Are you tossing up between Zip Co Ltd (ASX: ZIP) and Megaport Ltd (ASX: MP1) shares this month? Both have made plenty of headlines, but they're cut from very different cloths. With one riding the buy-now, pay-later wave, and the other connecting the digital world as a network heavyweight, I'm digging into the numbers and stories behind both to help decide which might be the smarter October buy.

The case for Zip

Zip is a homegrown fintech player best known for providing interest-free buy-now, pay-later (BNPL) services like Zip Pay and Zip Money. From its Aussie origins in 2013, Zip has spread its wings to 12 countries, aiming to shake up the credit card game with digital, flexible payment smarts for both shoppers and merchants. While its ambitions are big, Zip's focus remains on providing simple alternative finance products at the point of sale.

What stands out from the current figures? First up, Zip's market cap sits at $2.53 billion. It's trading on a price-to-earnings (P/E) ratio of 22.30, which suggests the market's factoring in some earnings growth but not getting carried away like with the more speculative tech darlings. The past year hasn't been kind, with a hefty year-to-date (YTD) return of -38.6% — that's a bruising ride for investors. Despite finally posting positive earnings per share (EPS) of $0.091, Zip doesn't pay a dividend, so no direct income for holders here.

The case for Megaport

Megaport is all about helping businesses connect seamlessly to the global cloud. It operates a network-as-a-service (NaaS) platform, linking more than 1,100 data centres across 31 countries, and plugging customers in with major cloud providers like AWS, Azure, and Google Cloud. Megaport's rapid, flexible connectivity model lets clients spin up virtual networks on the fly — no long-term contracts needed. Late in 2025, Megaport expanded into AI compute infrastructure with its acquisition of Latitude.sh, adding on-demand GPU cloud services into its growing toolbox. Its business spans the Americas, Asia-Pacific, and EMEA regions, plus an emerging Compute division.

On the numbers, Megaport's market cap is a much chunkier $4.91 billion. Its P/E ratio is sky-high at 370.00, reflecting its negative EPS of -$0.218 (so the "E" here isn't positive yet). This suggests the current P/E is calculated on some forecast or underlying basis — which may not line up exactly with the standard historical measure. Worth noting: Megaport's YTD return is glowing at 75.5%, showing the market's excitement about its recent momentum and expansion moves. Like Zip, there's no dividend attached.

Valuation comparison

With both companies firmly in the tech camp but playing very different games, here's how they stack up on key numbers:

A couple of important notes: Megaport's P/E ratio is 370.00, but with negative EPS of -0.218. This suggests the P/E is based on a different earnings measure (perhaps forecast or underlying), so the headline figure isn't quite apples-to-apples with Zip's standard P/E calculation.

Neither company is paying a dividend, so yields won't swing your decision.

Recent share price performance

Comparing recent share price activity up to 30 September 2026:

• As of 30 September 2026, Zip closed at $2.03, nudging up just 0.5% for the day.
• Megaport finished at $20.65, rising 0.1% from the previous session.
• Looking at the bigger picture, Zip is down an eye-catching 38.6% year-to-date, while Megaport has surged 75.5% YTD.

So, in terms of share price movement over 2026 so far, Megaport has delivered a major rally, while Zip's investors have endured a punishing decline.

Which is the better buy?

If I had to pick between the two for October, I'd lean toward Megaport. Megaport has a clear growth runway, building essential infrastructure for cloud and AI adoption worldwide. Yes, its P/E ratio looks steep, especially with reported negative EPS, but its 75.5% YTD share price gain and expansion into AI compute show serious momentum. Zip has finally turned an earnings profit but is still licking its wounds after a harsh share price fall. Neither name pays a dividend, so income isn't a factor here.

For me, the stronger recent performance, global presence, and future-facing business model tip the scales in Megaport's favour — even if its valuation looks a touch spicy. If you're after growth exposure in tech, Megaport would be my pick for October.

The post Zip vs Megaport: Which ASX tech share is the better buy? appeared first on The Motley Fool Australia.

However, as so many of us are invested in both markets, it's relevant to compare their performance over a given period.

So, let's canvas what happened in the Australian financial year (FY26) from 1 July 2025 to 30 June 2026.

Let's compare…

S&P/ASX 200 Index (ASX: XJO) shares increased 2.77% and delivered total returns, including dividends, of 7% in FY26. 

The S&P/ASX All Ords Index (ASX: XAO) rose 2.43% and provided total returns of 5.69%, according to S&P Global data.

By comparison, the S&P 500 Index (SP: INX) rose by 20.86% and delivered total returns of 22.32%.

The Nasdaq Composite Index (NASDAQ: .IXIC) ascended 28.69% and gave a total return of 30.55%.

The Dow Jones Industrial Average (DJX: .DJI) rose 18.65% and delivered a total return of 20.65%.

Why did US stocks outperform ASX 200 shares?

Drew Meredith from Wattle Partners says it comes down to America's leading position in the artificial intelligence (AI) revolution.

In an article in The Golden Times, Meredith explained:

The United States market is being driven by a small number of companies with outsized earnings power, almost all tied to artificial intelligence infrastructure.

Nvidia, Microsoft, Alphabet, Meta, and Amazon have delivered earnings growth that justifies, at least in part, the premium valuations US indices now carry.

Meanwhile, ASX 200 shares struggled to grow in FY26 amid resurgent inflation, three interest rate hikes in February, March, and May (reversing the impact of one cut in August), the energy crisis, and weak consumer confidence.

On top of that, fears of an AI bubble and a SaaSpocalypse weighed on our tech sector, which dove 37% in FY26.

ASX 200 healthcare shares also tumbled 37% amid many industry challenges, including a weaker US currency impacting global players.

Meredith says the Federal Budget's CGT reform package, announced in May, has also weighed on financial shares and property, too.

Can the US markets keep delivering?

Shaun Manuell, Chief Investment Officer (CIO) at AustralianSuper, isn't ready to call the top of the US stock market yet.

In the Weekend Australian, Manuell described US equities being in the "rational exuberance phase".

He said:

The retail investor is back in the US, and I think there's a lot of weight behind that.

When the US equity market gets going it's a very, very powerful engine. So, I wouldn't be calling the top of that just yet.

As for ASX 200 shares, Manuell is not optimistic for FY27.

It'll be another challenging year; you're going to have to be really careful in the sectors.

We know consumer sentiment's down, house prices are down, and that leads through to the wealth effect as well.

Manuell said AusSuper is "slightly overweight" US stocks, and underweight ASX shares compared to global stocks.

He likes ASX 200 mining shares but is underweight bank stocks.

Should you buy US stocks?

Meredith warns against 'recency bias' and any temptation investors may feel to switch out of ASX 200 shares in order to buy US stocks.

Meredith explains:

When one market dramatically outperforms another for two or three years, investors feel they were wrong to be diversified. That feeling is not evidence. It is recency bias.

The periods of sharpest US outperformance relative to global peers have consistently been followed by periods of mean reversion.

This happened after the dot-com peak in 2000. It happened in the early years after the GFC when US banks were recovering and Australian miners were printing money.

It does not happen on a schedule you can predict, which is precisely why systematic diversification matters more than tactical shifts.

Manuell says his team is eyeing off a recent pullback in the Magnificent Seven US stocks as a potential buying opportunity.

He also said he is more comfortable investing in the "picks and shovels" of the AI revolution, commenting:

Everyone's been playing the picks and shovels because they can see there's money to be made but this is just making the infrastructure.

Once we've got the infrastructure, what's going to happen? Nobody knows…

3-year snapshot of ASX 200 shares vs. US stocks

The post ASX 200 shares vs. US stocks in FY26 appeared first on The Motley Fool Australia.

Yet that could be a mistake. The ASX is home to some fine companies, to be sure. But the US markets house the best in the business. The likes of CBA or Telstra are simply not even in the same league as US stocks like Coca-Cola, Nvidia, or Alphabet when it comes to size, scale, and dominance.

Of all the US stocks available on the American markets, I think Alphabet is one of the best picks for ASX investors with a long-term horizon. This company has so many things going for it that it is hard to oversell.

Firstly, we have Google Search, a service we'd all be familiar with. To say that Google Search is dominant is a gross understatement. It has a near-monopoly on internet search in almost every country in the world, except China.

Alphabet has been able to leverage this with incredible effect by integrating it with its 'Google Ads' advertising business. This makes advertising with Google cheap and effective for customers, and highly profitable for the company.

