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It’s easy to feel complacent in today’s market. The S&P 500 hasn’t fallen by more than 3% from its all-time high for over five months — meaning volatility is virtually nonexistent.

Artificial intelligence (AI) spending deals are resulting in big stock pops and record runs for chip giants. The rift between winners and losers is growing, with just a handful of stocks making up a massive percentage of the index. That said, it’s a mistake to sell winning stocks just because they have gone up. So a better approach is to stay even-keeled and build a balanced financial portfolio.

Here’s why Netflix (NFLX -0.07%) is a growth stock that can back up its expensive valuation, and why Texas Instruments (TXN 1.95%) is a reliable high-yield dividend stock to buy in October.

Image source: Netflix.

Netflix is worth the premium price

Like many growth stocks, Netflix’s valuation is arguably overextended. But it could still be a good buy for patient investors. The simplest reason to buy and hold Netflix is that the company has become somewhat recession-proof. It is one of the few consumer-facing companies that continues to deliver solid earnings growth despite a challenging operating environment.

Inflation and cost-of-living increases have been no match for Netflix. Despite a crackdown on password sharing and price increases, Netflix’s subscribers are sticking with the platform — which is a great sign that folks believe the subscription is worth paying for, even as they pull back on other discretionary goods and services like restaurant spending.

Netflix is a textbook example of the effectiveness of boosting the quality of a product or service to justify higher prices. The company isn’t just making the same bag of chips and hiking the price in the hopes that customers give in and buy. Rather, the value of the platform has grown immensely due to the depth, breadth, and quality of its content.

Netflix’s business model acts like a snowball. The more subscribers there are, the more revenue it generates, the more content it can create, the more valuable the platform becomes, and the greater the justification for increasing prices.

What Netflix is doing sounds simple, but it is far from it. It has taken Netflix well over a decade to perfect its craft — developing content that resonates with subscribers of all interests. No other streaming platform comes close to replicating this efficiency, as evidenced by Netflix’s sky-high operating margins of 29%.

At about 47 times forward earnings, Netflix is far from cheap. But it’s the kind of stock that can grow into its valuation because the business can do well even during an economic slowdown.

A dividend play in the semiconductor space

The semiconductor industry has been soaring — led by massive gains in Nvidia, Broadcom, and most recently, Advanced Micro Devices. The iShares Semiconductor ETF, which tracks the industry, is up a mind-numbing 34.7% year to date — outpacing the broader tech sector’s 24.8% gain. So investors may be wondering why Texas Instruments, commonly known as TI, is down over 4% in 2025.

The most likely reason TI is underperforming the semiconductor industry is that it doesn’t sell graphics processing units and central processing units, which are in high demand by hyperscalers to build out data centers. Instead, TI makes analog and embedded semiconductors that are used across the economy.

The industrial and automotive markets accounted for around 70% of TI’s 2024 revenue. So this is a far different business model than chip companies that are playing integral roles in building out data centers. In fact, TI’s core business is in the midst of a multi-year slowdown, as evidenced by TI’s negative earnings growth.

Despite these challenges, the company is a coiled spring for a cyclical recovery in its key end markets. Lower interest rates should help boost spending by industrial customers and jolt demand in the automotive industry.

TI is a great buy for investors who value free cash flow and dividends. In its 2024 annual report, TI stated, “Looking ahead, we will remain focused on the belief that long-term growth of free cash flow per share is the ultimate measure to generate value. To achieve this, we will invest to strengthen our competitive advantages, be disciplined in capital allocation, and stay diligent in our pursuit of efficiencies.” This is a far different mantra than companies that are throwing capital expenditures at shiny new ideas.

With a 3.2% dividend yield and 22 consecutive years of dividend increases, TI stands out as an excellent buy for income investors in October.

If you’re ever in need of a new stock pick, you can always borrow an idea or two from Berkshire Hathaway‘s (BRK.A 0.55%) (BRK.B 1.06%) portfolio of holdings hand-picked by Warren Buffett himself. And you should. Given enough time, Berkshire shares consistently outperform the broad market largely due to the conglomerate’s investments in publicly traded companies.

