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

You won't find Warren Buffett spreading doom and gloom. That isn't his style. Buffett has always been an optimist at heart, even during the most perilous days of the 2008 financial crisis. 

However, Buffett is sending a clear warning as 2026 approaches. How? He has been a net seller of stocks for 12 consecutive quarters – the longest such streak ever since he took over Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). This reflects an unprecedented negative outlook for Buffett as he prepares to step down as Berkshire's CEO at the end of the year.

The "Oracle of Omaha" isn't publicly predicting what he thinks is about to happen with the stock market. He isn't telling investors specific steps to take, either. However, his actions speak volumes. Here are three things investors should do, based on what Buffett is doing himself. 

1. Don't panic

People often refer to Buffett's quote, "[W]e simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." There's a good case to be made that Buffett is fearful right now.

It can be tempting to equate the fear Buffett referenced with panic. But the legendary investor would never recommend panicking.

Sure, Buffett has sold numerous stocks in recent quarters. He wouldn't be a net seller of stocks if that were not the case. However, he hasn't dumped shares in a frenzy.

Do you want proof that Buffett isn't panicking? Simply look at Berkshire's portfolio. It still includes more than 40 stocks valued at over $300 billion. If Buffett were truly nervous about the future, Berkshire wouldn't have so much money tied up in the stock market.

Buffett has held onto positions for which he's most comfortable over the long term, including stalwarts such as American Express (NYSE: AXP) and Coca-Cola (NYSE: KO). That's a good strategy for other investors. Sell any stocks for which you have a lower conviction. Keep those you like the most. And, most importantly, remain calm.

2. Build cash

In the same letter to Berkshire Hathaway shareholders where Buffett provided his famous "be fearful" quote, he also wrote:

As this is written, little fear is visible in Wall Street. Instead, euphoria prevails-and why not? What could be more exhilarating than to participate in a bull market in which the rewards to owners of businesses become gloriously uncoupled from the plodding performances of the businesses themselves. Unfortunately, however, stocks can't outperform businesses indefinitely.

Those words were written in 1987 during a strong bull market, but they remain just as applicable today. The S&P 500 (SNPINDEX: ^GSPC) has skyrocketed to all-time highs. Many investors are fearful, but not in the way Buffett prescribed. They have FOMO -- the fear of missing out.

Buffett, though, understands that the boom will eventually come to a grinding halt. He wouldn't attempt to predict exactly when it will happen. However, he wants Berkshire to be prepared when it does. That's why he has amassed the largest cash stockpile in the company's history – around $382 billion.

BRK.A Cash and Short Term Investments (Quarterly) data by YCharts

Building cash is a smart idea for retail investors, too. It puts you and me in a good position to invest in wonderful companies when prices become more attractive. And with short-term U.S. Treasuries yielding north of 3.5%, you'll still make at least a little money as you wait.

3. Buy selectively

When some hear that Buffett has been a net seller of stocks for 12 consecutive quarters, they might think he hasn't been buying any stocks at all. That's not the case. Buffett has bought some stocks. However, he is buying selectively.

This doesn't mean that Buffett has changed his criteria for investing in stocks because he's worried about the market or the economy. Instead, he remains consistent in applying the criteria he uses, regardless of what's happening externally.

To be specific, Buffett is only buying stocks for Berkshire's portfolio that have attractive valuations relative to their growth prospects. That's exactly what he has done for decades. This is a prudent approach for any investor. Establish your criteria for buying a stock. Make sure it's sound. Then stick to it, selling only when the stock no longer meets your initial investment thesis.

Buffett once used a baseball metaphor to make his point, "The stock market is a no-called-strike game. You don't have to swing at everything – you can wait for your pitch." No matter what's in store for the stock market, wait for your pitch and buy selectively.

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

The post Warren Buffett is sending a clear warning as 2026 approaches: 3 things investors should do appeared first on The Motley Fool Australia.

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

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

More reading

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

American Express is an advertising partner of Motley Fool Money. Keith Speights has positions in Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

Back in California's gold rush in the mid-1800s, thousands of individuals flocked to the region hoping to find gold and strike it rich. However, the easy money was instead made by the suppliers who sold tools to the gold prospectors.

Today, the term "pick-and-shovel investing" honors that legacy. Oftentimes, providers of ancillary products and services achieve greater success than pure-play companies do.

Could this be the case with Nvidia (NASDAQ: NVDA) in the quantum computing market? Maybe so. 

Simulation paves the way for reality

Several companies are racing to develop large-scale quantum computers that can be utilized in a wide range of practical applications. They include tech giants such as Google Quantum AI parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), and Microsoft (NASDAQ: MSFT) as well as rising stars like D-Wave Quantum (NYSE: QBTS) and IonQ (NYSE: IONQ). However, Nvidia isn't in this group.

That doesn't mean that Nvidia doesn't have a vested interest in quantum computing, though. And the chipmaker doesn't have to wait for quantum computing to fulfill its potential to make money, either.

Researchers must develop simulations of quantum systems to design and test algorithms and circuits. However, access to quantum processing units (QPUs) today is limited and expensive. Nvidia recognized this challenge and offers a solution: Use its graphics processing units (GPUs) on classical computers for quantum simulation.

Nvidia Quantum Cloud supports quantum simulation using the company's GPUs and its CUDA-Q quantum computing platform. Roughly 75% of organizations deploying QPUs use CUDA-Q.

Three of the four largest cloud service providers have integrated Nvidia Quantum Cloud into their platforms: Microsoft Azure, Google Cloud, and Oracle (NYSE: ORCL) Cloud Infrastructure. The notable exception is Amazon Web Services (AWS). However, AWS allows QPU developers to use Nvidia's CUDA-Q.

Nvidia's bridge to the future

Nvidia's quantum opportunities aren't limited to simulation. The likelihood is that most practical quantum computers will be hybrid systems that connect QPUs with classical supercomputers for the foreseeable future.

The problem is that qubits (the basic units of information in quantum computers) are notoriously unwieldy, at least for now. Because they're prone to errors, complex calibration processes and control algorithms are required to keep them on track. Nvidia is addressing this challenge in two ways.

First, the company's GPUs are ideally suited for powering the supercomputers needed in hybrid quantum-classical systems. Second, Nvidia has developed a low-latency, high-throughput bridge between QPUs and its GPUs called NVQLink.

Nvidia found and CEO Jensen Huang describes NVQLink as "the Rosetta Stone connecting quantum and classical supercomputers." He recently predicted, "In the near future, every Nvidia GPU scientific supercomputer will be hybrid, tightly coupled with quantum processors to expand what is possible with computing."

A familiar path

Making money as a pick-and-shovel play in quantum computing should be relatively straightforward for Nvidia. The company has successfully navigated a similar path in artificial intelligence (AI).

OpenAI, Google, and others have developed powerful large language models (LLMs). Many of these companies are also pioneering agentic AI and working on artificial general intelligence (AGI) and AI superintelligence (ASI). Nvidia opted not to compete on their turf. Instead, it's supporting them with the chips and software tools that make their jobs easier.

In many respects, Nvidia's strategy in quantum computing mirrors the approach it has taken with AI. With the company generating revenue of $57 billion in the third quarter of 2025 and projecting revenue of $65 billion next quarter, Nvidia's AI strategy is paying off handsomely. I think supplying the picks and shovels for the quantum computing gold rush will prove to be a winning approach over the long run, too.

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

The post Why Nvidia could be a bigger winner in quantum computing than you might think appeared first on The Motley Fool Australia.

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

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

More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio

Keith Speights has positions in Alphabet, Amazon, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, IonQ, Microsoft, Nvidia, and Oracle. 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, 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.

Warren Buffett has spoken publicly about his disdain for cryptocurrencies. He's talked about his concerns about artificial intelligence (AI). But what has the "Oracle of Omaha" said about quantum computing? As far as I know, nothing.

But the legendary investor does have a favorite quantum computing stock. And it's not IonQ (NYSE: IONQ), D-Wave Quantum (NYSE: QBTS), or Rigetti Computing (NASDAQ: RGTI). 

Buffett's quantum leap

If you look through Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) portfolio, you won't find many quantum computing stocks. Actually, you'll see only one: Amazon (NASDAQ: AMZN).

Admittedly, Amazon probably isn't the first stock that would come to mind when the subject of quantum computing is mentioned. However, the company definitely belongs in the quantum computing club for a couple of reasons.

For one thing, Amazon Web Services (AWS) offers a service called Amazon Braket that's focused exclusively on quantum computing. Amazon Braket allows customers to use several types of quantum computers, including superconducting systems from IQM Quantum Computers and Rigetti. It supports IonQ's trapped-ion quantum computers. Braket also allows customers to use QuEra Computing's Rydberg atom-based quantum computing systems.

More importantly, though, Amazon is investing heavily in developing its own quantum computing technology. Earlier this year, AWS announced a prototype quantum computing chip called Ocelot. This chip reduces the cost of quantum error correction by as much as 90%. Oskar Painter, AWS director of Quantum Hardware, stated in the press release announcing Ocelot that the new chip "will accelerate our timeline to a practical quantum computer by up to five years."

Did Buffett buy shares of Amazon because of the company's quantum computing efforts? Nope. Actually, he didn't make the call to initiate a position in the stock back in 2019. Buffett revealed the decision was instead made by one of Berkshire's two investment managers, Todd Combs or Ted Weschler. However, he seemed to like the move, telling CNBC in an interview that he had been "an idiot for not buying" Amazon sooner.

