise value to revenue. Therefore, consider buying slowly and getting more aggressive when the broader market declines at some point. CrowdStrike is a long-term winner with a potentially decades-long growth runway that could make long-term investors very wealthy.

2. Snowflake

Data is arguably the most crucial ingredient for machine learning, highlighting Snowflake (NYSE: SNOW) as a mission-critical company in the AI industry.

Have you ever heard the expression "garbage in, garbage out"? Data must be well structured for machine learning applications. Snowflake allows companies to store, organise, and search their data through a cloud-based platform. They can also pull data from third-party sources through the company's marketplace.

Snowflake went public at a far too high valuation during a stock market bubble in late 2020. Slowing revenue growth, a CEO change, and competition from Databricks haven't helped the stock over these past four years, and it is still down nearly 60% from its peak. Given the company's rough few years, investors might be surprised at my optimism about Snowflake. The good news is that things are looking up.

The company operates a usage-based billing model, which is brilliant because data grows exponentially. More data means more usage on Snowflake and more revenue.

It essentially builds high net revenue retention (NRR) into the business. Snowflake's NRR was 127% in the third quarter, meaning existing customers spend significantly more once they start using it. Customer count grew 20% year over year in the third quarter, and the company now works with 754 of the companies in the Forbes Global 2000. With these trends, total revenue growth could hover at or above 20% for a long time.

Sure, it stinks that the stock hasn't performed, but this is about looking ahead. Snowflake's price-to-sales multiple was a mind-numbing 183 at its peak! Today, that's down to 16.

That's still not the cheapest you'll find on Wall Street, but a realistic valuation gives investors a reasonable shot at investment returns as the business grows. Snowflake's firm footing in the AI field, where data is exponentially created, could make it a massive company years from now, an outcome that could make investors a lot of money.

The post 2 millionaire-maker US artificial intelligence (AI) stocks appeared first on The Motley Fool Australia.

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Justin Pope 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 CrowdStrike and Snowflake. The Motley Fool Australia has recommended CrowdStrike. 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.

Judging by the stock's almost 40% surge since the election on November 5, Wall Street believes Tesla (NASDAQ: TSLA) will be a big winner under the incoming Trump administration. Tesla CEO Elon Musk, who actively supported Donald Trump's campaign, has frequently spent time with the president-elect over the past few weeks.

Reports have emerged recently that the Trump team is considering changes to some key policies that could impact Tesla, such as the Biden administration's electric vehicle credit and potential regulations to aid the development of self-driving vehicles.

Nobody knows what will happen, but Musk's ties to Trump understandably fuel speculation that Tesla could thrive during Trump's presidency.

But what should investors do with the stock right now? After all, the company and stock are two different things.

Here are some things to consider if you plan to buy, sell, or hold Tesla today.

Musk's Trump ties could move Tesla's most important catalyst forward

Tesla has evolved into a sprawling technology company that includes electric vehicles, humanoid robotics, energy, and artificial intelligence (AI). Elon Musk has repeatedly stated that self-driving vehicle technology is immensely important to Tesla's future. Currently, Tesla's core business is selling vehicles. However, it hopes to unleash a robotaxi fleet of low-cost, self-driving electric vehicles that it could monetise via ride-hailing services, fees, or subscriptions.

Musk announced during Tesla's Q3 earnings call that it plans to launch a robotaxi service in California and Texas next year and is currently testing its robotaxi vehicle (the Cybercab) with human driver assistance. Driverless vehicles are a huge deal, so deploying a fleet will be a tremendous regulatory task. SAE International regulations currently grade autonomous driving technology on a scale of six levels, zero through five.

Technically speaking, Tesla's current self-driving technology only has an SAE classification of level two, which still requires an attentive driver. Alphabet's Waymo has achieved level four and currently offers autonomous ride-hailing services in a small handful of cities in the U.S.

