money

There are certain benefits to being married in retirement. For one thing, it’s nice to have somebody’s company at a time when you’re not working and may find yourself getting lonely and bored.

Retirement is also a time when a lot of people try to ramp up on travel. And it can be more enjoyable to have a travel partner than to take your dream trips on your own.

Image source: Getty Images.

When it comes to the financial side of retirement, being married also has its advantages. If you and your spouse each have some savings, you can pool your resources for a larger income.

Plus, if you’re married, it could mean that you’re eligible to receive spousal benefits from Social Security. And that extra money could come in very handy. But if you’re looking to claim spousal benefits from Social Security, it’s important to understand the ins and outs. Here are three misunderstandings you must get to the bottom of if you think spousal benefits are something you’ll end up filing for.

1. You can only claim spousal benefits if you’re married

You may start off retirement as a married couple only to decide to dissolve your relationship a few years down the line. Sometimes, too much togetherness can unveil differences that are just too difficult to overcome.

You might assume that if you get divorced, you won’t be eligible for Social Security spousal benefits. But if you were married for at least 10 years before that divorce, and you’re not remarried, then those spousal benefits should still be on the table.

2. You can only claim spousal benefits if you didn’t work

The nice thing about Social Security is that it will pay spousal benefits to people who didn’t work. But even if you did work, you may still be eligible for spousal benefits.

Let’s say you worked enough to qualify for Social Security, but your wages were much lower than your spouse’s. If the spousal benefit you’re entitled to is greater than the benefit you’re entitled to based on your own earnings record, then you’ll get that spousal benefit.

However, if your personal benefit is the larger number, that’s what Social Security will pay you. This system is more than fair, as it basically allows you to collect whichever benefit puts the most money in your pocket each month. The only thing you can’t do is double dip by collecting a spousal benefit plus your own benefit at the same time.

3. You can grow your spousal benefits by delaying your Social Security claim

If you’re claiming Social Security on your own wage history, there’s an upside to delaying your claim past full retirement age, which is 67 for anyone born in 1970 or later. For each year you do, until you turn 70, your monthly benefit gets a permanent 8% boost.

But when you’re claiming spousal benefits, there’s no sense in delaying past full retirement age. That’s because you can’t grow a spousal benefit the same way you can grow a benefit based on your own earnings record.

Social Security spousal benefits max out at 50% of what your spouse is eligible for at their full retirement age. If you claim them before reaching your full retirement age, they’ll be reduced. But they also can’t grow beyond 50% of what your spouse gets at their full retirement age.

You may end up relying on Social Security to provide quite a bit of your retirement income. So it’s important to understand how the program’s spousal benefits work, especially since they can differ from how regular retirement benefits work. Knowing the rules inside and out could prevent you from making a big mistake you regret later on.

The big day for Social Security’s more than 70 million traditional beneficiaries is right around the corner. Assuming the government shutdown doesn’t delay a key data release, on Oct. 15, the Social Security Administration will unveil a multitude of changes for the upcoming year, with the highlight being the 2026 cost-of-living adjustment (COLA).

For retired-worker beneficiaries, who accounted for more than 76% of all traditional Social Security recipients in August, the income they receive from this all-important program is often vital to their financial well-being. Almost a quarter-century of annual surveys from Gallup shows that 80% to 90% of retirees lean on their monthly Social Security check to cover some aspect of their expenses.

Though retired-worker beneficiaries are less than two weeks away from knowing precisely how much they’ll receive each month in 2026, the dreaded lose-lose scenario looks to be very much on the table.

Image source: The Motley Fool

Social Security’s cost-of-living adjustment plays an important role for beneficiaries

Before digging into the nitty-gritty of what’s to come for program recipients, it’s imperative to understand why Social Security’s COLA exists.

The best way to view Social Security’s cost-of-living adjustment is as a near-annual “raise” that accounts for the effects of inflation that beneficiaries are contending with. Hypothetically, if a large basket of goods and services regularly purchased by Social Security beneficiaries increased in cost by 3% from one year to the next, Social Security payouts would also need to climb by the same percentage to avoid a loss of buying power. Social Security’s COLA is the raise that attempts to mirror the effects of rising prices (inflation).

Prior to 1975, there was no formula for calculating COLAs on an annual basis. From the very first payout in January 1940 through the end of 1974, only 11 cost-of-living adjustments were enacted by special sessions of Congress.

The near-annual COLAs we’re used to today began in 1975, which is when the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) was adopted as Social Security’s inflationary measure. The CPI-W is reported as a single figure on a monthly basis, which allows for quick year-over-year comparisons to determine if prices are, collectively, rising (inflation) or declining (deflation).

The quirk with Social Security’s COLA is that only three months of readings factor into the calculation: July, August, and September (i.e., the third quarter). If the average third-quarter CPI-W reading in the current year is higher than the comparable period of the previous year, inflation has taken place and beneficiaries are set for a higher payout. Payouts can stay the same year to year; they are not decreased, even if prices in the measured period drop.

A historic expansion of U.S. money supply sent the prevailing inflation rate and Social Security COLAs soaring. US Inflation Rate data by YCharts.

Independent Social Security COLA estimates for 2026 have been narrowed

Based on independent estimates, retired workers, workers with disabilities, and survivors of deceased workers are all in line for a boost to their monthly benefit in the new year.

Following a decade of anemic cost-of-living adjustments during the 2010s, the last four years have featured above-average COLAs. A historic expansion of U.S. money supply during the earlier days of the COVID-19 pandemic led to the highest prevailing rate of inflation in the U.S. in four decades. The result was a 5.9% COLA in 2022, followed by 8.7% in 2023, 3.2% in 2024, and 2.5% in 2025. To add some context to these payout increases, the average COLA over the previous 16 years is 2.3%.

The encouraging news (at least on paper) for Social Security recipients is that the 2026 COLA is on track to do something that hasn’t been witnessed in 29 years. For the first time since 1988 through 1997, the program’s raise is forecast to reach at least 2.5% for a fifth consecutive year. On a nominal-dollar basis, Social Security beneficiaries have seen their payouts notably increase over the last half-decade.

According to nonpartisan senior advocacy group The Senior Citizens League (TSCL), next year’s COLA is projected to come in at 2.7%. Independent Social Security and Medicare policy analyst Mary Johnson, who retired from TSCL early last year, foresees a slightly more robust payout boost of 2.8% in 2026.

If the assumption is made that one of these two forecasts proves accurate, the average monthly benefit for retired workers would climb by approximately $54 to $56 in 2026. Meanwhile, the average worker with disabilities and average survivor beneficiary would both see their monthly Social Security income rise by $43 to $44, respectively.

Image source: Getty Images.

The dreaded lose-lose scenario is looking likely for most retirees in 2026

But even though independent estimates point to a fifth straight year where Social Security’s raise will top its 16-year average, aged beneficiaries are almost certain to discover the 2026 COLA comes up short in two ways.

The first issue relates to the inherent shortcomings of the CPI-W. While near-annual COLAs are a vast improvement compared to Congress passing along raises without rhyme or reason, the CPI-W is itself far from perfect.