Buffett owns a stake in another quantum computing stock, too

While Amazon is the only quantum computing stock listed among Berkshire Hathaway's holdings, Buffett technically owns a stake in another quantum computing pioneer, too. He indirectly has a position in IonQ.

Would Buffett buy shares of IonQ himself? It's highly unlikely. The 95-year-old billionaire has frequently stated that he limits his investments to businesses inside his circle of competence. Quantum computing isn't exactly in Buffett's wheelhouse.

However, Buffett owns a massive stake in Berkshire Hathaway. Berkshire owns 10 million shares of Amazon. And Amazon owns (you probably guessed it) a position in IonQ. Granted, this isn't a huge holding: Amazon's investment in IonQ was worth only $36.7 million as of June 30, 2025. But, at least by extension, Buffett owns a little part of IonQ.

Is Amazon the best quantum computing stock?

Amazon is Buffett's favorite quantum computing stock, but is it the best one? Several other companies have more advanced quantum computing initiatives than Amazon. Some, including IonQ, could benefit more from advances in quantum technology because they're pure plays while quantum computing is a relatively minor focus for Amazon.

We could correctly describe Amazon as the 800-pound gorilla in the e-commerce market. As online shopping chips away at the market share held by brick-and-mortar stores, Amazon should be one of the biggest winners. AWS ranks as the largest cloud services provider. The unit enjoys a tremendous tailwind from surging AI adoption. Amazon also provides a way for investors to dip their toes into other new growth opportunities. For example, the company's Zoox business is a contender in the promising robotaxi market.

For investors who want to bet heavily on quantum computing, other stocks will probably be better choices. But I think Amazon is a great pick for investors who want solid long-term growth with some exposure to quantum computing. 

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

The post Here's Warren Buffett's favorite quantum computing stock (Hint: It's not IonQ, D-Wave Quantum, or Rigetti Computing) appeared first on The Motley Fool Australia.

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

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

More reading

• These 3 ASX ETFs can help protect your portfolio in 2026
• 2 ASX shares booming on electrification and mining. Is there more upside ahead?
• 3 ASX ETFs for new investors to consider in 2026

Keith Speights has positions in Amazon and Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon and Berkshire Hathaway. 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.

Key Points

• Google parent Alphabet has a relatively easy path to reaching a market cap of $3 trillion.
• It's a similar story for Amazon, which (like Alphabet) has a major AI tailwind at its back.
• Meta Platforms' ticket to join the $3 trillion club could be paid partly by success in the AI glasses market.

Two's a party, three's a crowd.

If that old saying is true, there's a crowd at the top of the stock market. Only three stocks currently sport market caps of $3 trillion or more: Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and Apple (NASDAQ: AAPL).

But I think it could get more crowded at the top in the not-too-distant future. Here are three stocks I predict will join the $3 trillion club alongside Nvidia, Microsoft, and Apple.

1. Alphabet

Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) has the easiest path to reaching a market cap of $3 trillion. The tech company's shares only need to rise another 20% or so to hit that mark. I think there's a reasonable chance that could happen next year.

If and when Alphabet does join the $3 trillion club, its Google Cloud unit will almost certainly be a key reason why. Google Cloud remains the fastest-growing among the top three cloud service providers, with its revenue soaring 32% year over year in the second quarter of 2025. Alphabet is ramping up its capital expenditures in 2025 in response to the strong demand for its cloud products and services, driven largely by the rapid adoption of artificial intelligence (AI).

Speaking of AI, CEO Sundar Pichai said in Alphabet's Q2 update that the technology "is positively impacting every part of the business." Google Search is benefiting from the introduction of AI Overviews and AI Mode generative AI features. AI is helping advertisers boost conversion rates in their search campaigns. The AI-powered Veo text-to-video tool is making content creation easier for YouTube.

I suspect that Alphabet's market cap will be much higher than $3 trillion by the end of the decade. In addition to its core businesses, the company has other potential growth drivers. Waymo especially stands out, thanks to its leading position in the autonomous ride-hailing services (robotaxi) market.

2. Amazon

Amazon's (NASDAQ: AMZN) market cap is running neck-and-neck with Alphabet's. The e-commerce and cloud services giant doesn't face a tough climb to achieve a $3 trillion valuation.

As is the case with Alphabet, the AI tailwind propelling customers to the cloud is the most important factor for Amazon's growth. The company's Amazon Web Services (AWS) claims the highest market share among cloud platforms. Although AWS isn't growing as fast as some of its rivals, it doesn't have to for Amazon's revenue and profits to increase significantly.

Don't ignore Amazon's growth opportunity in e-commerce, though. Revenue and operating income for this business continue to grow by double-digit percentages. With most retail sales still generated in brick-and-mortar stores, Amazon should have plenty of room for growth.

Like Alphabet, Amazon has other big opportunities. Advertising has become an important source of revenue. The company plans to launch its Project Kuiper satellite internet service this year. Its Zoox subsidiary is a contender in the robotaxi market as well.

3. Meta Platforms

With a market cap hovering around $1.9 trillion, Meta Platforms (NASDAQ: META) has a greater challenge to join the $3 trillion club than Alphabet and Amazon do. However, I think it's only a matter of time before Meta takes its place beside its fellow members of the so-called "Magnificent Seven."

Meta makes most of its money from advertising on its Facebook, Instagram, Messenger, and WhatsApp platforms. AI should continue to help the company boost its profits by recommending more relevant ads to users, increasing user engagement, and making content easier to create.

I think smart glasses could be a huge growth driver for Meta over the next few years. Sales for the Ray-Ban Meta AI glasses are booming. The new Oakley Meta AI glasses appear to be a big hit. Meta CEO Mark Zuckerberg believes that glasses offer the ideal way to interact with AI. I agree -- and fully expect Meta will be one of the biggest winners in this rapidly emerging market.

Perhaps the most intriguing part of Meta's growth story is the company's significant investment in AI superintelligence. Should Meta succeed on this front, its market cap will almost certainly be much higher than $3 trillion in the future. 

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

The post 3 stocks that could join the $3 trillion club alongside Apple, Microsoft, and Nvidia appeared first on The Motley Fool Australia.

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

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

More reading

• These 3 ASX ETFs can help protect your portfolio in 2026
• 2 ASX shares booming on electrification and mining. Is there more upside ahead?
• 3 ASX ETFs for new investors to consider in 2026

Keith Speights has positions in Alphabet, Amazon, Apple, Meta Platforms, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, 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.

Why should you not invest in Nvidia (NASDAQ: NVDA) right now? You'd definitely be late to the party buying shares of a company with a market cap of $4.2 trillion. Other stocks could have better growth prospects. Nvidia is also expensive, with a forward earnings multiple of over 38.

I'm not going to focus on the bear case for Nvidia, though. The bull case looks even more compelling. Here are five reasons to buy Nvidia stock like there's no tomorrow.

1. AI spending is growing

Any concerns that spending on artificial intelligence (AI) by cloud service providers and other customers would slow have evaporated. Alphabet gave more proof in its second-quarter update. The company raised its full-year capital expenditure guidance by $10 billion. This increase is due to Google Cloud investing in servers and data centers to meet rapidly growing demand.

We haven't heard Amazon's and Microsoft's quarterly updates yet. However, I'd be surprised if their stories aren't similar to Google's. And when these cloud titans are investing more in servers and data centers, you can bet that a lot of the money will go to buy chips from Nvidia.

2. Continued GPU dominance

There's a simple reason why customers are still turning to Nvidia: Its graphics processing units (GPUs) continue to dominate the AI market. Even with Google developing its tensor processing units (TPUs) and Amazon deploying its Inferentia and Trainium chips, Nvidia's seat on the throne remains secure.

Blackwell, Nvidia's newest GPU architecture, has delivered the fastest commercial ramp-up in the company's history. In the first quarter of fiscal 2026, Blackwell GPUs generated almost 70% of Nvidia's data center compute revenue. Keep in mind that these chips began shipping in significant volumes just earlier this year.

3. The CUDA moat

Can Nvidia sustain its grip on the AI chip market? It seems likely, thanks to what some refer to as the company's "CUDA moat."

CUDA (which stands for Compute Unified Device Architecture) is Nvidia's proprietary platform that allows programmers to use its GPUs. This architecture has been around for years, with millions of programmers using it. There's also an extensive library of code that's optimized for Nvidia's GPUs. The bottom line is that Nvidia's competitive advantage in AI chips probably won't disappear as long as the CUDA ecosystem remains strong.

4. Expanding into new markets

Nvidia has a successful track record of expanding into new markets. The company started out making chips for gaming systems before recognizing that its GPUs were ideal for powering AI models. It continues to move into new markets.

For example, Nvidia's Omniverse platform, which enables the creation of 3D simulations and digital twins, is already used by multiple major corporations. I suspect it could be a bigger growth driver in the future than meets the eye. The company's Drive platform should also enable it to profit as autonomous vehicles become more widely adopted.

Nvidia CEO Jensen Huang recently told shareholders that robotics represents the company's largest opportunity after AI. And while Huang seemed to pour cold water on expectations for quantum computing earlier this year, he stated at a conference in June that the technology "is reaching an inflection point." Unsurprisingly, Nvidia is investing heavily in quantum computing.