Tesla's robotaxi success (or failure) will ultimately hinge on how well the technology works. Musk is infamous for missing timelines, so Tesla has much to prove before investors can feel confident that a viable robotaxi business is imminent. At the same time, Musk has demonstrated his ties to Trump. The president-elect has accompanied Musk at multiple events and tapped him to co-lead a government project to cut wasteful spending.

It's speculating at this point, but logically, Musk could have an inside track to advocate for policies that might benefit Tesla, including regulatory decisions that aid the company's robotaxi development.

Weighing the potential future versus the current reality

A successful robotaxi business would be a game-changer for Tesla, but it's tough to quantify what that might look like. Investors shouldn't disregard what Tesla is right now based on what it might be in the future.

Right now, Tesla is growing, but it's struggling to generate the kind of growth that supports its current valuation. The company's progress in energy storage is impressive (up 52% year over year in Q3), but it's a small chunk of the overall business. Tesla's total revenue only grew by 8% in Q3, and non-GAAP earnings per share grew by 9%. Global electric vehicle adoption (excluding China) has slowed since mid-2023, and EV purchases in the U.S. still depend on aggressive financial incentives.

Analysts currently estimate Tesla will grow earnings by about 15% annually over the next three to five years, though I would wager that estimate excludes a wildcard variable like the robotaxi. The stock trades at a forward price-to-earnings (P/E) ratio of around 90, which is abhorrently expensive if analyst estimates prove accurate.

Tesla: Buy, sell, or hold?

If it were about hard numbers alone, Tesla's valuation would make the stock a sell, but it's not that simple. Investing in Tesla has always required a leap of faith because the company's CEO is remarkably ambitious. And to be fair, faithful Tesla shareholders have enjoyed staggering long-term returns of more than 1,400% over the past five years alone.

A Tesla Robotaxi may seem silly to some people, but so did the Cybertruck. Even though it took longer than Musk promised, Tesla did deliver the truck to market, and it was America's third-best-selling EV model across the entire industry in Q3. The lesson? Don't rush to count Tesla out.

Now that I've said that, it's hard to justify buying the stock at these prices. Tesla's valuation never seems to make total sense (as with many story-driven stocks). But high valuations can act like gravity, and everything eventually falls back to Earth. Investors should consider Tesla a hold for now. Tesla's a high-beta stock, so a broader stock market pullback might give investors a far better buying opportunity.

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

The post Tesla stock: Buy, sell, or hold? appeared first on The Motley Fool Australia.

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Justin Pope 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 Tesla. 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.

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

Consumer electronics giant Apple (NASDAQ: AAPL) recently unveiled the iPhone 16 at its annual Fall product event. It's become somewhat of a holiday for loyal customers who have come to love Apple's brand and device ecosystem. Over two billion people use active iOS devices, from phones to tablets, computers, and watches.

The stock is also an all-time great that has made long-term shareholders into millionaires on its way to becoming a multitrillion-dollar behemoth.

However, Apple's latest iPhone could face the most pressure it has in a long time. Artificial intelligence (AI) is changing modern life, and the world expects Apple to deliver on high expectations after unveiling several AI features at a developer event earlier this year. Apple stock continues to trade near its all-time highs; should investors buy, sell, or hold it today?

Here is what you need to know.

The iPhone 16 is Apple's first swing at AI

New iPhones arrive annually, but not every year delivers game-changing upgrades that make everyone go out and buy new phones. Apple's last colossal step forward came in 2020 when it launched its first 5G iPhone. Annual sales soared to nearly $400 billion but have plateaued since then:

AAPL Revenue (TTM) data by YCharts.

Apple packaged its AI features into a technology called Apple Intelligence, which requires enough computing power that only iPhone 15 Pro, Pro Max, and iPhone 16 models can run it. The hope is that Apple's leap into the AI era will spur a new growth cycle for the company that can finally boost annual sales past where they've stalled out for the past several years.

The stakes are high

Apple's stalling revenue growth is simple: People don't upgrade their phones as often as they once did. According to Verizon's CEO, their average customer only upgrades every three years. There are two primary reasons for this. For one, smartphones have gotten increasingly expensive. Want the new iPhone? It costs as much (or more) as a personal computer.