Indeed, Alphabet can probably be considered the largest advertising business in the world, rivalled only by its Magnificent 7 peer, Meta Platforms.

Alphabet shares: Here's what you're buying

But Search and Ads are only two arrows in Alphabet's quiver (albeit the biggest ones). The company also owns the YouTube platform in its entirety. YouTube is another business that you get with buying Alphabet shares that could be described as monopolistic. It simply has no effective rivals in its field. It is another advertising juggernaut and integrates well with Google Search and Ads. As do Google Maps and Gmail.

Aside from Google Search, Maps, Gmail, and YouTube, Alphabet also offers a leading artificial intelligence platform, Gemini. Like most AI platforms, Gemini is soaking up far more capital than it is bringing home right now. However, given its leading status amongst its rivals, I think there is a lot of potential for Gemini to become yet another cash cow for Alphabet shares in the years ahead.

It's a similar story with Google Cloud, Alphabet's back-end rival to the highly successful AWS from Amazon. Google Cloud is already profitable and is growing at a healthy rate.

There's also Alphabet's high-risk, high-reward 'Other Bets', of which self-driving car division Waymo is probably the most exciting.

So all in all, you have a collection of some of the most exciting (and profitable in many cases), wide-moat businesses in the world, all under one roof.

Alphabet is currently (at the time of writing) trading on a price-to-earnings (P/E) ratio of 27.75. That, at least in my view, isn't a bad entry price for this exciting company. As such, I think Alphabet shares are well worth considering for any ASX share portfolio today.

The post Here's why I'd add Alphabet shares to an ASX stock portfolio right now appeared first on The Motley Fool Australia.

Even if you have never invested in the likes of Microsoft Corporation (NASDAQ: MSFT) or Amazon.com Inc (NASDAQ: AMZN), chances are you have used their products or services, probably recently. Ditto with Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), Meta Platforms Inc (NASDAQ: META) and Apple Inc (NASDAQ: AAPL). Tesla Inc (NASDAQ: TSLA) and NVIDIA Corporation (NASDAQ: NVDA) are a little more niche. Even so, these last two of the seven are still household names, and possibly household presences.

Despite the ubiquity of the Magnificent 7 in Australian daily life, far fewer Australians would own shares of them directly. Saying that, international stock market investing has never been more popular in Australia. If an investor does own international stocks, there is a high chance that at least one of them will be a Mag 7 stock.

Personally, I directly own shares in five of the Magnificent 7. In fact, I have owned all seven of these ocmpaneis at various points (although never simultaneously).

Until quite recently, I thought of these positions as a small, although valuable portion of my overall portfolio. However, after a recent audit, I have discovered that I am far more invested in these seven stocks than I previously supposed.

The dominance of the Magnificent 7 stocks

It starts with an exchange-traded fund (ETF) that I own. As I have previously discussed, I recently sold my holdings in the BetaShares Nasdaq 100 ETF (AS:X NDQ) to buy a similar, but far cheaper ETF in the Schwab U.S. Large-Cap Growth ETF (NYSE: SCHG).

All seven of the Magnificent 7 are core holdings of this fund. As they are in almost every major US-based ETF listed on the ASX. That includes the iShares S&P 500 ETF (ASX: IVV) and the Vanguard MSCI Index International Shares ETF (ASX: VGS). Not to mention NDQ. Magnificent 7 stocks also sometimes pop up in the Schwab U.S. Dividend Equity ETF (NYSE: SCHD) and the iShares Core Dividend Growth ETF (NYSE: DGRO), which are also in my portfolio.

So that's three.

Next, one of my largest investments is the listed investment company (LIC) MFF Capital Investments Ltd (ASX: MFF). This Buffett-esque LIC is a long-term holding of mine, and a favourite investment. As it happens, Alphabet, Amazon, Microsoft and Meta Platforms are all large positions in MFF's portfolio. That's four.

These components routinely pop up in yet another of my favourite, long-term holdings. That would be the VanEck Morningstar Wide Moat ETF (ASX: MOAT). That's five major personal investments that are exposed to at least one Mag 7 stock. Outside my direct ownership of five of the Magnificent 7 stocks.

Don't forget about your superannuation

The cherry on the cake comes in the form of my superannuation fund. Like most Australians, my super is partially invested in US stocks. And the Magnificent 7 are at the top of that list, too.

As it turns out, these seven US tech titans are far heavier in my portfolio and my overall wealth than I had previously thought.

I do view most of the Magnificent 7 as companies of the highest calibre. You don't get to where they are now without being truly exceptional. As such, this high exposure doesn't bother me.

However, there's a big chance that other ASX investors out there are in the same boat. Thus, it may be worth checking out your own investments and seeing just how deep the Mag 7 goes. My exposure tolerance to these seven stocks may be higher than yours.

The post ASX investors: Are you overinvested in the Magnificent 7 without knowing it? appeared first on The Motley Fool Australia.

My top five favourite stocks in the world

Coca-Cola Co (NYSE: KO)

Is there a product that is more famous and more ubiquitous in the world than Coca-Cola? I challenge you to name one. The Coca-Cola Company is the business behind the brand, controlling global ownership of this invaluable trademark. Coke has been a solid investment for decades.

No challenger can dislodge its century-old brand, nor consumers' love for it. This makes Coca-Cola recession-proof, inflation-resistant and a formidable investment. Warren Buffett held Coca-Cola shares for decades, and that says more than anything I can.

Procter & Gamble Inc (NYSE: PG)

Procter & Gamble may not be the household name that Coca-Cola is. But I'd wager that there may be even more Procter & Gamble products than Coca-Cola ones in most Australians' houses as I write. This consumer staples giant is the name behind beloved household brands like Gillette, Oral-B, Fairy, Head & Shoulders, Vicks, Tide, Olay, and Old Spice, amongst others.

These brands have graced households all over the world for decades. Given how ingrained into daily life they are, this makes Procter & Gamble another top stock, and a defensive, reliable investment one can hold for decades.

Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)

Google-owner Alphabet is next up. This company's incredibly successful Google Search product, its flagship, needs little introduction. It is nothing less than the world's gateway to the internet, and has been for 20 years. These days, though, Alphabet has far more going for it than just Google Search. It also owns a leading AI platform in Gemini. Not to mention one of the world's most popular entertainment platforms, YouTube. Alphabet's other ventures include Google Cloud, and self-driving vehicle company Waymo.

There is so much to like about Alphabet. It is my yp Magnificent 7 stock, and is set, at least in my view, to be a world-leading company for decades to come.

Nintendo Co Ltd (TYO: 7974)

Next up, we have another household name in Nintendo. It's my opinion that Nintendo owns some of the most valuable intellectual property in the world. It has been a leader in gaming since the 1980s, with many of its original characters, including Donkey Kong and Mario, remaining entertainment staples today. In addition, Nintendo also part owns the most successful entertainment franchise in history: Pokémon.

This is a company that knows the value of its property and knows how to protect and leverage it. It has gone from strength to strength in recent years, and, in my view, remains a top stock and a screaming buy for long-term investors.

Washington H. Soul Pattinson and Co Ltd (ASX: SOL)

Our final stock is our only ASX share on this list. Washington H. Soul Pattinson and Co is an investment house. It manages a vast, underlying portfolio of investments for its shareholders. Soul Patts has been doing this for decades, and is very good at it.

Earlier this year, the company confirmed that its shareholders have enjoyed a total return (share price growth plus dividends) of 12.9% per annum over the 25 years to 31 January 2026. That's well above what the broader market returned. This top stock also has the best dividend growth streak on the ASX, having delivered an annual dividend hike every year since 1998.

The post Screaming buys: My top 5 favourite stocks in the world appeared first on The Motley Fool Australia.

Although Buffett may have vacated the CEO chair at Berkshire, he remains at the company as chairman and oracle. Even so, Berkshire's first 13F filing of 2026 is also the first that covers the tenure of new CEO Greg Abel.

As we discussed earlier this afternoon, Abel has certainly put his stamp on the Berkshire portfolio, with several notable buys. The most dramatic of these was a tripling-down of its Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) position, making it Berkshire's fifth-largest investment.

We've already been through Berkshire's stock purchases today, though, so let's get to the stocks that the company was selling over the first three months of 2026.

What stocks did Berkshire sell last quarter?

Long-time Berkshire watchers might be shocked to hear that the company sold positions in no fewer than 20 companies over the three months to 31 March. 14 of those 20 positions were closed out entirely.

