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Micron (MU 6.38%) stock jumped this morning on some positive comments from Wall Street analysts. Wolfe Research and Susquehanna raised price targets on Micron stock yesterday. Today, Wedbush made it three in a row with a hike to $200.

Micron stock is up 5.4% through 11 a.m. ET.

Image source: Getty Images.

What Wall Street likes about Micron stock

Micron makes semiconductors for computer memory — DRAM and NAND flash memory — and has become popular with the AI crowd for its high-bandwidth memory, or HBM. Yesterday, Wolfe cited “resilient” pricing for DRAM, and noted NAND flash memory demand is growing due to insufficient hard disk drive supply — supporting its thesis that Micron stock could hit $180 a share within a year.

Susquehanna added positive words about HBM prices holding up through 2026 — and posited a $200 price target.

Today, it’s Wedbush’s turn. In addition to agreeing with Susquehanna’s price target, Wedbush agrees that HBM will help profits in 2026. Wedbush explains its price target values Micron at 10x “peak” earnings next year, and argues this estimate could be conservative and based on Micron earning lower gross profit margins that it earned at the last cyclical peak in 2018, according to a note on The Fly. 

Translation: Gross margins this time could be better — and Micron’s profits could be, too.

Is Micron stock a buy?

Analysts polled by S&P Global Market Intelligence generally agree that Micron’s earnings this year will be 10x what the company earned in 2024, and could double by their peak in 2027, to $13.70 per share.

If “10x forward earnings” is the right price for Micron though, then at today’s price of $168 and change, the stock is arguably already overpriced. With Micron stock up 79% over the last year, it may be time to sell.

Shares of the crypto exchange Bullish (BLSH 12.36%) traded 8% higher as of 10:18 a.m. ET today. The move comes after the company reported second-quarter earnings results yesterday, received a license to operate in the U.S., and also received positive sentiment from Wall Street.

Entry into the U.S.

Bullish went public in August and was received extremely well. Shares priced at $37 but soared all the way to $118 on day one of trading. Since then, shares have struggled and trade around $57.50, which isn’t necessarily bad when you consider what the IPO priced at, but it’s also a common tale in an enthusiastic IPO market that has awoken after several years of limited activity.

Image source: Getty Images.

In the second quarter, Bullish reported net income of about $108 million on adjusted revenue of $57 million. Trading volume reached nearly $180 billion in the quarter, up about 35% year over year. Bullish is also guiding for net income between $12 million and $17 million in the third quarter and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of about $26.5 million at the midpoint of its guidance, which would be up significantly from the $8.1 million it reported in the second quarter.

Perhaps more importantly, Bullish obtained a BitLicense from the New York Department of Financial Services, which will allow the exchange to operate in the U.S. Bullish is only the third company to receive both a BitLicense and New York Money Transmitter License since 2023. Following this news, analysts at Cantor Fitzgerald raised their price target on Bullish to $59 and maintained an overweight rating on the stock.

Still a monster valuation

Trading at an $8.6 billion market cap, Bullish still trades at extremely high multiples any way you choose to value the company. I’m also not a huge fan of this space because it is so heavily dependent on crypto volume, which is swayed by the gyrations of the crypto market. For this reason, I plan to avoid the stock.

The S&P 500 closed Sept. 12 up 12% year to date, 62% over the last three years, and 97% over the last five years. Mega-cap growth-focused companies are largely responsible for driving the index to new heights.

The “Ten Titans,” which includes Nvidia, Microsoft, Apple, Amazon, Alphabet, Meta Platforms, Broadcom, Tesla, Oracle, and Netflix, now makes up over 39% of the S&P 500. And the technology sector alone makes up 34% of the index.

Here’s how the S&P 500 being dependent on the performance of a single sector impacts the broader market and your financial portfolio — and is a low-cost and straightforward way to bet on the continued dominance of tech stocks.

Image source: Getty Images.

Tech is even more dominant than it appears

The S&P 500 has a high concentration in the tech sector, namely because of just a handful of stocks. Nvidia, Microsoft, and Apple collectively account for approximately 20% of the S&P 500. Throw in Broadcom and Oracle, and that number jumps to close to 24%. So, nearly a quarter of the index is in just five tech stocks.

However, there are many leading tech-focused companies that aren’t in the tech sector. Amazon, which owns the largest cloud computing company by market share — Amazon Web Services — is in the consumer discretionary sector, along with Tesla, which is being valued more for its activities outside of electric vehicles, such as robotics, automation, and artificial intelligence (AI).

Alphabet and Meta Platforms are often thought of as big tech companies, but they are in the communications sector, along with Netflix.

The tech sector, plus these five companies, makes up 48.7% of the S&P 500. So, as big as the tech sector is, purely based on the companies that are classified as tech stocks, the real reach of tech-focused companies is far larger.

Let the S&P 500 work for you

The S&P 500’s concentration in the tech sector has expanded its valuation and made it more of a growth-focused index. This can pay off with outsized gains if tech keeps outperforming, but it can also lead to more volatility.

During the worst of the tariff-induced stock market sell-off in April, the Nasdaq Composite fell 24.3% and the S&P 500 also got crushed, falling as much as 18.9%. So while the S&P 500 used to be led by consumer staples, industrial, and energy companies, it has now become like a lighter version of the Nasdaq.

Any investor with exposure to index funds or market-cap-based exchange-traded funds (ETFs) will be impacted by this change. An S&P 500 index fund may seem diversified at first glance, with over 500 industry-leading companies. But the reality is that the S&P 500 is really betting big on just a handful of companies. This presents a dilemma for risk-averse investors, but an opportunity for risk-tolerant investors.

Risk-averse investors can reduce their dependence on mega-cap tech companies by mixing in value and dividend stocks or value-focused ETFs. Many low-cost ETFs have virtually the same expense ratio as an S&P 500 index fund, meaning there’s next to no added cost for picking an ETF that better suits your investment objectives.

