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Rigetti Computing Inc (RGTI 18.29%) closed at $35.40, up 18.59%. Trading volume reached 144 million shares, about 3 times its three-month average of 54 million. The stock hit an intraday high of $35.81, matching its 52-week peak.

U.S. markets moved higher. The S&P 500 (^GSPC 0.06%) edged up 0.062% to 6,715.35, and the Nasdaq Composite (^IXIC 0.39%) gained 0.39% to 22,844.05, with select technology names helping indexes close in positive territory.

Among quantum peers, D-Wave Quantum Inc (QBTS 13.75%) advanced 13.97% to $29.21, while IONQ Inc (IONQ 10.13%) rose 10.32% to $69.60.

Rigetti’s surge was fueled by its September 30 announcement of purchase orders for two Novera quantum systems totaling about $5.7 million, underscoring progress in moving from research toward commercial deployment. This momentum follows earlier news from September 18, when Rigetti was awarded a three-year, $5.8 million contract from the U.S. Air Force Research Laboratory in collaboration with QphoX. Together, the developments have reinforced investor confidence in Rigetti’s transition toward commercialization and driven sustained strength in the shares.

Market data sourced from Google Finance and Yahoo! Finance on Thursday, October 2, 2025.

Shares of Rigetti Computing (RGTI 18.29%) skyrocketed 83.6% in September, according to data from S&P Global Market Intelligence. Quantum computing stocks generally surged last month, with gains ranging from Quantum Computing‘s 17% jump to D-Wave Quantum‘s 58% spurt, but they couldn’t keep up with Rigetti.

Image source: Getty Images.

Government contracts and quantum orders fueled Rigetti’s recent rise

The stocks mentioned above often move as a group. When one quantum computing expert announces a technology breakthrough, all of them bask in that glory for a while.

September saw some of that effect play out. For example, Rigetti’s stock jumped 14% on Sept. 11, driven by IonQ restructuring its business to meet higher demand from the federal sector.

But Rigetti cooked up most of its own market-moving fuel last month. The flashpoint for a 48% price surge in the third week of September was a three-year contract from the U.S. Air Force Research Laboratory.

Rigetti and Air Force researchers will explore superconducting quantum networking together. This technology seeks to transfer the quantum state of qubit computing units over long distances, resulting in faster and more accurate data transfer.

At the very end of September, Rigetti also posted two purchase orders for its top-of-the-line Novera systems, sparking a single-day stock jump of 16.5%. The upgradable systems should be delivered in the first half of 2026.

The customers in this two-part deal are not arms of the American government. One is an as-yet-unidentified technology manufacturer headquartered in Asia. The other is a California-based start-up in the field of artificial intelligence and applied physics. Both will focus their Rigetti systems on noncommercial tasks such as internal training and hands-on error correction research.

Is Rigetti’s quantum leap worth the risk?

Rigetti’s blossoming sales and contracts are exciting, and the quantum computing industry as a whole is making big strides toward long-term commercial success at the moment. However, the financially sustainable future of the technology is still many years away. And it’s a risky ride.

The two Novera orders boosted Rigetti’s market cap from $9.66 billion to $11.22 billion. That’s a $1.56 billion boost from two sales worth (checks notes) a total of $5.7 million. That’s a lot of investor optimism based on a pair of fairly small contracts.

And that’s not a rare example. Stocks like Rigetti (and IonQ, and D-Wave, and…) often make big moves on tiny bits of news. Investors are looking for the next big thing, hoping to capture huge long-term returns before everyone else gets in on the same secret.

But Rigetti isn’t a secret anymore, and the company still faces huge risks on the road to profitable quantum computing operations. I’m watching this space with trillion-dollar tech titans in my quantum portfolio — not risky early-stage challengers with small revenue streams and huge bottom-line losses.

Rising 30% so far in 2025 and now a $120 billion company, Latin American e-commerce and fintech juggernaut MercadoLibre (MELI 2.89%) may have investors feeling like they missed their opportunity to buy.

However, despite the company’s immense size, one key attribute makes it worthy of buying today: its growth optionality.

MercadoLibre’s seemingly endless ways to grow

Growth optionality, or a company’s flexibility to expand into new markets, is one of the most powerful forces for a stock. And MercadoLibre has growth optionality in spades.

Image source: Getty Images.

Expanding to all of Latin America

MercadoLibre is home to 71 million monthly active buyers who purchased over $15 billion worth of products in the last quarter. Yet Brazil, Argentina, and Mexico account for 96% of the company’s total sales, leaving a long growth runway as it expands into new countries.

As a whole, Latin America has 50% more people than the United States. Still, the region’s e-commerce penetration rate is only half that of its neighbor to the north, highlighting the vast opportunity that remains.

Advertising

The company grew its share of the Latin American digital ads market from 1.5% in 2019 to 6.7% in 2024. This market share makes it the third-largest advertiser in the area.

This burgeoning segment grew sales by 38% in the second quarter. With the Latin American retail media market expected to triple in size between 2024 and 2028, MercadoLibre’s rapid growth here should persist.

Business-to-business (B2B)

MercadoLibre recently launched its B2B offering, with 4 million users enabled to make wholesale purchases.