Here are the stocks that Berkshire no longer owns:

• Atlanta Braves Holdings Inc (NASDAQ: BATRK)
• Liberty Latin America Ltd (NASDAQ: LILA)(NASDAQ: LILAK)
• Diageo plc (NYSE: DEO)
• Allegion plc (NYSE: ALLE)
• Lamar Advertising Co (NASDAQ: LAMR)
• Charter Communications Inc (NASDAQ: CHTR)
• Formula One Group (NASDAQ: FWONK)
• Heico Corp (NYSE: HEI)
• Amazon.com Inc (NASDAQ: AMZN)
• Pool Corp (NASDAQ: POOL)
• Domino's Pizza Inc (NASDAQ: DPZ)
• UnitedHealth Group Inc (NYSE: UNH)
• Mastercard Inc (NYSE: MA)
• Visa Inc (NYSE: V)

These are the stocks that Berkshire reduced its holdings of, but didn't sell down entirely:

• Liberty Live Holdings Inc (NASDAQ: LLYVK)
• Bank of America Corp (NYSE: BAC)
• Davita Inc (NYSE: DVA)
• Nucor Corp (NYSE: NUE)
• Contellation Brands Inc (NYSE: STZ)
• Chevron Corp (NYSE: CVX)

What should we take from these sells?

Some very interesting names there indeed. Perhaps the most shocking sell-offs to note are the household names Amazon, Visa and Mastercard. These have been in Berkshire's portfolio for a few years, and Buffett himself has sung the praises of all three businesses. It will be interesting to hear Abel explain these sales.

Chevron, another long-term Berkshire holding, is also notable. This oil stock was Berkshire's largest sale of the quarter, with the company offloading almost US$10 billion worth of Chevron (35.2% of its stake). Contellation Brands (an alcoholic beverage manufacturer famous for its Corona label) was also notable, with Berkshire selling 95.1% of its position. It is curious why the other 4.9% remains on the company's books.

It was also interesting to see that Apple Inc (NASDAQ: AAPL), Berkshire's largest position that has been reduced almost every quarter in recent years, was left untouched.

Berkshire Hathaway was a net seller over the quarter, with the sheer number of portfolio cuts and shaves outweighing the buys, and the huge Alphabet purchase in particular. It seems that Greg Abel isn't afraid to shake things up.

The post Berkshire Hathaway just sold these stocks appeared first on The Motley Fool Australia.

Of course, SpaceX is also famous for its CEO, the irreplaceable Elon Musk. Musk cuts a controversial figure. But no one can deny that his leadership of SpaceX is almost single-handedly responsible for the manic interest in its impending IPO.

According to Forbes, Musk is pursuing a dual-class stock structure for SpaceX, once it becomes a public company. Although these dual-class structures are not permitted on the ASX, they are an increasingly common choice for US stocks. Let's break down how it works.

In a nutshell, dual-class share structures create multiple versions of shares in a company's stock. Here on the ASX, we tend to follow a democratic 'one share, one vote' methodology. There is only one iteration of Telstra Group Ltd (ASX: TLS) shares, for example, and every share gives an investor one vote. That is not the case with many US stocks, though. Dual-class structures allow a company to create tiers of stock. Most of the time, these tiers represent the same ownership stake of a company, but alter its voting power.

SpaceX IPO: 10 votes for Musk, 1 for the public

They are often created to ensure that the founders of a company can retain control over it despite being able to sell down a significant portion of their shares. What's even more startling is that the class of shares that founders and insiders tend to own is often not even traded on the public market.

This is the model that SpaceX reportedly intends to follow. Here's how it set out its proposed stock structure in its recent prospectus:

Following the completion of this offering, we will have two classes of common stock issued and outstanding: Class A common stock  and Class B common stock. Each share of Class A common stock will entitle its holder to one vote per share. Each share of Class B  common stock will entitle its holder to 10 votes per share. Class A shareholders and Class B shareholders will vote together as a  single class on all matters to be voted on by shareholders, except Class B shareholders will be entitled to elect a majority of our board  of directors in addition to having certain other class votes…

If this structure is implemented, it will allow Musk to own about half of the economic share of SpaceX, but give him more than 80% of the company's voting power. That relegates other shareholders to mere spectators in the company's affairs.

The Zuckerberg method

If that sounds rather wild, it is not, by any means, unprecedented in America. Facebook-owner Meta Platforms Inc (NASDAQ: META) follows a similar structure. Meta's Class A shares are the META stock we see being quoted on the markets every day. However, its Class B shares are unlisted and are almost all owned by founder Mark Zuckerberg. It's how 'Zuck' can own less than 15% of Meta, but has a sole casting vote on any company decisions.

Some stocks take it even further. Google-owner Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) has three types of shares: Class A, Class B, and Class C. Class A shares (GOOGL) have one vote per share. Class C (GOOG) shares represent the same ownership stake in Alphabet, but come with no voting rights. However, Class B shares represent the same ownership stake as Classes A and C, but grant their owner ten votes per share.

Class B shares are unlisted, though, and are mostly divided between Alphabet's two co-founders, Larry Page and Sergei Brin.

Companies tend to follow these dual-class structures when they want outside investors' money, but not their input. That's clearly the model Musk is pursuing at SpaceX. Given his profile and following, I'd be surprised if too many investors even cared.

The post SpaceX IPO: What are dual-class shares? appeared first on The Motley Fool Australia.

IVV ETF has been a popular choice among investors seeking exposure to the roaring US stock market over the past three years.

IVV is now the third largest ASX ETF out of more than 400 on the market, with more than $11.67 billion invested in it.

However, last month, IVV ETF recorded the highest investment outflows, indicating an exodus amid the Iran war.

Aussie investors took $461 million out of the exchange-traded fund (ETF) in March, based on ASX data analysed by Betashares.

However, investors have not given up on US shares, with $232 million flowing into IVV ETF's currency-hedged counterpart in March.

That's the iShares S&P 500 AUD Hedged ETF (ASX: IHVV), which is up 1.62% to $62.68 per unit today.

This indicates investors still want US exposure but are mindful of the weaker USD against the stronger AUD today.

Stronger Aussie dollar weakens IVV ETF returns

The Australian dollar has risen almost 20% from just over 60 US cents 12 months ago to a three-year high of 70.8 US cents today.

As James Gruber, Equity Market Strategist at CommSec, explains:

When the Australian dollar strengthens, your international ETF returns shrink, and if the Australian dollar weakens, your returns improve.

To put that into perspective: last year, the S&P 500 delivered total returns of 17.88%, but IVV ETF investors received just 10.75%.

The US dollar has weakened due to expectations of interest rate cuts, concerns over the impact of tariffs, and geopolitical uncertainty.

Meanwhile, the AUD has strengthened given Australia has entered a tightening rate cycle, with two rate hikes so far in 2026.

There is also strong demand for our commodities, which foreign buyers purchase with Australian dollars, amid a new mining boom.

Investors prefer IHVV over IVV today because hedged ETFs reduce the impact of currency movements on investments. 

Gruber explained:

For example, you may invest in an ETF that tracks the S&P 500 index. If it is unhedged and if the Australian dollar strengthens after you buy it, your returns in AUD may drop, even if the underlying investments do well in their home currency. 

Conversely, if the Australian dollar declines, the value of an unhedged ETF may rise in AUD terms, assuming the underlying asset holds or increases in value.

Gruber points out that currency-hedged ETFs typically cost more than unhedged ETFs.

Case in point: IHVV has management fee of 0.1% while IVV has a fee of 0.03%.

US shares vs. ASX 200 in 2026

The S&P 500 has substantially outperformed the S&P/ASX 200 Index (ASX: XJO) over the past three years.

But change is afoot this year.

So far in 2026, the S&P 500 has lifted 0.6% while ASX 200 shares have increased 2.9%.

Gruber points out that a key difference between the two benchmark indices is their exposure to technology companies.

That's significant because a global tech wreck is underway, as investors fret over the impact of artificial intelligence (AI).

Illustrating the difference, the IVV ETF is 34% tech stocks, while the ASX 200 has just a 3% exposure to technology.

Gruber said:

… the S&P 500 leans heavily on technology stocks. 

If you add the likes of Amazon and Tesla – classified as consumer discretionary stocks in the S&P – and Meta and Alphabet – included in the communications sector – to the technology sector, then tech accounts for more than 40% of the S&P 500 index. 

The post Why ASX investors dumped IVV ETF last month appeared first on The Motley Fool Australia.