5. Tomorrow will be more exciting than today

Perhaps the most important reason to buy Nvidia stock like there's no tomorrow is that there will be a tomorrow -- and it will almost certainly be more exciting than today. The advancement of AI over the next few years, including the advent of AI agents and potentially artificial general intelligence (AGI), could turbocharge the demand for Nvidia's GPUs. So could the proliferation of humanoid robots.

Huang told analysts on Nvidia's Q1 earnings call, "The age of AI is here. From AI infrastructures, inference at scale, sovereign AI, enterprise AI, and industrial AI, Nvidia Corporation is ready." I think he was right.

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

The post 5 reasons to buy Nvidia stock like there's no tomorrow appeared first on The Motley Fool Australia.

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

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

More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, 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.

Tesla (NASDAQ: TSLA) fans should find it easy to identify reasons to buy the stock. For one thing, its shares remain roughly 34% below the previous high. Anyone who believes in Tesla's long-term growth prospects will likely view this as a great opportunity to buy the stock at a discount.

One prominent Tesla bull, Ark Invest founder and CEO Cathie Wood, thinks the autonomous ride-hailing (robotaxi) market makes the stock a fantastic investment opportunity. However, there's a good case to be made that there's an even better reason that makes Tesla a stock to buy hand over fist right now.

Bigger than robotaxis?

Wood and her Ark Invest team believe the the robotaxi market could skyrocket to around $4 trillion by 2030. They look for Tesla to be the biggest winner in this market, thanks to the company's lower-cost technology and scalability.

However, Ark Invest is much more optimistic about the robotaxi opportunity than most analysts. Fortune Business Insights projects that the robotaxi market could be nearly $119 billion by 2030. Market researcher Research and Markets thinks the robotaxi market could expand by a compound annual growth rate of 45.2% and hit $124.9 billion by 2034.

Tesla could have an even larger opportunity. Morgan Stanley projects that the humanoid robotics market could top $5 trillion by 2050. The financial services giant thinks that the adoption of humanoid robots will accelerate in the 2030s.

Citigroup analyst Wenyan Fei pegs the number at closer to $7 trillion by 2050. He and fellow analyst Rob Garlick think that humanoid robots will be especially helpful in providing home services. They envision the robots folding laundry, mowing lawns, and caring for older adults. And Tesla could be a big player in this market. Fei named Tesla's Optimus robot as "definitely one of the leaders for the market."

Want an even more bullish estimate of the humanoid robotics market? Ark Invest believes the global opportunity could eventually be in the ballpark of $24 trillion. Unsurprisingly, Wood's team thinks that Tesla "could capture a significant share of this multi-trillion-dollar market."

Tesla's Optimus ambitions

Tesla certainly has grand ambitions for Optimus. CEO Elon Musk said during the company's 2024 fourth-quarter earnings call that Optimus could eventually generate more than $10 trillion in revenue. He acknowledged that his revenue predictions "sound absolutely insane." However, Musk added that he thinks "they will prove to be accurate."

If Musk's revenue estimate for Optimus is anywhere close to realistic, humanoid robots will be more important for Tesla's future than electric vehicles or robotaxis. But a lot has to happen first.

Musk predicted in Tesla's 2025 Q1 earnings call that the company will produce 1 million Optimus units per year by 2030, and perhaps as early as 2029. Once that production goal is reached, he thinks the production cost for its humanoid robot will be under $20,000. While the list price will be higher than that, Optimus could be affordable for many families.

Tesla plans on using Optimus extensively internally, too. Musk said in the Q1 call, "We expect to have thousands of Optimus robots working in Tesla factories by the end of this year."

The best reason to buy Tesla stock hand over fist?

Is the potential for success in the humanoid robotics market the best reason to buy Tesla stock hand over fist right now? Maybe, but I think investors should be cautious.

For one thing, Tesla is running into problems with its Optimus program. Milan Kovac, the senior vice president in charge of Optimus, left unexpectedly. Production has also reportedly been delayed as the result of a design change.

I suspect Tesla will be able to resolve these issues. However, the bigger challenge for the company is competition. With a market opportunity this large, multiple companies are in the race. Morgan Stanley believes that China is in the driver's seat in developing humanoid robots.

It's also important to remember that the huge humanoid robotics market estimates are for 25 years in the future. Investors should maintain a long-term perspective, but Optimus would need to move the needle in a significant way much sooner for it to be a major factor in buying the stock now.

Still, progress in humanoid robot development is something to keep your eyes on. If Tesla can sell a flexible, multi-purpose Optimus for $30,000 or so by 2030, the company could deliver much greater growth in the next decade than many investors expect.

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

The post Could this be the best reason to buy Tesla stock hand over fist? (Hint: It's not robotaxis.) appeared first on The Motley Fool Australia.

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

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

More reading

• Guess which ASX All Ords stock is jumping higher today on big Tesla news

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

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

Warren Buffett readily admits that he doesn't understand artificial intelligence (AI). He has also said that he won't invest in businesses that he understands. So, does that mean the legendary investor doesn't own any AI stocks? Nope.

Actually, Buffett has invested roughly $90 billion in nine companies that are heavily focused on AI. Here they are -- and which one is the best of the bunch.

AI stocks in Berkshire Hathaway's portfolio

Apple (NASDAQ: AAPL) ranks as the largest holding in Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) portfolio. Berkshire's stake in the iPhone maker is valued at close to $59.3 billion. Although Buffett significantly reduced the conglomerate's position in Apple last year, it still makes up 21% of Berkshire's total portfolio.

AI has been at the forefront of Apple's development strategy for years. However, the company was seemingly left behind in the generative AI race until it launched Apple Intelligence in 2024. So far, though, Apple Intelligence doesn't appear to be igniting the super-cycle of iPhone upgrades that some analysts predicted.

Amazon (NASDAQ: AMZN) is another top AI stock in Berkshire's portfolio, albeit a much smaller one. Berkshire owns around $2.1 billion of the e-commerce and cloud service giant's shares. Buffett didn't make the initial decision to buy Amazon; one of Berkshire's other investment managers (either Todd Combs or Ted Weschler) bought the stock.

Most AI models run in the cloud. As the largest cloud services provider in the world, Amazon Web Services (AWS) has been a big winner as organizations scrambled to build and deploy AI models in the cloud. Amazon is also using AI extensively internally to increase efficiency and provide more services to customers.

AI stocks in Buffett's "secret portfolio"

Apple and Amazon are the only AI stocks owned directly by Berkshire Hathaway. But I said that Buffett owned nine AI stocks. Where are the other seven? In Buffett's "secret portfolio."

General Reinsurance acquired New England Asset Management (NEAM) in 1995. Three years later, Berkshire Hathaway acquired General Re. NEAM continues to manage investments for insurance companies. Its holdings don't show up in Berkshire Hathaway's regulatory filings, but any stock owned by NEAM is also owned by Buffett.

Apple is the only AI stock in both Berkshire's and NEAM's portfolios. NEAM owns two other so-called "Magnificent Seven" stocks -- Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Microsoft (NASDAQ: MSFT). Like Amazon, both Alphabet and Microsoft are major cloud service providers and are profiting from the strong AI tailwind.

NEAM also has stakes in a couple of tech pioneers that are investing heavily in AI. IBM (NYSE: IBM) made headlines in the past with the success of its Watson AI technology. Texas Instruments (NASDAQ: TXN) isn't exactly a shining star in the AI world. However, the company makes edge AI products (AI deployed on local devices) and is working with Nvidia to develop power management and sensing technologies for data centers.

The stocks of three AI chipmakers are also in NEAM's portfolio. Broadcom (NASDAQ: AVGO) manufactures AI products, including Ethernet switches designed to accelerate AI workloads and custom AI accelerators. NXP Semiconductors (NASDAQ: NXPI) and Qualcomm (NASDAQ: QCOM) sell products that support edge AI.

The best of the bunch

If you're an income investor, Texas Instruments is probably the best pick among Buffett's nine AI stocks. Its forward dividend yield stands at 2.73%.

Alphabet is arguably the most attractively valued AI stock in the group, with growth prospects factored in. The Google parent's price-to-earnings-to-growth (PEG) ratio is 1.36.

I think the best Buffett AI stock all-around, though, is Amazon. The company is poised to profit as more organizations move their apps and data to the cloud. It still has significant growth prospects in e-commerce as well. Amazon is also expanding into new markets, including healthcare, autonomous ride-hailing, and satellite internet services.

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

The post Warren Buffett has $90 billion invested in these 9 artificial intelligence (AI) stocks. Here's the best of the bunch. appeared first on The Motley Fool Australia.

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

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

More reading

• Why now could be the time to buy these popular ASX ETFs
• 5 of the best ASX ETFs to buy in April
• The stress-free ASX ETF portfolio built to weather market crashes
• Market meltdown? Follow Warren Buffett's 5-step investing strategy
• These 3 ASX ETFs can help protect your portfolio in 2026

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet, Amazon, Apple, Berkshire Hathaway, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, Berkshire Hathaway, International Business Machines, Microsoft, Nvidia, Qualcomm, and Texas Instruments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom and NXP Semiconductors 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 Alphabet, Amazon, Apple, Berkshire Hathaway, 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.

