money

XRP (XRP 0.69%) is a cryptocurrency that was launched by Ripple Labs in 2012. Its main purpose is to enable low-cost international money transfers, particularly for banks and financial institutions. It uses XRP as a bridge currency, which essentially means that two parties can exchange different currencies by putting their funds into XRP.

It has gained over 420% in the last year, spurred by an end to its long-running court case and optimism about changing political attitudes toward crypto.

XRP enthusiasts think this is only the beginning. Free from the shackles of legal battles, they think the token can go to the moon. Indeed, analysts at Standard Chartered predict it could soar another 300% or more before 2028.

Image source: Getty Images.

Anything is possible in the world of cryptocurrency. For example, if the SEC approves a spot XRP ETF and more companies start to use Ripple’s payment solutions, both could be big drivers of growth. However, speculation is rife, and a lot of potential positive news is already priced in. Moreover, there are a few reasons XRP may not be able to sustain its current price.

1. XRP looks overvalued

One of the challenges in cryptocurrency investing is that we can’t use traditional metrics like P/E ratios to value a project. Blockchain-specific metrics exist, such as network activity, market cap, and fees or revenue. But Ripple Labs is a private company that doesn’t have to publish financial statements, and XRP transaction fees work differently from other blockchains. In itself, the very lack of information is a reason to be cautious.

We know that XRP has a market cap of almost $170 billion as of Aug. 29. If it were a public company, it would be one of the top 100 companies in the U.S. Its market cap is bigger than Nike, Capital One, and S&P Global.

That just doesn’t seem realistic. For sure, the global cross-border payment market is huge. The IMF estimated that the traditional and crypto international payment market was almost 1 quadrillion dollars in 2024. It’s also true that Ripple may be well-positioned to capitalize on — and even drive — changes to the industry.

But right now, only a fraction of international payments go through Ripple’s network.
It’s hard to see how a cryptocurrency created by a team with over 900 employees is comparable to a global icon like Nike with almost 80,000 employees.

2. XRP is not the only payment solution

With the average international remittance fees at over 6%, per the World Bank, the global money-moving space is ripe for disruption. Particularly as U.S. lawmakers recently passed the GENIUS Act, creating a clear framework for stablecoin issuance and reserves.

Now that the regulatory roadblocks are gone, various businesses are trying to work out how to integrate blockchain technology and stablecoins into their operations. Stripe is developing its own blockchain.PayPal has its own stablecoin and “Pay with Crypto” functionality. Visa
has announced a new tokenized asset platform. Mastercard has crypto credit cards and blockchain infrastructure.

Ripple Labs could benefit from a boom in stablecoins and tokenization because it offers custody and blockchain integration solutions, which could be built on the XRP Ledger. But it’s all still to play for. Ripple Labs is only one of several players jostling for position in a space that is undergoing dramatic changes.

3. The SWIFT network is piloting its own blockchain solutions

XRP is slightly outside the payments fray, as its main focus is to facilitate transactions between banks and financial institutions. Its main competitor is the existing SWIFT network, an international cooperative made up of over 11,500 institutions. Indeed, Ripple CEO Brad Garlinghouse told the XRP APEX 2025 conference in June that XRP could take 14% of SWIFT’s international payment transfer volume in the coming five years.

But SWIFT is taking its own steps into the blockchain world. And it isn’t using XRP to do it. Last year, the existing Swift payment system completed a tokenized asset pilot with UBS and Chainlink.

XRP feels overhyped

XRP is an interesting cryptocurrency that uses blockchain technology to solve real-world problems. That fact alone sets it apart from many crypto projects and might earn it a spot in your portfolio. Unfortunately, its market cap seems extremely high for a crypto that is only starting to establish itself in an extremely competitive space.

It’s also important to note that holding XRP is not the same as owning shares in Ripple Labs. Ripple is a private company that owns around 40% of XRP. Not only does that give Ripple significant control over XRP’s price, but it also means XRP holders are vulnerable to shifting business priorities. If other non-XRP avenues, such as its own stablecoin, prove more profitable, that’s the direction the business will follow.

Nvidia (NVDA -3.38%) has delivered a fantastic win to investors over the past few years — whether you got in on the stock five years ago and watched it climb a mind-blowing 1,200% or you bought early this year and have benefited from a double-digit gain so far. As long as you’ve held on to this top artificial intelligence (AI) player, with the idea of accompanying it over the long term, you’ve likely watched your investment grow.