Management estimates this market is roughly four times the size of the company’s existing consumer marketplace. Any success here could be a major multiplier over time.

Fintech and credit

Home to 68 million monthly active fintech users, MercadoLibre is well positioned to disrupt the largely underbanked and cash-payment-heavy nature of most Latin American countries.

Furthermore, the company now has 35 million users in its credit portfolio — 60% of whom had no credit offers before.

Still growing sales by more than 30% quarter after quarter, MercadoLibre’s growth story is far from over.

Bitcoin (BTC 2.64%) soared past $117,000 on Oct. 1, erasing September’s losses. Meanwhile, the U.S. government shut down for the first time in seven years, after lawmakers failed to agree on a temporary spending bill. Both gold and the S&P 500 set new record highs, though only time will tell whether the surge comes in spite of the government shutdown or because of it.

Some commentators say this supports Bitcoin’s safe-haven status, but that isn’t necessarily what happened here. The fact that stocks also rose could suggest other factors are at play. For example, there’s optimism around traditional gains in so-called “Uptober” as well as potential rate cuts. Plus, the Internal Revenue Service eased crypto treasury rules, which could reduce corporate crypto tax bills.

Image source: Getty Images.

How the shutdown could affect crypto investors

Previous government shutdowns have not had a huge effect on financial markets, particularly for long-term investors. As a cryptocurrency investor, here are a few potential shutdown consequences to have on your radar.

1. A longer shutdown could reduce investor appetite for risk

There are two ways that the current shutdown could affect consumer sentiment. The first is if it drags on for a long time. The last shutdown, which began in December 2018, extended 35 days and was the longest the U.S. has ever seen. A repeat could put even more pressure on the economy and reduce confidence in U.S. markets.

The second is if the shutdown leads to federal job layoffs, rather than the furloughs we’ve seen before. Vice President JD Vance told reporters that this possibility becomes more likely the longer the shutdown continues.

For crypto investors, there are two opposing forces at play. Faltering confidence in the dollar might push people toward alternative assets. However, people are less likely to buy Bitcoin or other risky assets when they are worried about how to cover the essentials.

2. A shutdown could delay spot crypto ETF approvals

Anticipation about approval from the Security and Exchange Commission for a flurry of crypto ETFs has been building for months — even more so since mid-September, when the SEC said it would follow a streamlined generic listings process rather than approving each one individually. However, the SEC is unlikely to be able to approve new crypto ETFs when it’s operating with a skeleton staff, no matter how simple the process.

3. It may test Bitcoin’s digital gold narrative

Crypto enthusiasts have long touted Bitcoin’s potential as a form of digital gold — a safe haven during times of crisis. As a decentralized, independent asset, it does have a lot in common with gold. However, it is still a relatively new asset, and its price can be extremely volatile. Bear in mind that Bitcoin fell by over 64% in 2022 on the back of Fed rate increases that triggered exchange failures.

Bitcoin has matured a lot in recent years, particularly since the approval of spot Bitcoin ETFs attracted huge inflows of institutional funds. The gridlock in Washington could put pressure on the dollar and increase economic uncertainty. That makes it a good time to see whether it can live up to its safe-haven potential.

Rate cut optimism could be behind Bitcoin’s initial shutdown surge

Investors were already hopeful that the Fed would cut rates at its October meeting. Following the shutdown, they are almost certain. The CME FedWatch tracker now puts the likelihood of a cut this month at 99%. Rate cuts have historically been positive for cryptocurrency prices, as they add liquidity to the market and make riskier assets more appealing.

The difficulty here is that the shutdown could delay the publication of the key economic data that the Fed relies on to make its decisions. The lack of jobs and inflation data could make it harder for officials to get a clear picture. This can also add to volatility, as markets can’t use public data to prepare for potential Fed moves.

How Bitcoin behaved in previous shutdowns

There have only been three government shutdowns since Bitcoin’s launch in 2009. Bitcoin’s price fell during the shutdowns of 2018 and 2019. However, it would be misleading to read too much into the data, given how much the industry has matured in the past seven, or even 12, years.

Data source: CoinGecko.

It is important to look at the government shutdown in a wider economic context. Right now, the prospect of rate cuts and IRS rules that favor crypto treasury companies may have had a bigger effect on crypto prices. But if the shutdown continues, this could dent confidence and drive investors away from risky assets.

Shares of AppLovin (APP -3.57%) rose 50.1% in September, according to data from S&P Global Market Intelligence. The climb reflected growing optimism ahead of the company’s Oct. 1 product event, which unveiled a self-serve ads platform aimed at e-commerce and other non-gaming advertisers (the company already has a strong foothold in gaming).

Leading up to the event, a string of bullish analyst actions late in the month bolstered investor sentiment for shares of the advertising technology company. In addition to boosting their price targets for the stock, the analysts expressed optimism for the upcoming expansion of its platform.

Image source: Getty Images.

Expanding its addressable market

Late last month, Wall Street leaned in. Multiple analysts raised price targets and highlighted AppLovin as a top idea, citing strong demand for the company’s next wave of AI-powered ad tools and a broader push beyond gaming advertisers. The anticipation centered on “Axon Ads Manager,” a self-serve portal designed to reduce manual onboarding and open the platform to more e-commerce brands.