As its full name makes clear, the CPI-W tracks the costs “urban wage earners and clerical workers” are facing. These are typically working-age Americans not currently receiving a Social Security benefit. More importantly, urban wage earners and clerical workers spend their money differently than seniors — and adults aged 62 and over make up 87% of Social Security’s traditional beneficiaries.

Older, retired Americans spend a larger percentage of their monthly budget on shelter and medical care services than working-age folks. Not only does the CPI-W not adequately account for the higher weighting retirees place on these two spending categories, but the trailing-12-month inflation rate for shelter and medical care services has been consistently higher than the COLA passed along to program recipients.

Based on two separate studies by TSCL, the purchasing power of a Social Security dollar dropped by 36% from 2000 to 2023, and by 20% between 2010 and 2024. This loss of buying power is likely to continue in 2026.

Retirees who are dually enrolled in Social Security and traditional Medicare are also set to lose in the upcoming year.

People who are enrolled in traditional Medicare and Social Security almost always have their Medicare Part B premium automatically deducted from their monthly Social Security payout. Part B is the portion of Medicare responsible for outpatient services.

In 2023 and 2024, the Part B premium rose by 5.9% each year. But based on estimates from the June-published Medicare Trustees Report, the Part B premium is forecast to climb 11.5% to $206.20 per month in the upcoming year. There’s little doubt that this is going to partially or fully offset the impact of next year’s Social Security COLA for most dual enrollees.

Even if the cost-of-living adjustment for 2026 surpasses TSCL’s and Johnson’s respective forecasts, it won’t be enough to pull retirees out of this lose-lose scenario in 2026.

In January 2024, Office 365 quietly reached 400 million paid seats. Microsoft (MSFT 0.26%) products are as integrated into our professional lives as meetings that could’ve been emails, but these “boring” and decades-old tools are the fuel Microsoft is using to compete in the artificial intelligence (AI) race.

As AI progresses and automates away chunks of the professional world as we know it, the legacy suite of Microsoft 365 products shows no signs of slowing down. This ability to quietly and reliably generate revenue is funding Microsoft’s riskier AI bets.

Office products generated $54.9 billion in fiscal year 2024 (the 12 months ended in June 2024). That was 22% of all of Microsoft’s revenue. Microsoft 365 will keep the company on the leaderboard of AI innovators for years to come. This is great news for long-term Microsoft investors.

Image source: Getty Images.

Microsoft’s lagging AI strategy

Microsoft is still playing catch-up when it comes to generative AI. OpenAI leads with more than 200 million weekly active users and set the gold standard with the release of ChatGPT in 2022. Alphabet‘s Google and Meta Platforms both have models nearly equivalent to OpenAI.

Compared to these companies, Microsoft got a late start in deciding on an AI strategy. However, it has since closed the gap significantly by partnering with competitor OpenAI and, as of the end of 2024, was beginning to build models in-house.

Microsoft also purchased billions in Nvidia chips and continues to innovate on its cloud computing platform, Azure, and agentic powerhouse, Copilot. These strategic moves are, thus far, keeping pace with the other major players in the AI industry.

Microsoft requires immense amounts of capital to remain competitive in the AI landscape. Fortunately, its decades-old productivity and business lines are the stable engine propelling Microsoft into its new, automated era.

The Office moat

Normally, when one thinks of a legacy business, it’s of an outdated, shrinking portion of revenue. That is not the case with Microsoft’s Office products. Microsoft 365, including the applications Excel, Word, PowerPoint, Teams, and Outlook, is still growing by double digits year over year.

This indicates these product lines are not only here to stay, but are so universally adopted by businesses and individuals alike that it’ll be nearly impossible to dethrone them anytime soon.

These products are also mostly recession-resistant, as businesses are unlikely to cut them in an economic downturn. Microsoft also switched to a subscription model more than a decade ago, making revenue from these lines of business extraordinarily predictable and dependable.

The significant growth in the legacy products is also great news for the capital-intensive investments Microsoft will need to continue making for the next several years. Microsoft reports that it’s on track to invest approximately $80 billion to build out AI-enabled data centers for training and deploying AI models and applications.

Microsoft’s AI revenue is exploding

In its earnings call on July 30, Microsoft revealed Azure’s income for the first time: a whopping $75 billion, an increase of 34%, according to chairman and CEO Satya Nadella.

The CEO added, “Cloud and AI is the driving force of business transformation across every industry and sector. We’re innovating across the tech stack to help customers adapt and grow in this new era.”

Microsoft’s market cap is approaching $4 trillion, and there seems to be quite a bit of room left for growth, particularly if the company’s big AI bets pay off.

Microsoft remains a top competitor

For investors, Microsoft remains a solid long-term play, largely because of the stable products users have known for years. With a quarterly dividend of $0.91 per share, investors are rewarded on both the value and growth side, though the dividend yield is under 1%. Microsoft’s burgeoning agentic and innovative technologies will continue to produce massive revenue alongside mature, reliable products.

Overall, Microsoft’s total revenue increased 18% from Q4 2024 to Q4 2025. There’s plenty of risk associated with investing in AI technologies, but thanks to Microsoft’s steady lines of business, the downside is far less than that of many competitors.

In June 2020, I happily invested in one of my favorite consumer brands: Coffee giant Starbucks (SBUX -0.36%). But after it’s underperformed the returns from the S&P 500 by a wide margin over these five years, it’s high time I reconsidered its role in my portfolio.

I believed that Starbucks stock would provide my portfolio with a blend of growth and income. For growth, I was quite optimistic that the company’s business in China would quickly rebound from the pandemic and unlock much higher earnings. That hasn’t happened. With it now looking for strategic options for its China business, it’s time for me to wave the white flag here.

Regarding income, Starbucks didn’t disappoint. It’s increased its dividend payment every year that I’ve held it, and is currently on a 14-year streak of doing that. And as of this writing, the dividend yield is approaching 3%, which is close to the highest it’s ever been.

Therefore, I can’t really complain when it comes to dividend income from Starbucks stock. But growth has been lacking. Going back to just before the pandemic started, Starbucks has averaged a single-digit compound annual growth rate (CAGR) for revenue. This often isn’t good enough to propel market-beating stock performance. So the question is: Can I find a comparable dividend-paying stock that offers better growth? Indeed, there are some options.

1. Academy Sports & Outdoors

With only 300 locations, sporting goods retailer Academy Sports (ASO 1.77%) is easy to overlook. But if management has its way, the company could put up better top-line growth than Starbucks from here.

Perhaps the biggest way that Academy Sports is driving revenue growth is by opening new stores. This year, it hopes to open up to 25 locations. It had already opened eight of these by the end of the second quarter of 2025. Past guidance suggests that the company intends to open around 150 additional locations by the end of 2028.

These new store openings could allow Academy Sports to deliver a double-digit growth rate in coming years. Management is also known for methodically returning cash to shareholders. It buys back stock, and its quarterly dividend has grown at a nice pace in recent years.

ASO Shares Outstanding data by YCharts.

With a dividend yield of only 1%, Academy Sports won’t necessarily attract income investors today. But those with a long-term view hope to ride the company’s growth plans to much higher earnings in time, which could result in much better dividend income down the road.