But, if you haven’t yet bought Nvidia shares or aim to add to your position, you may be looking for a good entry point, a time when the stock is reasonably priced and may be set to fly high. And that’s why you might have your eye on Sept. 8, a day when we may hear the latest news from Nvidia. Should you buy the stock before then? Let’s find out.

Image source: Getty Images.

The dominant AI chip designer

First, though, a quick summary of why and how Nvidia has been such a market superstar during this AI boom. Early on, as the importance of AI emerged, Nvidia decided to switch gears and focus on developing its graphics processing units (GPUs) for this new technology. Prior to this, the company’s GPUs mainly served the gaming market. The strategy proved itself to be spot on as Nvidia has become the dominant AI chip designer, recording billions of dollars in earnings and double- and triple-digit growth in recent years.

Nvidia’s chips have the first-to-market advantage, but wisely, the company has prioritized innovation in order to keep this advantage going — it’s always a step ahead with AI chip technology. This AI powerhouse launched Blackwell, its latest architecture, late last year and now is rolling out update Blackwell Ultra — next on the release list is the Rubin architecture, planned for next year. All of this should help maintain Nvidia’s position in the AI market, a market forecast to reach beyond $2 trillion a few years down the road.

Considering the fast pace of development in the AI field and the dynamic nature of the Nvidia story so far, it’s not surprising that investors eagerly await any update from Nvidia regarding what may happen next. And this brings me to the subject of Sept. 8. Nvidia is set to present at the Goldman Sachs Communacopia + Technology Conference.

Updates from Nvidia

The annual event, hosted by Goldman Sachs, invites tech and media companies to discuss industry trends, talk about their strategies, and offer business updates. As Nvidia presents, analysts and other attendees will listen closely for any updates on key items that could impact growth in the quarters to come — such as a potential return to selling chips in the Chinese market or any developments in the Rubin release timeline.

The U.S. halted Nvidia’s sales to China earlier this year but in recent days has agreed to grant the company chip export licenses in return for 15% of revenue generated in that country. Details about how this will be put into place haven’t yet been released by the government. As for Rubin, Nvidia recently said the platform is on track for production in volume next year. If Nvidia offers additional details on these points or other key subjects during the Sept. 8 presentation, the stock could react accordingly.

That said, considering the tech giant just reported earnings and spoke with analysts last week, it’s likely Nvidia shared most of its significant news at that time — so it may not reveal much more during the upcoming conference.

Should you buy Nvidia now?

Now, let’s return to our question: Should you buy Nvidia before Sept. 8? Today, Nvidia trades for about 38x forward earnings estimates, more expensive than it was a few months ago but still reasonably priced considering the company’s earnings potential. So, Nvidia makes a great buy right now — but you don’t have to rush into the stock before Sept. 8 and here’s why.

Even if Nvidia’s presentation boosts the stock, if you aim to hold on for the long term — and long-term investing always is the best idea — this short-term price movement won’t change your returns by very much. All of this means, when investing, take your time and don’t rush to get in on a stock before or after one particular date as it won’t matter over the long haul.

With this in mind, it’s a fantastic idea to get in on Nvidia today — or after Sept. 8.

Warren Buffett turned Berkshire Hathaway (BRK.A 0.66%) (BRK.B 0.63%) into a trillion-dollar company primarily by investing in stocks. “That preference won’t change,” Buffett wrote in his most recent letter to shareholders.

But Buffett has been challenged by the current market to find great value in equities. He’s sold more stocks from Berkshire’s publicly traded portfolio than he bought every quarter for nearly three straight years. As valuations continue to climb higher, there’s more reason to sell Berkshire’s biggest holdings, and fewer reasons to buy new positions with the proceeds and the company’s operating cash flow. As a result, Buffett’s seen his company’s cash position balloon to $344 billion as of the end of June.

Despite the difficult market, Buffett did find a few opportunities last quarter. Berkshire bought $3.9 billion worth of equities, including 10 publicly traded stocks disclosed in its quarterly 13F filing with the Securities and Exchange Commission (SEC). Here are all 10 of Buffett’s recent buys, including the one that looks like the best opportunity for investors right now.

Image source: The Motley Fool.

Buffett’s buy list

Berkshire Hathaway filed form 13F with the SEC on Aug. 14, revealing all of the moves Buffett and his fellow portfolio managers made during the second quarter. The filing also included an amendment to the company’s first-quarter 13F, which detailed previously undisclosed purchases.