Many investors might be experiencing stock market acrophobia these days. Acrophobia is the fear of heights. Stock market acrophobia is the fear that stock prices are reaching worrisome heights. This feeling is unsurprising considering the S&P 500 is now in the third year of a strong bull market and has delivered gains of 23% or more in two consecutive years.

Rich Dad Poor Dad author Robert Kiyosaki predicts the biggest stock market meltdown in history will happen soon. New York University professor emeritus Nouriel Roubini, who warned of a major housing correction and recession in 2006, expects resurging inflation and slower economic growth. This combination, known as stagflation, could set the stage for a significant stock market decline.

But at least one famous investor isn't in the doomsday camp — Warren Buffett. Here's why Buffett isn't predicting a stock market crash in 2025.

No, Buffett isn't bullish

Don't get the wrong idea: Just because Buffett isn't predicting a stock market crash this year doesn't mean he's bullish about stocks. Pretty much everything he's been doing indicates that he's instead relatively bearish.

Buffett has been a net seller of stocks for eight consecutive quarters. Berkshire Hathaway should disclose its portfolio transactions for the fourth quarter of 2024 within the next day or two. I expect Berkshire's regulatory filing will reveal that Buffett's net selling streak extended to nine consecutive quarters.

Another sign of Buffett's less-than-rosy outlook is Berkshire's cash stockpile. As of Sept. 30, 2024, the conglomerate had cash, cash equivalents, and short-term investments in U.S. Treasury bills totalling over $325 billion. That's the biggest cash position by far in Berkshire Hathaway's history.

BRK.A Cash and Short Term Investments (Quarterly) data by YCharts

We also shouldn't overlook the valuation metric bearing Buffett's name. The Buffett indicator measures the ratio of the total U.S. stock market capitalisation to GDP. In 2001, Buffett wrote, "If the ratio approaches 200% — as it did in 1999 and a part of 2000 — you are playing with fire." This metric is now above 200% — its highest level ever.

One simple explanation

With all of the evidence that Buffett is decidedly bearish about the stock market, why isn't he predicting a crash in 2025? There's one simple explanation: The legendary investor avoids making stock market predictions at all.

In his 1992 letter to Berkshire Hathaway shareholders, Buffett wrote:

We've long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie [Buffett's longtime business partner Charlie Munger, who died in 2023] and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.

He expressed a similar sentiment in his 2008 shareholder letter: "[N]either Charlie Munger, my partner in running Berkshire, nor I can predict the winning and losing years in advance. (In our usual opinionated view, we don't think anyone else can either.)"

The same view came up in Buffett's 2022 letter to Berkshire shareholders as well. Buffett wrote that he and Munger "firmly believe that near-term economic and market forecasts are worse than useless."

Preparation beats prediction

When the stock market plunged in October 2008, The New York Times published an op-ed written by Buffett. The legendary investor stated, "Let me be clear on one point: I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month or a year from now."

But Buffett added something that every investor should consider, "What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over."

Buffett won't try to forecast a stock market downturn. However, he knows that if one occurs it will present a buying opportunity. And he wants to be ready if and when such an opportunity arises.

He's only buying high-conviction stocks that meet his stringent investing criteria. He has amassed a hefty cash stockpile that could be used to aggressively buy stocks if a market downturn makes valuations more attractive. Buffett's words and actions underscore an important lesson for all investors: Preparation beats prediction.

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

The post Why Warren Buffett isn't predicting a stock market crash in 2025 appeared first on The Motley Fool Australia.

More reading

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

Keith Speights has positions in Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

Arguably the world's greatest stock picker isn't picking many stocks these days. Warren Buffett has been a net seller of stocks for eight consecutive quarters. I suspect when Berkshire Hathaway discloses the transactions it made in the fourth quarter of 2024, that count will increase to nine.

There's a reason Buffett isn't buying many stocks — and it's the same reason he ranks among the greatest investors of all time. Buffett is a master stock picker because he's highly selective about which stocks he buys.

Your chances of investing success will likely be greater if you're as picky as Buffett. Don't buy any stock in 2025 unless it passes this Buffett test.

A two-part test

Can we really know the "magic" process Buffett uses to select the stocks he buys? Actually, yes. In his 2013 letter to Berkshire Hathaway shareholders, the legendary investor revealed exactly what he does to select stocks. Buffet revealed a two-part test in that shareholder letter. By the way, it's very similar to the process he uses to identify companies for Berkshire to acquire.

Buffett first determines whether he can "sensibly estimate an earnings range for five years out or more." The operative word there is "sensibly." He doesn't pluck numbers out of the air but instead thoroughly reviews a company's business along with industry trends to make the best earnings estimate possible.

Note that five years is a minimum estimation period. Buffett wants to avoid investing in a business that might temporarily deliver strong earnings growth only for that growth to quickly evaporate. In his letter to Berkshire shareholders, Buffett wrote that if he can't estimate future earnings, he moves on to the next stock.

Buffett's second step is to buy a stock only if it trades at "a reasonable price" relative to the lower end of his estimated earnings range. He will buy a stock only if it's reasonably valued using this approach. Again, if the stock doesn't pass this second step, he moves on.

Simple, yet difficult

This two-step test used by Buffett might seem simple. However, it's more difficult to follow than you might think.

For one thing, "sensibly" estimating a company's earnings over five years or more can be challenging. If you've ever wondered why Buffett didn't invest in Apple or Amazon earlier than he did — or never bought stocks such as Nvidia that turned out to be massive winners — it's because he couldn't project their future earnings with enough confidence.

In his 2013 shareholder letter, Buffett explained that he needed to recognise "the perimeter of our 'circle of competence' and stay well inside of it." He knew (and still knows) how important understanding a business and industry is to estimating earnings.

It's also tough in some market environments to find stocks valued attractively enough to pass the Buffett test. That has clearly been the case in recent quarters. Otherwise, you can bet Buffett would have bought more stocks instead of amassing a cash stockpile of over $325 billion for Berkshire.

US stocks that might pass the Buffett test in 2025

Are there some stocks that might pass the Buffett test in 2025? I think so.

Energy Transfer (NYSE: ET) is a leading North American midstream energy company. Even with the increasing use of renewable energy, Energy Transfer's pipelines should transport natural gas, natural gas liquids (NGLs), and crude oil for years to come. The company also pays a juicy distribution that yields around 6.5%.

Don't look for jaw-dropping growth from Energy Transfer, but average annual growth of between 3% and 5% should be easily attainable. That's how much the company expects to grow its distribution. Even at the low end of this range, Energy Transfer's valuation looks attractive, especially considering its distributions provide a solid head start to a double-digit annual total return.

Buffett probably views Occidental Petroleum (NYSE: OXY) as one of the few stocks that meet his test. He has continued to regularly scoop up shares of the oil and gas producer, most recently during a sell-off last month.

I also like Oxy's prospects. However, investors should note that Berkshire owns warrants that allow it to buy the stock at a predefined share price. This undoubtedly makes the stock even more attractive to Buffett than it will be to other investors who don't benefit from such a deal. Occidental Petroleum might pass the two-step test for Buffett but not for others.

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

The post Take Warren Buffett's advice: Don't buy any stock in 2025 unless it passes this test appeared first on The Motley Fool Australia.

More reading

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

 Keith Speights has positions in Amazon, Apple, Berkshire Hathaway, and Energy Transfer. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Apple, Berkshire Hathaway, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Occidental Petroleum. The Motley Fool Australia has recommended Amazon, Apple, Berkshire Hathaway, 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 (SNPINDEX: ^GSPC) has enjoyed a nice run since Donald Trump won the presidential race on Nov. 5, 2024. Although the widely followed index pulled back after the Federal Reserve hinted fewer rate cuts might be on the way than expected, it's now rebounding and is only around 1% below the record high.

How long will the "Trump bump" for the stock market last? Here's what history shows.

Presidential bumps and slumps

How does the stock market typically react after a new president is elected? And how long does positive momentum last into the new president's term? There hasn't been a consistent theme.

Since 1960, we've had 10 new incoming U.S. presidents. I didn't count Lyndon B. Johnson since he served as president after John F. Kennedy's assassination before winning the presidency in 1964 in what was essentially a reelection. The S&P 500 rose in only half of those cases.

After JFK was elected in 1960, the stock market delivered a strong gain of nearly 9% by his inauguration on Jan. 20, 1961. While the S&P 500 continued to enjoy momentum during the first year of his term, it sank in 1962.

However, there were no bumps after the elections of Richard Nixon in 1968 and Jimmy Carter in 1976. The S&P rose a couple of percentage points following Ronald Reagan's election in 1980. But the market began a sharp sell-off during the first year of his first presidential term.

George H.W. Bush inherited a strong economy and stock market from Reagan. The S&P 500 increased nearly 5% between his election and inauguration. The honeymoon didn't last long, though, with a steep market decline in October 1989.

Stocks rose a little after Bill Clinton was first elected in 1992. However, that slow start gained momentum that lasted for years. The S&P didn't decline by 10% or more until 1997 -- and then only briefly. Clinton presided over one of the strongest bull markets ever.

By the time George W. Bush narrowly won the presidency in 2000, though, the joyride was over. Stocks fell after his election as the dot-com bubble continued to burst. Barack Obama's election in 2008 also came at a major negative inflection point for the S&P 500. Stocks plunged nearly 20% between Election Day and his inauguration.