In Australia and globally, several powerful themes are driving investment. Electrification is reshaping energy systems, requiring significant spending on transmission infrastructure, renewable generation, and storage. At the same time, strong commodity prices are supporting mining companies, while large-scale infrastructure projects — including those linked to the Brisbane 2032 Olympics — are lifting activity domestically.

Against this backdrop, two ASX-listed companies, Wagners Holding Company Ltd (ASX: WGN) and NRW Holdings Ltd (ASX: NWH), have delivered standout share price performance over the past 12 months, rising over 157% and 94%, respectively.

But after such strong gains, are the fundamentals keeping pace?

Riding the infrastructure and construction wave

Wagners is a construction materials and infrastructure business with exposure to concrete, cement, composite materials, and aviation services. The company generates revenue by supplying essential inputs into infrastructure, civil construction, and mining projects — sectors that are currently benefiting from elevated investment levels.

Recent updates suggest Wagners has been experiencing strong trading momentum, supported by higher demand across its key divisions. In particular, infrastructure activity in Queensland and major project pipelines have been contributing to increased volumes and improved pricing outcomes.

The company has also continued to invest in its proprietary composite technologies, which offer lighter and more durable alternatives to traditional materials. This positions Wagners to benefit not only from near-term construction demand but also longer-term structural shifts in how infrastructure is built.

Looking ahead, the outlook appears supported by sustained infrastructure spending and population growth, particularly in regions such as southeast Queensland. If project activity continues to ramp up, Wagners could see further earnings growth, provided cost pressures remain controlled.

NRW Holdings: Leveraged to mining services growth

NRW Holdings operates as a mining services contractor, providing civil, mining, and drill and blast services to resource companies. Its revenue is largely tied to contract work across mine development, production, and infrastructure.

The company has benefited from strong commodity prices, which have left many miners with robust balance sheets and the ability to fund expansion projects and exploration programs. This has translated into a growing pipeline of work for contractors like NRW.

Recent results highlight solid profit growth and a healthy order book, with the company securing new contracts and maintaining strong utilisation across its fleet. Importantly, NRW's diversified exposure across commodities and clients helps mitigate reliance on any single project or resource.

The outlook remains favourable as mining investment continues, particularly in bulk commodities and critical minerals linked to the energy transition. As long as commodity markets remain supportive, demand for mining services is likely to stay elevated.

What could drive the next leg of growth?

Both ASX shares are benefiting from trends that appear durable rather than cyclical in nature.

Electrification requires significant capital investment in infrastructure. Mining companies are expanding to meet demand for key resources. And government-backed infrastructure pipelines remain strong.

However, after such significant share price appreciation, future returns may depend more heavily on continued earnings growth rather than multiple expansion.

For Wagners, this means maintaining margins while scaling production and delivering on project demand. For NRW, it comes down to converting its order book into sustained revenue and profit growth while managing costs.

If both companies can continue to grow revenue and earnings, maintain or expand margins, and avoid valuation compression, there is potential for further upside over time.

As always, the key will be execution.

The post 2 ASX shares booming on electrification and mining. Is there more upside ahead? appeared first on The Motley Fool Australia.

With more than $8 billion in assets under management, QUAL is currently the fifth most popular ASX ETF on our markets. It comes in behind the Vanguard Australian Shares Index ETF (ASX: VAS), the Vanguard MSCI Index International Shares ETF (ASX: VGS), the iShares S&P 500 ETF (ASX: IVV) and the BetaShares Australia 200 ETF (ASX: A200).

Unlike those four ETFs, though, QUAL isn't a market-wide index fund that blindly invests in companies according to their market capitalisation, with few other considerations.

Instead, it tracks an index that actively screens companies to identify their quality. These screens include factors like a stock's return on equity, earnings stability and financial leverage.

After applying these screens to a range of internationally listed shares, the VanEck International Quality ETF settles on a portfolio of around 300 different stocks, hailing from more than a dozen different countries. These countries range from Switzerland, Japan and the United Kingdom to China, Denmark and Ireland.

However, the vast majority of QUAL's portfolio is drawn from the United States of America, which commands more than three-quarters of this ETF's weighted holdings.

So, let's get into what you're actually buying when purchasing QUAL units in 2026.

QUAL: What's in this ASX ETF's box?

Here are the current top ten holdings of the VanEck International Quality ETF, as well as their respective weightings in the QUAL portfolio:

1. Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) at 5.67% of the total QUAL portfolio
2. Meta Platforms Inc (NASDAQ: META) at 5.02%
3. NVIDIA Corporation (NASDAQ: NVDA) at 4.64%
4. Apple Inc (NASDAQ: AAPL) at 4.62%
5. Microsoft Corporation (NASDAQ: MSFT) at 4.46%
6. Eli Lilly & Co (NYSE: LLY) at 3.44%
7. Visa Inc (NYSE: V) at 2.92%
8. ASML Holding N.V. (AMS: ASML) at 2.52%
9. Johnson & Johnson (NYSE: JNJ) at 1.86%
10. Walmart Inc (NYSE: WMT) at 1.77%

Some other significant QUAL holdings include Mastercard Inc (NYSE: MA), Netflix Inc (NASDAQ: NFLX), Costco Wholesale Corp (NASDAQ: COST) and Caterpillar Inc (NYSE: CAT).

Not only does this list reveal how dominant the US is in this ASX ETF, but it shows how similar its holdings are to a broad-market US index fund like the iShares S&P 500 ETF. We discussed that ETF just the other day, so check out how its holdings compare to QUAL's here.

This methodology seems to have worked quite well for the VanEck International Quality ETF, though. As of 31 December, QUAL units have returned an average of 14.8% per annum over the past ten years, and 22.85% per annum over the past three. It will be interesting to see if this performance keeps up in 2026.

This ASX ETF charges a management fee of 0.4% per annum.

The post Investing in the VanEck International Quality ETF (QUAL)? Here's what you're really buying appeared first on The Motley Fool Australia.

Only two Mag 7 shares delivered impressive capital growth, while the other five underperformed the major US indices.

Yep, they underperformed.

The health of the Mag 7 companies matters to Australian investors because we are heavily invested in them, whether we like it or not.

Got a superannuation fund? Chances are a chunk of your retirement savings are invested in these seven high-tech companies.

Own exchange-traded funds (ETFs) tracking the US or global markets?

You're definitely invested in the Mag 7 stocks.

The Mag 7's high market caps mean they dominate the S&P 500 Index (SP: .INX) and the Nasdaq Composite Index (NASDAQ: .IXIC).

Therefore, their performance has a direct impact on many Australians' investments.

Let's take a look at how the Magnificent 7 stocks performed in 2025, starting with the No. 1 riser.

And no, it's not the stock you think!

Magnificent Seven stocks in 2025

To set the scene for you, the S&P 500 rose 16.39% and the Nasdaq Composite lifted 20.36% last year. (Compare that to ASX shares here.)

Here's how the Magnificent Seven stocks compared to the broader market.

1. Alphabet Inc Class A (NASDAQ: GOOGL)

Both Class A and Alphabet Inc Class C (NASDAQ: GOOG) shares lifted 65% in 2025.

Class A stock closed at US$313 per share, and Class C shares closed at $313.80.

Nvidia Corp (NASDAQ: NVDA)

US stock market darling Nvidia still put in a good performance as it continues to leverage the artificial intelligence megatrend.

Stock in the US graphics and AI chip designer rose 39% to close at US$186.50 per share on 31 December.

In October, Nvidia became the first company in the world to reach a US$5 trillion market cap.

Investment platform Stake reports that Nvidia was one of the five most traded US stocks by Australian traders last year.

According to Stake's 2025 Retail Investor Report Card:

It beat revenue estimates every quarter in 2025 by an average of 8.9% and is on track to generate US$212B in FY26.

Its earnings have become a global market catalyst: Nvidia's results serve as a directional signal for traders worldwide.

For Stake investors, the biggest 'buy-the-dip' moment came during the DeepSeek moment in January, when Nvidia lost US$260B in market cap but buy orders surged 460%.

Microsoft Corp (NASDAQ: MSFT)

The Microsoft stock price rose 15% to close 2025 at US$483.62 per share.

Meta Platforms Inc (NASDAQ: META) 

Meta Platforms shares rose 13% to finish the year at US$660.09.

Tesla Inc (NASDAQ: TSLA)

Stock in electric vehicle manufacturer Tesla rose 11% to US$449.72 per share.