All told, Berkshire established or added to 10 of its positions last quarter:

• UnitedHealth (UNH 2.48%)
• Nucor (NUE -0.71%)
• Lennar (LEN 0.01%) (LEN.B)
• Constellation Brands (STZ 1.79%)
• Pool Corp
• Lamar Advertising
• Allegion
• Heico
• Chevron
• Dominos Pizza

The amended filing also disclosed that Berkshire established a new position in homebuilder D.R. Horton (NYSE: DHI) in the first quarter, but trimmed back shares slightly in the second quarter.

There are a lot of great investment candidates among the new purchases in Berkshire Hathaway’s portfolio.

The new position in UnitedHealth comes at a time when the stock has been beaten down by a series of poor financial results and declining consumer sentiment. It’s facing an investigation into potential Medicare Advantage fraud, which could result in billions in revenue clawbacks and penalties. At the same time, medical costs and utilization have increased, weighing on its profitability. The stock looks like a classic “be greedy when others are fearful” purchase from Buffett.

Nucor is another interesting investment, as many see it as a stealth artificial intelligence stock. As a leading U.S. steel supplier, the company is well-positioned to capitalize on new data center construction across the country. And with President Donald Trump imposing a 50% tariff on steel imports, it could benefit Nucor’s pricing. Costs have weighed on Nucor recently, but less competition from foreign suppliers could open the door for bigger profits going forward, especially as demand increases with data center buildouts.

Homebuilders Lennar and D.R. Horton have been pressured by the current market. High home prices combined with high interest rates have led to a drop in buying activity, forcing them to offer incentives to buyers like buying down their mortgage rates. That’s weighed on both revenue and profit margins, which in turn has weighed on their stock prices. But the housing shortage isn’t going away, and that could make right now an opportunity to buy one of the homebuilders.

But another stock on Buffett’s buy list looks like an even better value than the rest, and it’s no wonder he’s been buying shares for three straight quarters.

The best of the bunch

Warren Buffett loves a company with a wide moat. And one of the companies with extremely strong competitive advantages on Buffett’s buy list is Constellation Brands.

The company owns the exclusive distribution rights to many of the most popular Mexican beer brands, including Modelo and Corona. It’s worked to expand its portfolio and build strong distribution relations that have led it to gain market share over the last decade. It’s now the second biggest beer vendor in the United States, dominating the premium import category.

Despite headwinds for the beer industry, Constellation continued to gain market share last quarter. Management said the beer business captured 0.6 points of dollar sales share. That growth was supported by expanding distribution and continuing to spend on strategic marketing to expand its customer base to more non-Hispanic drinkers. That positions it well to capitalize when consumer spending turns around.

Constellation’s wine and spirits business has been a drag on its results, though. To that end, management divested its low-end brands in the segment in June, and it now operates a leaner portfolio of premium brands. Still, management expects the segment to weigh on profits for some time as it resizes the operations.

Importantly, Constellation generates significant free cash flow, with expectations for $1.5 billion to $1.6 billion this year. It should be able to consistently generate that level of cash flow every year with steady sales growth and minimal capital expenditure needs. That supports its share repurchase program and quarterly dividend. Management bought back $306 million worth of shares last quarter while returning an additional $182 million through its dividend.

The stock price has dropped since Buffett’s initial purchase at the end of last year. With the pressure on the beer industry, the stock price has remained low, and shares now trade for less than 13 times forward earnings estimates. Despite the slow growth of the business, it’s well-positioned to continue making steady gains and outperforming its peers. Combined with share repurchases, it should be able to generate respectable earnings-per-share growth. That makes its current valuation very attractive, especially for investors who like to follow Buffett’s value investing style.

Artificial intelligence (AI) has taken the world by storm in what seems like the blink of an eye. It’s also played a huge role in pushing the stock market to new record highs.

While there has recently been some data that’s raised questions about the level of profitability that businesses are getting from AI integration, the technology is still just starting to change the world — and long-term investors who back the right players could score huge wins.

With that in mind, read on for a look at two stocks identified by Fool.com contributing analysts as standout buys even among other top artificial intelligence investment opportunities.

Image source: Getty Images.

The largest cloud provider, the most to gain

Jennifer Saibil (Amazon): Amazon (AMZN -1.16%) disappointed investors with its second-quarter report released two weeks ago, but if you can focus on the future, you can take Amazon stock’s dip as a buying opportunity. There are many reasons to imagine it can keep growing over the next few years and become one of the top players in AI.