The first "Trump bump" came in 2016 with the index rising close to 6% leading up to his first inauguration. This bull market lasted until the second half of 2018 when stocks fell sharply. By mid-2019, though, the losses were erased with the S&P continuing to soar until the pandemic caused a huge slump.

SPY data by YCharts.

Joe Biden enjoyed the biggest presidential bump of all as the S&P 500 soared 14% between his election and inauguration. The market kept up its winning ways during the first year of Biden's presidency but sank in 2022.

Lessons from history

So what can we learn from the history of presidential bumps? Not much. Over the last seven decades, the chances of the S&P 500 rising after the election of a new president are the same as the chances the index declines.

In three of the five cases when the market rose between Election Day and inauguration day, the momentum didn't last very long. In only one case (during Bill Clinton's presidency) did a bull market extend into the second presidential term.

Probably the most important lesson from history is that it doesn't serve as a reliable guide for how the stock market will perform during a new presidential administration. Macroeconomic factors have varied so much in the past that there is no clear historical pattern for stocks.

Four more years

A recent survey by CNBC found that most investors believe the stock market will flourish in a second Trump term. But that sentiment could be nostalgic thinking at work because many remember the S&P 500's gains during much of Trump's first four years in office.

It's important to note that interest rates are higher as Trump returns to the White House than they were his first time as president. He also appears to be more adamant about imposing steep across-the-board tariffs than he was eight years ago. Many economists believe these tariffs will hurt the U.S. economy, which could cause stocks to decline.

I think investors should focus on a longer time horizon than one presidential term, regardless of who sits in the Oval Office. We can't know for sure how the stock market will perform over the near term. Over the long term, though, the S&P 500 has always delivered solid returns. The more years in your investment period, the better your chances of success.

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

The post How Long Will the "Trump Bump" for the Stock Market Last? Here's What History Shows. appeared first on The Motley Fool Australia.

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

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

More reading

• Why these ASX ETFs could be top picks for investors in their 50s
• Buy, hold, sell: Life360, Northern Star, and Sigma shares
• 2 ASX gold stocks to buy next week
• $100k vs $600k in superannuation: How different would retirement be?
• A rare buying opportunity to buy 1 of Australia's top shares?

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

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

Another year, another huge gain. That's what appears to be shaping up for Nvidia (NASDAQ: NVDA). Shares of the GPU maker are up big with only a few weeks remaining in the year.

It's too late for investors who don't own Nvidia to benefit from the stock's past performance. But should you buy Nvidia stock hand over fist before the end of 2024? Here's what history suggests.

An impressive Q1 track record

There's often no reason to hurry to buy a stock. Whether you purchase shares immediately or a few months later doesn't matter too much in many cases. However, it's been a different story with Nvidia.

The company conducted its initial public offering on January 22, 1999. In the nearly 25 years since then, Nvidia has delivered a positive return in the first quarter 20 times. The stock's average Q1 gain is an impressive 19%. If you waited until after the beginning of the year, you would have been poorer most of the time.

In 14 of Nvidia's 25 full first quarters since its IPO, the stock has delivered a double-digit percentage gain. The most impressive performance came last year when Nvidia's share price skyrocketed 90%. But the first quarter of 2024 ranks as the stock's second-best Q1 performance ever with a huge gain of 82.5%.

NVDA data by YCharts

Granted, Nvidia has turned in some dismal Q1 performances. In the first quarter of 2008, the stock plunged roughly 42%. However, over the last 10 years, Nvidia has experienced only one negative first quarter with its shares falling around 7% in Q1 of 2022.

Expanding the horizon

Of course, most investors won't buy Nvidia shares before the end of a given year and then sell them three months or so later. How has the stock performed over longer periods?

Nvidia delivered a positive return in 17 of the 23 three-year periods since the company's IPO (including the period between 2022 and 2024). The average return for these three-year periods was around 195%.

But if you bought before the end of a given year and held onto the stock for five years, you'd really be sitting pretty. Nvidia's share price has risen in 19 out of 21 five-year periods since its IPO. The average return for these five-year periods was a staggering 551%.

What's the bottom line from a historical standpoint when it comes to buying Nvidia stock before the end of the year? It nearly always pays off handsomely.

Throw out the history books

Now for the bad news: There's a good case to be made that history doesn't matter much regarding investing in Nvidia. Why? The present is unlike the past.

Most of Nvidia's stellar performances in previous years came before the generative AI explosion. Interest rates were also much lower during the period when Nvidia delivered its greatest gains. Rivals are scrambling to develop chips that compete with Nvidia's GPUs. The stock's future returns may be significantly lower in the future as the supply of AI chips catches up with demand, interest rates remain higher (relatively speaking), and competition intensifies.

However, there's also an argument that Nvidia's future could be even brighter than its past. CEO Jensen Huang believes that the company's new Blackwell GPU architecture could become the most successful product in not only Nvidia's history but in "the history of the computer." Importantly, Nvidia is now on a yearly cycle of launching new chips, so even more powerful GPUs will be on the way after Blackwell.

AI is still only in its early innings. New advances, potentially including artificial general intelligence (AGI), could boost Nvidia's growth like never before. Even if we eliminate AI altogether, the company could have a $1 trillion opportunity as organisations shift from general-purpose computing to accelerated computing.

If you think Nvidia's growth prospects will improve (and there's good reason to do so), throw out the history books: Buying this stock hand over fist before the end of the year makes perfect sense.

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

The post Should you buy Nvidia stock before the end of 2024? Here's what history suggests appeared first on The Motley Fool Australia.

More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio

Keith Speights 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.

Time flies when you're having fun. And Nvidia (NASDAQ: NVDA) shareholders are having a lot of fun this year. The stock has soared over 180%. It could very well fly even higher.

Nvidia plans to announce its fiscal year 2025 third-quarter results on Nov. 20, a little over three weeks away. Should you buy Nvidia stock hand over fist before then?

If history is any guide…

Investors might want to think long and hard about buying shares of Nvidia before its Q3 update. The company has an excellent track record of performing better than expectations.

New York University finance professor Aswath Damodaran recently noted that Nvidia has topped Wall Street's earnings estimates in all but two quarters (both in 2022) over the last five years. If history is any guide, the chances of the company delivering better-than-expected earnings next month are pretty good.

Damodaran provided two potential reasons for Nvidia's impressive string of beating analysts' earnings estimates. One possibility is that the company is adept at recognising revenue and recording expenses so that it can outperform Wall Street's expectations. Another is that the demand for Nvidia's graphics processing units (GPUs) is growing so quickly that analysts' forecasts aren't keeping up.

I think Damodaran's second scenario is more compelling. Nvidia might have enough wiggle room with accounting rules to sometimes manage an earnings beat. However, such manipulation wouldn't realistically enable the company to exceed expectations consistently for nearly every quarter over five years.

But there's an even better argument for the NYU professor's second potential reason for Nvidia's outperformance. The demand for Nvidia's GPUs unequivocally has accelerated more quickly than Wall Street projected in the past because analysts have said so themselves.

Will history repeat itself?

Should investors expect Nvidia to do it again? Based on management's comments in recent months, there are some reasons to be optimistic.

Nvidia CFO Colette Kress said in the company's Q2 earnings call that the demand for Hopper GPUs "will continue to grow into the second half" of the year. She also noted later that Nvidia believes its adjusted gross margin will be around the same level in Q3 as reported in Q2.

The consensus estimates among the 37 analysts surveyed by LSEG are for Q3 revenue of $32.9 billion and adjusted earnings of $0.74 per share. Those numbers reflect sequential growth of roughly 9.7% and 8.8%, respectively.

In Q2, Nvidia's revenue jumped 15% from the previous quarter with adjusted earnings per share increasing 11%. The company's growth could slow somewhat in Q3 and still be enough for Nvidia to top Wall Street's estimates. For what it's worth, though, Nvidia projects Q3 revenue of $32.5 billion, which is lower than analysts expect. Of course, the company has been known to sandbag with its guidance.

Two things to keep in mind

So, does it make sense to buy Nvidia stock hand over fist before Nov. 20? Maybe. However, I think investors should keep two things in mind.

First, earnings beats don't necessarily translate to significant stock gains. Nvidia exceeded analysts' estimates with its Q2 results in August only for its share price to immediately sink and continue falling for several more days.

Second (and more importantly), whether you buy Nvidia stock before or after the company's Q3 update probably won't make much of a difference in your returns over the long run. If you're a long-term investor and believe the shift to accelerated computing and artificial intelligence (AI) are unstoppable trends, any time is arguably a good time to buy Nvidia.

On that note, I'd be remiss without pointing out that the big story in Nvidia's next quarterly update could be more information about customers' excitement over the new Blackwell chips. Nvidia CEO Jensen Huang has already said the demand for Blackwell is "insane." Perhaps the biggest way the company could beat expectations in its Q3 update will be with its outlook related to the new GPU platform. We'll find out soon.

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

The post Should you buy Nvidia stock before November 20? appeared first on The Motley Fool Australia.

More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio

Keith Speights 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.

Nvidia Corp's (NASDAQ: NVDA) luster seems to have faded. The stock is down roughly 25% below its high set only a few weeks ago. Roughly one-third of Wall Street analysts surveyed by LSEG in August no longer recommend buying Nvidia stock, a big change from July.