Stake analysts said Tesla was the only Magnificent Seven stock not to set a new share price record in 2025.

Apple Inc (NASDAQ: AAPL) 

US technology stock Apple rose by 9% to close at US$271.86 per share on 31 December.

Amazon.com, Inc. (NASDAQ: AMZN) 

The Amazon share price inched 5% higher to close at US$230.82 on 31 December.

Interesting sidenote

My US Fool colleague Trevor Jennewine recently covered the third-quarter report from Warren Buffett's Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B).

The report showed that the 'Oracle of Omaha', who retired at the end of last year, bought Alphabet stock — the best performer of the Magnificent Seven in 2025 — and continued to sell down Apple — the second-worst performer of the group — during the third quarter.

Berkshire Hathaway purchased 17.8 million shares in Alphabet, which now accounts for 2% of the company's $267 billion portfolio of 41 stocks.

Berkshire sold 41.7 million Apple shares, and although the company remains Berkshire's largest holding at 21%, its position has reduced by 74% in just two years.

The post Here's how the US Magnificent Seven stocks performed in 2025 appeared first on The Motley Fool Australia.

• Washington H. Soul Pattinson and Co Ltd (ASX: SOL)
• REA Group Ltd (ASX: REA)
• MFF Capital Investments Ltd (ASX: MFF)
• Wesfarmers Ltd (ASX: WES)
• TechnologyOne Ltd (ASX: TNE)

My US picks were:

• Amazon.com Inc (NASDAQ: AMZN)
• Doulingo Inc (NASDAQ: DUOL)
• S&P Global Inc (NYSE: SPGI)
• Costco Wholesale Corp (NASDAQ: COST)
• Mastercard Inc (NYSE: MA)

Obviously, not much has changed in a week, and I would still love to own more of all ten of these companies in 12 months' time.

But we're not stopping wth those stocks. Today, let's discuss ten more stocks that I think anyone can buy today to start 2026 off on a strong note. We'll once again do five ASX shares and five US stocks.

5 top ASX shares to kick off 2026 with a bang

I love consumer staples companies, and Coles Group Ltd (ASX: COL) is one of my favourites here on the ASX. Coles is a strong dividend payer with a defensive and mature earnings base that can provide protection against both recessions and inflation. It will, in my view, be around for decades to come.

Telstra Group Ltd (ASX: TLS) is another veteran ASX stock I like for 2026. Its dominance of the defensive mobile and internet markets gives it a strong moat and, thus, a reliable dividend. This company's fully-franked payouts are historically some of the best on the ASX.

Turning to a faster-growing company now, Xero Ltd (ASX: XRO) is another top stock looking interesting as we start the new year. Xero has a remarkably sticky product in its cloud-based accounting software. Consumers seem willing to keep paying those monthly fees to use Xero's platform. The company's growth plans are very exciting too.

JB Hi-Fi Ltd (ASX: JBH) is our fourth pick of the day. JB has proven itself to be one of the ASX's best retailers, having savvily evolved from selling hi-fi products to becoming an all-out electronics and appliances retailer over the past two decades. Customers love JB's distinctive marketing tactics and innovative store layouts. With JB having a rare lacklustre year in 2025, this one is looking tempting as we start 2026.

Our final ASX stock worth discussing today is more left-field. It is the gold miner Newmont Corporation (ASX: NEM). Normally, I shy away from more speculative investments like Newmont. But Newmont can be viewed as an insurance policy of sorts. If 2026 produces geopolitical or economic uncertainty on the global stage, Newmont could benefit from a rush to the 'safe haven' of gold. If some experts are to be believed, it could have another bumper year in 2026.

5 top US stocks to check out too

When I named Mastercard as one of my top US picks last week, it was partly due to my conviction that contactless and electronic payments are in the middle of a powerful long-term tailwind. That's why I am also happy to own and spruik Mastercard's arch-rival Visa Inc (NYSE: V). Visa is the largest payments company in the world, and is an extraordinarily profitable stock. However, I think its best days lie ahead.

We can say the same for Magnificent Seven winner Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL). Google-owner Alphabet owns several of the world's best businesses. These include Google Search, YouTube, Google Cloud, and AI-platform Gemini. I'm also excited about the company's self-driving division.

I would be happy to own Alphabet's Magnificent 7 sibling, Microsoft Corp (NASDAQ: MSFT), too. Buying Microsoft stock means buying a share in Windows, Office, Xbox, Teams, Activision Blizzard, LinkedIn, and many other leading digital products and services that Microsoft owns. I rest my case.

Netflix Inc (NASDAQ: NFLX) is another winner that I think will keep on winning. If Netflix manages to acquire the assets of Warner Bros Discovery Inc (NASDAQ: WBD) this year, it will own one of the most extensive and valuable collections of intellectual property on the planet. Even if it doesn't, Netflix owns a service that is well on its way to becoming an internationally recognised household essential.

Our final stock is a simple one that we all know and may love. McDonald's Corporation (NYSE: MCD) is one of the most resilient businesses in existence. Its brand is universally recognised, having transcended into popular culture decades ago. As an inflation and recession-resistant stock, I'd be happy to buy more McDonald's this January.

The post My 10 top stocks to buy to start the New Year off right appeared first on The Motley Fool Australia.

Like the internet was 30 years ago, artificial intelligence (AI) is the next major technological shift that will reshape the economy. That also makes it a generational opportunity for investors to accrue wealth by buying and patiently holding the right growth stocks. Research from Morgan Stanley projects that AI could deliver operating efficiencies worth as much as $40 trillion to the global economy over the long term. 

Investors don't need to gamble on unproven companies and excessively risky stocks for the chance to profit from this trend. Simply sticking with leading tech stocks could help you achieve market-beating returns. After all, it's the world's largest and most profitable companies that are doing much of the work involved in enabling the wider adoption of AI. To position your portfolio to profit from this opportunity, I suggest adding shares of these two tech titans that will likely still be leading their respective industries 20 years from now. 

Nvidia

For those seeking to profit from the AI trend over the past few years, Nvidia (NASDAQ: NVDA) has been one of the best stocks to own, and the company's innovation and financial fortitude should keep it in the driver's seat. Its high-end graphics processing units (GPUs) are used by all the leading cloud infrastructure providers, and those data center GPUs are sold out for the foreseeable future.

Nvidia's data center revenue surged by 66% year over year last quarter to $51 billion. This high-growth trajectory reflects a long-term transition from traditional computing that relies more on central processing units (CPUs) to accelerated computing that demands massive quantities of parallel processors such as GPUs.

The good news for investors buying Nvidia stock today is that this transition will unfold over many years. Capital spending on AI infrastructure is expected to grow from $600 billion in 2026 to at least $3 trillion by 2030. This massive buildout portends significant growth for Nvidia.

Nvidia will have to continue innovating to maintain its lead over other semiconductor companies that are designing chips to handle AI workloads. However, in recent years, it has accelerated its pace of innovation, moving to a cadence of introducing new and better GPU architectures annually. That continually pushes its chips' performance to new levels, and will make it difficult for competitors to keep up. It is already preparing to launch its Vera Rubin chips in 2026 -- those will deliver significant performance improvements over its current Blackwell generation.

Facilitating Nvidia's steady innovation is its financial fortitude. It's one of the most profitable companies in the world, with net profits of $99 billion over the last four reported quarters on $187 billion in revenue.

In a world where AI is increasingly driving everything, Nvidia looks likely to remain a solid investment for the next 20 years. It is investing in solutions that will underpin the future economy, such as robots, autonomous vehicles, and AI agents. Analysts expect the company to experience 37% annualized earnings growth over the next few years, pointing to substantial returns ahead for shareholders.

Alphabet

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) delivered market-beating returns for investors over the last decade, driven by strong growth in advertising through Google Search and YouTube. The stock climbed 700%, but the next decade could see more returns as demand for AI and cloud computing takes off.

The stock rocketed to new highs in 2025 as investors started to recognize Google as a leader in AI, but that was likely just the beginning. Google Gemini is one of the most capable AI models, and it's being layered into all of Alphabet's services, including enterprise tools in Google Cloud. Revenue from its cloud segment increased 34% year over year in the third quarter.

Alphabet just surpassed $100 billion in quarterly revenue for the first time, as AI features are driving Google Search usage higher. The Gemini app has over 650 million monthly active users, making it the second-most-used AI model behind ChatGPT.