It’s already the biggest cloud services provider in the world, with 30% of the market, according to Statista. One of the updates that alarmed the market after the report was growth in Amazon Web Services (AWS), Amazon’s cloud segment. Sales increased 17% in the quarter, only half the growth of its closest competitor, Microsoft‘s Azure. It may be somewhat of an overreaction, since AWS sales are much higher than Azure’s, at nearly $120 billion over the trailing 12 months, while Azure’s were $75 billion, and Amazon’s dollar share gain was still higher.

There were other things that bothered the market, such as tariff uncertainty and an outlook that didn’t quite match expectations. But these are short-term bumps along the road, and investors should be able to look past them and see the long-term opportunity, especially in AI.

As the largest cloud company, Amazon has incredible potential in building its generative AI business, which is primarily on the cloud. It’s investing more money than competitors, which CEO Andy Jassy upped to more than $100 billion this year in the second-quarter release. It offers a slew of services to meet demand at every level, from the small player who needs plug-in solutions to some of the biggest companies in the world, which employ a full staff of developers to create custom large language models (LLM).

Amazon’s trademark service is called Bedrock, and it offers a large array of LLMs and tools for developers to create AI apps that fit their needs. These include the gamut of LLMs, from high-cost to free, as well as Amazon’s own Nova LLMs. Amazon acquired a stake in AI company Anthropic last year, which has some of the best LLMs available. It’s even creating its own hardware, with budget chips for smaller needs, but it also has a robust partnership with chip powerhouse Nvidia.

CEO Andy Jassy keeps reminding investors that 85% to 90% of information technology (IT) spend is still on the premises, but that’s going to flip to the cloud over the next 10 to 15 years. As the largest cloud provider, with the most competitive set of options in place, Amazon is well-positioned to benefit from a windfall when that happens.

Up more than 140% over the last year, this stock is still flying under the radar

Keith Noonan (Unity Software): When most people think of hot AI stocks, Unity Software (U -1.95%) is probably a name that doesn’t come up much. The company specializes in video game development tools and digital marketing services, and it’s generally had a rough go of things since going public nearly five years ago. The company’s share price is down 41% from market close on the day of its initial public offering (IPO) and 80% from its all-time high.

Some poorly conceptualized and executed growth bets and monetization strategies caused the company to lose ground in its key markets, but the company has switched up its leadership team and is moving forward with renewed focus on profitability and strategic innovation. The turnaround initiative has helped the company’s share price surge more than 140% over the last year, and the comeback rally could still be in its early innings.

Sales increased 1.4% on a sequential quarterly basis in Q2, and management is guiding for mid-single-digit sequential growth in the current quarter. Compared to other companies with substantial exposure to AI trends, that may not look like much — but the relatively modest top-line expansion is obscuring the bigger comeback picture. Along those lines, the company’s new AI-driven ad network powered 15% sequential sales growth in Q2 and is likely still in the very early stages of making an impact.

Unity’s AI digital marketing platform looks poised to reenergize the business, and that’s far from the company’s only AI-related opportunity. Software and data that’s used to help nonplayable game characters navigate virtual worlds could wind up proving very useful when it comes to training robots to navigate real-life space.

Unity also provides the leading development platform for creating augmented reality (AR) and virtual reality (VR) applications, and its data and software tools could prove very valuable as tech giants look for the next big hardware platform after mobile.

Exchange-traded funds (ETFs) make investing simple. With a few clicks of a button, you could quickly gain the opportunity to profit alongside a diversified collection of high-quality businesses.

In addition, select ETFs offer relatively easy ways to cash in on powerful economic trends, such as the artificial intelligence (AI) boom. Well-chosen funds could also provide you with bountiful and reliable passive income.

Read on to see why AI chip suppliers and high-yield dividend payers are particularly attractive stocks to buy today.

Image source: Getty Images.

This ETF could help you profit from the AI revolution

The world runs on semiconductors. Laptops, smartphones, medical devices, modern cars and trucks, airplanes, satellites, and solar panels are just some of the products that require these essential components to function properly.

The microchips that underpin computer technology of all sorts are becoming even more valuable in the age of AI. The global semiconductor industry is poised to grow from $697 billion in 2025 to $1 trillion by 2030 and $2 trillion by 2040, according to Deloitte. Chip suppliers are set to see their sales and profits soar in the coming years.