Secondly, smartphones have matured. A decade ago, each year's model brought notable improvements. Today, customers usually get incrementally better cameras and processors. Giant leaps forward, such as 5G or AI capabilities, are rare now. It's become hard to justify spending that money yearly, especially while consumers are pushing back on high prices across the economy.

Apple needs a home run with the iPhone 16. Despite Apple's revenue flatlining, the stock's price and valuation have crept higher in anticipation of AI-driven growth:

AAPL Revenue (TTM) data by YCharts.

The stock's price-to-earnings ratio has doubled to 34. Without notable sales growth, analysts have continually lowered their growth expectations. This isn't sustainable; Apple's growth will pick up to justify the higher valuation, or the stock price will come down to match Apple's lower performance. How it breaks will probably depend greatly on how the iPhone 16 sells.

Should investors buy, sell, or hold the stock?

Even the best companies can be poor investments when their price doesn't make sense. Unfortunately, Apple's stock price is acting like the iPhone 16 is already a home run. Apple could grow its earnings by 50%, and the stock would still trade above its average P/E ratio from the past decade. Famous investor Warren Buffett has dramatically trimmed Berkshire Hathaway's stake in the company. However, Apple represented a massive portion of his company's portfolio, so selling some makes sense for diversification reasons alone.

The bottom line? Investors should do what they feel comfortable with. Some may want to sell to realize profits, while others believe in holding blue chip companies like Apple through the ups and downs. Ultimately, nobody knows what share prices will do in the future. For all anyone knows, Apple stock could trade flat for years until earnings grow enough that the valuation makes more sense.

One thing seems clear: The evidence points to a situation where there is far more downside risk in Apple than upside potential at these prices. This risk-to-reward dynamic is not something investors should buy into, so Apple is probably not a great investment today.

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.

The post Apple: Buy, sell, or hold? 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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Justin Pope 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 Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Verizon Communications. 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.

Rockstar artificial-intelligence (AI) stock Nvidia (NASDAQ: NVDA) likely has many investors tied in knots right now. Those who have thus far avoided shares of the company, which makes computer chips critical in AI's development, have missed out on 200% returns over the past year alone. Now, shares have fallen a bit from their highs, which may leave investors wondering if the run is over or if this is just a pause before the stock's next leg higher.

Unfortunately, nobody can tell you the answer. However, this Fool has done the due diligence to prepare you for what might happen. Is Nvidia a stock to buy now? Here is what you need to know.

Nvidia stock remains cheap at first glance

The investment thesis for Nvidia is straightforward. Technology companies building massive data centers to run powerful artificial intelligence (AI) models are choosing Nvidia's chips -- so much so that experts estimate Nvidia's market share for AI chips is as high as 90%. Nvidia has won this war with a quality product and proprietary software that helps developers easily configure the chips for AI applications.

The result has been eye-popping growth that has fueled the stock's meteoric rise over the past few years:

NVDA Revenue (TTM) data by YCharts

Money could continue flowing into AI. Experts predict that America's data center footprint could double by 2030. Lisa Su, CEO of rival company AMD, expects the AI chip market to grow to over $400 billion over the next few years. Better AI models may require increasingly better chips. CEO Jensen Huang has stated that Nvidia is aiming for annual AI chip releases.

Analysts believe continued AI chip demand will drive Nvidia's earnings growth by an average of 38% annually for the next three to five years. The stock's forward P/E is 48 today. That's a steep price tag, but it is one that Nvidia could easily grow into if it performed up to analysts' expectations.

There are potential risks in this promising tale

It's a hopeful story, but things could get ugly if it doesn't go according to plan. Nvidia has grown remarkably fast; total revenue has more than doubled in short order. Maintaining that revenue (and growing it) requires that AI chip demand lives up to the hype and that Nvidia continues owning the lion's share of that market.