That anticipation culminated on Oct. 1, when AppLovin began rolling out Axon Ads Manager on a referral or invitation basis — a timely move aimed at capturing holiday-season budgets and making it easier for non-gaming marketers to buy on the platform. The company also emphasized Axon as the artificial intelligence (AI) engine powering its ad matching.

The setup followed solid summer fundamentals. In early August, AppLovin reported 77% year-over-year top-line growth in the second quarter. In addition, its net income margin expanded from 44% in the year-ago period to 65%, helping its bottom line soar 164% year over year to a substantial $820 million for the quarter.

Looking ahead

After September’s rally, AppLovin now trades at an extremely high valuation. Shares trade at a price-to-earnings multiple of 88 as of this writing. Clearly, there are high expectations for Axon’s adoption, e-commerce penetration, and continued margin expansion for the overall company.

From here, investors should watch three things. First, the Axon Ads Manager rollout pace — particularly how quickly referral-only access broadens and how many non-gaming advertisers start spending meaningfully. Second, investors should focus on fundamentals, looking for sustained revenue and free cash flow growth at high rates throughout the holiday quarter and beyond. Finally, keep an eye out for competitive response across ad tech — especially as rivals court the same e-commerce budgets with their own AI-assisted tools. If the uptake of the new Axon Ads Manager is slower than expected, or the macroeconomic environment prompts markets to tighten ad budgets, shares could underperform; the valuation multiple leaves little room for disappointment.

October is off to a strong start for Roku (ROKU 1.13%) investors. Shares of the streaming video pioneer are trading north of $100 for the third consecutive day on Tuesday. It’s a familiar but unfortunately fleeting experience.

Roku has proven mortal since the initial pandemic feeding frenzy sent the shares to an all-time high of $490 in early 2021. The shares would go on to pull back dramatically, but it hasn’t dimmed the fight. This is the fourth year in a row that Roku revisits trading in the triple digits. It has failed to stay there at the end of the last three years.

It could be different this time. Momentum is on its side, but will the company stick the landing in 2025? Let’s take a closer look at how Roku is doing, and why the latest dalliance above $100 can have staying power this time.

This is why we can’t have nice things

The inability to enjoy the good times isn’t limited to the stock’s short-lived tenure in the triple digits. Roku has now moved lower the day after posting financial results in four of the last five quarters. It happened last time out, even with Roku beating expectations on both ends of the income statement, raising its guidance, and delivering its first quarterly profit in more than three years.

Roku was checking most of the boxes that growth stock investors like to see, even before what should’ve been a transformational second quarter this summer. Revenue growth has been in the double digits for more than two years. It’s been generating nine-figure trailing free cash flow for almost as long.

The lack of positive earnings was holding Roku back, but that headwind is now a tailwind. Analysts see the bottom-line gains improving exponentially through the second half of this year and beyond.

What are the other knocks on Roku now that the red ink has been wiped clean? Naysayers argue that Roku is in a cutthroat market, competing with three of the world’s most valuable companies with far greater financial resources. How is that playing out?

Like the other leading streaming services stocks, Roku is no longer publishing its active user count or its average revenue per user. It’s still putting out usage metrics. Streaming hours on the platform have soared 17% over the past year.

Like the other consumer tech titans in this space, Roku sells its hardware at a loss, but gross margin was surprisingly flat in its latest quarter. More importantly, since its high-margin platform revenue now accounts for 88% of its revenue, it’s OK to treat its devices business as a loss leader.

Image source: Getty Images.

The narrative is changing

Roku shares keep climbing the wall of worry. The stock has risen nearly 40% over the past year, even with the initially negative reactions to its financial updates. Reality is beating the knee-jerk reactions.

Roku hasn’t just landed ahead of analyst profit targets over the past year — it has demolished them. Roku’s positive bottom-line surprises have been 25% to 144% better than Wall Street targets. It’s using its scalability and desirable audience to its advantage, forging partnerships that will enhance its already strong position in the connected TV adverting market.

All the storm clouds aren’t gone. Even the connected TV ad market will take a hit if the economy heads south. Its rivals with market caps in the trillions can decide to throw even more money at their fledgling streaming operating systems. It will take a couple more years of expanding profitability before Roku has a reasonable P/E ratio.

Roku will be just fine. With its healthy run of “beat and raise” quarterly performances mowing down the worrywarts, 2025 should be far different from 2022, 2023, and 2024. There is more than just something good to watch on TV. Roku has cracked the code, and now it’s the one that can go afford to go channel surfing from the couch.

Following a monstrous run over the last five years that saw the share price outperform the S&P 500, shares of Costco Wholesale (COST -0.89%) have cooled off in 2025. The stock is roughly flat year to date after surging to a 52-week high of $1,078 earlier this year.

Costco shares have trailed the bull market rally in recent months. The only thing investors can blame is the stock’s high valuation. At a price-to-earnings (P/E) ratio of 50, the stock is the most expensive it’s been in 25 years. But sometimes stocks can trade for years at extended valuation levels. Costco’s exceptional operating performance and superb leadership certainly are deserving of a premium valuation.

While the stock could be in the process of settling at a lower P/E, there are two things about Costco’s business that make me interested in the stock even if it’s historically expensive.