2. Arcos Dorados

Restaurant chain Arcos Dorados (ARCO -0.15%) owns the rights to the McDonald’s brand in 21 countries in Latin America and the Caribbean, allowing it to own and operate franchised locations and sub-franchise to other operators. With over 2,400 locations, it’s the largest independent McDonald’s franchisee.

Differences in currency exchange rates are masking double-digit revenue growth for Arcos Dorados. For the second quarter of 2025, the company reported just 3% year-over-year growth. But adjusting for currency fluctuations, it grew by 15%. This includes both same-store sales growth and the contribution of new restaurant locations.

With a 3.5% dividend yield, Arcos Dorados stock is more attractive than Starbucks stock as an income investment. The company also pays out just a small portion of its earnings as a dividend, leaving plenty of room for future growth.

About one-third of Arcos Dorados’ locations are sub-franchised. And like McDonald’s itself, Arcos Dorados generates some revenue from its franchisees via rental income — it owns the land and buildings at nearly 500 locations. This real estate layer to the business can make it a stronger investment compared to other restaurant companies.

3. Stick with Starbucks?

Over my investing career, I’ve learned to only sell a stock after taking plenty of time to think it over. So while I’m thinking about selling Starbucks stock and buying a replacement that’s growing faster and still offers income, it’s not a done deal. In fact, I see some reason to continue holding Starbucks stock.

It’s been just over one year since Starbucks hired new CEO Brian Niccol, and he’s still trying to reinvigorate the brand. That starts with bringing back the more inviting coffeehouse atmosphere. The company just announced that it will close hundreds of locations that don’t fit its vision.

Niccol’s plan comes with an expensive price tag of around $1 billion. But investors’ expectations are now low, and Starbucks can start bouncing back as difficult decisions pay off.

For now, I believe the downside risk for Starbucks stock is low because it’s still a top consumer brand and Niccol has a good reputation as an operator. Academy Sports and Arcos Dorados are on my radar as potentially filling the role in my portfolio currently filled by Starbucks. But I see no reason to rush this decision today, so I’ll keep holding Starbucks stock for now.

Niche video streaming service and cloud computing company Rumble (RUM 15.83%) rumbled the stock market Friday but in the best way possible for investors. Its stock surged almost 16% higher on news of a business tie-up in the revolutionary artificial intelligence (AI) space. That pop felt especially impressive when matched against the flat performance of the ultimately sleepy S&P 500 index.

Deepening integration with AI

Shortly after market close on Thursday, Rumble announced that it was partnering with privately held Perplexity AI, a developer that has concocted an “answer engine” harnessing AI technology.

Image source: Getty Images.

The collaboration between the two will see them combine on several initiatives for Rumble, including souped-up search functions on its web portal and a new subscription for users that bundles the AI company’s Perplexity Pro service.

In the press release trumpeting this arrangement, Rumble wrote that it “addresses a fundamental product challenge in digital video: helping users discover relevant content in an increasingly crowded media landscape.”

It explained that “by integrating Perplexity’s AI search technology into Rumble.com, the partnership aims to improve content discoverability for both creators seeking to reach their audiences and viewers looking for specific topics or discussions.”

Gradual uptake

Rumble did not provide any financial details of its partnership with Perplexity AI. It did say the integration of the latter company’s tech will occur in stages.

Although it’s tough to determine what effect the collaboration will have on Rumble’s fundamentals, it feels like a sensible, potentially quite beneficial move to hone the company’s competitive edge. Any enhancement to the user experience can make Rumble that much more “sticky” with the public.

After driving more than 30% higher in August, Chinese electric vehicle (EV) maker Nio (NIO -2.41%) continued powering higher last month. Investors found good news bookmarking September, with the company reporting strong quarterly earnings early in the month, through the end of the month, when Nio posted encouraging September sales.

According to data provided by S&P Global Market Intelligence, shares of Nio rose 19.4% in September.

Image source: Getty Images.

Strong vehicle deliveries was only one of several green flags investors

From the starting line in September, Nio gave investors a reason to cheer. The company reported 31,205 vehicle deliveries for August, a 55.2% year-over-year increase. Nio’s performance was especially impressive considering it grew vehicle deliveries in July a mere 2.5% compared to July 2024.

Further good news came on Sept. 2, when Nio reported second-quarter 2025 financial results. In addition to growing revenue 10% year over year, the company reported a slimmer net loss. Nio posted an adjusted loss per share of $0.25 in Q2 2025 compared to an $0.30 adjusted loss per share in Q2 2024.

Management also charged up investors’ excitement for the EV maker’s stock with an auspicious outlook for the third quarter: vehicle deliveries of 87,000 to 91,000. Should the company achieve this forecast, it will represent a year-over-year increase of 40.7% to 47.1%.

In response to its Q2 2025 financial report, Wall Street grew increasingly bullish on Nio. Mizuho raised its price target on Nio stock to $6 from $3.50, while Bank of America bumped its price target up to $7.10 from $5.

Growing increasingly optimistic about Nio stock’s upside over the ensuing weeks, Bank of America revisited the price target two weeks later and raised it to $7.60. Citigroup took the pole position for the most bullish on Nio stock in September, however; it raised it price target to $8.60 from $8.10, keeping a buy rating on the stock

Is Nio stock a buy now?

While Nio stock was in reverse for the first half of 2025, shares have shifted gears and driven higher in the second half of the year as the company continues to report growth — growth that extended into September. The company recently reported 34,749 vehicles deliveries for September 2025, a year-over-year increase of 64.1% and a new monthly record.

Impressive as the company’s performance may be, the company is still consistently unprofitable, making it an undesirable option for investors looking to mitigate their risk exposure. Fortunately, there are plenty of other EV stocks to consider.

St. Louis Financial Planners Asset Management, LLC initiated a new stake in AbbVie (ABBV -1.04%), acquiring 14,630 shares for an estimated $3.39 million in Q3 2025.

What happened

According to a Securities and Exchange Commission (SEC) filing dated October 02, 2025, St. Louis Financial Planners Asset Management, LLC disclosed a new position in AbbVie(ABBV -1.04%). The firm acquired 14,630 shares, bringing its quarter-end holding to $3.39 million. The position accounted for 2.1842% of the fund’s $155,093,822 in reportable U.S. equity assets across 37 positions.

What else to know

This new position represents 2.2% of the fund’s 13F assets as of 2025-09-30

Top holdings after the filing:

• NYSEMKT:BIL: $36.73 million (23.7% of AUM as of 2025-09-30)
• NYSEMKT:TFLO: $17.27 million (11.1% of AUM as of 2025-09-30)
• NASDAQ:BSCP: $10.45 million (6.7% of AUM as of 2025-09-30)
• NASDAQ:PLTR: $9.23 million (6.0% of AUM as of 2025-09-30)
• NASDAQ:AVGO: $5.16 million (3.3% of AUM as of 2025-09-30)

As of October 1, 2025, AbbVie shares were priced at $244.38, up 24.08% over the past year and outperforming the S&P 500 by 11.71 percentage points

Company Overview

Company Snapshot

AbbVie generates revenue primarily through the development, manufacturing, and sale of branded pharmaceuticals, including key products such as HUMIRA, SKYRIZI, RINVOQ, IMBRUVICA, and BOTOX Therapeutic.