The iShares Semiconductor ETF (SOXX -2.86%) offers you a convenient way to claim your share of this enormous and rapidly expanding market.

The fund is managed by BlackRock, one of the world’s largest investment companies, with assets under management of $12.5 trillion as of the end of the second quarter.

The ETF holds stakes in 30 stocks, all of which are key cogs in the global semiconductor supply chain. Leading chipmakers Nvidia, Advanced Micro Devices, Intel, Broadcom, and Taiwan Semiconductor Manufacturing stand among the fund’s largest holdings.

The ETF’s annual expense ratio is reasonable at 0.34%. That amounts to $3.40 for every $1,000 invested.

All told, the iShares Semiconductor ETF is a relatively effortless and low-cost way to position yourself to benefit from the AI-fueled chip boom.

This dividend ETF can help you build a lucrative passive income stream

Dividends are the sweet rewards of investing. A swell of cash payments pouring into your account year after year can drastically reduce your financial worries. Dividends can also help you pay for the things you enjoy.

Moreover, dividend stocks can add ballast to your diversified investment portfolio. Stocks that regularly pay out cash to their investors are generally less volatile than those that don’t. Dividend-payers also tend to outperform non-dividend-payers during bear markets. Better still, companies that can consistently grow their cash distributions often see their share prices rise in kind.

As its name suggests, the Vanguard High Dividend Yield ETF (VYM -0.09%) offers convenient access to a broad collection of income-generating stocks with above-average payouts. The fund’s annualized dividend yield of roughly 2.6% is more than twice that of the S&P 500 Index, making it an excellent source of passive income.

With positions in roughly 580 stocks across a range of sectors, the ETF also provides investors with the wealth-protecting benefits of diversification. Top holdings, which include dividend stalwarts such as JPMorgan Chase, ExxonMobil, and Walmart, further help to mitigate the risks for shareholders.

Best of all, Vanguard charges ultralow fees, so nearly all the ETF’s gains will be passed on to investors. The Vanguard High Dividend Yield ETF has an expense ratio of 0.06%, which amounts to just $0.60 per $1,000 invested annually.

One critical thing every retiree (if not every American) needs to know about Social Security in 2025 is that the program is in trouble.

Some scary headlines may have you believing it’s going to run out of money completely and will soon be unable to pay retirees anything, but that’s not the case. As long as workers keep paying into the system, there will be funds to pay retirees. But not enough funds, unless some changes are made.

Image source: Getty Images.

The problem is that with people living longer and often retiring earlier, Social Security is no longer running a surplus. The ratio of workers to Social Security beneficiaries has shrunk over time, from 8.6 in 1955 to 3.3 in 1985 to 2.7 in 2023 — and it’s projected to fall to 2.3 by 2036.

So Social Security’s surplus is turning into a deficit. It’s been estimated that come 2034, there will only be enough money coming to the program (largely via taxes on workers) to pay beneficiaries 81% of what they’re owed. Making matters worse are actions by the Trump administration (via the “Big, Beautiful Bill”) that will hasten the depletion of Social Security’s surplus.

Fortunately, there are multiple ways to fix Social Security’s shortfall. For starters, the tax on our earnings for Social Security could be increased. Even a fraction of a percentage more would deliver a big infusion to Social Security’s coffers. Another fix is to raise — or eliminate — the cap on earnings that are taxed for Social Security. The cap is currently $176,100.

The bottom line is that as we plan for our retirements, we shouldn’t count on receiving the full benefits to which we’re entitled, though we can certainly hope for that. It can’t hurt to let your elected officials know that you’d like Social Security strengthened, too. And in the meantime, save and invest effectively for retirement, perhaps aiming to set up multiple income streams.

In a week that saw the S&P 500 lose value, one stock in particular, space rocket operator Rocket Lab (RKLB 1.42%), glowed a bright shade of green as it rocketed to close the week 9.5% higher on Friday.

And I know why.

Because I was there to see it.

Image source: Rocket Lab.

Welcome to Virginia, LC-3

On Thursday morning, Aug. 28, Rocket Lab officially opened its third “launch complex” in the world, LC-3, at the Virginia Spaceport Authority’s Mid-Atlantic Regional Spaceport on Wallops Island, just off the Virginian eastern seaboard.