Not every Berkshire Hathaway holding is always a great buy, however. Sometimes they’re trading at too steep of a valuation for newcomers, and other times, they’ve just turned into clunkers.

With that as the backdrop, here’s a closer look at two Warren Buffett stocks you can feel good about buying today, but one name you might want to avoid until something big changes for the better.

Image source: The Motley Fool.

Buy: American Express

Many investors don’t realize that — through the attrition of other holdings as well as its own growth — credit card outfit American Express (AXP 0.55%) is now Berkshire Hathaway’s second-biggest stock holding, accounting for 17% of the outfit’s portfolio of publicly traded equities. Underscoring this bullishness is the fact that Berkshire also holds stakes in Visa and Mastercard, but has chosen to only hold much smaller positions in both.

Then again, it’s not difficult to see what the Oracle of Omaha has seen in AmEx since first establishing the position back in the 1990s. It’s not just a payment middleman like the aforementioned Mastercard and Visa. It operates an entire consumerism ecosystem, serving as the card issuer as well as the payment processor, while also managing a perks and rewards program that’s attractive enough for some members to pay up to $900 per year to hold the plastic. These perks include credit toward hotel stays and ride-hailing, cash back on grocery purchases, and discounted entertainment, just to name a few. Although some have tried, no rival has been able to successfully replicate this offering.

Of course, it’s worth pointing out that American Express’s cardholders tend to be a bit more affluent than average, and are therefore mostly unfazed by economic soft patches. As CEO Stephen Squeri pointed out of its Q2 numbers despite the turbulent economic backdrop at the time, “Our second-quarter results continued the strong momentum we have seen in our business over the last several quarters, with revenues growing 9 percent year-over-year to reach a record $17.9 billion, and adjusted EPS rising 17 percent.”

Buy: Kroger

It’s not a major Berkshire holding, and certainly not one that’s talked about much by Buffett (or anyone else, for that matter). But Kroger (KR -0.08%) is quietly one of Berkshire Hathaway’s best-performing stocks.

You know the company. With 2,731 stores producing annual sales on the order of $150 billion, Kroger is one of the country’s biggest grocery chains. Oh, it doesn’t grow very quickly, or produce a ton of profit; this year’s expected top-line growth of around 3% is only likely to lead to operating income of a little less than $5 billion. That’s just the nature of the well-saturated, low-margin food business.

What Kroger lacks in growth firepower, however, it makes up for in surprising consistency.

Although the volatile food business doesn’t exactly lend itself to it, not only has this company not failed to produce a meaningful full-year profit every year for over a decade now, but has roughly doubled its bottom line during this stretch. Making a point of remaining relevant by doing things like entering the e-commerce realm has helped a lot.

More important to would-be investors, although the grocer’s reported growth doesn’t seem all that impressive, the company’s found other ways to create considerable shareholder value. Its quarterly dividend payment has grown by a hefty 250% over the course of the past decade, for example, boosted by stock buybacks that have roughly halved the number of outstanding Kroger shares. In fact, reinvesting Kroger’s dividends in more shares of the increasingly scarce stock over the course of the past 30 years would have consistently outperformed an investment in the S&P 500 during this stretch.

Avoid: UnitedHealth Group

Finally, while Buffett was willing to dive into a small position in beleaguered health insurer UnitedHealth Group (UNH -0.43%) a few weeks back, you might not want to do the same just yet…if ever.

But first things first.

Yes, there’s some drama here. UnitedHealth shares have been beaten down since April, starting with a surprise shortfall of its first-quarter earnings estimates, followed by then-CEO Andrew Witty’s abrupt resignation for “personal reasons” in May. Then in July, the company confirmed that the U.S. Department of Justice was investing its Medicare billing practices. Its second-quarter earnings posted later that same month also missed analysts’ estimates due to the same high reimbursement costs that plagued its first-quarter results. All told, from peak to trough, UNH stock fell 60% in the middle of this year.

As Buffett himself has said, of course, you should be fearful when others are greedy, and greedy when others are fearful. Taking his own advice, he recently plowed into a stake in a long-established company that’s likely to be capable of overcoming all of its current woes. Berkshire now owns 5 million shares of UNH that are currently worth a little less than $2 billion.