Image source: Getty Images.

1. World-class operating efficiency

Costco has 81 million paying warehouse club members because it sells stuff in bulk cheaper than anyone else. Some investors might assume Costco prioritizes keeping its margins at a fixed level and reinvesting any cost savings in lower prices. While this is the basic strategy, Costco is still seeing its margins gradually rise.

Over the past 10 years, the company’s operating margin has improved from 3.1% to 3.8%. It has ticked up about 0.1% almost every year. This reflects several initiatives to improve operating efficiency, including automation, streamlining the checkout process, and continued growth in its private label brand Kirkland Signature, where sales continue to outpace Costco’s overall sales growth.

Costco capped off another solid year in terms of margin and operating profit growth. For fiscal 2025 (which ended in August), operating income grew 12% year over year, slightly above its past 10-year average annual increase of 11%. Earnings per share (EPS) grew 14% year over year excluding a tax benefit last year.

Consistency is a key element that can cause investors to award a premium valuation to a company. Next year, analysts expect Costco’s sales and adjusted earnings to grow 8% and 16%, respectively. The continued growth of Kirkland, which generates higher margins than other brands, and Costco’s culture of relentlessly squeezing every last ounce of inefficiency out of operations should maintain its recent trend of improving operating margin and earnings growth.

2. International opportunity

Perhaps the biggest factor that may cause the market to continue valuing Costco at a higher-than-average P/E is global expansion. Only 31% of Costco’s warehouse stores are outside the U.S., yet its discount operating model and global sourcing capabilities could pave the way for profitable international growth.

Costco currently has 914 warehouses worldwide, with 629 in the U.S. It plans to increase this base to 944 in fiscal 2026. Opening warehouses in foreign markets requires longer planning than in the U.S., but the company has a pipeline of openings it is pursuing internationally.

Current international stores are performing well. In the most recent quarter, its adjusted comparable-store sales in Canada grew 8.3% year over year, with other international markets up 7.2%. This was marginally higher than its U.S. comp-sales growth of 6%. Strong international growth prospects extend Costco’s ability to maintain consistent performance for many years.

But Costco is still finding plenty of room to expand on its home turf. Over the next year, two-thirds of its planned warehouse increase will be in the U.S. The combination of improving margins and growth opportunities at home and abroad justifies a high valuation.

Beyond numbers and growth opportunities, Costco’s corporate culture is just something you cannot pin to a specific P/E. The company’s consistent performance reflects a management team that is focused on one thing: delivering more value to customers. The fact it is succeeding on that mission while still improving margins makes Costco a highly valuable business.

Costco is one of a kind, and that’s why the stock still looks like a tempting buy even if it’s expensive.

Amazon (AMZN 0.57%) is best known for its e-commerce empire and its highly profitable cloud arm, Amazon Web Services (AWS). The tech giant’s shares have rallied over the last year, lifting the company’s market cap to more than $2.3 trillion as of this writing. That strength reflects solid execution across the business and optimism about the company’s growing role in artificial intelligence (AI). Yet one driver often takes the back seat to AWS: advertising.

Advertising is now a sizable, fast-growing revenue line that benefits from Amazon’s unmatched data, the shopping intent of visitors, and its expanding media footprint. Further, ad revenue accelerated again in Q2, and recent management commentary points to more opportunity ahead. Put simply, advertising is an important reason the long-term investment case remains compelling.

Image source: Getty Images.

Advertising momentum keeps building

Amazon’s advertising services revenue rose 23% year over year to about $15.7 billion in the second quarter of 2025 (22% growth excluding currency impacts). This followed 18% growth in the first quarter (19% excluding currency impacts), showing healthy acceleration as the year progresses. Drivers include more shopping activity, improved ad tools and measurement, the ongoing rollout of Prime Video ads, and connected-TV (CTV) partnerships that broaden where Amazon can serve ads. Notably, Amazon highlighted a June integration with Roku, with the partnership reaching an estimated 80 million U.S. households. The company’s push into CTV expands advertiser reach beyond retail search into high-engagement streaming, where advertisers are willing to pay more for ad spots.

Together with retail search, brand and display placements, and its demand-side platform (DSP), Amazon is deepening the ways it can match advertiser goals with shopper intent and authenticated audiences across its sprawling digital services. In other words, the company isn’t just selling placements; it is selling performance.

Why advertising is key to the bull case

Advertising represents high-margin revenue layered on top of Amazon’s massive retail and media ecosystem. While the company does not disclose ad margins, the economics are attractive and scale with traffic, selection, and relevance improvements.

Although management doesn’t provide specific commentary on its advertising margins, it often implies that they are key to the company’s profit growth story.

“Advertising remains an important contributor to profitability” in both its North America and international segments, said Amazon CFO Brian Olsavsky in the company’s most recent earnings call.

While Amazon does not break out operating income for advertising separately, the high-margin nature of the business is a meaningful tailwind for overall profitability in North America and internationally. AWS, of course, remains the largest profit center, generating $10.2 billion of operating income in the quarter, but advertising is an increasingly important profit contributor that diversifies and helps stabilize the overall business through cycles.

It’s also worth noting that Amazon’s capabilities in advertising are difficult for rivals to replicate, given the company’s scale. So it wouldn’t be surprising to see Amazon continue gaining market share in advertising for years to come.