There are several realistic scenarios in which this might not happen. Nvidia gets a large chunk of its AI sales from a few large technology companies. What if those companies decide to design custom in-house chips instead? Or, what if these companies reach a point where they're not getting a good enough return on investment on these chips? This isn't for fun; AI must make these companies a ton of money to justify spending billions of dollars.

None of these questions even factor in the reality that AMD, Intel, and others will all be gunning for Nvidia's market share. Nvidia could retain its market share but face pricing pressure if competitors dramatically undercut its pricing with comparable chips.

How should investors approach Nvidia stock?

Everyone buying Nvidia stock now is banking on future growth, not what has already happened. Ultimately, the risk to investors is that Nvidia fails to deliver for whatever reason. And because of how giant Nvidia's leap has been so far, going backward could be especially painful.

That doesn't mean investors should avoid the stock entirely. As shown above, the stock could still perform well if the company's growth continues. The key is not chasing the stock, and keeping Nvidia to a small percentage of a diversified portfolio.

Nvidia is the perfect opportunity for dollar-cost averaging, building an investment with small, repeated purchases. Slowly accumulating shares means you won't be all-in to the stock too soon. You can steadily increase your investment as Nvidia shows it can maintain its growth. Let the company earn your investment dollars. It also would be less costly to pull your investment and move on if Nvidia gets in trouble.

In this scenario, it's heads-you-win, tails-you-win. That's smart investing.

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

The post Is Nvidia stock a buy now? 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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Justin Pope 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 Advanced Micro Devices and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Intel and has recommended the following options: long January 2025 $45 calls on Intel and short August 2024 $35 calls on Intel. The Motley Fool Australia has recommended Advanced Micro Devices 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.

Investors tend to follow the companies in which Warren Buffett invests. After all, he's considered by many to be the greatest investor of all time, so naturally, it's fascinating to see what he buys and sells. Did you know U.S. e-commerce giant Amazon (NASDAQ: AMZN) is a Buffett stock? 

It's a position you don't hear much about because it's not very big in Buffett's portfolio. His holding company, Berkshire Hathaway, allocates just 0.5% of its holdings to Amazon, a position Buffett didn't add until 2019.

But don't let Buffett's relatively modest stake in Amazon prevent you from capitalizing on an opportunity sitting in plain sight. Amazon is cheap today, even after shares have risen over 50% this past year.

Here's how Amazon is poised to make long-term investors richer over the coming years.

The great pandemic-era investment spree

Any investor reading this is likely familiar with Amazon's e-commerce business. Over 200 million households worldwide subscribe to Amazon Prime, and the company has a whopping 38% market share of all online retail sales in the United States.

Amazon has invested a lot of time and money into building the network of distribution centers, vehicles, planes, and other logistics infrastructure needed to have just about anything in stock and quickly delivered anywhere in the country. Yet, the company was still caught off guard by COVID-19's boost to online shopping. Amazon responded with a monstrous hike in capital expenditures:

Data by YCharts.

These investments helped take Amazon's logistics business to a new level. Late last year, Amazon surpassed dedicated logistics companies UPS and FedEx to become the country's largest delivery company. That mind-blowing size and scale illustrate Amazon's competitive edge against other online retailers.

Andy Jassy on Amazon's next potential opportunity

Retail in America is an ocean of opportunity. It's such a large market, which has helped explain how Amazon has grown seemingly endlessly over the years and generated such blistering investment returns. But Amazon's not done growing.

CEO Andy Jassy hinted at a potential long-term opportunity in his annual shareholder letter in April. Notably, Jassy underlined the potential demand for same-day delivery services. He discussed how Amazon's 58 same-day fulfillment facilities have cut time-to-ship readiness for its top 100,000 products to as little as 11 minutes. The success has inclined Amazon to invest in growing its same-day facilities.

Jassy also noted the potential markets that same-day services could help it penetrate, including pharmacy and grocery. Groceries caught my interest because it's currently a $900 billion-plus opportunity in the U.S. that Amazon has virtually no share in -- just about 1%.