Except, maybe this is one of those times you don’t follow Buffett’s lead, recognizing that UnitedHealth Group — along with the entire healthcare industry — seems to be running into these regulatory and pricing headwinds more and more regularly. UnitedHealth’s Medicare business ran into similar legal trouble back in 2017, for instance, while its pharmacy benefits management arm OptumRX was sued by the Federal Trade Commission just last year for artificially inflating insulin prices. It would also be naïve to not notice the federal government is increasingly scrutinizing every aspect of the nation’s healthcare industry, now that care costs have raced beyond reasonable affordability.

And for what it’s worth, although UnitedHealth has managed to continue growing its top line every year for over a decade now, actual operating profits and EBITDA stopped growing early last year, not counting the recent unexpected surges in its medical care costs.

UNH Revenue (TTM) data by YCharts

What gives? The entire healthcare industry may be at a tipping point, so to speak, and not in a good way. Although this wouldn’t necessarily be catastrophic for UnitedHealth, it certainly would undermine its value to investors. If nothing else, you might want to wait on the sidelines for the proverbial dust to settle before following Buffett into this uncertain trade.

For the first time since artificial intelligence (AI) captured Wall Street’s imagination, investors are beginning to broaden their scope beyond the “Magnificent Seven.” Two names that have attracted growing attention this year are Oracle and CoreWeave.

Unlike the tech titans that dominate headlines, Oracle and CoreWeave are carving out their niche at the infrastructure layer of the AI ecosystem. The opportunity they’ve identified is straightforward but also mission-critical: providing cloud-based access to GPUs. These chips — designed primarily by Nvidia and Advanced Micro Devices — remain supply constrained as they are largely absorbed by the world’s largest companies.

This supply imbalance has created an opportunity to enable AI model development by offering GPUs as a service — a business model that allows companies to rent chip capacity through cloud infrastructure. For businesses that cannot secure GPUs directly, infrastructure services are both time-saving and cost-efficient.

In the background, however, a small, albeit capable, company has been competing with Oracle and CoreWeave in the GPU-as-a-service landscape. Let’s explore how Nebius Group (NBIS 5.54%) is disrupting incumbents and why now is an interesting time to take a look at the stock for your portfolio.

17.4 billion reasons to pay close attention to Nebius

Last week, Nebius announced a five-year, $17.4 billion infrastructure agreement with Microsoft. For reference, up until this point, Nebius’ management had been guiding for $1.1 billion in run rate annual recurring revenue (ARR) by December. I point this out to underscore just how transformative this contract is in terms of scale and duration.

The Microsoft deal not only places Nebius firmly alongside peers like Oracle and CoreWeave in the AI infrastructure conversation, but it also serves as validation that its technology is robust enough to meet the standards of a hyperscaler.

For Microsoft, the partnership is equally strategic. With GPUs in chronically short supply and long lead times to expand data center capacity, this agreement allows Microsoft to secure adequate compute resources without stretching internal infrastructure or assuming the upfront capital expenditure (capex) budget and execution risks that come with it.

Image source: Getty Images.

Why this deal matters for investors

AI investment is not a cyclical trend — it’s a structural shift. Enterprises are deploying applications into production at unprecedented speed, workloads are scaling rapidly, and new use cases in areas like robotics and autonomous systems are emerging.

For companies that supply the compute underpinning this increasingly complex ecosystem, these dynamics create durable secular tailwinds. By securing Microsoft as a flagship customer, Nebius has established itself within this foundational layer of the AI infrastructure economy.

Is Nebius stock a buy right now?

Since announcing its partnership with Microsoft, Nebius shares have surged roughly 39% as of this writing (Sept. 16). With that kind of momentum, it’s natural to wonder whether the stock has become expensive. To answer that, it helps to put its valuation in context.

Prior to the Microsoft deal, Nebius was guiding for $1.1 billion in ARR by year-end. If I assume Microsoft’s $17.4 billion commitment is evenly spread across five years (2026 to 2031), that adds about $3.5 billion annually — bringing Nebius’ pro forma ARR closer to $4.6 billion.

Against its current market cap of $21.3 billion, Nebius stock trades at an implied forward price-to-sales (P/S) ratio of 4.6. On the surface, that looks meaningfully discounted to peers like Oracle and CoreWeave.