But this part of Amazon’s business comes with risks. Ad budgets are cyclical, and privacy and regulatory changes can impact targeting and measurement. Additionally, competition from other large advertising platforms remains intense. Meanwhile, Amazon stock’s valuation already bakes in healthy growth across its businesses. With a market cap in excess of $2.3 trillion, trailing-12-month sales approaching $700 billion, and net income of $70.6 billion for the same period, shares trade at a premium that assumes steady execution. But advertising strengthens the case that Amazon can sustain double-digit top-line growth and rising profitability alongside AWS over time.

AWS may be the more important profit engine today, but advertising is a quiet force that is enhancing Amazon’s profit engine. The business benefits from Amazon’s data and distribution, adds higher-margin revenue to retail, and opens new monetization surfaces in streaming. For investors evaluating Amazon’s long-term return profile, understanding the momentum and durability of advertising — not just cloud — is key.

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The steel sector raised the alarm on Wednesday over the fate of Europe’s steel jobs due to the dual impact of Chinese surplus entering the EU market and punitive US tariffs targeting European steel production.

“Europeans have to do something. They have to find strong answers against these overcapacities because if they don’t we will lose all our jobs and all our confidence,” Manuel Bloemers, from the powerful German union IG Metall, told Euronews.

“In Germany, the steel industry is heavily impacted from these imports. Thyssenkrupp has a lot of layoffs planned,” he added.

European Commission Vice-President Stéphane Séjourné convened an emergency summit in Brussels with both steel industry leaders and unions to explore urgent solutions.

The European steel industry currently supports around 2.5 million direct and indirect jobs across the EU, with Germany, Italy and France being the main producers in 2024, according to data by EUROFER, a lobby that represents Europe’s leading steel producers.

Thyssenkrupp Steel alone has announced plans to cut up to 11,000 jobs — around 40% of its German workforce — by 2030. Across Europe, thousands of jobs are also under threat at ArcelorMittal, the world’s second-largest steel producer.

The past year was a challenging one for the sector, which saw a loss of 18,000 jobs in the EU, according to IndustriAll, the European steel union.

The situation may worsen with the new trade policy implemented by US President Donald Trump, industry representatives believe.

Since June, the US has imposed 50% tariffs on steel imports and an influx of heavily subsidised Chinese steel is diverted from the US to the EU market, lowering prices and revenues of the EU industry.

EUROFER has called for measures to slash foreign steel imports by half.

“The big risks we have as Europeans is that not only our exports into the US are being limited, but also the imports which are directed to the US usually are landing in an unprotected Europe,” Henrik Adam, president of EUROFER said.

After weeks of transatlantic trade tensions, the EU and the US reached a trade deal in July, which includes a 15% US tariff on all EU imports, while maintaining 50% tariffs on steel and aluminium — a bitter setback for the sector.

The Commission has told Euronews it will unveil new measures of protection for the market at next week’s European Parliament plenary session in Strasbourg.

‘Time is running out’

“Time is running out,” warned German MEP Jens Geier (S&D), describing the outlook as “anxious” for workers across the continent.

“This is a worthwhile timely initiative by the commission to propose this defence instruments since we all are eager to see action from the Commission,” the MEP said.

To respond to the crisis, the steel industry is proposing a tariff rate quota system: imports above a certain threshold would be subject to a 50% tariff. The threshold remains to be determined.

The quota aligns with a proposal launched in July by France, backed by 10 other EU member states, which notes that the new system “must apply to all third countries without exception.”

Since 2019, the European Commission has implemented safeguard measures to limit imports of foreign steel. However, those are set to expire in 2026, and EUROFER argues the current rules have already proven insufficient, with foreign steel imports doubling over that period.

The OECD published data in April showing that global steel overcapacities stood at 600 million tonnes in 2023 and are expected to rise to 720 million tonnes next year.

To stand its ground, the EU hopes the US will agree to lower its tariffs.

Negotiations between Brussels and Washington are expected to resume once the Commission has finalised its approach to protecting the sector.

The White House will then assess what it is willing to grant the Europeans. But talks are expected to be difficult, as Trump is pushing to bring production capacity back to US soil.

“Our steel and aluminum industries are coming back like never before. This will be yet another big jolt of great news for our wonderful steel and aluminum workers. Make America great again,” Trump wrote on his Truth Social platform in May.

RTX (RTX 0.02%), best known for its defense business, also happens to be what’s known as a defensive stock. The recession-resistant nature of the company’s defense unit provides stability to earnings and dividends, making the stock defensive in nature.

But stability is not just another way of saying “low growth.” Over the past year, this stock has surged by 38% largely on enthusiasm for the strong growth it’s generating, particularly from the company’s commercial aerospace segment.

Even better, further growth could be just around the corner. Unlike last quarter, where commercial business was the growth driver, future growth could be led by RTX’s core defense business.

Image source: Getty Images.

RTX and its “magnificent” year-to-date gains

With its surge thus far in 2025, RTX has not only handily beaten major indices like the S&P 500, but it has also outperformed larger stocks that the markets have come to associate with strong returns, like the “Magnificent Seven” tech giants.