Same-day facilities and the eventual spread of delivery drones (Prime Air) could unlock a whole new segment of U.S. retail for a company that has already invested in logistics like Amazon has.

Why shares are still cheap while at all-time highs

Grocery is just one of several needle-moving initiatives Amazon has in the works, meaning earnings growth could continue for years despite Amazon already having a nearly $2 trillion market cap. Shares look pricey, sitting at all-time highs, but I don't think Amazon is as expensive as some might fear.

Here is why.

Few companies continually invest back into their business as much as Amazon does. The company is always planting seeds for future growth. Capital investments can skew earnings and make it hard to get a good read on the stock's valuation.

So, consider Amazon's price versus its operating cash flow instead of looking at earnings. The business generates these cash profits before reinvesting into the company. As you can see below, Amazon's stock is arguably the cheapest it's been in years when looking through this lens:

Data by YCharts.

Amazon is really good at getting value from the investments it makes in its business. Its return on invested capital is an impressive 10% on average. The company's ballooning investments in recent years could result in years of strong earnings growth, especially if it once again finds a new industry to dominate in grocery. 

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

The post This ridiculously cheap Warren Buffett stock could make you richer 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. Justin Pope 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, Berkshire Hathaway, and FedEx. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended United Parcel Service. 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.

Electric vehicle, energy, and technology company Tesla Inc (NASDAQ: TSLA) is unique. It made electric cars cool. An eccentric CEO, Elon Musk, leads it. The company has sold clothing apparel with a double meaning, aimed at poking fun at those who doubted it.

But the company's relationship with shareholders might stand out most of all. It maintains a large shareholder base of individual investors and has already split its stock for them twice.

A new bull market has begun, which could bode well for the share price. Should you be on the lookout for Tesla's next stock split?

Why do companies split their stock?

Companies split their stock for a couple of reasons. A stock split is when a company divides its stock into a higher number of smaller shares. It's like cutting a pie into smaller slices so more people can have some.

Suppose you own 10 shares of a stock trading at $100 ($1,000 in total). The company splits its stock 4-to-1, dividing each share into four. Your 10 shares would become 40 shares, trading at $25 each. You still have $1,000 worth of stock but more shares at a lower price per share.

This point is crucial: A stock split impacts the share price because each share represents a smaller portion of the company. Fundamentally, the value of the stock itself doesn't change. The pie never gets bigger just because you cut it into more pieces.

So, why do companies do it? First, it makes it easier for individual investors to accumulate shares. It also creates some buzz around a company, which may be good for the share price in the short term.

Tesla's stock-split history

Tesla has split its stock twice. The first time was a 5-to-1 split in 2020, and the second was a 3-to-1 split in 2022:

TSLA data by YCharts

The company has noted two reasons for stock splits. First, it awards stock to employees as compensation, and splitting it into smaller shares helps them manage their stake in the company.

Second, Tesla knows that individual investors heavily support it, and the company wants to ensure the stock remains accessible to them. According to Wall Street Zen, non-insider individuals own roughly 44% of the company's outstanding shares.

Will Tesla split its stock? Here's what matters

Today, Tesla stock is trading at just over $180 per share, far from its 52-week high of $299. Tesla didn't split at roughly $300, so it's hard to see a split coming without the stock at least hitting a new high.

Investors should focus more on the company's recent fourth-quarter earnings report, which gave shareholders a glimpse into the short- and medium-term future. Management stated that vehicle deliveries would likely decline in 2024 because Tesla was focusing resources on readying a next-generation vehicle design that it believes could spark its next major growth phase.

The market often doesn't look very far ahead, so this anticipated production decline could keep shares from new highs despite the broader market recently enjoying its own all-time highs.

What ultimately matters is whether investors believe Tesla will continue to grow and create value for its shareholders over time. Its next-generation platform aside, there's certainly no shortage of growth opportunities in electric vehicles, energy storage, and artificial intelligence (AI). Tesla's stock has already returned 11,000% over its lifetime, and the future looks as bright as ever.