The company operates a research-driven business model, focusing on innovation and the expansion of its drug portfolio across multiple therapeutic areas.

AbbVie serves a global customer base, including healthcare providers, hospitals, and government agencies, with a focus on advanced therapies for autoimmune diseases, oncology, and specialty care.

AbbVie discovers, develops, manufactures, and sells pharmaceuticals worldwide, including products for autoimmune diseases, oncology, and other conditions. Its diversified portfolio and commitment to research support its competitive position in the healthcare sector.

Foolish take

AbbVie is one of the top pharmaceutical companies on the market right now, despite its relatively recent loss of patent for Humira, which was a blockbuster drug for the company. Despite this, its dividend remains strong and its drug pipeline robust. Several new drugs are in the works for fields like immunology, oncology, and aesthetics.

Since its acquisition of Allergan, maker of Botox, AbbVie has been burdened with a higher debt load than usual, but equally high cash flows have kept balance sheets healthy. However, a dependence on a few successful drugs does create serious risk should regulation or pricing pressures become a more significant factor in the near term. Higher interest rates could also become a problem, should the company need to refinance the debt it acquired in 2019 with the purchase of Allergan.

Even so, AbbVie is still a solid Wall Street Buy recommendation, with 5 Strong Buys and 13 Buys for October, as well as 9 Hold recommendations. It continues to beat on analysis estimated EPS this year, showing that it can, in fact, pivot despite the loss of a major income stream.

Glossary

Stake: The ownership or investment a firm holds in a particular company or asset.
Reportable AUM: Assets under management that must be disclosed in regulatory filings, such as the SEC’s 13F report.
13F assets: U.S. equity securities managed by institutional investment managers, reported quarterly to the SEC on Form 13F.
Top holdings: The largest investments in a fund’s portfolio, typically ranked by market value.
Dividend yield: Annual dividends paid by a company as a percentage of its current share price.
Outperforming: Achieving a higher return than a benchmark index or comparable investment.
TTM: The 12-month period ending with the most recent quarterly report.
Branded pharmaceuticals: Prescription drugs sold under a trademarked brand name, as opposed to generic versions.
Autoimmune diseases: Medical conditions where the immune system mistakenly attacks the body’s own tissues.
Oncology: The branch of medicine focused on the diagnosis and treatment of cancer.

Shares of leading private-label snacking and beverages manufacturer TreeHouse Foods (THS 3.47%) rose 31% this week as of 2 p.m. ET on Friday, according to data provided by S&P Global Market Intelligence.

Octus, a global financial intelligence firm, learned that private equity firm Investindustrial was working on trying to acquire the beleaguered packaged foods company for $3 billion.

This news sent shares rocketing higher, following the stock’s decline from $40 to just $15 over the last year.

Image source: Getty Images.

Where there’s smoke, there’s fire?

While these types of M&A (mergers and acquisitions) updates are often speculative at best, there may be reason to believe in this potential bid.

In 2022, Investindustrial purchased a large portion of TreeHouse Foods’ meal preparation business for $950 million. So there is a history between the two.

One possible scenario could be that Investindustrial saw success from its previous deal and is coming back for seconds with TreeHouse’s stock cratering.

Now trading with an EV-to-EBITDA (enterprise value-to-earnings before interest, taxes, depreciation, and amortization) ratio of 8, TreeHouse is quite reasonably valued, even with its minimal growth rates.

Furthermore, the company is home to a portfolio of steady private label categories, such as baked snacks, tea and coffee, broth, hot cereal, powdered beverages, refrigerated dough, and pickles.

As private-label brands continue to grow market share in the consumer-packaged goods category — and remain popular among Gen Z and millennial shoppers — a well-priced buyout could make a lot of sense for InvestIndustrial.

For investors currently holding the stock, I would leave the arbitrage opportunity to the traders and move on from the debt-heavy, low-growth business. Its valuation is appealing, but it might be better off left to private equity to turn around.

Shares of Lyft (LYFT -2.21%) were moving higher last month after the No. 2 ride-hailing company took some significant steps in offering an autonomous vehicle service with two key partnerships.

Additionally, earlier momentum in the stock seemed to carry over to September as Wall Street’s perception of the business’s prospects has improved. Lyft earned a number of bullish notes and price target hikes last month in response to things like its acquisition of Freenow, improving financials, and innovative products like Lyft Silver.

According to data from S&P Global Market Intelligence, the stock finished the month up 36%. As you can see from the chart below, shares surged in the first half of the month before levelling off later.

LYFT data by YCharts

Lyft is going autonomous

The biggest piece of news on Lyft last month was a new partnership with Alphabet‘s Waymo, the leading autonomous vehicle platform, to launch an autonomous vehicle service in Nashville.

As part of the deal, Waymo will use Lyft’s fleet management service, Flexdrive, to handle vehicle maintenance, infrastructure, depot operations, and related services in Nashville. The service will launch exclusively on the Waymo app in 2026, but is expected to become available through the Lyft app later next year.

Lyft stock jumped 13% on the news on Sept. 17 as partnering with Waymo in Nashville could pave the way to a larger partnership. Shares of rival Uber, which has also teamed up with Waymo, fell on the news, as it shows Waymo is interested in working with both companies.

Earlier in the month, The Wall Street Journal reported that Lyft was teaming up with May Mobility to launch an autonomous vehicle service in Atlanta. May Mobility, a start-up based in Michigan, plans to start its minivan-based autonomous vehicle services with a small number of vehicles in a limited part of the city.

Image source: Lyft.

Can Lyft stock keep gaining?

The gains in September added to what’s already been a banner year for the ridesharing stock, which is up 73% so far this year as I write this.

Lyft is delivering solid growth and improved profitability, and initiatives like Flexdrive seem to have been overlooked by investors thus far. In Nashville, Lyft is building out a custom AV fleet management facility with charging and service capabilities. If it can do that successfully, there could be a long runway of growth in that business, especially if its partnership with Waymo expands.

The company still has a lot of ways it can grow and disrupt the broader transportation market. At a market cap of just $9 billion, there’s still a lot of upside potential for the stock.

Since the close of trading last week, shares of the artificial intelligence (AI) cloud company Nebius Group (NBIS 3.67%) had risen 16%, as of 10:18 a.m. ET today. The company has purchased new land that could signal expansion, and one of its competitors also just signed a major deal earlier this week.

Still plenty of fuel behind AI infrastructure

There’s a lot of debate among investors regarding what inning of AI infrastructure buildout we are in. While no one knows for sure, there still appears to be a strong appetite for AI data centers. Earlier this week, CoreWeave, a competitor of Nebius, signed a new multiyear, $14 billion deal to provide capacity to Meta Platforms.

Image source: Getty Images.

While Nebius and CoreWeave compete, many of the hyperscalers use more than one AI data center, provider and if demand for AI infrastructure is still strong, it’s good for everyone in the space. Kimberly Forrest, the chief investment officer for Bokeh Capital Partners, said the deal shows that demand for high-quality AI chips is “limitless.”