Interestingly enough, earlier this year, RTX’s shares delivered sideways price performance. Concerns about rising tariffs were top of mind among investors. This factor outweighed positives like RTX’s solid Q1 2025 results.

However, in June, following a sudden spike in Mideast tensions, share prices in RTX and its defense industry peers began to spike as well. Even as these tensions de-escalated, RTX’s rally persisted. Shares continued to rise ahead of and after the company’s Q2 2025 earnings release, hitting new all-time highs as a result.

Source: RTX earnings reports.

It’s no wonder. As seen in the chart above, during the quarter ending June 30, 2025, the company reported solid sales and earnings growth. This growth was driven largely by strong commercial sales growth from RTX’s Pratt & Whitney division.

There are still many chapters left in this growth story

For RTX last quarter, sales and earnings were not only up on a year-over-year basis. They were also up sequentially, or quarter over quarter, as well. During Q1 2025, RTX’s sales and adjusted earnings per share grew by only 5% and 10%, respectively.

Before you jump to the conclusion that last quarter’s growth was a “one and done” event, take a look at another key performance indicator: contract backlog. As of June 30, 2025, the company’s total backlog stood at $236 billion, up 15% compared to a year ago. Commercial backlog totaled $144 billion, while defense backlog totaled $92 billion.

A year ago, these figures stood at $129 billion for commercial and $77 billion for defense.Hence, with the defense backlog, up 20% over the past year, growing faster than the commercial backlog, up 11.6% over the past year, RTX’s defense segment could experience a greater growth resurgence in the coming quarters.

That’s not all. Strong growth in defense could make up for any turbulence among RTX’s commercial aviation businesses, if recent macro uncertainty gives way to an economic slowdown. Instead of stalling out within a quarter or two, this “growth story” may have many more chapters to go.

What this means for the stock moving forward

Currently, RTX trades for around 24.6 times forward earnings. Compared to peers like Lockheed Martin (LMT), which trades for around 16.8 times forward earnings, this valuation may sound steep.

However, if the growth story persists, I believe this valuation is sustainable. Wall Street loves a growth story, and this one continues to strengthen. That’s clear from RTX’s recent spate of contract wins, including a $1.7 billion air and missile defense radar contract with the U.S. Army.

Only time will tell whether shares experience further multiple expansion, but the stock could continue to rise in tandem with earnings growth. Coupled with its quarterly cash dividend, which was recently increased by 8% and provides shares with a 1.67% forward yield, RTX could deliver steady gains over the next year. The prospect of this appeals to me, given growing concerns about another stock market correction on the horizon.

At the time of this writing, the S&P 500 (^GSPC 0.34%) is less than 1% off its all-time high and up 73% since the start of 2023. Artificial intelligence (AI) and investor appetite for risk have contributed to the torrid gains, making the market relatively expensive.

You may have seen headlines saying that the S&P 500 is overvalued compared to its historical averages. Or that red-hot growth stocks have run up too fast. But that doesn’t tell the full story.

Three simple valuation metrics — earnings, trailing price-to-earnings ratio, and forward price-to-earnings ratio — explain what’s going on with the market’s valuation. Here’s why they matter, why the S&P 500 isn’t as expensive as it seems, and what that means for your investment portfolio.

Image source: Getty Images.

This growth-driven market commands a premium price

The S&P 500 is an index featuring the 500 largest companies in the U.S. by market cap. The more valuable a company, the greater its influence on the index through its stock price. So a $4.5 trillion-plus company like Nvidia has more than 10 times the influence as a $400 billion company like Home Depot. But that also means Nvidia has 10 times the impact on S&P 500 earnings.

Just like individual companies, the S&P 500 has an earnings per share (EPS) metric. This is just an average of the earnings of each company adjusted for weight in the index. So again, Nvidia’s earnings will have 10-plus times the impact as Home Depot’s.

Ten particularly influential growth stocks, known as the “Ten Titans,” now make up 39% of the S&P 500. But many of these companies are being valued for where they will be several years from now rather than where they are today. Meaning that their price-to-earnings ratios (P/E) and forward P/E ratios are elevated, thereby bloating the valuation of the S&P 500.

According to data from FactSet, the forward P/E of the S&P 500 is 22.5, compared to a five-year average of 19.9 and a 10-year average of 18.6. Based on forward earnings projections for the next year, which tend to favor growth stocks, the S&P 500 is 13.1% pricier than its five-year average and 21% more expensive than its 10-year average. Even if companies live up to expectations, their stock prices may not go up in the near term simply because these results may already be priced in.

Valuation matters less for investors with a long-term time horizon. If the S&P 500 goes nowhere for a year or two but earnings keep growing, the narrative will flip, and the index will look cheap. So the five- or 10-year return could still be solid, reinforcing the importance of approaching the stock market with a long-term time horizon rather than trying to make a quick buck.

S&P 500 gains can be misleading

Using P/E ratios and forward P/E ratios compared to historical averages only tells part of the story. Those two metrics alone may suggest that all stocks are expensive, but that’s not the case.

Data by YCharts.