ORCL PS Ratio data by YCharts

That said, there are important caveats to consider. My analysis assumes no customer attrition over the next several years — this is unrealistic due to competitive pressures. While Nebius may continue winning large-scale contracts, it’s also reasonable to expect some customer churn.

Moreover, comparing Nebius’ future ARR to Oracle’s and CoreWeave’s current revenue base is not an apples-to-apples match. Oracle, for example, has reportedly inked a $300 billion cloud deal with OpenAI. Meanwhile, CoreWeave also has multiyear, multibillion-dollar commitments tied to OpenAI. The catch is that OpenAI itself doesn’t have the cash on its balance sheet to fully fund these agreements — leaving questions about their viability.

In short, Nebius appears attractively valued relative to its peers — but the landscape is evolving quickly and riddled with moving parts. The more important takeaway is that Nebius is now winning significant business alongside its brand-name peers.

In my eyes, this validation in combination with ongoing structural demand tailwinds makes Nebius a compelling buy and hold opportunity as the AI infrastructure narrative continues to unfold.

September is here, and it looks like the Federal Reserve‘s Federal Open Market Committee just might lower its benchmark interest rate again when it meets next week. Many stocks, especially those of companies that are particularly sensitive to interest rates, are already climbing in anticipation.

As a bank and credit card network, American Express (AXP -0.28%) is very sensitive to interest rates. It was a standout stock last year, gaining 58%, and its gains so far this year are roughly in line with the S&P 500. If the federal funds rate gets the expected cut, Amex could benefit in a big way, and its stock could start to outperform again.

Standing out in finance

American Express is known for its credit and charge cards, but the company has become a lot more than that. It has a large banking segment that works together with its card network to create a closed-loop model, but each segment adds its own unique value to the whole.

American Express targets an upscale clientele that prizes its card rewards programs, which offer travel perks and points, as well as discounts at premium shopping locations and restaurants. The company charges annual fees to cardholders for these privileges, and the fee income is a major part of its model. As a bank, American Express targets small businesses and offers a more boutique experience than many larger institutions.

Image source: Getty Images.

The bank also provides the credit to people using its cards, so it doesn’t need to work with partner institutions. This also makes American Express a business that can perform well in different economic environments. When interest rates are higher, it makes more net interest income on its deposits. When the economy is doing well and customers are spending, it thrives. However, it usually demonstrates resilience when the economy is under pressure since its core customers have more money to spend, and since it collects its annual fees regardless of the macro conditions. That important recurring revenue stream keeps its profits coming in smoothly.

Gaining momentum

This all played out perfectly in 2025’s second quarter. American Express’s revenue increased 9% year over year (currency neutral) despite continued macroeconomic pressure, and adjusted earnings per share were up 17%. Card fees increased by 20% and accounted for almost 14% of the total.

There was record cardmember spending in the quarter and high demand for premium products. The company frequently “refreshes” its card offerings and perks to stay relevant and attract new members, and it said it’s going to launch a “major upgrade” to its U.S. business and personal platinum cards in the fall. If that coincides with greater access to money due to lower interest rates, it could be a recipe for robust growth.

It’s also focusing more on appealing to younger people, and that’s paying off. While there was 7% increase year over year in cardmember spending in the second quarter, there was a 39% in Gen Z spending, and a 10% increase in millennial spending. Gen X still accounted for the most total spending of any age category at 36%, but the higher growth in younger categories bodes well for the bank’s future.

A longtime Buffett favorite

Warren Buffett has praised American Express’ global brand and the fact that it doesn’t have to spend a lot of money to make a lot of money. He also loves to invest in companies that pay dividends and give back to shareholders through stock repurchase programs. American Express’ dividend yields 0.9% at the current price. That’s not a high yield, but its payouts are reliable, management has a long track record of maintaining or hiking them, and it repurchased $1.4 billion in stock in the second quarter. American Express is the paradigm of the Buffett stock, and he frequently references it as an example of a great business.

If the Fed cuts interest rates as expected this month, American Express stock should jump. More importantly, higher economic activity should boost its business.