Some investors might think it's time to move on to greener pastures. I suspect the opposite is true. Why is Nvidia still a buy after its steep sell-off? Just ask Amazon.com Inc (NASDAQ: AMZN), Google parent Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL), Microsoft Corp (NASDAQ: MSFT), and Meta Platforms Inc (NASDAQ: META).

Singing the same song

All four artificial intelligence (AI) leaders sang the same song in their latest quarterly updates. And their music should be sweet to the ears of Nvidia shareholders.

Alphabet reported its second-quarter results on July 23. CFO Ruth Porat noted in the Q2 earnings call that the company's capital expenditures were "driven overwhelmingly by investment in our technical infrastructure with the largest component for servers, followed by data centers." She added that capex in subsequent quarters this year would be at or above the Q1 level of $12 billion.

CEO Sundar Pichai was asked about the high levels of AI infrastructure investment. He replied, "[T]he risk of under-investing is dramatically greater than the risk of over-investing for us here, even in scenarios where it turns out that we are over-investing."

Microsoft announced its fiscal 2024 Q4 results on July 30. CFO Amy Hood said in the company's earnings call, "To meet the growing demand signal for our AI and cloud projects, we will scale our infrastructure investments with FY '25 capital expenditures expected to be higher than FY '24." Around half of that spending will be on servers to support cloud and AI models.

The next day, Meta provided its Q2 update. CFO Susan Li stated in the Q2 call, "[W]e currently expect significant capex growth in 2025 as we invest to support our AI research and our product development efforts."

Amazon followed with its Q2 results on Aug. 1. In the company's earnings call, CFO Brian Olsavsky said, "[W]e expect capital investments to be higher in the second half of the year." He added, "The majority of the spend will be to support the growing need for AWS infrastructure as we continue to see strong demand in both generative AI and our non-generative AI workloads."

Great news for Nvidia

Alphabet, Microsoft, Meta, and Amazon plan to continue spending heavily on AI-related infrastructure. That's great news for Nvidia because it almost certainly means higher sales of its graphics processing units (GPUs).

Sure, these big companies are using their own AI chips to some extent. Google has its Trillium custom AI accelerator. Microsoft has Azure Maia. Meta's custom AI chip is MTIA (which stands for Meta Training and Inference Accelerator). Amazon played up its Trainium and Inferentia chips in its Q2 call.

However, make no mistake about it: These AI giants rely heavily on Nvidia. That isn't going to change anytime soon. It's possible the dependence on Nvidia could increase soon. Nvidia's Blackwell GPU architecture is leaps and bounds better than anything else on the market. Amazon, Alphabet, Microsoft, and Meta are lined up to be among the first to receive the new Blackwell-based chips when they begin shipping.

Nvidia CEO Jensen Huang has great expectations for Blackwell. He predicts that it could be the "most successful product" in the company's history. I suspect he'll be proven right — with Amazon, Alphabet, Microsoft, and Meta helping make it happen.

What about the reported Blackwell delay?

Some investors could be concerned about the report in The Information of a delay in shipping Blackwell chips due to a design flaw. Nvidia hasn't commented on the rumor other than to confirm that it expects production of the new chips to ramp up in the second half of 2024.

I'm not sure if the report is true, although it could be. In Nvidia's quarterly update in May, CFO Colette Kress said the company was working to make Blackwell available for global partners "later this year." However, in Alphabet's Q2 call, Pichai noted that "the latest Nvidia Blackwell platform will be coming to Google Cloud in early 2025."

But any Blackwell delay should only be a temporary issue for Nvidia. The overall prospects for the company shouldn't change. And if you listen closely to what Amazon, Alphabet, Microsoft, and Meta are saying, those prospects should remain very good.

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

The post Why is Nvidia stock still a buy after its steep sell-off? Just ask Amazon, Google, Microsoft, and Meta appeared first on The Motley Fool Australia.

More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• 5 of the best ASX ETFs to buy in April
• The stress-free ASX ETF portfolio built to weather market crashes
• These 3 ASX ETFs can help protect your portfolio in 2026

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. Keith Speights has positions in Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

All good things must come to an end. Or do they? That's a question many investors could be asking about Nvidia Corp's (NASDAQ: NVDA) remarkable run.

Shares of the graphics processing unit (GPU) maker have skyrocketed more than ninefold since the fourth quarter of 2022. Nvidia is up almost 130% so far this year. However, the stock has plunged around 17% in recent weeks. Despite this big pullback, some Wall Street analysts think Nvidia is still a no-brainer buy.

Full steam ahead

Four analysts have reiterated buy ratings for Nvidia since its shares began to retreat on July 10, 2024, according to LSEG. And they're even more optimistic about the stock than before Nvidia's pullback started.

On July 12, Benchmark analyst Cody Acree maintained his buy recommendation for Nvidia and raised its 12-month price target to $170 from $135. This higher target came after Benchmark hosted a fireside chat with Nvidia and investors. After this event, Acree said he had "increasing conviction" about Nvidia's continued leadership in the artificial intelligence (AI) chip market.

Three days later, TD Cowen analyst Matthew Ramsay reiterated a buy rating for Nvidia. Ramsay also raised the price target for the stock to $165 from $140. Ramsay believes that the demand for Nvidia's chips is sustainable and predicts another strong quarterly update from the company in August.

Two more votes of confidence in Nvidia came on July 22. Loop Capital's Ananda Baruah maintained a buy rating for the stock and raised the price target to $175 from $120. Piper Sandler's Harsh Kumar reiterated an overweight rating for Nvidia. Kumar increased his firm's price target for the stock to $140 from $120. He wrote to clients, "We see the strong business trends exhibited over the prior year by Nvidia set to continue, aided by the official launch of the Blackwell architecture in the October quarter."

Not everyone on Wall Street is as bullish about Nvidia

LSEG didn't report any downgrades for Nvidia since its recent pullback began. However, not all Wall Street firms are as bullish about the stock as Benchmark, TD Cowen, Loop Capital, and Piper Sandler.

Fifteen of the 38 analysts surveyed by LSEG in July rated Nvidia as a "hold." This group includes DeutscheBank's Ross Seymore, who said in May that it was "too late to buy" the stock. Two of the analysts surveyed by LSEG in July were even more pessimistic.

Why are so many analysts less enthusiastic about Nvidia? It's not that they don't think the company's GPU sales will continue to grow. Instead, the primary concern is that Nvidia's valuation already reflects this anticipated growth.

Is Nvidia stock still a no-brainer buy?

I don't think Nvidia is the no-brainer buy it once was. The euphoria surrounding the initial launch of generative AI models has died down somewhat. However, I believe the stock can and probably will move higher.

Benchmark's Acree is correct, in my view, that Nvidia will maintain its leadership in the AI chip market. I agree with TD Cowen's Ramsay that Nvidia will deliver another round of impressive results in its second-quarter update. I suspect Piper Sandler's Kumar is right that the company's launch of its Blackwell-based chips will provide a catalyst.

Blackwell could be a game changer for Nvidia. I'm not sure how much growth the new architecture will generate for the company, but I expect it to be significant. My take is that Nvidia's tremendous run hasn't come to an end. Instead, the stock is likely just taking a breather.

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

The post Nvidia stock plunges: Why some Wall Street analysts think it's still a buy appeared first on The Motley Fool Australia.

More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio

Keith Speights 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.

Anyone who thought Nvidia Corp (NASDAQ: NVDA)'s sizzling momentum would go on forever without a hitch should now know better. A hitch has unquestionably arrived.

Sure, the high-flying artificial intelligence (AI) stock is still up close to 140% year to date. However, Nvidia stock has pulled back over 10%. Here's what history says could happen next.

A track record of pullbacks and rebounds

Nvidia has fallen by double-digit percentages from its high plenty of times since its stock began trading publicly in 1999. The first one came only days after its initial public offering. However, within a few weeks, Nvidia shrugged off the temporary setback and marched to a new high.

NVDA DATA BY YCHARTS

Several other pullbacks of 10% or more occurred during Nvidia's first year on the market. In each case, the stock bounced back. However, Nvidia's sell-offs weren't always short-lived. Between late 2001 and October 2002, shares of the graphics processing unit (GPU) maker plunged nearly 90%. Nvidia didn't climb back to its previous high until December 2006.

NVDA DATA BY YCHARTS

And that wasn't Nvidia's longest trough. The stock market sell-off that began in late 2007 sparked another huge sell-off of Nvidia. Although the worst was over by the latter part of 2008, it took the stock over eight years — until May 2016 — to recover.

NVDA DATA BY YCHARTS

However, Nvidia always eventually bounced back after a major decline. Given enough time, the stock has a 100% rebound rate historically.

Is this time different for Nvidia?

Investors shouldn't automatically conclude that history will repeat itself. Just because Nvidia has come back from big pullbacks in the past doesn't mean that it will necessarily do so again. Could this time be different for Nvidia?

Nvidia has never had a market cap of over $3 trillion before a double-digit percentage sell-off until now. The company is clearly at a different stage than it's ever been. Some could argue that Nvidia's valuation makes things different now than in the past.

I question that premise, though. Based on several valuation metrics (including price-to-earnings ratio and price-to-free-cash-flow), Nvidia isn't as expensive as it's been at other times in its history.

The factors that contributed to Nvidia's lengthy downturns in the past aren't problems today, either. While many tech stocks trade at a premium, valuations aren't at the excessive levels seen in the dot-com boom. There is no financial crisis like we saw in 2007 through 2009. Overall, the macroeconomic conditions are pretty good for Nvidia right now.