Additionally, this week Nebius purchased 79 acres of land in Birmingham, Alabama, for $90 million that appears to be tied to a previous announcement from the company about U.S. expansion. M.V. Cunha, who runs a substack and a popular account on X and who has nailed bullish calls on Nebius, believes the company could use the newly purchased land to build new data centers with hundreds of megawatts of capacity.

It’s not too late

Nebius has been a monster this year, with its stock up about 310%. That said, I think investors can still buy the stock, especially with the huge deal with Microsoft it announced recently. While I do have concerns about an AI slowdown at some point, Nebius still has a strong balance sheet, is likely to reach other big deals with hyperscalers, and also has other businesses like autonomous driving that could be valuable down the line.

Many investors don’t readily think of dividends and tech together, but there’s more than meets the eye with this union.

Talk to enough experienced dividend investors and chances are they’ll rattle off sectors like consumer staples, healthcare and utilities as some of their favorite payout destinations. Odds are equally good that they won’t mention technology.

That’s understandable, because the 12-month distribution rate on the largest exchange traded fund (ETF) tracking the tech-heavy Nasdaq-100 Index is a piddly 0.48%Obviously nothing to write home about, but that data point obfuscates tech’s status as a rising payout growth spot. In fact, in dollar terms, Microsoft (MSFT 0.78%) and Apple (AAPL 0.42%) are two of the biggest dividend payers in the S&P 500.

Image source: Getty Images

Apple and Microsoft are widely held stocks, but in what amounts to a pleasant surprise for equity income investors, the duo is an appetizer in the tech dividend equation. Seven-course meals are available with the First Trust NASDAQ Technology Dividend Index Fund (TDIV 0.79%) and the ProShares S&P Technology Dividend Aristocrats ETF (TDV 0.81%).

Similar tickers, but different methodologies. So, let’s examine how these ETFs live up to their tech dividend billings.

TDV: A familiar playbook

As its name implies, the ProShares S&P Technology Dividend Aristocrats ETF has Dividend Aristocrats DNA. The TDV follows the S&P Technology Dividend Aristocrats – a collection of tech companies that have increased payouts for at least seven straight years.

With tech and dividends still considered newlyweds, that index requirement sounds confining, but TDV holds 38 stocks. That roster size is aided by index flexibility that allows for “tech-related” companies. Mastercard (MA 0.42%) and Visa (V 1.39%) being prime examples.

If there’s a rub with TDV’s plumbing, it’s that the dividend increase streak requirement precludes some big names from entering the index. For example, Alphabet (GOOG -0.98%) and Nvidia (NVDA 0.24%) are dividend payers, but they haven’t increased payouts for seven straight years, so they’re not yet candidates for TDV admission.

TDV has points in its favor, including equally weighting its holdings. That means the ETF can be an income-generating complement to stakes in tech funds that weigh components by market capitalization – many of which have rosters where a small number of stocks command whopping percentages of the portfolios.

TDIV: Tech dividend flexibility

While TDV’s dividend increase streak mandate has a country club membership feel to it, the First Trust NASDAQ Technology Dividend Index Fund has its own elements of exclusivity. The fund follows the Nasdaq Technology Dividend™ Index, which has several rules dividend investors need to acknowledge. Those include requiring member firms to have paid a dividend over the past year, no payout cuts over that time and a minimum yield of 0.50%.

By eschewing the payout increase streak protocol, TDIV sports a significantly larger roster than its rival – 94 holdings to be precise. There’s another big difference between the tech dividend ETFs. TDIV holdings are dividend value-weighted. In plain English, the ETF’s index places added emphasis on stocks with big dividends and massive market caps. Hence, Broadcom (AVGO 0.88%), Oracle (ORCL 0.84%) and Microsoft combine for nearly a quarter of the ETF’s weight. TDIV has a different way of doing things, but it’s hard to argue with its performance since inception in August 2012.

There are other marquee differences between TDIV and its nearest competitor. Notably, the First Trust ETF can hold international stocks, some of which have been additive to performance, and 20% of its portfolio can be allocated to communication services stocks. The latter point is pertinent because if Alphabet and Meta Platforms (META -1.08%) increase their payouts enough to drive their yields to 0.50%, those stocks would be eligible for TDIV admittance, perhaps increasing the ETF’s growth profile along the way.

Different tech dividend strokes for different folks

For fee-conscious investors, TDV is an appealing option because its annual expense ratio is 0.45%, or $45 on a $10,000 position, compared to TDIV’s 0.50%, but fee tussles aren’t the end ETF comparisons. Smart investors know there’s more to the story.

The ProShares ETF may be more appropriate for investors seeking documented dividend dependability via an instrument that as currently constructed, leans into mature, older guard technology companies. Plus, the fund’s equal-weight methodology may be attractive at a time when so many cap-weighted indexes are heavily concentrated in a small number of stocks.

On the other hand, TDIV is perhaps the better choice for growth investors that want a dash of income. Past performance isn’t a guarantee of future returns, but it shouldn’t be ignored that over the past three years, TDIV’s returns and volatility traits stacked up well against some traditional tech ETFs, indicating its flexibility and index mechanics play in investors’ favor.

It’s hard to argue with Dogecoin‘s (DOGE 0.68%) performance. In the past five years, this cryptocurrency has skyrocketed 8,740% (as of Sept. 30). It has taken its owners on a roller coaster ride, but the returns have been truly magnificent.

Right now, Dogecoin trades 66% below its record, established in May 2021. Should investors take advantage of the dip and spend $1,000 to buy this dog-inspired meme token right now?

Image source: Getty Images.

Betting on community support

Dogecoin was created in 2013 as a joke to rival Bitcoin. It deserves credit for building a strong community of supporters that has driven its market cap to $35 billion. However, when it comes to legitimate use cases, Dogecoin is lacking.

One key data point to keep in mind is developer activity. A report by Electric Capital reveals that Dogecoin is 97th on the top-100 list of blockchain networks when it comes to the total number of developers working on it. This is a bearish indicator, as it points to a low probability of critical innovation and advancements.

Buy the proven winner

The only market participants that should bet on Dogecoin are speculators looking to make a quick profit. The true long-term investors out there will have no problem avoiding this token. Compared to today, there’s a very real chance that Dogecoin will be worth less five or 10 years down the road.

When allocating $1,000 in capital to cryptocurrencies, it’s a smart idea to focus on a proven winner like Bitcoin.

The state of Constellation Brands (STZ 1.12%) continues to worsen. Even with increased interest from Warren Buffett‘s Berkshire Hathaway, tariff worries and falling levels of alcohol consumption prompted the company to lower guidance in September.

However, investors should also take a closer look at the potential buy signals that may have contributed to the growing interest in the stock from Berkshire. Do such conditions justify buying Constellation stock in hopes of a market-beating return five years from now, or should investors stay on the sidelines?

Image source: Getty Images.

Why Constellation’s pain can continue

First of all, I must issue a mea culpa regarding this stock. I predicted in early August that Constellation in one year would outperform the market. With the latest downgrade and decline, such a relatively quick turnaround looks increasingly unlikely.

Indeed, the state of the company illustrates why the turnaround might take years. For one, over 89% of Constellation’s revenue came from beer in the first quarter of fiscal 2026 (ended May 31), specifically beers like Modelo, Corona, and Pacifico that it imports from Mexico. That will subject it to higher tariffs that could cost Modelo its No. 1 position in the U.S. market.