The Los Angeles Lakers have won 20 of 24 games and now, after an uneven start to the season, have NBA fans wondering whether the team is a legitimate championship contender. We’re about to find out over their next four road games, starting Saturday when the team plays the franchise currently in possession of the trophy, the Boston Celtics.

In 2020, LeBron James and Anthony Davis led the Purple and Gold to championship No. 17, moving the franchise into a tie with Boston for most in league history. Last summer, Boston broke that tie. Now, behind the play of James and new running mate Luka Doncic, one can’t help but get excited about the possibility of these two longtime rivals slugging it out once again come June. Maybe if James beats the hated Celtics in the NBA Finals, longtime Lakers fans will be OK with him having a statue at Star Plaza.

Maybe.

It’s a touchy subject given that real estate is normally reserved for players who have put in more years with the franchise than James has. Although this is his 22nd season in the NBA, it’s just his seventh with the Lakers. So while he has scored more points than Kobe Bryant, dished more assists than Magic Johnson and grabbed more rebounds than Elgin Baylor — he didn’t do it all for the Lakers.

The issue is that every other championship the franchise has won since moving from Minneapolis to L.A. in 1960 — starting with Jerry West and the 1972 team — is represented by a statue in that plaza outside Crypto.com Arena. It would be odd not to immortalize championship No. 17 in the same way. It takes a high level of cognitive dissonance to be both proud of an accomplishment and not want to acknowledge who accomplished it.

Even if that were resolved in favor of honoring James, there remains the larger question: What are statues for?

I was in middle school when the iconic Joe Louis monument “The Fist” was dedicated in downtown Detroit. At the time I only saw the 24-foot bronze statue through the lens of boxing. In high school, I learned Louis wasn’t born in the Motor City but in Lafayette, Ala., in 1914. His family relocated to Michigan in the 1920s, coinciding with the rise of the KKK.

That was the first time I began to see the full scope of the Great Migration and understand why most families in my neighborhood had roots in the South. By the time I left for college, “The Fist” reminded me of boxing less and the resiliency of Black people more.

Just as I rarely think about football when I attend Arizona Cardinal games and walk past the statue of Pat Tillman, who left the NFL in May 2002 to enlist in the Army shortly after the Sept. 11 attacks. He gave up millions to defend this country, and he made the ultimate sacrifice. That registers with me more than his playing career. I suspect I’m not alone.

Whether it’s “The Fist,” Tillman’s memorial or a sculpture of Oscar De La Hoya — the Mexican American kid out of East L.A. who went on to become an international superstar— the story of a statue is always more than the game.

And yes, the precedent for a statue at Star Plaza is one that typically requires more years than perhaps James will ultimately spend in a Lakers uniform. Shaquille O’Neal was with the team for only eight seasons, but half of them ended in the NBA Finals. Half of James’ time in L.A. has been him losing in the first round or worse. And there’s plenty of reasons why the thought of a James statue next to the Showtime Lakers just feels wrong.

Unless you think about the larger question: What are statues for.

James’ mother had him when she was 16. His father was not in the picture. Growing up in poverty, he experienced housing insecurity and moved as many as 10 times in one calendar year before he was 9. By his junior year in high school, Sports Illustrated named him “The Chosen One.” Today he has stakes in Liverpool FC, the Boston Red Sox and Major League Pickleball. He is the first NBA player to become a billionaire while playing. And he is the first 40-year-old still expected to lead a team to a championship.

We’ll see how realistic those expectations are during this upcoming road trip. Three of the four teams they face — Milwaukee, Denver and Boston — have won the title since the Lakers did it in 2020 and combined have won 64% of their home games. At the end of this stretch, fans in L.A. will either be slightly deflated or thinking about parade routes. Paired with Doncic, who led Dallas to the Finals last year, James appears poised to add even more accolades to his basketball resume. If the year ends with No. 18, not only will L.A. be tied again with Boston for the most titles, but also James will become a greater part of Lakers folklore.

Maybe then die-hard fans will overwhelmingly want to see the top scorer in NBA history depicted in the plaza.

Though oddly the longer he plays, the less I think about him as just a great player. Now he represents one of the most inspiring stories about achieving the American Dream that America has ever seen.

@LZGranderson