As mentioned before, the S&P 500 is up 73% since the start of 2023, but the S&P 500 Equal Weight Index has returned just 33.3% — a nearly 40 percentage point difference. Instead of weighting by market cap, the S&P 500 equal-weight gives all S&P 500 components the same influence on the index. Nvidia moves the S&P 500 equal-weight index the same as any other company does.

When the S&P 500 outperforms its 500 equal-weighted index, it means that megacap companies are doing better than companies with smaller market caps. When the equal-weighted index outperforms, it means the megacap names are dragging down the index.

Since the start of 2023, megacap companies have drastically outperformed smaller S&P 500 names. Over the last decade, the S&P 500 rose 253.1% while the equal-weight jumped 161.6%. It would have been especially difficult for an individual investor to keep pace or outperform the S&P 500 during this period without significant exposure to megacap growth stocks.

Buying the S&P 500 for the right reasons

The biggest takeaway from these metrics is that the S&P 500 is expensive because a handful of growth stocks are driving its returns. But that doesn’t mean that all S&P 500 stocks are pricey. In fact, that’s hardly the case.

Many consumer discretionary and consumer staples companies have dirt cheap valuations due to pullbacks in spending. Even pockets of the tech sector are beaten down, namely in the application software industry, due to concerns of AI disruption for software-as-a-service business models.

Investors looking for stocks at a better value may not want to buy the S&P 500 at an all-time high. Or at least have it make up a smaller percentage of their portfolios. Whereas folks who believe that the Ten Titans will keep driving market gains may argue that the S&P 500 can grow into its lofty valuation because these companies are extremely well run, have tons of growth potential, high margins, and exceptional balance sheets.

In sum, the S&P 500 is no longer a balanced index, but rather a growth index. And that means investors should only consider buying it if its composition and valuation suit their risk tolerance.

Reddit (RDDT -11.84%) is one of the most visited websites in the world. And its focused subreddits can make it incredibly easy for advertisers to target specific types of users, without having to track them via cookies. If someone’s on a particular subreddit, that’s a good indicator that they are interested in that particular topic.

The monetization opportunities are massive for Reddit and the company has been producing some fantastic growth. In return, investors have rewarded it with a skyrocketing valuation. In just the past 12 months, Reddit’s stock has soared by more than 260% (returns as of Sept. 29), propelling it to a market cap of $45 billion.

But has it risen too fast too quickly and is it too late to invest in Reddit? Or can this still make for a great growth stock to add to your portfolio today?

Image source: Getty Images.

Reddit’s fundamentals look terrific

Not only has Reddit been generating strong revenue and user growth, but its margins and overall earnings have also looked incredibly impressive. In its most recent quarter, which ended on June 30, its revenue rose by 78%, totaling $500 million. And its daily active unique visitors increased by 21% to 110.4 million. Its strong gross profit margin was just under 91% of revenue, which enabled the business to post a solid profit margin of around 18%.

The company’s excellent margins could make it easy for the business to grow its bottom line in the future, which could be crucial for the stock to continue rising in value. That’s because while its valuation may rise higher, it can still be cheap with respect to earnings. Currently, however, its price-to-earnings (P/E) multiple doesn’t look all that low, and that could scare off investors who are worried about inflated valuations in the market right now.

The stock is trading at more than 100 times its trailing earnings

The risk with investing in a fast-growing stock is that you often need to pay a significant premium for it, and Reddit is no exception. Right now, its P/E multiple is over 100, and that’s steep when you compare it to other social media stocks such as Meta Platforms and Pinterest, which trade at multiples of 27 and 12, respectively.

When you’re paying such a high multiple for a stock, that leaves little to no margin of safety should it encounter headwinds that slow down its growth. And if that happens, that could lead to a sharp sell-off. Although there is a lot of enthusiasm around Reddit’s stock, the consensus analyst price target is around $202, which suggests there is a downside risk of 17% from where it trades today. Analyst price targets are by no means a definitive guide of where a stock is headed, but they can be useful in gauging just how overpriced or undervalued a stock is. And when you combine that downside risk with the extremely high P/E multiple at which Reddit trades, a strong case can be made that the stock is indeed wildly overpriced.

Is Reddit’s stock worth buying?

I really like Reddit’s stock but not at its current valuation. It has proven to be a highly volatile stock to own this year. It fell to around $80 when reciprocal tariffs were announced in April, which sent the overall market into a tailspin. With the economy still not looking all that strong and question marks about where it’s headed, my concern is that Reddit could be due for another sizable correction in the not-too-distant future.

If, however, you’re planning to invest for the long haul and are looking to hold onto the stock for at least five years, then Reddit can still be a good buy as its site has a lot of value for marketers and its growth potential looks promising in international markets. But in the short term, you should brace for the possibility of a correction.

Shares of SoundHound AI (SOUN 0.31%) rose 23.5% in September 2025, according to data from S&P Global Market Intelligence. It wasn’t a smooth ride for the artificial intelligence (AI) expert, with several big jumps and a couple of painful drops along the way — but it’s hard to complain about a monthly gain of more than 20%.

The meme stock crowd is back in action

Unfortunately, it looks like SoundHound AI is sliding back into the meme stock phenomenon again.

The big swings in September’s stock chart seem more closely correlated to online discussion volumes than to broader stock market trends — and the spikes didn’t really line up with SoundHound AI’s handful of business-related announcements. It’s an “all talk and no action” sort of thing.