Consumption trends also look increasingly unfavorable. Among all generations, increasing trends toward better health and other factors may have persuaded people to either cut or eliminate alcohol consumption, placing further pressure on the company.

So it likely comes as no surprise that in fiscal Q1, net sales fell 6% to just over $2.5 billion. Also, since the cost of goods sold barely fell and operating expenses increased, the net income fell to $516 million versus $877 million in the year-ago quarter.

The company issued a mid-quarter report to revise its fiscal 2026 net sales estimate downward to a range of -6% to -4%. Although investors should have more clarity on this trend after the release of the fiscal Q2 report on Oct. 6, the update indicates that the pain will persist longer than anticipated.

The five-year bull case

Amid such conditions, Constellation Brands’ stock has lost nearly half of its value over the past year, wiping out almost all of its gains over the last 10 years. This means that new investors can buy the stock at a significant discount. Losses stemming from asset impairments temporarily left it without a P/E ratio. Still, a forward P/E ratio of 11 could indicate the selling in this stock is overdone.

This is notable since Berkshire has long sought value plays. It began buying Constellation Brands stock in the third quarter of last year. Also, despite being a net seller of stocks, it has increased its Constellation position every quarter since that time. So it may spot an opportunity that other investors have overlooked.

Berkshire has long made it known its favorite holding period is “forever.” The fact that people have consumed alcohol since the beginning of recorded history may be leading Berkshire to ignore the current consumption trends and forecast that demand is not going to go away.

Another factor drawing interest to the stock could be its dividend. Constellation began payouts in April 2015 and has increased its total dividend annually since that time. As a result, its $4.08 per share annual dividend offers new shareholders a dividend yield of 3%, well above the S&P 500 average of 1.2%.

Despite declining net sales, it generated $444 million in free cash flow in fiscal Q1. Since its dividend currently costs the company $182 million per quarter, it remains in a position to hike its payout. That, along with the lower forward P/E ratio, could make it attractive to dividend investors.

Constellation Brands in five years

Over the next five years, Constellation Brands can beat the market. Admittedly, investors who buy now will have to do so in the face of data and trends that appear increasingly bleak for the company. Moreover, the company’s release of lower guidance in the middle of the quarter suggests that any recovery will take years.

However, betting that humans will behave toward alcohol in the same way they always have should ultimately be a winning bet. With Berkshire’s backing, along with the low forward P/E ratio and increasingly attractive dividend, any improvements in Constellation’s current state are likely to take the stock significantly higher.

Only about 1 in 5 Americans use a high-yield savings account (HYSA), according to a recent CNBC study. And that’s a shame, because that means the other 4 in 5 Americans are missing out on easy money.

I’ve been writing about personal finance for years, and here’s something I’ll never understand: Why leave free money on the table?! If you’re going to keep cash in the bank, you might as well earn something worthwhile on it.

Here’s exactly how much you could make with $10,000 sitting in a top HYSA today.

How much interest $10,000 earns at 4.00% APY

Some of the top HYSAs are paying around 4.00% annual percentage yield (APY) right now.

At 4.00% APY, here’s how much interest $10,000 would earn in interest:

• In one year: $400
• Per month: About $33
• Each day: About $1.10

Compare that to a traditional bank paying 0.01% APY, where $10,000 would make just $1 in an entire year. The gap is staggering.

I always tell people — If you were walking along and saw a $1 bill on the ground, would you pick it up? Of course you would. Because it’s “free money.”

Well, moving your cash pile into a high-yield savings account is kind of like picking up extra money every day (except there’s no bending down required — it just collects and grows in your account). It’s one of the easiest wins in personal finance.

Why online banks are better

Bigger interest checks are nice. But online banks have several other benefits that come with high-yield savings accounts:

• FDIC insurance: Just like the big banks, most online HYSAs insure your money up to $250,000.
• Easy transfers: You can usually link your checking account and move money back and forth in a day or two.
• No hidden fees: Many top HYSAs don’t charge monthly maintenance fees or have account minimums. Some even waive ATM fees and overdraft charges.
• Better apps and tech: Most online banks focus on a digital-first convenience which lets users manage everything from their phone.

In short, online banks give you all the safety of a traditional bank, but with more modern features and way better returns.

It’s hard to believe that Warren Buffett’s time as CEO of Berkshire Hathaway is coming to an end. The legendary investor took the holding company from a textile manufacturer in 1965 to become one of the largest companies on the planet today, owning more than 100 businesses and with an equity portfolio worth more than $300 billion.

Berkshire Hathaway stock has wildly outperformed the market over these past few decades, delivering a total gain of 5,502,284% in per-share market value vs. 39,054% for the S&P 500. Today, Berkshire Hathaway has joined the ranks of the $1 trillion market cap club, and investors everywhere follow Buffett’s trades and guidance to become more successful investors.

Most Buffett holdings are the antithesis of the hot growth stock. Buffett is known for his value approach to investing, and he steers clear of high-risk stocks or technology that he’s not familiar with. But at least one stock that the broader investing community and Warren Buffett can agree upon is Amazon (AMZN 0.82%).

The classic moat

There are several features Buffett loves in a great stock, and one of them is a moat. An economic moat ensures that the business has a product or service that stands out and a leg up on the competition. Amazon’s size and name give it a competitive edge, so even though it’s not the classic Buffett stock, it has some clear features that fit the mold.

Its core business is of course e-commerce, and it has almost 40% of the market share in the U.S. That’s a massive amount of market share for any business, and Amazon can do so much to keep its share because it’s so large and has so many resources. It hasn’t reported the number of Prime members it has in a while, but it’s estimated at 220 million to 240 million. These members rely on it for their everyday essentials and more, and the membership model generates loyalty and repeat purchases.

It also drives growth in its advertising business, since advertisers get access to Amazon’s hundreds of millions of Prime members where they’re already shopping and ready to make a purchase. More recently, Amazon has developed a robust video ad business for its Prime streaming platform, and it’s also expanding the business outside of the Amazon platform.

Amazon’s market share lead isn’t quite as big in cloud computing, but it’s still hefty at 30% of the global market, well ahead of Microsoft Azure’s 20%.

Opportunities in AI

Amazon is in constant growth mode to stay on top of its game in all of its categories. Its greatest opportunities today lie in generative artificial intelligence (AI) through its cloud business, Amazon Web Services (AWS). Amazon is investing hundreds of billions of dollars in developing the most competitive generative AI capabilities to meet every kind of demand, from the small business through its large enterprise clients.

Its signature AI service is called Bedrock, which provides access to a plethora of large-language models (LLM) for clients to customize, but it also has tools for developers to build their own LLMs and for small businesses to use ready-made solutions.

The AI business already has a $123 billion run rate, and CEO Andy Jassy pointed out, “How often do you have an opportunity that’s $123 billion of annual revenue run rate where you say it’s still early?”

Indeed, independent sources point to a massive long-term opportunity. According to Grand View Research, the AI market is expected to reach $3.5 trillion by 2033, growing at a compound annual growth rate (CAGR) of 31.5%. What we see today continues to grow at a pace that’s hard to keep up with as generative AI moves from wonky results to near-human content creation.