However, some investors may feel that it’s best not to fight the market’s momentum, and if anything, lean into it. The Ten Titans are massive, but they are also extremely well-run companies with high-margin businesses and multi-decade runways for future growth. So some folks may cheer the fact that these companies have gotten so large and are dominating the S&P 500.

In that case, buying an S&P 500 index fund may be more interesting. Or even a sector-based fund like the Vanguard Information Technology ETF, which has a staggering 53.2% invested in Nvidia, Microsoft, Apple, Broadcom, and Oracle.

Navigating a tech-driven market

As an individual investor, you don’t have to measure your own performance against an index like the S&P 500. Rather, it’s best to invest in a way that suits your risk tolerance and puts you on a path to achieving your investment goals.

Regardless of your investment time horizon, I think it’s important for all investors to be aware of the current state of the S&P 500 and what’s moving the index. Knowing that so much of the index is invested in tech-focused companies explains why the S&P 500 has such a low dividend yield and a higher-than-historical valuation.

Put another way, the U.S. stock market is being increasingly valued for where its top companies could be years from now rather than where they are today. And that puts a lot of pressure on leading growth stocks to deliver on earnings and capitalize on trends like artificial intelligence and cloud computing.

Bitcoin (BTC) remains a volatile asset. It’s up 25% this year (as of Sept. 12). However, it was down 18% at one point. And right now, it’s 7% below its peak, which was established in August. Bitcoin has still performed exceptionally well historically, so it deserves some attention.

Should you buy the world’s most valuable cryptocurrency while it’s trading under $120,000? Let’s consider both the bear and bull cases of Bitcoin before making a decision.

Image source: Getty Images.

Bitcoin’s bear case

It seems that with each passing year, after seeing its price continue to rise, the Bitcoin bears become quieter. However, that doesn’t mean there aren’t any risks to consider.

One of the most obvious is government intervention. The U.S., the world’s biggest economy, is embracing Bitcoin, most notably with the Securities and Exchange Commission approving spot Bitcoin ETFs and the current administration creating a Strategic Bitcoin Reserve. These are obviously encouraging trends.

But it’s anyone’s guess what the next president will do. If politicians become concerned that Bitcoin will weaken the Federal Reserve’s influence over the economy, then it could face an effective ban. This could mean making it illegal to mine, buy, and hold Bitcoin within our borders. This could weaken demand from a large source of capital.

Another risk is quantum computing. If these machines, which can process complex calculations faster than regular computers, ever develop to the point of mass commercialization and adoption, it could pose a threat. A quantum computer might be able to break Bitcoin’s public key cryptography, exposing everyone’s private key, and rendering the network worthless.

We could still be a long way from mainstream quantum computing. What’s more, Bitcoin’s developers are fully aware of this risk. And updates can be made to the blockchain to strengthen its security.

These are two of the most important risks facing Bitcoin. If any of them become a serious problem, the top digital asset’s price will likely decline dramatically.

Bitcoin’s bull case

Bitcoin has been around for more than a decade and a half. And the longer it stays relevant, the more confidence investors should have that it isn’t going anywhere. This durability is one bull argument.

By being the oldest and most valuable cryptocurrency, Bitcoin not only has the most recognizable brand name in the industry, but it has developed a tremendous network effect. Users, developers, miners, and nodes all interact with Bitcoin because there are already so many other participants. This creates a positive feedback loop.

And there is a rapidly expanding ecosystem of products and services that companies are building to support Bitcoin’s adoption. This doesn’t just include financial services. Wallet hardware, mining equipment, and energy infrastructure are also being impacted. Bitcoin is penetrating the global economy in many ways, something that will certainly be hard to reverse.

Even though Bitcoin has soared 50,080% in the past decade, there is still upside. The market cap of $2.3 trillion could increase substantially over time. Gold provides a key signal of what could come. The precious metal has been viewed as the best store of value for thousands of years. However, the world is becoming more digital, which creates a favorable environment for Bitcoin to keep thriving.

The value of all the Earth’s gold is estimated to be $24.8 trillion. I think there’s a very good chance that Bitcoin will reach this figure, perhaps even in the next decade. Bitcoin can be used in transactions, while gold can’t. Bitcoin can easily be transported. Gold’s weight, on the other hand, makes it difficult to move around.

Maybe most importantly, Bitcoin is scarcer. Its supply can’t change due to shifting demand trends. There will only be 21 million units.

I believe the bull case is much more compelling. With Bitcoin under $120,000 per unit, now is a good time to think about buying the digital asset.

Billionaire Bill Ackman is one of the most widely followed investment managers on Wall Street. His Pershing Square Capital Management hedge fund has outperformed the S&P 500 in 2025. It’s up 22.9% as of the end of August, compared to a 10.8% gain in the benchmark index during that period.

Ackman’s outperformance stems from taking advantage of opportunities when the market temporarily undervalues certain stocks. He holds only a handful of positions in the fund, and he typically buys and holds them for a long time. Even better, he and his team are happy to share the details on social media and investor calls, making it relatively easy for average investors to follow along.

In May, Pershing Square disclosed that it had bought another member of the “Magnificent Seven” stocks. Its first Magnificent Seven stock, Alphabet (GOOG -0.72%) (GOOGL -0.73%), has been a longtime holding for the hedge fund, and represents one of its biggest holdings. While the new addition isn’t quite as large as its stake in Alphabet, it presents another great opportunity for those following Ackman’s investing style.

Image source: Getty Images.

A magnificent new position

The stock market saw some very big swings at the start of the year, which were exacerbated in early April by President Donald Trump’s tariff announcements. While the stock market was moving wildly, it presented several great opportunities for investors that could follow Warren Buffett’s timeless advice: “Be greedy when others are fearful.”