I mean, the company isn’t sitting on its hands. Its business moves just aren’t inspiring bullish price moves. Social media posts are doing more of that work.

Let’s look at the three press releases SoundHound AI shared last month:

• On Sept. 4, the company released a custom AI agent for Primary Health Solutions, a regional healthcare network near Cincinnati and Dayton, Ohio. The Denise agent delivers quick answers to common questions, online or over the phone. SoundHound AI’s stock rose 7% that day — not too shabby!

• Sept. 9 saw a 5.4% stock price drop as SoundHound AI acquired Interactions, an agentic AI specialist. This deal should boost the company’s operating profits from the get-go and expand its market reach into new sectors such as retail management and insurance. For what it’s worth, the S&P 500 (^GSPC 0.34%) index rose 0.3% the same day.

• Finally, Red Lobster ordered a systemwide SoundHound AI solution for its phone ordering services on Sept. 23. This announcement should have started a victory march at SoundHound AI’s headquarters, but the stock didn’t move at all on the news. Instead, a 13% price drop followed over the next two market days. The S&P 500 held steady across this period.

The market reaction on Sept. 4 made sense, but I see the opposite effect around the (arguably more significant) announcements that followed.

Image source: Getty Images.

Great company, but the stock valuation is getting silly again

The meme stock action kind of makes sense. I understand that investors are getting excited about SoundHound AI’s high-quality voice controls and related AI tools. I’m convinced that the company has a bright future, and the shares I’ve been holding since the spring of 2024 should serve me well in the long run.

But the recent market action is too optimistic. People are jumping to conclusions, long before SoundHound AI gets a chance to prove its actual market value. On Oct. 1, the stock is up 238% over the last year and 424% in three years. It’s also trading at the nosebleed-inducing valuation of 50 times trailing sales. Profit-based metrics don’t make sense, because the company is deeply unprofitable so far.

So I’m holding on to my existing SoundHound AI shares for the long haul, but I’m not tempted to buy any more at these lofty prices. Check again when this meme-stock rally fades out. It’s too early to ask for stronger sales or positive profit margins.

The announcement of a new buildout, as well as developments on the political front, were the factors driving up AbbVie (ABBV 5.72%) stock on Wednesday. The pharmaceutical company’s shares rose by nearly 6% in value as a result, during a session when the S&P 500 (^GSPC 0.34%) crept up a comparatively modest 0.3%.

Getting out the shovels

On Tuesday afternoon, AbbVie reported that it had begun construction on a $70 million expansion of its AbbVie Bioresearch Center (ABC) in the Massachusetts city of Worcester. The project is aimed at bolstering both research and development (R&D) of investigational medicines and manufacturing, specifically of biologics.

Image source: Getty Images.

The buildout will see an expansion of existing manufacturing spaces, in addition to the construction of a three-story building to house warehouse, office, and laboratory facilities.

Dovetailing with the Trump administration’s goal of locating more corporate assets such as factories in this country, AbbVie said that this is part of a $10 billion-plus aim to support the advancement of biologics.

The company quoted COO Azita Saleki-Gerhardt as saying that the project will also “build upon its impressive track record of developing, manufacturing, and launching next-generation complex biologic medicines.”

A deal with Trump

AbbVie also benefited from the latest moves of a major peer in the pharmaceutical realm. On Tuesday, Pfizer CEO Albert Bourla formally agreed to lower the prices of a clutch of its drugs, apparently for the Medicaid program. His company will also get a break from the pharmaceutical industry tariffs planned by the Trump administration, as Pfizer has pledged to invest more in the U.S.

If Pfizer can do it, so can AbbVie. It seems the two major threats hanging over the pharmaceutical industry — pricing and tariffs — might not be as scary as they first appeared.

On reports that it has secured a new deal with a major company in the chip sector, Arm Holdings (ARM 6.28%) saw a leap in share price Wednesday. The U.K.-based semiconductor specialist’s equity increased to close the day over 6% higher, crushing the 0.3% gain of the S&P 500 (^GSPC 0.34%) that trading session.

Speculation about a new gig

Reuters published an article stating that leading mobile chip company Qualcomm has elected to use Arm’s current technology in its products. Citing unidentified “sources familiar with the matter,” the news agency said that Qualcomm’s recently introduced PC and smartphone chips will be packed with the ninth version of Arm’s tech.

Image source: Getty Images.

That report surely caught many Arm- and Qualcomm-watchers off guard, as just the day before, the two companies received the latest judgment in a long-running dispute over licensing brought by the former over Qualcomm’s Snapdragon X chipsets. Judge Maryellen Noreika quashed Arm’s request for a full retrial on the matter.

Arm has pledged to appeal the ruling; however, at the same time, it’s clearly eager to continue doing business with Qualcomm, a client of long standing despite the legal tussle.

Numbers wanted

The Reuters article did not provide any numbers for the apparent deal, so even if the reporting is accurate, it’s difficult to ascertain what it might mean for Arm’s financials.

Also, at this point it’s as-yet unconfirmed speculation, regardless investors are justifiably glad the specialty tech company might have earned this latest Qualcomm work. They’re also surely relieved that the lawsuit has been resolved — at least this stage of it.