The company is benefiting from profitable revenue streams across its diverse business lines, including online advertising, subscription services (e.g., YouTube TV and Google One), and cloud services. This will support the hiring of top AI engineers and an expanding base of data centers that will help it maintain its leadership in AI.

The company was on course to spend more than $91 billion on capital expenditures in 2025, and plans a significant increase from that in 2026. It can cover those outlays through its operating cash flow, which totaled $151 billion over the last four reported quarters. These investments are strengthening its competitive position, paving the way for compounding returns for investors over the long term.

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

The post 2 AI stocks to buy in January and hold for 20 years appeared first on The Motley Fool Australia.

Over the last three years, artificial intelligence (AI) has become a theme so influential that the broader market seems to ebb and flow based on this singular narrative. The S&P 500 and Nasdaq Composite indices are both hovering near record highs, with megacap technology stocks being some of the largest contributors to the market's ongoing rally.

While just about every major investment fund on Wall Street can't seem to get enough of AI, Berkshire Hathaway's Warren Buffett -- who just retired as CEO -- has primarily stuck to his contrarian methods. Throughout the AI revolution, Berkshire has been a net seller of stocks -- hoarding cash on its balance sheet and collecting passive income through Treasury bills.

Last quarter, Berkshire finally put some of its excess capital to use and made a significant addition to its portfolio. Let's dig into some of the fund's moves in recent years and try to make sense of what drove these decisions. From there, we'll take a look at valuation and assess if now is a good opportunity to follow in Buffett's footsteps. 

No longer the apple of Buffett's eye

Berkshire Hathaway has long been a fan of consumer businesses and financial services. For decades, many of the firm's largest positions have included insurance companies and banks, as well as a mix of consumer staples and discretionary brands.

Back in 2016, Buffett made headlines following Berkshire's purchase of Apple (NASDAQ: AAPL) stock. Many investors viewed this as a rare instance of Buffett investing in the technology sector. However, given Apple's brand moat, consumer loyalty, robust hardware ecosystem, and steady cash flow generation, the company actually checks off many of Buffett's investment criteria.

A combination of meaningful price appreciation and subsequent buying over the last decade ultimately turned Apple into Berkshire's largest position. Throughout the AI revolution, however, Buffett has been trimming exposure to the iPhone maker.

Data Source: 13f.info

Since the end of 2023, Berkshire has reduced its exposure to Apple by roughly 73%. Many pundits on Wall Street have criticized Apple for being late to the AI market. While I personally agree, I do not think this necessarily played much of a role in Buffett's decision to sell the stock.

To me, the rationale behind these sales was more macro-oriented. Since October 2023, both the S&P 500 and Apple stock have risen by about 60% -- an abnormally high return in a rather short period. Buffett has always exercised prudent judgment. I think taking advantage of a frothy market and rotating capital into more passive vehicles seemed like a better deal in the eyes of Buffett.

Billionaires are plowing into Alphabet stock

For much of the AI revolution, companies such as Nvidia and Palantir Technologies have been the main attractions. When it comes to legacy internet companies, both Amazon and Microsoft have also become heavily featured in the broader AI discussion.

One company that has been relatively quiet for the last few years, however, is Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG). For a while, the rise of large language models (LLMs) such as ChatGPT were viewed as a knockout punch for traditional search engines -- namely, Google.

But over the last few years, Alphabet quietly trudged along and built out its AI roadmap. Now, billionaires are finally catching on. During the third quarter, notable investors, including Stanley Druckenmiller, Israel Englander, Ken Griffin, Philippe Laffont, and now Warren Buffett, all poured into Alphabet stock.

Is Alphabet stock a good buy right now?

Alphabet currently boasts a forward price-to-earnings (P/E) multiple of 29. While the time to buy the stock at bargain prices may have passed, there are still plenty of upsides.

GOOGL PE Ratio (Forward) data by YCharts

Today, Alphabet has integrated its own LLM, Gemini, into core aspects of its business -- from an overhauled Google search landing page to the company's Android consumer electronics devices.

In addition, Alphabet has also invested heavily into its own hardware in the form of custom application-specific integrated circuits (ASICs) called Tensor Processing Units (TPUs) -- integrating this technology into its budding cloud computing platform. Most recently, Alphabet announced a $4.7 billion acquisition of Intersect -- a provider of clean energy power sources for data centers.

By vertically integrating all aspects of the AI value chain across its ecosystem, Alphabet is positioning itself to emerge as a durable leader of the next technological supercycle. Against this backdrop, I think Alphabet is poised for meaningful valuation expansion over the next several years and see the company as a compelling opportunity to buy and hold for patient investors with a long-term time horizon -- just like Berkshire Hathaway. 

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

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Artificial intelligence (AI) continues to be the biggest driving theme in the market today, and there is little reason to think that this won't continue. Demand for both AI infrastructure and services appears insatiable, and it still looks as if we're still in the very early innings of this trend.

Against this backdrop, let's look at the top two AI stocks to buy right now. 

1. Nvidia

Nvidia (NASDAQ: NVDA) is the king of AI infrastructure, and the company's recent acquisitions have made it even stronger. It's best known for its graphics processing units (GPUs), which provide the processing power for the majority of AI workloads. GPUs are particularly dominant in large language model (LLM) training, where the company's CUDA software platform adds to its wide moat. Nearly all foundational AI code was written on CUDA, and that code only works natively with Nvidia's chips.

With its recent acquisition of SchedMD, Nvidia has only expanded its software moat. SchedMD is the developer of Slurm, an open-source software platform that helps manage GPUs by determining which tasks they perform and when. With this acquisition, Nvidia now controls the primary orchestration platform for AI chips. While it says it will keep Slurm open-source, its control over the platform will allow it to more tightly integrate it with CUDA to offer an even more seamless experience.

Then, on Christmas Eve, the company acquired top talent from Groq and signed a licensing agreement with the company for its technology. The deal essentially gives Nvidia access to Groq's language processing units (LPUs), which are specialized chips designed specifically for AI inference. Demand for AI inference processing is eventually expected to become larger than demand for training, so this deal can be viewed as Nvidia playing both offense and defense to get ahead of that shift.

Overall, Nvidia remains the company best positioned to profit from the continued AI buildout, and its recent acquisitions only strengthen its position. The stock is also reasonably valued, trading at a forward price-to-earnings (P/E) ratio of about 25, based on analysts' estimates for its fiscal 2027, which will begin in late January 2026.

2. Alphabet

Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) is arguably the best positioned AI company because it is the only one not reliant on Nvidia.

While other companies are working on designing their own custom AI accelerator chips, Alphabet's Tensor Processing Units (TPUs) are now in their seventh generation and have been battle-tested by running Google's workloads for more than a decade. Those years of experience aren't something that its competitors can easily emulate.

As such, the company enjoys a big structural cost advantage in both AI training (having trained its world-class AI model Gemini) and inference relative to companies that rely largely on Nvidia for chips. Its TPUs have proven so good that Anthropic signed a large deal with Alphabet to deploy TPUs to power its AI workloads. Morgan Stanley estimates that for every 500,000 TPUs that Alphabet rents out, it generates around $13 billion in revenue.

Alphabet's other advantage over its cloud computing competitors is that it owns a world-class LLM that rivals OpenAI's ChatGPT. First, this lets it capture more cloud computing revenue by offering its own model. Second, it can monetize its AI model more readily by integrating it into its products, including Google Search, its Android operating systems, YouTube, Google Maps, Gmail, and its workplace productivity tools. With lower costs for training and inference, as well as more platforms upon which it can deploy and monetize its models, Alphabet holds significant advantages over OpenAI and other LLM developers.

As the most vertically integrated AI company, Alphabet is in a strong position, and its advantages should only widen in the coming years. Meanwhile, the stock is attractively valued, trading at a forward P/E of 28. 

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

The post What are the 2 top artificial intelligence (AI) stocks to buy right now? appeared first on The Motley Fool Australia.

The "Magnificent Seven" grouping of stocks represents seven of the biggest and most influential companies in the world that make up roughly one-third of the market cap-weighted S&P 500. Its members have a significant impact on whether the overall stock market rises or falls in a given day, so they are closely watched by both analysts and retail investors.

In a series of articles, I've been looking at each of these companies to predict which is the best Magnificent Seven stock to buy for 2026. And while I'll reveal the full rankings later in this piece, it's time to unveil the legendary company that tops the rankings and appears to be in the best position as we head into the new year.

Let's pull the curtain back on my No. 1 pick: Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). 