To that point, Ackman saw the chance to pick up one stock he’s been studying and has long admired. Amazon (AMZN -1.20%) shares fell on fears that tariffs would negatively affect its retail business, and that a slowing economy would produce less demand for its cloud computing services. Ackman and his team freed up capital by selling Pershing Square’s entire position in Canadian Pacific Kansas City to buy the stock.

Ackman got a steal of a deal. He said he bought shares at 25 times forward earnings estimates. While there was a lot of uncertainty at the time about whether those earnings estimates would need to be revised downward, Ackman had confidence that Amazon was well worth the price. In fact, he thinks the stock is still undervalued. “Although the company’s share price has appreciated meaningfully from our initial purchase, we believe substantial upside remains given its ability to drive a high level of earnings growth for a very long time,” he wrote in his letter to shareholders last month.

Here’s why Ackman may continue to hold Amazon shares for a very long time.

Two great category-defining businesses

Amazon essentially has two businesses: Its retail operations and its cloud computing platform. Ackman believes both still have room to benefit from long-term growth trends and opportunities for margin expansion.

On the cloud computing side, Amazon Web Services (AWS) is the largest public cloud provider in the world. It now sports a $120 billion run rate, and it’s about 50% bigger than its next-closest rival. It’s also tremendously profitable already. The segment sports a 37% operating margin over the past 12 months. To put that in perspective, Alphabet’s Google Cloud has an operating margin of less than half that (although it’s gaining leverage as it scales).

Despite Amazon’s large run rate, there’s still ample room for growth in both the near term and long term, according to Ackman. Amazon’s management has struggled to build out capacity fast enough to meet the surging demand from artificial intelligence customers. It’s spending over $100 billion on capital expenditures this year (some of that related to its logistics network), and management says that demand continues to outstrip supply growth. That situation is echoed by Alphabet’s management and other hyperscale cloud providers.

In the long run, Ackman expects more enterprises to move from on-premise computing to the cloud. He points out that just 20% of IT workloads are currently using cloud computing, but he expects that to invert over time, to 80% of workloads being in the cloud.

On the retail side of the business, Ackman points out that Amazon isn’t the only retailer affected by tariffs. In fact, it may be better suited to navigate the environment, as it sports a wide selection of goods. Amazon’s ability to offer reliable and convenient delivery on a growing number of items gives it an advantage over competitors.

That advantage is only improving as it continues to build out its logistics network and warehouse technology, and reduce costs. That allows it to get more items to more customers faster, all while decreasing its fulfillment expenses. Ackman points out that Amazon’s logistics improvements led to a 5% reduction in per-unit shipping costs last quarter. He thinks further improvements could lead it to double its retail profit margin from 5%. That’s a huge profit on a $550 billion business.

While Amazon shares have climbed significantly since Ackman established Pershing Square’s position, investors shouldn’t shy away from the stock at this higher price. The long-term trends favor Amazon’s businesses, and it’s a leading player in both.

Amazon (AMZN -1.20%) is one of the world’s most recognizable companies. Its e-commerce platform is responsible for delivering billions of dollars worth of goods every year in over 100 countries around the globe, and has led the e-commerce revolution. However, the e-commerce shift has largely played out, and with artificial intelligence (AI) investing dominating the market, it may seem like Amazon stock is out of favor.

But that’s not the case. Amazon is also heavily involved in the AI arms race and has another exciting division that’s driving impressive growth. The combination of a strong base business alongside a couple that are growing rapidly can lead to long-term outperformance, making Amazon an intriguing stock to buy now.

But what kind of growth can Amazon investors expect by 2030? Let’s find out.

Image source: Getty Images.

Two divisions are driving Amazon’s outsize profit growth

Amazon’s commerce divisions are well known, but there is a fact that’s not as widely known: This business isn’t as profitable as one might think. In Q2, Amazon’s North American commerce divisions generated $7.5 billion in operating profit on sales of $100 billion. However, most of that profit likely comes from one unlikely source: digital advertisements.

Amazon’s advertising services divisions have been rapidly growing behind the scenes, and are a large reason why Amazon’s operating profits have improved over the past few years. In Q2, ad services revenue rose 23% year over year, making it the fastest-growing division within Amazon. While Amazon doesn’t break out the individual operating margins per segment, this division likely has impressive margins. Another advertising-focused business, Meta Platforms, has consistently delivered operating profits between 30% and 45% over the last five years. That’s quite a bit higher than Amazon’s divisionwide operating margin of 7.5%, so it’s likely that the faster advertising service growth rate will continue to improve Amazon’s operating profits.

One division where Amazon breaks out the operating margin outside of commerce is Amazon Web Services (AWS), its cloud computing division. AWS is the world’s largest cloud provider, having experienced several years of impressive growth. It’s also benefiting from the AI arms race, as several clients lack the resources to build their own data centers for training and running AI models, so they rent them from AWS.

AWS’ operating margins are significantly better than those of its commerce siblings, as it reported an impressive 33% operating margin. That’s down from Q1’s 39% margin, but it makes sense considering how much money AWS is spending to build out increased computing capacity due to massive demand.

Cloud computing is expected to be a massive growth trend over the next few years, with Grand View Research estimating that the global cloud computing market will expand from $752 billion in 2024 to $2.39 trillion by 2030. That’s massive growth, and shows that AWS will continue to be a strong profit driver for Amazon over the next five years.

With two strong growth trends propelling Amazon’s profits higher, what will Amazon’s stock price be five years from now?

Amazon could be a $500 stock by 2030

In Q2, Amazon’s operating profits increased by 31%. This is a significantly slower rate of growth than it was previously, but with the outsize growth of highly profitable divisions like AWS and its ad services, I believe this is a sustainable growth rate through 2030. To account for some conservatism, we will use a 20% growth rate.

Data by YCharts.

If Amazon can continue growing its operating profits by 20% through 2030, that indicates $210 billion in operating profits by the end of 2030. That’s a 172% increase from today’s levels.