If you don't wish to buy whole shares of the stock today, consider a stock broker that allows fractional shares so that you can invest a fixed dollar amount, regardless of whether the stock splits.

Including Tesla in a long-term-oriented and diversified portfolio could help you enjoy the benefits of investing in several great companies.

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

The post Stock-split watch: Is Tesla next? 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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Justin Pope 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.

This market is taking no prisoners. Whether you own shares of a newly public company or one of the world's most dominant technology enterprises like Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), it's been a rough year. Specifically, Alphabet is down 35% from its high, its largest decline since the Great Recession (2007-2008).

But it's not just a market issue. Companies that advertise to make money, like Alphabet, are pointing out economic turbulence on the horizon and bracing for a more challenging operating environment. It can sound cliched, but leaning into the fear and buying Alphabet could be a decision you're bragging to your friends about when things eventually turn around. Here is why.

Advertising is becoming treacherous waters

Alphabet makes most of its money by selling ads on its two most popular internet platforms, Google Search and YouTube. Traffic is a vital part of that. The more eyeballs you have, the more you can charge for your ads. However, the total money companies spend on ads, which you can think of as a pie, can fluctuate in size. Companies might advertise more when the economy is doing well, and potential customers are spending more. On the other hand, ad budgets might shrink when the economy is doing poorly, and people aren't spending as much.

The US economy has already been slowing down. Gross domestic product (GDP) was negative over the past two quarters. Some view it as a recession already, but the worst might not be over. The Federal Open Markets Committee (FOMC), which sets the federal funds rate, the benchmark interest rate that determines what the rest of the economy can borrow at, is rapidly increasing rates to combat high inflation.

U.S. Inflation Rate data by YCharts

This affects the economy. You may notice that mortgage rates at your local bank have soared. Companies that borrow money must now pay higher interest on their loans. Rising rates make borrowing more expensive and reduce how much people and businesses spend. That lower economic activity means that advertising budgets are likely coming down. That pie piece that represents advertising spend may get smaller.

Broken stock, not broken company

You can see this play out in Alphabet's revenue growth over the past year, which has dramatically decelerated. Going from 40% growth year over year to 12% growth in four quarters seems like hitting the brakes pretty hard. But it's essential to understand the context behind this and ask: Is this because Alphabet isn't getting the eyeballs to charge for its ads, or is what companies spend on ads shrinking?

GOOG Revenue (Quarterly YoY Growth) data by YCharts

Based on the economic circumstances above, the pie is getting smaller. You can check advertising companies' landscapes and see similar growth collapses. Roku, for example, guided for 35% revenue growth for the entire 2022 year in the first quarter. But it completely withdrew its full-year revenue growth guidance just one quarter later due to economic concerns.

On the other hand, Alphabet's top two platforms (Google and YouTube) remain top traffic getters. A report for August from Semrush named Google and YouTube as the two top sites on the internet, garnering more than 23 billion visits in August. Facebook.com was third at just 5.5 billion visits, which shows just how large the gap is between Alphabet and the rest of the field. Investors can be reasonably sure that Alphabet's ad revenue will recover once the economy improves because its websites remain the dominant internet destinations where brands prioritize their ad budgets.

Enjoy the sale

The stock's decline remains a buying opportunity for long-term investors. Alphabet now trades at its lowest price-to-earnings (P/E) ratio in a decade and is well below its median P/E of 27. From a price-to-sales (P/S) standpoint, the stock has only been less expensive during the COVID-19 crash in 2020.

GOOG PE Ratio data by YCharts

Sure, growth may slow temporarily in this cruddy economic environment. Still, Alphabet remains a dominant business with a fortress-like balance sheet that includes $125 billion in cash against just $12 billion in debt. It seems this drop is market- and economy-driven and not due to Alphabet's fundamentals, making this a possible buy-the-dip moment for patient investors.