About Alphabet stock

Alphabet is probably still better known as Google, and for good reason. Google has an unshakable lead in global internet search, with 89.9% of the market share. The search engine in second place, Bing, has just 4.2%. And Alphabet's Chrome browser is nearly as dominant with 71.2% of the market, topping second-place Safari with 14.3%.

This means that Alphabet is unquestionably the most consequential internet company in the world. And it gives it a massive advantage, both in selling advertising and pushing content to prime locations on the web.

Alphabet brought in $74.18 billion in revenue during the third quarter from advertising, which includes Google Search, its Google network, and YouTube. That's a 12.6% increase from a year ago, made possible by Alphabet's use of powerful AI tools. For instance, Alphabet uses AI to provide more relevant answers to search queries and also launched an AI Overviews feature that appears at the top of a search result. It also uses AI to optimize the creation and placement of advertising, and even has AI tools to help users answer their email.

In all, advertising made up 72% of Alphabet's $102.34 billion in revenue for the third quarter, helping it achieve an incredible $73.55 billion in free cash flow over the last 12 months.

Alphabet is making huge strides in cloud computing

As dynamic as Alphabet's advertising business is, I think the cloud computing opportunity is even greater. Google Cloud is only third by market share with 13%, trailing Amazon Web Services and Microsoft Azure, but it's seeing substantial growth. Google Cloud generated $15.15 billion in revenue in the third quarter, up 33% from a year ago. It was also responsible for $3.59 billion in operating income, up from $1.94 billion a year ago.

Finally, Alphabet has a big opportunity with its Tensor Processing Units (TPUs), which are its in-house alternative to Nvidia's vaunted (and expensive) graphics processing units (GPUs). Alphabet's TPUs aren't as versatile as GPUs, but they are effective in training its AI models. Now Alphabet is reportedly discussing a deal that would sell billions of TPUs to Meta Platforms and it has a deal with Anthropic, which announced it will expand its use of Google Cloud to include up to 1 million TPUs.

Coupled with Google's massive advertising business, the fast-growing cloud opportunity makes Alphabet even more formidable -- and attractive for investors as we head into 2026.

Why Alphabet is No. 1

Alphabet shares are up more than 60%, but the company is still reasonably priced. Its forward price-to-earnings ratio of 29.7 remains one of the lowest in the Magnificent Seven.

Revenue estimates for next year of $454.8 billion have climbed steadily over the last six months, as the market begins to realize the massive potential of Alphabet stock.

While this company may not be the flashiest in the Magnificent Seven -- I would give that crown to either Nvidia or Tesla -- I think it's a no-brainer for any investor to buy right now.

The list in review

Now we finally have the full list, in order:

• No. 1 Alphabet is the dominant internet company on the planet and is starting to market its alternative to Nvidia GPUs.
• No. 2 Nvidia is the largest company in the world by market capitalization and has taken the leading role in providing high-powered GPUs to data centers, powering the AI revolution.
• No. 3 Meta Platforms shifted its attention away from the metaverse and is now focused on developing "personal superintelligence" through AI.
• No. 4 Microsoft has powerful revenue streams through its cloud computing division and its profitable suite of software, including Word, Excel, and PowerPoint.
• No. 5 Tesla aims to make breathtaking advancements in autonomous driving, which, if successful, will enable hundreds of thousands of Teslas to be used as robotaxis.
• No. 6 Amazon is the globe's biggest provider of cloud computing, but is hampered by the comparatively low margins of its legacy e-commerce business.
• No. 7 Apple isn't monetizing AI like its Magnificent Seven peers, but it's developing advanced chips to run large AI models on its products.

You really can't go wrong with any of these companies. However, I believe Alphabet is the clear winner for investors seeking to purchase a Magnificent Seven stock for 2026.

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

The post Ranking the best "Magnificent Seven" stocks to buy for 2026. Here's my no. 1. appeared first on The Motley Fool Australia.

Warren Buffett has never been one to push Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) into hot trends. He gave an excellent reason for that in his 1996 letter to shareholders: 

We are searching for operations that we believe are virtually certain to possess enormous competitive strength ten or twenty years from now. A fast-changing industry environment may offer the chance for huge wins, but it precludes the certainty we seek.

In other words, Buffett would rather be the tortoise than the hare. So, hot trends like internet stocks in 1996 or booming artificial intelligence (AI) companies today don't interest him too much as an investment manager.

Nonetheless, Buffett finds himself in charge of a stock portfolio where roughly 23% of the assets are invested in three companies that are heavily tied to AI -- among them, one of Berkshire's biggest equity purchases of the last few years. But all three have qualities that he generally seeks in investments -- and qualities that will surely set up his successor, Greg Abel, to deliver excellent returns for the next 10 or 20 years or more. 

1. Apple (20.5%)

Apple (NASDAQ: AAPL) has been the largest position in Berkshire Hathaway's equity portfolio since Buffett and his right-hand man, the late Charlie Munger, built up a massive stake in the company between 2016 and 2018. At this year's shareholder meeting, Buffett jokingly thanked Apple CEO Tim Cook for making Berkshire Hathaway shareholders more money than he ever has.

But Buffett has been selling shares of Apple since late 2023. There may be a few reasons for that. First, the stock's weight in the portfolio might have been too much, even for Buffett, who historically keeps a highly concentrated portfolio. At its peak, Apple accounted for about half of the portfolio's value. It remains Berkshire's largest marketable equity holding heading into 2026, based on the conglomerate's most recent SEC disclosures.

Second, Buffett saw what he viewed as an opportunity to take gains while corporate tax rates are low, as he expects that Congress will have to increase tax rates due to the federal government's massive deficits and debts. Lastly, Buffett assessed the valuation of Apple stock and deemed it to be well above its intrinsic value.

That last point is key. Apple hasn't benefited as much as other tech giants from the increase in AI spending on semiconductors, cloud computing infrastructure, and advanced software. It has continued to exhibit steady revenue and earnings growth, though, and its earnings per share have been further boosted by its massive share-repurchase program. But the stock now trades for a premium valuation of about 33 times forward earnings estimates, in line with other big AI stocks.

However, Apple will push its AI ambitions forward next year with the long-awaited release of a revamped Siri that will feature numerous new generative AI capabilities. The advanced AI assistant may spur a big upgrade cycle for the company's devices, pushing iPhone sales higher. Additionally, the introduction of more on-device AI capabilities could increase its high-margin services revenues significantly in the coming years. Based on those expectations, it may be worth paying a premium for Apple stock.

2. Alphabet (1.8%)

Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) is the latest major addition to Berkshire Hathaway's portfolio. The conglomerate acquired 17.8 million shares during the third quarter, which are worth $5.6 billion as of this writing.

The stock has been on an incredible run since September, when a federal judge imposed remedies upon Alphabet that were much more lenient than expected following its conviction for maintaining an illegal monopoly in online search. Strong financial results and continued momentum for both its cloud computing business and its large language model (LLM) development have helped propel the stock materially higher.

Its cloud computing business has seen strong growth. Revenue climbed 33% last quarter, and its operating margin expanded to 24%, but there could be even more room for margins to expand as it scales. That's especially true given the momentum for its custom Tensor Processing Units (TPUs), which can offer its cloud computing clients a more cost-effective alternative to graphics processing units (GPUs) for AI training and inference. It has signed several big deals with major AI developers to use its TPUs, helping push its remaining performance obligations 46% higher year over year to $155 billion.

The core search business remains a cash cow despite the threat of AI chatbots taking market share away from Google. The company has effectively integrated AI into its search results through AI Overviews and AI Mode, resulting in an increase in search traffic without negatively impacting monetization. As a result, Google Search revenues continue to climb. And that may have been the key to Buffett's decision to invest in the company -- the "enormous competitive strength" of its core business.

As mentioned, Alphabet shares have climbed significantly in Q4, pushing their valuation to almost 30 times expected earnings. It's unclear if Buffett and his team will keep buying shares at that significantly higher valuation, but they could be worth it given the AI-driven momentum behind the company.

3. Amazon (0.7%)

Amazon (NASDAQ: AMZN) has been a small position in Berkshire Hathaway's marketable equity portfolio since 2019. Based on the size of the investment, many believe one of its other investment managers, Ted Weschler or Todd Combs, made the decision to buy it. The driving force behind Amazon's operations when Berkshire first acquired shares in 2019 was its cloud computing division, Amazon Web Services (AWS). That remains true today. 