LC-3 will be home to Rocket Lab’s newest and biggest rocket, the 141-foot-tall, methane-and-liquid oxygen-fueled Neutron. Capable of lifting 13 metric tons to low Earth orbit, Neutron will be 43 times more powerful than its little brother (and Rocket Lab’s current only rocket), the Electron. Neutron is scheduled to make its inaugural test flight from LC-3 later this year.

Of course, all of this we already knew about Neutron. We’ve know this since Rocket Lab CEO Sir Peter Beck promised the rocket was coming, four years ago. But here are three things you probably didn’t know about Rocket Lab stock and Neutron., things I only learned myself by attending the LC-3 ribbon-cutting last week.

From MARS to Mars

As Virginia Gov. Glenn Youngkin pointed out in his opening speech before assisting with the ribbon-cutting, Neutron will be launching from a site at the Mid-Atlantic Regional Spaceport — “MARS,” the spaceport. And as CEO Beck observed, bigger rockets can send bigger payloads farther distances — including to Mars, the planet.

Rocket Lab actually already has two satellites built and ready to go to Mars, as part of the ESCAPADE science mission for the University of California Berkeley’s Space Science Laboratory and NASA. What it hasn’t had is a rocket big enough to get them there, and delays caused by trying to hitch rides on other companies’ rockets — SpaceX’s Falcon Heavy and Blue Origin’s New Glenn — have delayed the mission.

Neutron, when it’s ready, could solve that problem by giving Rocket Lab a way to get to Mars under its own power.

Targeting SpaceX

With 43 times the payload capacity of Electron, which can itself often carry multiple small satellites at a time to orbit, Rocket Lab’s Neutron rocket is often described as ideal for the deployment of Earth orbit satellite constellations. Rocket Lab’s most recent descriptions of the medium-lift rocket, however, suggest the company is preparing to compete with rivals such as SpaceX and Northrop Grumman (NOC 0.36%) in the “cargo resupply” market as well.

Resupply whom, you may ask? Well, the International Space Station is the party most obviously in need of regular resupply runs, and currently, SpaceX and Northrop Grumman are fulfilling that function. NASA has indicated openness to allowing other companies to bid on Commercial Resupply Services contracts, however, awarding one to Sierra Nevada Corporation in 2016, for example. Nearly a decade later, Sierra Nevada has yet to actually perform a resupply mission.

Seems to me that opens up a gap that Rocket Lab may soon be able to fill.

Uncle Sam is looking for a few good astronauts

Arguably the biggest reveal of last week’s LC-3 opening, though, was a heavy hint Rocket Lab dropped as to a previously unexpected aspiration: putting astronauts in orbit.

Describing the missions it hopes Neutron to perform once it starts launching, Rocket Lab named all the things we’ve already discussed — launching constellations, visiting other planets, “and eventually human spaceflight,” too.

This revives an early hope that Neutron might give NASA and other space-users a third way to send astronauts to space, in addition to SpaceX’s Crew Dragon and Boeing‘s (BA -0.54%) ill-starred Starliner.

Admittedly, Rocket Lab stopped short of giving any real detail on its plans to develop a human-rated spacecraft for Neutron to carry. Just the hint it did drop at the LC-3 opening, though, already has investors talking about what Rocket Lab’s plans might be along these lines, which could run the gamut from helping to keep space stations crewed, to sending astronauts to the moon or Mars, or even conducting space tourism around Earth.

Stay tuned. As soon as I know more, so will you.

Walmart (WMT 0.88%), the world’s largest retailer, isn’t usually considered a high-growth stock. But over the past five years, its stock has more than doubled as the S&P 500 rose about 80%. It achieved those market-beating gains even as the pandemic, inflation, geopolitical conflicts, tariffs, and other macro headwinds rattled the global economy.

But can it stay ahead of the market over the next five years? Let’s review its core strengths, upcoming catalysts, and valuations to see how much higher its stock could go.

Image source: Walmart.

What happened to Walmart over the past five years?

Walmart operates more than 10,750 stores and warehouse clubs across 19 countries. It generates most of its revenue from its namesake U.S. stores, while its Sam’s Club stores compete against Costco in the warehouse club market. It also operates a broad range of e-commerce websites and smaller regional banners.

Walmart’s scale and diversification helped it keep pace with Amazon (AMZN -1.16%) as other brick-and-mortar retailers crumbled. It expanded its e-commerce marketplace, renovated its stores, matched Amazon’s prices, upgraded its shipping and curbside pickup options, and leveraged its massive network of brick-and-mortar stores to fulfill its online orders. It also rolled out more private-label brands to lock in its shoppers and boost its gross margins.