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

The post This FAANG stock is down 35%. Buying it could be a genius move 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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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Justin Pope has positions in Roku. 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.

Microsoft Corporation (NASDAQ: MSFT) has its hands in many different businesses. Most investors think immediately of the company's Windows computer software or Azure, its public cloud segment. But gaming has long been a part of the company, starting with personal computers and the Xbox gaming console that first launched in 2001.

Gaming remains a rapidly growing business today, and Microsoft is arguably more dedicated to the industry than ever before. Here is how Microsoft is battling for market share in the gaming sector and why it could benefit shareholders over the long-term.

Gaming may be more significant than you realize

Most celebrities rise to fame through the film and music industries, long considered the pillars of entertainment. But you might not have known that the gaming industry's $180 billion revenue in 2021 was more than that of film and music combined.

What's more, the industry is still growing; research from Mordor Intelligence estimates that global gaming could grow to $340 billion in value by 2027, driven by increased accessibility through emerging gaming methods like mobile and cloud-based gaming.

Microsoft's broad exposure to gaming makes it a logical sector for the company to invest in further. For example, PC gaming is in Microsoft's wheelhouse, given that Windows has roughly 76% market share of the global desktop computer operating system market. Additionally, the company has built up its Xbox ecosystem, consisting of multiple console products and a subscription service for gaming content, including cloud-based gaming for phones, tablets, and laptops.

Borrowing a strategy from the streaming wars

Microsoft's subscription service, called Game Pass, is where it has put its financial muscle in recent years. Content has become king in the ongoing video streaming wars. Netflix, Inc.(NASDAQ: NFLX) was the first streaming platform to market, but a company like The Walt Disney Company (NYSE: DIS) has quickly built a rival service because its rich library of intellectual content draws eyeballs. Netflix initially licensed content from third parties but was forced to spend heavily to develop its own after these third parties figured out the importance of that content and launched their own streaming services.

It can work similarly in video games. Many people don't buy an Xbox or a Playstation console because they love the hardware itself; you buy whatever will give you access to your favorite gaming content. That's probably why gaming companies fight and spend to keep key game franchises exclusive to their consoles. You'll probably never see a game franchise like Mario, the second-highest-grossing game franchise of all time, on any hardware other than a Nintendo system.

Microsoft seems to be buying into this content strategy -- literally. It spent $7.5 billion in 2021 to acquire ZeniMax, the parent company of Bethesda Studios, which owns trendy game franchises like Elder Scrolls, Fallout, and Doom. More recently, it has a pending acquisition of Activision Blizzard, Inc.(NASDAQ: ATVI) for $68.7 billion, a deal still undergoing regulatory review. Closing that deal would give Microsoft ownership of some of the most popular gaming franchises in history, including World of Warcraft and Call of Duty.

Recurring revenue is the long-term goal

Microsoft wants Game Pass to be such a good value that it would be silly not to subscribe. The service currently costs $14.99 per month, includes instant access to nearly 500 games, and includes free access to cloud gaming and day-one access to virtually every game released by one of the 32 game studios that Microsoft will own if the Activision Blizzard deal closes (23 without the merger).

Microsoft revealed that Game Pass hit 25 million subscribers when it announced its deal with Activision Blizzard. There is a ton of room for growth -- 5G is helping bring the connectivity required for gaming to more areas of the world, including an estimated 3.24 billion gamers.

Microsoft is spending to acquire top-notch gaming content because Game Pass could eventually become a free cash flow geyser for the company. Getting Game Pass to 100 million subscribers paying $14.99 monthly would total $18 billion in annual recurring revenue, which would be far more profitable than selling gaming consoles alone. Gaming is a vast business, and Microsoft wants to be king of that hill.

There are plenty of reasons to like Microsoft as a long-term investment, but gaming might be its next big thing. 

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

The post Following this streaming strategy could pay off big for Microsoft 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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Justin Pope 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 Activision Blizzard, Microsoft, Netflix, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool Australia has recommended Activision Blizzard, Netflix, and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.