Amazon and its peers are using enormous loads of data to access new levels of training, inference, and reasoning, reaching new capabilities that could further revolutionize daily life. The way it’s going, AI could eventually take over as Amazon’s larger business and launch its stock into new territory.

A great time to buy

Despite its immense size, Amazon’s revenue is still growing by double digits — 12% in the second quarter. That’s quite a feat, and with the potential for the AI business, it could keep that up for a while. However, there’s some uncertainty in the business due to tariffs and lawsuits, and the market has soured on Amazon stock recently; it’s roughly flat this year, despite the ongoing opportunities.

At the current price, Amazon stock trades at 29 times forward, 1-year earnings, which is an attractive entry point for new investors. If you’ve been on the fence, now could be a fantastic time to take a position in this no-brainer stock.

What a difference a week can make on the stock market. Next-generation healthcare tech company Tempus AI‘s (TEM 1.56%) stock was doing quite well, thank you very much, over the past few days, in contrast to the preceding five-day trading stretch.

Due to some positive news from a subsidiary brought into its portfolio recently, this week to date (as of early Friday morning) Tempus AI’s shares were rising by almost 14%, according to data compiled by S&P Global Market Intelligence.

Image source: Getty Images.

A technological leap forward

That subsidiary, California-based genetic testing specialist Ambry Genetics, was acquired by Tempus AI in February. Ambry announced a major upgrade to its cancer risk assessment platform Wednesday. It said that the Ambry CARE Program integrates data such as breast density to feed into the score calculated by the benchmark Tyrer-Cuzick breast cancer risk assessment tool.

This update, the company said, supplies “clinicians with more precise and personalized risk estimates at the point of care that can guide recommendations for breast cancer screening and risk reduction.”

Ambry added that this type of cancer is the most common to be diagnosed in women. As such, it makes CARE that much more compelling for this large addressable market.

Reputation enhancer

Not only is this a boost for the Ambry Genetics product, it should also help burnish the reputation of Tempus AI as a whole. After all, the company has positioned itself as a cutting-edge, tech-forward solutions provider harnessing artificial intelligence (AI) to improve outcomes for patients.

BigBear.ai‘s (BBAI 4.16%) stock has been on a volatile ride on the market so far in 2025, but it still managed to clock impressive gains of 57% as of this writing. It’s worth noting that the stock is down 28.5% from the 52-week high it achieved in mid-February. For a company that is compared to Palantir Technologies thanks to their very similar business models, investors may now be wondering if the slide in BigBear.ai stock can be treated as a buying opportunity.

Let’s take a closer look at what BigBear.ai does and check if its prospects and valuation make it worth buying in the wake of its share price pullback.

Image source: Getty Images.

BigBear.ai stands to gain from a massive end-market opportunity

Just like Palantir, BigBear.ai is in the business of providing artificial intelligence (AI) software solutions to customers so that they can improve the efficiency of their operations and enhance productivity. It provides various kinds of tools related to data analytics, cybersecurity, enterprise IT solutions, digital twins, and digital identity.

The good part is that the demand for these AI software solutions is on track to grow rapidly. IDC projects that the AI software platforms market could generate a whopping $153 billion in revenue in 2028, up from $27.9 billion in 2023. The bad part is that BigBear.ai has been unable to make the most of this fast-growing opportunity.

The company’s recent results clearly indicate that it is missing the AI software opportunity. Its revenue was down by 18% on a year-over-year basis to $32.5 million. The gross margin shrank as well, which explains why its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss more than doubled to $8.5 million in Q2.

Of course, BigBear.ai reported a $380 million revenue backlog at the end of Q2 — up by 43% from the prior-year period — but it comes with a lot of caveats. The primary concern with BigBear.ai is that it gets the majority of its revenue from government contracts. That probably explains why a huge chunk of its revenue backlog is unfunded, or is up to customers’ discretion whether they want to purchase its services or not.

Just 4% of BigBear.ai’s backlog is funded, which refers to the remaining value of existing contracts that it has yet to fulfill. The remaining backlog is either unfunded or unexercised. So, despite reporting a healthy backlog, BigBear.ai doesn’t have solid revenue visibility going forward. Throw in the fact that BigBear.ai has reduced its full-year revenue forecast by 19%, and there is a good chance that the stock will remain under pressure until and unless there is a substantial turnaround in its fortunes.

The good part is that there have been some silver linings for BigBear.ai investors of late. The stock jumped recently on the news that it will support the U.S. Navy in a maritime exercise, giving investors hope that it could win more business. Additionally, BigBear.ai’s enhanced passenger processing (EPP) solution has been deployed at Nashville International Airport.

However, it remains to be seen if these developments are going to have a positive impact on the company’s financial performance.

Analysts aren’t upbeat about the stock’s prospects

BigBear.ai’s median 12-month share price target of $6 points toward a potential drop of 7% from current levels. That’s not surprising, as the company’s growth estimates have taken a big hit.

Data by YCharts.

Moreover, BigBear.ai stock isn’t exactly cheap right now. It trades at 12 times sales. That’s well above the Nasdaq Composite index’s price-to-sales ratio of 5. With the company’s sales set to decline in double digits this year as per its updated guidance, its rich valuation isn’t justifiable. All this tells us that this AI stock isn’t worth buying even after its recent pullback, which is why investors would do well to take a closer look at other names that are clocking healthy growth and are trading at attractive valuations.

Warren Buffett has long held Occidental Petroleum (OXY -7.16%) and its CEO, Vicki Hollub, in high regard. His trust in Hollub led Buffett’s company to invest heavily in Occidental. Berkshire Hathaway (BRK.A -0.14%) (BRK.B -0.40%) now owns over $12.6 billion of Occidental’s stock — almost 27% of its outstanding shares — making it Berkshire’s sixth-largest holding at 4.1% of the investment portfolio.

In addition to Occidental’s leadership, Buffett’s company sees unique value in Occidental’s assets. While Buffett has previously stated that acquiring the entire company was not his goal, he clearly sees strategic value in owning a part of the company: OxyChem. Berkshire is paying $9.7 billion for the chemicals company — a move that will significantly reshape Occidental’s business.

Image source: Getty Images.

Drilling down into the OxyChem deal

Berkshire Hathaway is buying OxyChem for $9.7 billion in cash. OxyChem is a global manufacturer of commodity chemicals essential to water treatment, pharmaceuticals, and other key industries. It operates 23 facilities around the world, producing items such as caustic soda (the second-largest merchant seller in the world) and PVC (the third-largest domestic supplier).

OxyChem is consistently profitable despite the ups and downs of the chemicals sector. The company is about to deliver a step-change in profitability, driven by a major investment phase. Occidental was on track to invest over $1.5 billion into several projects through 2026, including the modernization and expansion of the Battleground plant in Texas. These and other projects will add an incremental $325 million in annualized earnings before interest, taxes, depreciation, and amortization (EBITDA) to OxyChem’s total in 2026 and beyond.

The steady cash flows and growing profitability of OxyChem make it an ideal fit for Berkshire Hathaway, which already has experience operating in the chemicals sector. Berkshire also owns specialty chemical company Lubrizol, which it bought for $9.7 billion in 2011.