As long as Amazon’s valuation today is reasonable (it’s somewhat pricey at 32 times operating profits), its growth would be similar to its stock price growth. If we project Amazon to trade at 25 times operating profits, that would give the company a $5.3 trillion market cap, or a stock price of $492.

So, even with a lot of conservatism baked in (a lower growth rate than I think is possible and a decreased valuation), Amazon has the potential to be nearly a $500 stock by 2030. That’s more than a double in under six years, making it a great stock to buy now and hold over the next few years.

Despite its stock price already doubling since 2024, leading online pet goods retailer Chewy (CHWY 0.05%) remains one of my favorite stocks to buy right now.

One particular reason stands out to me as to why Chewy stock is worth owning, and that is the potential for its profit margins to keep rising.

Since the company’s focused on an array of higher-margin growth areas, Chewy’s profitability could continue improving — and investors should be very excited about it.

Chewy’s burgeoning profit margins

Over the past two years, Chewy has become consistently profitable and cash-generative.

However, despite already recording a 2% net profit margin and a 4% free cash flow (FCF) margin (1.2% if you include stock-based compensation), the company’s margins could keep rising as management focuses on the following higher-margin areas.

Autoship

Chewy’s Autoship subscription plans account for 83% of total sales. This large base of Autoship sales means that most of Chewy’s revenue is predictable, steady, and ripe for further streamlining.

Image source: Getty Images.

Chewy Vet Care

The company plans to have 20 Chewy Vet Care clinics running by year’s end. These clinics give the company a physical presence and also offer the higher margins that veterinary shops typically achieve.

Get Real

Chewy recently launched its own private-label healthy and fresh dog food, Get Real. This premium-priced product offers higher margins (particularly as a private label good) and ties in perfectly with Chewy’s Autoship subscriptions.

Advertising

Chewy’s sponsored ads business remains a major driver of the company’s growing profitability. Management believes that these high-margin placements should one day grow to account for between 1% and 3% of total revenue.

Chewy+

The company’s new $49 annual membership program, Chewy+, received a positive reaction following its launch. Chewy+ provides members with free shipping, 5% rewards on purchases, and exclusive offers. Chewy+ members already accounted for 3% of the company’s June sales, and the program could generate substantial high-margin membership fees annually.

Trading at 29 times forward earnings — but with these earnings potentially set to rise — Chewy is a top stock to consider today.

There’s one very big reason some income-focused investors might want to buy mortgage real estate investment trust (mREIT) AGNC Investment (AGNC 0.79%). That would be its astonishingly high 14% dividend yield. But a yield that high is highly unusual, given that the S&P 500 index (^GSPC -0.10%) yields only 1.2%, and the average REIT yields only 3.8%. If you’re looking for an investment that will set you up for a lifetime of reliable dividends, you’ll need to tread with caution here.

AGNC Investment is a decent mREIT

A double-digit dividend yield isn’t particularly abnormal in the mortgage niche of the broader REIT sector. For the most part, AGNC Investment is a fairly well-run mREIT. Notably, the stock’s total return since its initial public offering (IPO) is very compelling, as the chart below highlights. In fact, the total return is very close to that of the S&P 500 index. However, the return doesn’t track along with the S&P 500, so AGNC Investment looks like an attractive diversification tool.

AGNC Total Return Price data by YCharts.

If you’re looking for a total return type of investment, however, AGNC Investment could be attractive for your portfolio. There’s just one small problem. Total return requires the reinvestment of dividends. That makes sense, given the nature of the mortgage-backed securities that AGNC Investment buys.

When you make a mortgage payment, part of the payment goes to the principal and part goes to the interest. That doesn’t change just because AGNC Investment owns mortgages that have been pooled into bond-like securities. Thus, every time AGNC Investment collects a payment on a security it owns, part is interest and part is principal. The huge dividends the mREIT pays are, similarly, made up partly of interest and partly of principal. That principal is effectively a return of investor capital.

Image source: Getty Images.

AGNC Investment’s big dividend problem

The issue for dividend investors is that AGNC Investment’s dividend hasn’t been stable over time. In the table below, the blue line is dividends, and it has been highly volatile. After the IPO, the dividend rose sharply. Then it started to fall, and it’s been heading lower for roughly a decade, as have the shares. Paying out principal, or returning capital to investors, means that the value of the portfolio inherently shrinks over time. That means that there’s less capital to earn interest.

AGNC data by YCharts.

If you spend the dividends AGNC Investment pays you, you are, effectively, spending some of your own capital. To be fair, AGNC Investment has paid out more in dividends than it has lost in value since its IPO. So dividend investors have made out OK with this arrangement. But you still can’t buy AGNC Investment and expect a reliable dividend to support your spending needs in retirement. That’s just not on the table here, and the company’s dividend history proves it. To be fair, the company itself highlights that its ultimate goal is total return, not dividend income.

AGNC is an acquired taste

AGNC Investment is not an easy REIT to wrap your head around. It’s not a bad investment, but it is highly complicated to understand. More specifically for dividend investors, the dividend is not, and probably never will be, reliable.

Most dividend investors are looking for a stock that pays a dividend that’s sustainable, if not growing, over time. If that’s what you want, this 14% yield is very likely to let you down, no matter how attractive it looks relative to other high-yield dividend stock options you have.

Chinese internet search king Baidu (BIDU 11.34%) was looking very regal on Wednesday, at least as far as its U.S.-listed equity was concerned. The company’s American depositary receipts (ADRs) shot more than 11% higher in price on the back of two successive, bullish analyst updates in as many days. That double-digit gain came during a trading session when the S&P 500 index fell by 0.1%.

Bet on Baidu, says analyst

Well before market open, Jefferies‘ Thomas Chong upped his price target on Baidu substantially. He now believes the company’s ADRs could rise to $157 per ADR, where before he thought their ceiling was $108. In making the change, he maintained his buy recommendation on the company.