Nvidia's current double-digit decline is mainly due to concerns about China. Bloomberg reported last week that the Biden administration could further restrict exports of chipmaking equipment to China. Soon afterward, GOP presidential nominee Donald Trump suggested that Taiwan should pay the United States for defending it against attack. Although these developments are concerning for Nvidia, they don't rise to the level of the issues that have caused extended declines for the stock in the past.

Look to Nvidia's future instead of its past

I think that history is on the side of a relatively quick rebound for Nvidia. But I'd also argue that investors should look to the company's future instead of its past. Nvidia's share price won't bounce back because it's always done so. It will bounce back if investors are convinced that growth prospects present a compelling case for buying the stock.

On that front, there's reason to be optimistic. Nvidia will soon launch new chips based on its Blackwell architecture. CEO Jensen Huang believes Blackwell will be the company's "most successful product" in its history. If he's right, the current pullback presents a great buying opportunity.

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

The post Nvidia stock has pulled back over 10%. Here's what history says could happen next appeared first on The Motley Fool Australia.

More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio

Keith Speights 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.

When key insiders buy shares of their company, they're probably confident about its future. Sure, that confidence could be misplaced. However, most investors see insider buying as a positive sign.

But it can be a much different story when key insiders sell shares. In some cases, such moves could hint that they aren't optimistic about the stock's future — at least over the near term.

That leads me to Nvidia (NASDAQ: NVDA). The stock has been on a roll, skyrocketing more than seven times over the last three years and soaring more than 160% so far in 2024. However, Insiders are selling their shares of Nvidia. Should you?

Selling away

Since the beginning of May, 10 Form 144 filings have been reported by Nvidia to the U.S. Securities and Exchange Commission (SEC). There are two important things to know about Form 144. First, it's a notice of the proposed sale of securities. Second, it's only used when there's a planned sale of 5,000 or more shares or an aggregate amount of over $50,000.

The most prominent person selling Nvidia stock is the company's CEO, Jensen Huang. Nvidia notified the SEC that Huang planned to sell 120,000 shares on June 13, 2024. At the market close on that date, this transaction would have been worth around $15.5 million.

Huang wasn't the only Nvidia executive selling shares. Executive vice president of operations Deborah Shoquist sold 41,140 shares worth more than $45 million on June 3, 2024.

Several members of Nvidia's board of directors also got in on the action. Dawn Hudson sold a total of 25,000 shares on three separate occasions since May 29, 2024. Board members Tench Coxe, John Dabiri, Michael McCaffery, Brooke Seawell, and Mark Stevens also sold some of their Nvidia shares in recent weeks.

More to the story

These insider sales could be alarming to some investors. To use an old saying: Are the rats fleeing a sinking ship? Nope. There's more to the story.

The shares Huang sold were part of his executive compensation package. Specifically, they were restricted stock units (RSU) and performance stock units (PSU). Company CEOs frequently sell such shares when they're allowed to do so.

Importantly, Huang owned nearly 93.5 million shares of Nvidia as of March 25, 2024. That's almost 3.8% of the company's outstanding shares. His recent sales were only a drop in the bucket compared to his total holdings. Huang still has plenty of skin in the game.

Most of the other sales (including the ones by Shoquist and several board members) were also of restricted stock units. Investors shouldn't be too concerned about these transactions.

Should you sell Nvidia stock?

I don't think the recent insider sales of Nvidia are a reason for outsiders to sell the stock. However, there could be some reasons for you to consider selling.

Nvidia's jaw-dropping gains might have caused the stock to make up a worrisome percentage of your overall portfolio. Some investors might want to trim their positions as a result.

My colleague Sean Williams predicts that Nvidia stock is poised to plunge by at least 50%. If you agree with his rationale, selling soon makes sense.

However, Nvidia's underlying business remains strong. The company continues to execute exceptionally well. The demand for its graphics processing units isn't waning. Those are great reasons to hang on to a stock.

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

The post Insiders are selling Nvidia stock. Should you? appeared first on The Motley Fool Australia.

More reading

• Why now could be the time to buy these popular ASX ETFs
• Why are ASX 200 tech stocks like WiseTech and Life360 going gangbusters on Wednesday?
• Nvidia CEO reveals massive US$1 trillion AI chip opportunity
• Just 3 ASX ETFs could build a lazy Australian millionaire portfolio

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. Keith Speights has no position in any of the stocks mentioned. 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.

Some might think Apple Inc's (NASDAQ: AAPL) best days are behind it. Revenue growth has ground to a halt. The company's biggest new product in years, its Vision Pro mixed reality headset, might be a commercial flop. Apple's reign as the largest company in the world based on market cap has ended. It's now in third place behind Microsoft and Nvidia.

Don't give up on Apple just yet, though. Anytime people have done so in the past, the company has reinvented itself and gone on to achieve tremendous success. Apple just might do it again. And the company could have a clear path to making it happen. Meet Apple's new $186 billion market opportunity.

Living on the edge

Artificial intelligence (AI) could be bigger than the internet. That's not just my opinion. Alphabet CEO Sundar Pichai and Altimeter Capital CEO Brad Gerstner think so. Nvidia CEO Jensen Huang believes that one specific type of AI — generative AI — will be bigger than the internet all by itself.

So far, AI development has been primarily done in the cloud. That's why Nvidia's data center revenue soared 427% year over year in the first quarter of 2024 and now makes up nearly 87% of the company's total revenue.

But this story could soon change as edge AI gains momentum. Edge AI is the deployment of AI on devices near where data is created (on the "edge"). There are several advantages of edge AI compared to AI on the cloud, including lower latency (delays in data transfer) and bandwidth requirements along with increased privacy.

How big could the edge AI market be? Estimates vary, but there's a consensus that the market will grow rapidly. Market researcher Market.us predicts the edge AI market will expand by a compound annual growth rate (CAGR) of 25.9% to $143.6 billion by 2032. Fortune Business Insights projects a CAGR of 27.5% with the edge AI market topping $186 billion by 2032.

Why Apple could be the leader in edge AI

Morgan Stanley wrote in a 2023 report that it believes "Apple will emerge as one of the key winners" in the edge AI market. I wholeheartedly agree with that assessment.

Edge AI must run on devices. Apple has over 2.2 billion devices in active use throughout the world. This number largely consists of iPhones, but the company also has other devices, including computers and wearables.

Importantly, Apple already has chips powerful enough to run AI apps on its devices. The company's next-generation iPhone chip on the way will almost certainly provide even better AI performance.

Apple has the ecosystem to foster edge AI software development by other companies. It also has deep pockets to fund internal R&D and acquisitions to advance edge AI technology going forward.

Some might be excited by Apple's AI announcements at its Worldwide Developers Conference (WWDC) this week. Others could be disappointed. Either way, any WWDC revelations are only the beginning. Look for Apple to continue to launch edge AI functionality over the coming years.

Does this opportunity make Apple stock a no-brainer buy?

Even for a company that generates as much revenue as Apple does, the edge AI market opportunity is big enough to move the needle significantly. But does this opportunity make Apple stock a no-brainer buy? Not necessarily.

Apple could squander its opportunity. It's possible that edge AI won't be as impactful as many expect. I don't expect either to happen, though. However, Apple won't be a no-brainer buy until there's sufficient reason to believe the company will return to strong growth. We're not at that point yet, but we could be relatively soon.

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

The post Meet Apple's new $186 billion market opportunity appeared first on The Motley Fool Australia.

More reading

• Why now could be the time to buy these popular ASX ETFs
• 5 of the best ASX ETFs to buy in April
• The stress-free ASX ETF portfolio built to weather market crashes
• These 3 ASX ETFs can help protect your portfolio in 2026
• 3 ASX ETFs for new investors to consider in 2026

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet, Apple, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

Imagine you could go back in time to November 2008. Amazon's (NASDAQ: AMZN) share price has dropped like a brick and is down well over 50% year to date. Would you buy the stock? You'd be crazy not to do so. Amazon went on to deliver a staggering 88x gain by the end of 2021.

Now let's return to the present. Amazon's share price has dropped like a brick yet again. It's down the most since that huge sell-off 14 years ago. Should you back up the truck and load up on Amazon stock?

Behind Amazon's plunge 

To answer that question, we need to first examine the factors behind Amazon's steep plunge this year. Much of the blame can be placed on macroeconomic headwinds and uncertainty that have caused the overall stock market to fall.

Amazon's revenue growth has been dampened by the strong U.S. dollar. In the third quarter alone, the company's sales were around $900 million lower due to unfavorable foreign exchange rates. 

But Amazon's growth is slowing even on a constant-currency basis. The company expects Q4 revenue will increase by only 2% to 8% year over year, with an impact of foreign exchange rates of around 460 basis points (or 4.6%). 

What's Amazon's main problem? Inflation. CFO Brian Olsavsky said in the company's Q3 conference call, "The continuing impacts of broad-scale inflation, heightened fuel prices and rising energy costs have impacted our sales growth as consumers assess their purchasing power and organizations of all sizes evaluate their technology and advertising spend." 

However, the top line isn't Amazon's only issue. The company's earnings are also falling because of a significant increase in spending. This has contributed to Amazon's free cash flow, arguably the most important measure of its financial health, sinking into negative territory.