How this deal will change things for Occidental

The sale of OxyChem will reshape Occidental Petroleum. The oil company plans to use $6.5 billion of the proceeds to immediately repay debt. That would enable the company to achieve its long-standing target of reducing its principal debt below $15 billion. Occidental plans to put the remaining $1.5 billion in after-tax proceeds on its balance sheet, enhancing its financial flexibility.

Debt has been an issue for Occidental Petroleum over the years. The oil giant bought rival Anadarko Petroleum in a cash-heavy $55 billion deal in 2019. Berkshire Hathaway assisted the company with funding for the acquisition by making a $10 billion preferred stock investment in Occidental. That deal turned out to be poorly timed as oil prices crashed early in 2020 when the pandemic hit. Lower crude prices and issues with selling assets significantly impacted the company’s ability to achieve its initial debt reduction targets.

However, Occidental slowly dug out of that hole as oil prices improved. That enabled it to make another debt-heavy deal in late 2023 when it agreed to buy CrownRock for $12 billion. The company set goals at that time to repay at least $4.5 billion of debt within a year of closing the deal and eventually reduce its principal debt to below $15 billion.

Occidental quickly achieved its initial goal by using free cash flow and asset sales. Now it will reach the $15 billion target by selling OxyChem.

Achieving that lower debt level will improve Occidental Petroleum’s credit metrics and financial flexibility. It will also save the oil company over $350 million annually in interest expenses, boosting its free cash flow. The increased financial flexibility will enable Occidental Petroleum to opportunistically repurchase shares and repay additional debt as it matures. The oil company can also continue growing its dividend. Additionally, Occidental plans to resume the redemption of Berkshire’s preferred equity investment, which it anticipates beginning in August 2029 after it builds a bigger cash balance.

In addition to significantly reshaping the company’s financial profile, the deal will sharpen Occidental’s focus on oil and gas production. The company will have greater financial flexibility to invest in unlocking the treasure trove of low-cost oil and gas resources it has around the world. As Hollub put it in the press release unveiling the sale, the transaction will “create this strategic opportunity that will unlock 20+ years of low-cost resource runway and deliver meaningful near and long-term value.”

A financially stronger, more focused oil and gas company

The sale of OxyChem is a transformational event for Occidental Petroleum. The oil company will achieve its long-term debt reduction target, significantly enhancing its financial flexibility while reducing interest expenses. It will also narrow the company’s focus on growing its oil and gas business. As a result, Occidental will become a significantly lower-risk oil company with substantial long-term growth potential as it focuses on developing its vast, low-cost oil and gas resources.

Few stocks are as directly exposed to artificial intelligence as CoreWeave (CRWV 0.72%). The AI cloud infrastructure company reinvented itself, transitioning from a crypto mining company by repurposing its GPUs to provide AI computing power to customers like Microsoft, Nvidia, and OpenAI.

With the AI boom in full swing, that business model has led to jaw-dropping growth. In its second quarter, its revenue jumped 206% to $1.21 billion, showing how fast demand for its services is ramping up.

Now, CoreWeave just got another shot in the arm as the stock jumped 12% on Tuesday after announcing another blockbuster deal, this time with Meta Platforms (META 1.35%).

Image source: Getty Images.

What’s happening with CoreWeave and Meta?

Meta is committing to spend up to $14.2 billion through 2032 on cloud computing capacity from CoreWeave, with an option to expand its commitment.

The deal comes at a time when Meta has been ramping up its spending on AI, seeing it as a must-win for its future. In June, Meta acquired a 49% stake in Scale AI, a data-labeling start-up, and poached its CEO, Alexandr Wang, to run its new AI lab.

On the same day that the CoreWeave news came out, Meta also announced that it’s buying the chip start-up Rivos, which designs chips based on RISC-V architecture, an alternative to those used by leading CPU architecture designers Arm, Intel, and AMD. Rivos is also expected to help Meta build out full-stack AI systems.

For CoreWeave, the deal builds on the earlier momentum it earned when it signed an expanded $6.5 billion agreement with OpenAI in September, bringing its total contract with OpenAI to $22.4 billion.

The drumbeat of positive news for AI includes rival Nebius’s $17 billion deal with Microsoft, Oracle’s huge cloud computing forecast, and CoreWeave’s own wins, including OpenAI, Meta, and a $6.3 billion deal with Nvidia, in which it will buy any of CoreWeave’s unused capacity, effectively backstopping the company’s growth.

Those news items, and improving sentiment around CoreWeave, sparked a recovery in the stock last month. After falling by more than 50% from its peak in June, CoreWeave jumped more than 50% off its lows early in September.

Is CoreWeave overvalued?

CoreWeave is a challenging stock to value. The company is delivering phenomenal top-line growth, but it’s also reporting huge losses. The company’s business model is risky. It’s borrowing billions of dollars to buy Nvidia GPUs and build out the infrastructure to provide next-generation AI computing.

That high-interest debt has also led CoreWeave to pay significant interest expense, set to be above $1 billion this year, essentially preventing CoreWeave from turning a profit.

For most stocks, to determine an appropriate valuation, you just look at the numbers. However, CoreWeave is in a class of its own. Given its growth rate, in which revenue is still tripling, the upside potential for the stock is tremendous, and conventional cloud computing businesses like Amazon Web Services and Microsoft Azure have shown how profitable cloud computing can be at scale.

Rather than parsing the numbers for CoreWeave to determine whether the stock is overvalued, investors are better off considering the future of the AI boom. If the massive capex buildout continues, including on CoreWeave’s infrastructure, the stock is a good bet to be a winner. At a market cap of $66 billion, the stock still has room to move higher.

However, if the AI boom turns into a bubble and spending suddenly slows, CoreWeave is likely to plunge. While it’s locked in multi-billion-dollar deals with the likes of Meta, the company will need more of those to turn profitable and justify its current valuation.

Either way, expect the volatility in the stock to continue.

Industrial robotics company Symbotic (SYM 9.50%) enjoyed a nearly double-digit rise in its stock price on Thursday, with its shares increasing by just under 10% in value. Investors were taken by a bullish initiation of coverage by an analyst now trading the company. Symbotic’s bounce looked impressive when placed next to the under-0.1% advance of the S&P 500 index.

Launched with a buy

That entity behind the upgrade was Northcoast Research, whose analyst Keith Housum launched his coverage of Symbotic with a buy recommendation at a price target of $65 per share.

Image source: Getty Images.

The reasons for Housum’s optimistic stance weren’t immediately apparent. He’s hardly the only pundit or investor bullish on Symbotic’s future, however, as the company combines two hot tech and industrial trends — artificial intelligence (AI) and robotics, mainly geared to the warehouse segment.

Symbotic has quite the anchor client in retail industry giant Walmart, which owns an equity stake in the company and has tasked it with automating its warehouses.

The challenge for the future

As much as Americans like what Walmart has to offer, plus the fact that its outlets are nearly everywhere in this country, no person or company can live on that company alone.

The trick for Symbotic will be to rope in more clients and become a go-to provider of AI-enhanced robotics goods and services. There has been quite a run-up in the company’s share price so far. However, this will be difficult to sustain if it doesn’t expand the client list.