Image source: Getty Images.

According to reports, Chong is convinced that the artificial intelligence (AI) Baidu has embraced so fully and rapidly will have a very positive effect on its fundamentals.

He noted several positive developments in this area, specifically the company’s success in partnering with large companies on AI cooperation, and its becoming a top earner of AI cloud revenue. Additionally, one factor that sets Baidu apart is that it’s developing its own AI accelerator chip, the Kunlun.

One big bump

Chong’s upbeat new take on Baidu might not have had as much of an impact on Wednesday if it hadn’t been for a peer’s recommendation upgrade the day before.

On Tuesday, Richard Kramer at Arete changed his rating on Baidu for the better. This is understating the case, as he moved it all the way up from sell to buy, tagging it with a price target of $143 per ADR.

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Social media company Snap (SNAP 3.16%) proved to be a popular stock on Wednesday, as news about a peer made its equity look attractive. Snap closed the day more than 3% higher in price, comparing very favorably to the slight decline of the benchmark S&P 500 index.

Yet another TikTok delay

Towards the end of Tuesday’s trading session, President Trump issued the latest in a series of executive orders concerning TikTok, the controversial short-form video app from Chinese developer ByteDance.

Image source: Getty Images.

The new order extended the delay — for the fourth time — in enforcing a law that effectively bans TikTok in this country; the extension expires on Dec. 16. That move followed Treasury Secretary Scott Bessent’s announcement that U.S. and Chinese officials had agreed to a “framework” of a deal that might put TikTok’s U.S. operations in the hands of domestic companies.

The same day, Reuters reported that these would be handed over to a consortium that included tech sector mainstay Oracle, private equity firm Silver Lake Technology Management, and venture capital firm Andreessen Horowitz.

Citing unnamed “people familiar with the matter,” the news agency added that the entity’s ownership would be approximately 80% U.S. investors, with the remainder being Chinese.

Snap judgement

The delay benefits Snap because it implies that the Chinese/American deal — the specifics of which have yet to be provided — will take some time to implement. In the hands of well-capitalized American investors, TikTok on our shores could be developed into a giant social media company that might eat share from sector players like Snap.

On a Wednesday wedged between its latest quarterly earnings release and a major customer event, Braze (BRZE 2.38%) had a fine day on the stock market. The company’s shares rose by more than 2%, on the back of a positive note from an analyst tracking the stock. What’s more, this was on a day when the S&P 500 (^GSPC -0.10%) dipped underwater, closing 0.1% lower that trading session.

Bolstering the buy case

That analyst note came from Stifel‘s Parker Lane, who before the market open reiterated his buy recommendation and $40 per-share price target on Braze’s stock in a new update.

Image source: Getty Images.

According to reports, Lane justified this by pointing to Braze’s performance in the second quarter of fiscal 2026, the results of which were published earlier this month.

The customer relationship management specialist’s revenue surged 24% higher year over year to $180 million, while the non-GAAP (generally accepted accounting principles) adjusted bottom line expanded by 85% to nearly $17 million. Both figures topped the consensus analyst estimates.

Lane wrote in his Braze update that despite the post-earnings share price rise, the company’s stock is still undervalued. That’s because, in his view, it’s merely at the beginning of a vast opportunity to sell its artificial intelligence (AI)-enhanced customer engagement platform to eager clients.

A fine stock to own, say most pundits

The Stifel analyst’s view on Braze’s future is more or less in line with the typical analyst take. According to data compiled by MarketBeat.com, of the 21 pundits tracking the stock, 20 currently have buy recommendations (or the equivalent) on Braze. The one dissenter rates the company as a hold.

Chinese e-commerce giant Alibaba Group (BABA 2.24%) was standing tall on the stock market Wednesday. Fueled by a successful round of capital-raising, the company’s U.S.-traded American depositary shares (ADSes) were rising by nearly 3% in late-session action. That was easily outpacing the S&P 500 index’s gain of 0.2% at that point.

Billions of dollars in fresh capital

Alibaba announced that it has completed a roughly $3.2 billion flotation of zero coupon convertible senior notes. The purchasers were “certain non-U.S. persons,” it did not identify.

Image source: Getty Images.

These securities can be converted into ADSes at an initial rate of nearly 5.18 per every $1,000 in principal amount of the notes. The notes mature in 2032 if not converted. Alibaba stressed that the conversion rate is subject to adjustment, under certain conditions.

At the initial rate, Alibaba wrote, the conversion price would be $193.15 per ADS. That’s a more than 31% premium to the price of the company’s Hong Kong-listed ordinary shares.

The company said it will use the amount it nets from the sales of the notes for “general corporate purposes.” The two specific uses it mentioned were a bolstering of its cloud infrastructure and international operations.

Dilution? What dilution?

Investors liked the idea of Alibaba raising capital in this way because the note issue won’t end up being too dilutive to existing shareholders, or present a huge additional burden to the balance sheet. The market cap of the ADSes currently tips the sales at almost $397 billion, while at the end of its latest-reported quarter its debt pile stood at 227 billion Hong Kong dollars ($32 billion).

Shares of Opendoor Technologies (OPEN 13.23%) are soaring on Wednesday, up 6.5% as of 2:58 p.m. ET. The jump comes as the S&P 500 (^GSPC -0.11%) lost 0.6% and the Nasdaq Composite (^IXIC -0.17%) lost 0.9%.

A regulatory filing from the company, as well as the Federal Reserve’s rate cut confirmation, is sending Opendoor stock flying.

Opendoor is expanding its reach

The company filed an 8-K disclosure with the SEC, revealing that it “intends to expand its product offerings to allow [Opendoor] to provide services through the entire continental United States in the coming weeks, through one or more of its direct cash offer, cash plus, or working with its partner agents to provide listing services.”