AWS is the world's largest public cloud computing platform. Its revenue is more than double Google Cloud's, and its operating margin of 35% dwarfs it. Management notes its AI services on AWS are growing at a triple-digit percentage pace, and demand continues to outstrip its ability to add capacity despite three years straight of building as fast as possible.

Like Alphabet, Amazon's massive investment in cloud capacity to capitalize on the AI opportunity is supported by a stalwart business with a wide competitive moat. Amazon's e-commerce business has become increasingly profitable over the past few years. That profitability has been driven by an increase in high-margin advertising sales as a percentage of total revenue, improvements to its logistics network to reduce shipping costs and operating expenses, and the continued growth and scale of its Prime subscription service. As a result, the operating margin for the North American retail business has expanded to 6.6% over the last 12 months, and the international segment's margin sits at a respectable 3.2%.

Amazon shares have recently been weighed down by investors' concerns about the high capital expenditures for its cloud computing business. As of Q3, its free cash flow over the last 12 months fell to $14.8 billion. But as sales continue to grow, margins expand, and capital spending levels off, Amazon should see its free cash flow soar to new highs. That could push the stock price significantly higher, making the stock worth paying a premium multiple of free cash flow for today. 

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

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Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) has done extremely well for its shareholders this year, and the stock hit a new all-time high of $329 in November. However, after a recent pullback, shares briefly moved below $300 and are still close to that level as of Dec. 19.

Many investors may be wondering if they should buy shares now or wait to see if Alphabet falls further, considering the recent dip in the tech sector. Personally, I wouldn't wait. Here's why. 

The benefit of investing in great companies

It's hard to find many tech companies as dominant as Alphabet. The holding company is most famous for owning Google, the world's largest search engine, but it also owns the most popular web browser (Chrome), video streaming site (YouTube), and mobile operating system (Android). Among the other businesses that Alphabet owns are Waymo, a self-driving car company, and Wing, a drone delivery service.

Alphabet generated $73.6 billion in free cash flow (FCF) over its past four reported quarters. And even with all of its successes, it remains a more affordable investment than many of the other megacap tech stocks. Trading at 29 times trailing earnings as of Dec. 17, it's the second-cheapest company among the "Magnificent Seven" (which also include Apple, Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla).

Alphabet has historically outperformed the stock market. Based on the strength of its businesses, it looks likely to keep doing so.

This isn't your last chance to buy Alphabet, and truthfully, its share price could go up or down in the short term. The current price might not be the very lowest it will go in the near future. But when you're investing in great companies, you don't need to worry about timing the market. What's important is filling your portfolio with long-term winners -- not whether you bought their shares at $295, $305, or somewhere in that area.

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

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Two of the big three cloud computing companies are Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) and Amazon (NASDAQ: AMZN). While both Google Cloud and AWS (Amazon Web Services) have seen solid growth, Alphabet's stock far outpaced Amazon's in 2025, climbing nearly 60% as of this writing, versus a modest gain for Amazon.

Let's look at which stock is set to outperform in 2026. 

The case for Alphabet

Alphabet has been one of the best-performing mega-cap tech stocks in 2025, largely because it was able to flip the script from being viewed as an AI loser to perhaps having the potential to be one of the biggest AI winners. While the company turned in some strong numbers, its performance was much more about changing perceptions.

It did this largely through the advancements with its Gemini foundational large language model (LLM) and custom artificial intelligence (AI) chips. Gemini has become one of the best LLMs in the market today, and Alphabet has infused it throughout its products, including its core search business. AI-powered features, like AI Overviews, AI Mode, and Lens, have helped the company accelerate its search revenue, while its Gemini stand-alone app has also gained traction.

At the same time, its Tensor Processing Units (TPUs) have become increasingly viewed as one of the top alternative AI chips to Nvidia's graphics processing units (GPUs). These chips are in their seventh generation, and Alphabet uses them to power much of its internal workloads, giving it a huge structural cost advantage. Meanwhile, the chips are so highly regarded that Anthropic has committed to buying $21 billion worth of them next year.

As time progresses, the advantage Alphabet has of owning both top-notch AI chips and a top-tier LLM should only widen, as it creates a powerful flywheel that will make both better over time.

The case for Amazon

While Alphabet was able to change investor perceptions this year, Amazon was not. However, the company could now be in a similar spot to where Alphabet was heading into 2025.

Much of Amazon's lackluster recent performance can be tied to the growth of AWS, which trails that of Microsoft Azure and Google Cloud. However, Amazon saw AWS revenue growth accelerate to 20% last quarter, and the company said it was capacity-constrained. As such, it's boosting its capital expenditure (capex) budget to try to meet growing demand.

At the same time, the data center that it built for Anthropic, featuring its custom Trainium chips, is still ramping up. It is also in talks with OpenAI about making an investment in the company, where OpenAI would start to use some of its AI chips. The two companies already signed a $38 billion cloud computing deal, although that was to use Nvidia GPUs.

Meanwhile, Amazon's e-commerce business is really clicking. The company is seeing huge operating leverage come from its robotics and AI investments, while its high-margin sponsored ad business is growing quickly from a large base. This could be seen in its third-quarter results, as its North America revenue rose 11%, while its segment adjusted operating income soared 28%.

The verdict

Alphabet and Amazon are two of my favorite stocks heading into 2026. Both stocks are trading at attractive valuations with forward price-to-earnings ratios (P/Es) of below 30 times and solid growth prospects ahead.

Data by YCharts.

I think Alphabet is going to become one of the biggest winners in AI over the long term, but for 2026, I think Amazon's stock can outperform. As AWS revenue continues to accelerate and Trainium gains some traction, Amazon can begin to shift perceptions, much like Alphabet did last year. I think that will really help power a stock that is trading well below other leading retailers like Walmart and Costco, which have forward P/Es nearing 40 times.

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

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However, many investors around the world are concerned about the Magnificent 7, given their significance to the entire US stock market and, by extension, the global economy. Some investors are feeling queasy over the possibility that the Magnificent 7-led AI boom might not be as lucrative as some optimistic projections suggest, and thus could lead to a share market correction, or even a crash.

I'm not letting worries about a whole market event that may or may not happen impact my individual assessments of each of the Magnificent 7 stocks. Saying that, there is one Mag 7 company I'd be willing to buy (more) today, and one that I would avoid in 2026.

One Magnificent 7 stock to buy in 2026

That Magnificent 7 stock is Google-owner Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL). Alphabet has had a stellar 2025 to date, with Class A shares currently up 62.15% since the start of the year. This gain has still left Alphabet on a price-to-earnings (P/E) ratio of 30.7 as it currently stands.

While that is not nearly as cheap as the company was a few months ago, when it was on a sub-25 earnings multiple, it still leaves it at a compelling entry point in my view. Despite its size, Alphabet is still growing at a healthy clip. In its most recent quarterly earnings from October, Alphabet reported year-on-year revenue growth of 16% to US$102.3 billion for the three months to 30 September.

Earnings per share (EPS) rocketed by an even more impressive 35% to US$2.87.

Given the near-monopoly that Google Search enjoys, together with the success of YouTube and Google Cloud, I think Alphabet has plenty of growth left in the tank. And that's not even factoring in the advances Alphabet has made with its Gemini AI platform. Alphabet is one of the cheapest members of the Magnificent 7 right now. Given its growth and future plans, I think this stock is one to watch and potentially buy in 2026.

One stock to avoid

Whilst Alphabet is looking very interesting right now, I cannot say the same for its fellow Mag 7 member, Apple Inc (NASDAQ: AAPL). Apple is an incredible company, to be sure. It would have to be to compel Warren Buffett to make it Berkshire Hathaway's largest single investment.

However, looking at the Apple stock price today, as well as its recent growth rates, I don't see much to like. Apple is far more expensive than its Magnificent 7 peer, Alphabet, right now, given its current 36.82 P/E ratio. Yet it is growing at a much slower pace. Its own most recent quarterly report showed the company growing revenues by 8% year on year to US$102.5 billion, while EPS was up 13% to US$1.85. Sure, Apple had a good year, with its most recent round of iPhones seeing above-average interest. But if that isn't repeated in 2026, we could see much lower numbers.

Additionally, I don't see much in the way of exciting growth avenues for the company ahead. Its present AI offerings are arguably inferior to Magnificent 7 competitors like Alphabet and Microsoft, and the company remains dependent on hardware for the lion's share of its earnings. I'd be happy to buy more Apple shares in 2026, but not at anything close to a P/E of 36.

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