Two important questions

One of the most important questions to ask when considering whether or not to buy Amazon stock now is: Are the company's issues only temporary? I think the answer is clearly "yes."

The two biggest challenges for Amazon right now -- the strong U.S. dollar and high inflation -- are intertwined. The dollar is strong in large part because of the Federal Reserve's monetary policy. And the Fed's policy, which is focused on aggressively raising interest rates, is in place to try to curb inflation.

Sooner or later, though, the Fed's moves will cause inflation to moderate. We're seeing a few signs that it could already be happening, such as the lower-than-expected producer price index announced earlier this month. When the Fed feels that inflation is in check, it will stop raising interest rates and will eventually lower them.

In the meantime, Amazon is wisely cutting costs to improve its bottom line and free cash flow. The company announced major layoffs recently. It's also shutting down several businesses that have weighed on growth.

There's also another important question that investors should consider: Does Amazon have strong growth prospects? Again, I think the answer to this question is a resounding "yes."

E-commerce in the U.S. made up only 14.1% of total retail sales in the third quarter of 2022. Cloud hosting remains an attractive option for businesses, with Amazon Web Services still the No. 1 player in this market. Amazon also has other potential growth drivers, including its moves into digital advertising, healthcare, and streaming TV.

Back up the truck?

Probably the biggest knock against Amazon is its valuation. The stock trades at more than 46 times expected earnings. I suspect that most discounted cash flow models analyzing Amazon would indicate that the stock is overvalued despite its sharp decline this year.

However, Amazon has appeared to be overvalued throughout its entire history. That hasn't prevented the stock from delivering massive returns. The reality is that Amazon is a business that's difficult to value because its management team continually comes up with new ways to grow. That's a good "problem" to have for investors.

Amazon isn't likely to go on the huge surge going forward as it did after 2008. But I fully expect the stock will nonetheless return to its winning ways in the not-too-distant future. Should you back up the truck and load up on Amazon stock? I think so.

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

The post Should you back up the truck and load up on Amazon stock? appeared first on The Motley Fool Australia.

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

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

More reading

• These 3 ASX ETFs can help protect your portfolio in 2026
• 2 ASX shares booming on electrification and mining. Is there more upside ahead?
• 3 ASX ETFs for new investors to consider in 2026

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

Don't believe for one second that Warren Buffett doesn't think about dividends. In his latest letter to Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) shareholders, he mentioned that the company received $785 million in dividends from just one stock in 2021 (it was Apple).

Buffett's recent buys for Berkshire's portfolio also hints that dividends might have been on his mind. In the third quarter of 2022, he purchased eight stocks. Seven of them pay dividends. A few of them offer dividends that are quite attractive. Buffett just bought these three dividend stocks with yields of over 3%.

1. Paramount Global

Paramount Global (NASDAQ: PARA) stands out as Buffett's only high-yield purchase in the third quarter. The media company's dividend yield currently tops 5.1%. 

Buffett's history with Paramount goes back to when the company was known as Viacom. He led Berkshire to open a position in Viacom in 2012. While the legendary investor later sold all of those shares, he apparently regained an interest in the stock in the first quarter of this year and has kept on buying.

Berkshire now owns 15% of Paramount Global's outstanding class B shares. The stock hasn't been a winner for Buffett so far, though, with a year-to-date decline of close to 40%. 

What does the multibillionaire investor like about Paramount (other than its dividend)? Its valuation probably ranks high on the list. The stock trades below 12.8 times expected earnings.

2. Jefferies Financial Group

Buffett has long been a fan of bank stocks. But he's become less enamored of the financial services sector lately. That's what makes Berkshire's new position in Jefferies Financial Group (NYSE: JEF) somewhat surprising.

With a market cap of under $9 billion, Jefferies is much smaller than the other banks in Berkshire's portfolio. Unlike those other bigger corporations, Jefferies focuses only on investment banking and doesn't have a commercial banking unit. But it offers a dividend that rivals the big boys with a yield of more than 3.2%.

Jefferies' stock has also outgained Berkshire's other bank stocks so far this year. However, Buffett's investment in the company played a key role in that outperformance.

Berkshire owns only a tiny position in Jefferies, though. That could indicate that Buffett and his team began buying in the latter part of the third quarter and are continuing to scoop up shares in the fourth quarter.

3. Chevron

It wasn't surprising whatsoever that Buffett added to his position in Chevron (NYSE: CVX) in the third quarter. The oil and gas giant is Berkshire's third-largest holding, including shares owned by its New England Asset Management subsidiary. 

Chevron's dividend yield of 3.1% is lower than it's been throughout much of the past 10 years. That's not because the company has cut its dividend, though. Actually, Chevron is a Dividend Aristocrat with 35 consecutive years of dividend increases.

Instead, the company's dividend yield is lower because its stock price has risen so much. Chevron stock has soared nearly 60% year to date. That follows a 39% gain in 2021.

Buffett seems to still think Chevron is attractively valued. Its shares trade at 11.2 times expected earnings. There's a good chance that this stock -- and its dividend -- go even higher. 

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

The post Warren Buffett just bought these 3 dividend stocks with yields of over 3% appeared first on The Motley Fool Australia.

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

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

More reading

• Why these ASX ETFs could be top picks for investors in their 50s
• Buy, hold, sell: Life360, Northern Star, and Sigma shares
• 2 ASX gold stocks to buy next week
• $100k vs $600k in superannuation: How different would retirement be?
• A rare buying opportunity to buy 1 of Australia's top shares?

Keith Speights has positions in Apple and Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Berkshire Hathaway (B shares), and Jefferies Financial Group Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple and Berkshire Hathaway (B 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.

Warren Buffett has made many memorable statements throughout the years. One I've always especially liked is this line he wrote in his 1996 letter to Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) shareholders: "If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes."

That's exactly the kind of thing you'd expect to hear from a legendary investor known for his buy-and-hold long-term mindset. This is the same person who once stated that his "favorite holding period is forever". You'd also probably think Buffett has always practised what he's preached.

Think again. Buffett doesn't follow his own advice on this front nearly as often as you might expect. And it's actually made him richer.

The 10-year test

My curiosity recently got the better of me. I went back to Berkshire's 13F-HR filing for the third quarter of 2012. The purpose was simple: I wanted to see just how many of the stocks Buffett owned (via his stake in Berkshire) 10 years ago were still in his portfolio as of the latest regulatory filing.

In Q3 2012, Berkshire owned 37 stocks. Only 15 of those stocks were in the conglomerate's portfolio 10 years later. Of course, this didn't mean that Buffett hadn't owned the other 22 stocks for 10 years. After all, he could have bought them well before 2012 and still held them for at least that long. That was exactly the case with seven of them. 

There were also some other unusual scenarios to account for. One of those stocks from 2012 (Precision Castparts) was fully acquired by Berkshire along the way. On the other hand, Buffett sold Viacom during the period only to buy it back with the purchase of Paramount Global shares earlier this year. (Viacom later became ViacomCBS and renamed itself Paramount Global in February 2022.)

We also should cut Buffett some slack in a few cases. Three of the companies in which Berkshire owned shares back in 2012 were later acquired and taken private -- USG, Wabco, and The Washington Post. He couldn't still own these stocks today even if he wanted to.

Still, though, Buffett didn't hold on to 11 of the stocks in Berkshire's portfolio in Q3 2012 for at least 10 years. That's nearly 30% of the total number of stocks he owned back then. This got me to question whether his decisions to sell those stocks were smart moves.

A lazy analysis

I took an admittedly lazy approach in analyzing Buffett's wisdom in selling so many stocks before he had held them for 10 years. But I think my quick-and-dirty method is nonetheless instructive.

No, I didn't try to do the practically impossible task of guessing what Buffett did with the money made from those sales. I simply compared the performances of all the stocks in Berkshire's Q3 2012 portfolio that Buffett hadn't held for at least 10 years against how Berkshire itself performed between the end of Q3 2012 and the end of Q3 2022.

So what did I find? Only two of the 11 stocks that Buffett sold without holding for 10 years had delivered a total return greater than Berkshire's by the end of the third quarter of 2022 -- Deere and Verisk Analytics.

The bottom line here is that Buffett appears to have come out better overall by selling this group of stocks instead of holding them for 10 years. He's richer because he didn't dogmatically buy and hold.

RIP, buy and hold?

Don't say "rest in peace" to the buy-and-hold philosophy just yet, though. For one thing, Buffett did use some wiggle words in his previous statements. He didn't insist that investors should always hold stocks for at least 10 years. He merely said that you should be willing to own the stocks for that long.

The reality is that you can have a long-term mindset even when you don't hold some stocks for an especially long period. I don't think Buffett bought any of those stocks back then without being willing to own them for at least a decade. However, business dynamics can change. And it's possible for even the Oracle of Omaha to make mistakes.

Perhaps Buffett won't keep the stocks that he's recently added to Berkshire's portfolio for 10 years. If he doesn't, though, I think his advice to Berkshire shareholders in 1996 is still relevant. Be willing to buy and hold for the long term. Let your winners run. But if your premise for buying a stock changes, sell it. Buy and hold doesn't have to mean buy and hope.

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

The post Warren Buffett doesn't follow his own advice – and it's made him 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.

More reading

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

Keith Speights has positions in Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Deere & Company and has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.