The revelation that the company is officially expanding to the entire U.S. market is fueling investor enthusiasm.

Image source: Getty Images

Powell confirms rate cut is here

Federal Reserve chairman Jerome Powell confirmed today that the central bank will cut the federal funds rate by 0.25%. Rate cuts generally boost equities across the board, but as a real estate company, Opendoor’s bottom line is directly impacted by interest rates. Lowered rates will help improve the company’s margins.

Opendoor still has to prove its business model can work

While the digital real estate disruptor operates in a market with genuine potential for innovation, the economics of its model remain unproven. The company is operating at a loss and relies heavily on debt, making it sensitive to interest rates, and the real estate market doesn’t look particularly strong. I would avoid Opendoor stock.

Shares of hydrogen fuel cell company Plug Power (PLUG 14.29%) soared 16.1% through 1 p.m. ET Wednesday, but here’s the thing:

There doesn’t seem to be any good reason for the rise.

Image source: Getty Images.

Introducing Plug Power

Plug Power bills itself as “a first mover in the [hydrogen] industry,” manufacturing everything from electrolyzers to liquid hydrogen to entire “fuel cell systems, storage tanks, and fueling infrastructure.”

That’s both good and bad for investors.

The good side of being a “first mover” is that it promises early investors a ground-floor investment in what Plug predicts will one day become a “global hydrogen economy” replacing the use of traditional fossil fuels.

The bad news is you’re investing in a start-up that’s actually been “starting up” forever. Plug’s spent the last 28 years promising investors profits, without ever earning even one cent. It’s also supposedly a growth stock…but saw its revenues shrink nearly 30% last year.

Is Plug stock a buy?

Analysts who follow Plug Power stock do think Plug will turn profitable eventually — but no sooner than 2030. And the big risk for investors is that Plug will run out of money before it ever begins earning a profit.

Plug has only about $140 million in the bank right now, against nearly $1 billion in debt. It’s also burning more than $800 million per year. To keep this game going, Plug must either go deeper into debt or issue even more stock (its share count has doubled over the last two and a half years), diluting current investors out of even more of their hoped-for future profits.

To me, Plug Power stock looks a lot more like a sell than a buy.

Today is the day.

At 2 p.m. ET Wednesday, give or take a few minutes, the Federal Open Market Committee should decide on its next round of interest-rate changes. Presumably it will lower its target interest rate from the current range of 4.25% to 4.5%, to one of 4% to 4.25% — a quarter-point cut. Potentially, it could lower the interest rate by twice as much — 0.5%.

Either way, and assuming a cut of any size at all, this will be the first interest-rate cut by the Federal Reserve in the past nine months, the Fed having last cut rates (also by 0.25%) back on Dec. 18, 2024.

Image source: Getty Images.

Why might the Federal Reserve cut interest rates?

Economists seem pretty certain a rate cut of some size is in the offing. According to the latest inflation update here at The Motley Fool, inflation is still running hotter (2.9%) than the Fed’s target rate of 2% — which you might think would give the Fed some pause. That said, the jobs market is showing sufficient signs of weakness that the Fed is getting concerned — and inclined to roll the dice and risk a bit of extra inflation in hopes of goosing the jobs numbers higher.

In July, the U.S. Bureau of Labor Statistics (BLS) reported that only 73,000 net new jobs were created, which was below projections. Then came August’s number, which was an objectively horrible 22,000 net new jobs — less than one-third of what economists had predicted. And all of this came after May and June jobs numbers were revised downward by more than a quarter-million.

So the jobs market doesn’t look great, and that means the Fed probably will cut rates today. Now what does this mean for you, the individual investor?

What it means for investors

Believe it or not, bad news for the jobs market and worrisome trends in inflation are both generally interpreted as good news for the stock market — at least when a Fed interest-rate cut is on the table as a possible solution. This is because when the Fed lowers interest rates, it becomes cheaper to borrow, and cheaper to pay interest on debts, which can be a boon for companies not yet earning profits.

Which kinds of companies? Well, maybe I’m biased because I write a lot about nuclear stocks. But if you ask about companies that might benefit from debt getting a bit cheaper, the first to come to my mind are the handful working to develop a new generation of small modular (and micro) nuclear reactors (SMRs). In order from smallest to largest, these include Nano Nuclear Energy (NNE -2.67%), NuScale Power (SMR -4.70%), and Oklo (OKLO -2.77%).

Investors value these three companies very differently. Nano Nuclear is worth only $1.5 billion in market capitalization, versus NuScale with an implied market cap of $11.1 billion, and Oklo tipping the scales at a weighty $14.1 billion.

But in many respects, these three companies look similar. Neither Nano Nuclear nor Oklo has any revenue to speak of. NuScale, which does have some revenue (from technology licenses, not from actual sales of either reactors or nuclear energy), still did only $56 million in business over the last 12 months — enough to value the stock at nearly 200 times sales.

Lacking revenue, it stands to reason that all three of these nuclear energy stocks are also unprofitable. What worries me more than the losses based on generally accepted accounting principles (GAAP), though, is the fact that these companies must continue burning through their cash reserves as they work toward commercializing their technology. Any nuclear stock that runs out of cash before it starts generating positive free cash flow on its own is at risk of needing to sell shares, or take on debt, to raise the cash it needs.

It’s here that lower interest rates from the Fed could lend a helping hand.

Who benefits most from a Fed rate cut?

I expect NuScale Power to benefit more than the others from a rate cut today. With only $420 million in the bank and an annual cash burn rate of $95 million, NuScale’s on course to be the SMR stock that runs out of cash first — potentially before it reaches profitability in 2030 (according to analysts polled by S&P Global Market Intelligence).

In contrast, both Oklo (with $534 million in cash and a burn rate of $53 million per year) and Nano Nuclear (with $210 million and $23 million, respectively) already have enough cash laid up to keep themselves in business for roughly a decade.

Relatively speaking, they’re both in stronger financial positions than NuScale is — but for this very reason, I expect NuScale stock to benefit most from today’s Fed rate decision.

Cathie Wood is in a good groove again. The largest of the exchange-traded funds (ETFs) she manages as CEO of Ark Invest is up by 77% over the past year, crushing the market. The aggressive growth stocks she favors are in style on Wall Street, and investors are paying attention to her moves.

She did a little more buying than usual on Tuesday, adding to her funds’ existing positions in Advanced Micro Devices (AMD -0.92%), Airbnb (ABNB 1.31%), and Figma (FIG 2.27%). Let’s take a closer look at these three dynamic stocks.

1. Advanced Micro Devices

It has been a wild ride lately for AMD investors. The maker of central processing units (CPUs), graphics processing units (GPUs), and other types of microprocessors has seen its shares more than double since bottoming out in early April after the first wave of concerns about President Donald Trump’s tariffs rattled the market. However, despite that surge, the stock is barely trading 5% higher over the past year. Yes, this chipmaker has underperformed the market over the past year. No one said that investing in AMD was going to be boring.

The case for buying AMD stock these days is clear. Booming demand for generative artificial intelligence (AI) means that tech players will keep building out massive new data centers to crank out resource-intensive results. AMD makes chips that propel data centers onto their AI-rendering journeys. It’s not the top dog in this niche, but there is clearly room for more than one canine here.

Image source: Getty Images.

There are some signs that AMD stock might be taking a breather — the shares have slipped by 15% from the 52-week high they touched last month. After a year of accelerating revenue growth, AMD’s top-line increase slowed to 32% in the second quarter. Management is forecasting revenue growth of just 28% year over year in the current quarter.

One analyst did downgrade the stock late last week. Erste Group’s Hans Engel feels that its valuation is elevated given the lack of improvement in its operating margins and its unimpressive returns on equity. AMD also trades now for about 27 times next year’s expected earnings, which Engel believes is a bit too high. So he replaced his earlier buy rating on the stock with a hold rating.

That valuation may seem high for a company experiencing decelerating growth, but there are external issues contributing to the drag. AMD, like others in this space, has been caught in the crossfire of the trade war, which is restricting sales of its potent Instinct MI308 GPUs into China. It’s still selling plenty of chips elsewhere, though, and its client and gaming segment is in the midst of a resurgence, with sales up 69% in the second quarter.

2. Airbnb

Airbnb shareholders could probably use a vacation. The stock is up just 4% over the past year — and trading 7% lower year to date despite 2025’s generally buoyant market environment. The top app for booking vacation properties has found revenue growth for the fourth consecutive year. However, the 13% year-over-year increase it booked in its latest quarter was its healthiest result in more than a year.

There are certainly plenty of reasons to be concerned about investing in Airbnb. Trade war rhetoric is making international travel less savory. Closer to home, more companies are requiring employees to return to working in offices, which means fewer will be able to travel — often using an Airbnb — while still getting work done remotely. The biggest area of looming concern for the company’s outlook, though, is that the U.S. economy may be softening. Consumer confidence has been dropping for the past year, and when people are worried about their finances, they may not see springing for a getaway as prudent. Meanwhile, hotel chains are hopping into Airbnb’s niche, offering standalone property rentals to loyalty club members who are pining for something different.

The good news is that Airbnb is still a moneymaker. It has generated $4.3 billion in free cash flow over the past year. Management appears to see the stock as a good deal at current prices, given that it announced a $6 billion share buyback authorization this summer. It’s trading at just 25 times forward earnings, a historical low for the travel platform operator.

Novo Nordisk (NVO 2.83%) — the original Ozempic stock — got a boost from private German bank Berenberg this morning, which upgraded the stock to buy. In fact, Berenberg says Novo is its “preferred obesity play,” as The Fly reports.

Novo stock is up 2.9% through 10:30 a.m. ET.

Image source: Getty Images.

What Berenberg said about Novo Nordisk

Novo Nordisk created the GLP-1 weight loss market — then fumbled it, allowing first Hims & Hers to horn in on the business when Novo was unable to produce enough semaglutide, then giving Eli Lilly time to develop competing products (that by some measures work better) in the form of Mounjaro and Zepbound.

Still, Berenberg argues, since Novo’s fumbles, market expectations for Novo have reset, and the stock price has gotten considerably cheaper. With Novo Nordisk shares now selling for less than 15 times earnings, paying a 3% dividend yield, and expected to grow only 8% annually over the next five years, investor expectations are a whole lot more realistic today than they were a year ago.

Is Novo Nordisk stock a buy?

Now, there’s still some debate about whether Novo Nordisk stock is a buy, based on its growth outlook, potential catalysts, and valuation, admits the analyst. A P/E of 15 with a 3% dividend and an 8% growth rate still values Novo Nordisk at a total return ratio of about 1.3 — which is more expensive than the value investor’s target of a 1.

In other words, there’s still room for Novo Nordisk to fall.

On the other hand, if the company can find its footing, perhaps by marketing Ozempic and Wegovy in upsized dosages and at attractive prices, Novo might grow faster than expected. And with fast enough growth, Novo Nordisk could quickly turn from a sell into a buy.

SoundHound AI (SOUN -0.48%) quickly became a top AI stock over the past several years, as the company’s conversational AI platform has been adopted by restaurants, automakers, healthcare leaders, and more. SoundHound’s ability to attract new customers and rapidly increase its revenue has helped push its share price up nearly 200% over the past year.

But the company isn’t without its issues. Profitability remains elusive; the company’s gross margins have ticked downward over the past year, and its valuation is sky-high. That has left many investors wondering where SoundHound might be over the coming year and whether the stock is a buy right now. Here’s what I think could happen with the company over the next year.

Image source: Getty Images.

1. More customer growth and sales momentum

SoundHound has a knack for attracting new customers and expanding its revenue, and the company continued these trends in Q2. Here are just a few of the wins SoundHound had in the quarter:

• Had a “breakthrough quarter” for new customers and renewals in its restaurant segment.
• Won a major OEM automotive customer in China, which sells vehicles domestically and worldwide.
• Added “one of the world’s largest healthcare companies” to its customer list.
• Has seven of the top 10 global financial institutions as customers, upselling and renewing to four of them in the quarter.

The result of its strong customer growth, renewal, and upselling was that revenue jumped 217% to $42.7 million, and management raised its 2025 revenue guidance to $173 million, up from previous guidance of $167 million, both at the midpoint.

SoundHound’s revenue growth has been very impressive over the past several years. Take a look at the past two years and guidance for the current year:

Source: SoundHound filings. Calculations by author.

If SoundHound achieves its full-year revenue guidance for 2025, it will have more than doubled its sales over the past year. And with its impressive Q2 results, the company is well on its way to achieving its goal.

2. Profitability could still be an issue

If there’s one thing that’s troubling about SoundHound, it’s the fact that, despite its impressive sales growth, the company still isn’t profitable.

On a generally accepted accounting principles (GAAP) basis, SoundHound lost $0.19 per share in Q2, widening its loss from $0.11 per share in the year-ago quarter. On an adjusted (non-GAAP) basis, the loss narrows to $0.03 per share, but no matter how you slice it, the company is losing money.

What’s more, SoundHound is burning through cash while its gross margins are slipping. The company’s negative free cash flow was about $25 million in Q2, and is at about negative $112 million over the past 12 months. Meanwhile, gross margins dropped to 58.4% in Q2 from 66.5% a year earlier — a sign the company is finding it increasingly difficult to translate sales growth into profitability.

As of now, there’s little evidence that SoundHound is making significant strides toward profitability. That should concern investors, because its impressive sales growth ought to make profitability easier. What’s more, with a price-to-sales (P/S) ratio of 43, SoundHound AI’s stock is already expensive. For context, the software AI stock C3.ai trades at just 6 times sales, while fellow conversational AI company Cerence trades at 1.8.

So, is SoundHound stock a buy?

Some investors may have a higher appetite for risk and care less about profitability than I do, but I don’t believe SoundHound is a buy right now. If the company can reduce losses, slow spending, and improve gross margins, there could be a case for buying it — but at present, it doesn’t appear to be moving in that direction. With a price-to-sales ratio of 43, investors are paying a steep premium for a company that still faces profitability concerns.

Costco Wholesale (COST -0.84%) is one of the most successful retail stocks in history. It launched its IPO in 1985 at a split-adjusted $1.67 per share, meaning it has risen 575-fold during its 40-year trading history. Amid its 205% stock price growth over the last five years, it outperformed the S&P 500 during that time, and one might assume it can surpass the index again in the next five.

Nonetheless, its past performance is not a guarantee that the retail stock will repeat or exceed its returns. Thus, investors need to take a closer look at the company and its financials before making such a determination. Let’s do that now.

Image source: Getty Images.

The state of Costco

Without a doubt, Costco’s business model helps make it one of the world’s most successful retailers. That fee, which is as low as $65 per year in the U.S., allows customers to purchase desired, high-quality bulk goods at a price that is little more than the cost of goods sold plus overhead.

More importantly, it has developed a business culture that seems to work no matter where Costco tries it. As of its fiscal 2025’s third quarter (ended May 11), 629 of Costco’s 914 stores were in 47 U.S. states. Thus, as the U.S. market becomes more saturated, Costco could potentially drive decades of growth in other countries.

This stands in contrast to retailers like Target and Home Depot, which failed to adapt their business cultures to work outside of their home regions. Since both companies lack obvious avenues for higher growth, Costco seems to have the best growth prospects among the brick-and-mortar retailers with nationwide footprints in the U.S.

Why some investors might hesitate to buy Costco

Unfortunately for new investors, the investment community already has a wide appreciation of Costco’s success. Its price-to-earnings (P/E) ratio of 54 demonstrates its popularity, which far outpaces its largest competitors’.

COST PE Ratio data by YCharts.

Moreover, in 2025, the earnings multiple briefly exceeded 60, its highest level since the stock market bubble of the late 1990s and early 2000s.

Although Costco is on track for continued prosperity, one must question whether its growth rate justifies the earnings multiple. The company planned to expand by 24 warehouses in fiscal 2025, but that amounts to less than a 3% annual increase.

Additionally, while its financial growth is steady, it remains in the single digits. In the first nine months of fiscal 2025, net sales of $189 billion rose 8% compared to the same period in fiscal 2024.

Although it kept cost and expense growth in check, interest income fell just as its tax burden rose. Thus, its $5.5 billion in net income for the first three quarters of the year rose by 9%.

While such growth levels bode well for the company, one might question whether they justify a 54 P/E ratio. Looking ahead, analysts foresee growth levels taking the forward P/E ratio of 48 and a forward one-year earnings multiple of 43.

At that rate of increase, it could take Costco approximately five years to reach the S&P 500’s average earnings multiple of 31. History shows that Costco tends to beat that average, but even if its P/E ratio fell to 40, it could bode poorly for the company’s five-year growth trajectory.

Where will Costco be in five years?

Given what we know about Costco’s financials, investors should expect Costco to trade at a higher price than it does today, albeit with returns that underperform the S&P 500.

Admittedly, a lot can change in five years, and changes may occur that we cannot predict today. Thus, investors should not discount the possibility of an unforeseen event that either bolsters or undermines the current investment thesis.

Nonetheless, the company’s growth and financials do not appear to justify a 54 P/E ratio. Hence, that earnings multiple is likely to come down over time, reducing the stock’s return. While Costco likely remains a hold for its longer-term investors, people should probably put their existing cash to work elsewhere.