From fiscal 2021 to fiscal 2025 (which ended this January), Walmart’s total revenue grew at a compound annual growth rate (CAGR) of 5%. Its comparable sales in the U.S. grew at a healthy rate, even as many of its retail peers struggled with macro and competitive challenges.

Data source: Walmart. Comps growth excludes fuel sales.

During the pandemic, Walmart’s sales surged as more shoppers stocked up on essential goods. Its e-commerce investments also paid off as more of those customers shopped online. When inflation surged from 2021 to 2023, it drew more cost-conscious shoppers to its stores. Its international growth stalled out in fiscal 2022 after it divested some of its weaker overseas stores, but the segment stabilized in fiscal 2023 and grew over the following two years.

In fiscal 2021, Walmart’s reported earnings per share (EPS) declined as its pandemic-related expenses surged, it divested some of its international businesses, and it generated a higher mix of its revenue from its lower-margin e-commerce marketplace.

In fiscal 2023, its EPS dropped again as inflation, markdowns for flushing out excess inventories, currency headwinds, and a one-time litigation charge from an opioid settlement compressed its margins. However, Walmart’s profits surged again in fiscal 2024 and fiscal 2025 as those headwinds dissipated.

What will happen to Walmart over the next five years?

For fiscal 2026, Walmart expects its total net sales to rise 3.75% to 4.75% as its adjusted EPS increases 0.4% to 4.4%. It expects its top-line growth to be driven by its rising e-commerce sales, its streamlined pricing and inventory management strategies, and the expansion of its integrated advertising business, which will be strengthened by its recent takeover of Vizio.

On the bottom line, it expects higher tariffs — especially on Chinese goods — to squeeze its margins. It might offset some of that pressure by negotiating new deals with its Chinese suppliers, storing more of their products in its domestic warehouses, or passing those costs onto its consumers, but those strategies aren’t long-term solutions. However, the cost savings from its AI and automation efforts (especially in its warehouses) might cushion that blow.

From fiscal 2025 to fiscal 2028, analysts expect Walmart’s net sales and reported EPS to grow at a CAGR of 5% and 10%, respectively. That growth should be driven by its tech-forward “Store of the Future” upgrades, the expansion of its advertising arm, the automation of its warehouses, and AI-driven upgrades for its e-commerce marketplaces.

We should take those estimates with a grain of salt, but they seem like a realistic continuation of Walmart’s current growth strategies. But a lot of optimism is already baked into its stock at 35 times next year’s earnings, and that higher valuation might set it up for a steep drop on any negative news.

Assuming Walmart matches Wall Street’s estimates, grows its EPS at a CAGR of 10% over the following three years, and trades at a more reasonable 30 times earnings, its stock price could rise another 33% to about $121 by 2030. That would be a solid five-year gain, but Walmart’s premium multiple might prevent it from replicating its previous gains or consistently staying ahead of the S&P 500, which has generated an average annual return of more than 10% since its inception in 1957.

D-Wave Quantum‘s (QBTS -1.82%) stock surged more than 1,480% over the past 12 months. That explosive rally, which lifted it from its all-time lows, was driven by the market’s growing enthusiasm for quantum computing stocks.

But with a market cap of $5.4 billion, it trades at a whopping 222 times this year’s sales and 142 times next year’s sales. Should investors still buy D-Wave’s stock and expect it to grow into those nosebleed valuations? Let’s review its business model, upcoming catalysts, and challenges to decide.

Image source: Getty Images.

What does D-Wave Quantum do?

Traditional computers still store their data in binary bits of zeros and ones. Quantum computers can store those zeros and ones simultaneously in qubits, which lets them process larger quantities of data at a much faster rate than their traditional counterparts.

Yet quantum computing systems are also larger, pricier, and consume a lot more power than traditional servers and mainframes. That’s why they’re still mainly used for niche research projects at universities and government agencies instead of mainstream computing applications.

D-Wave could change that perception with its quantum annealing tools, which are used to streamline a company’s workflows, supply chains, and logistics networks. It runs those processes through different scenarios, and it identifies the processes that consume the least power as the most efficient ones. In other words, it’s a quantum-powered “efficiency expert” that maps out multiple outcomes faster than traditional analytics tools.

D-Wave designs its own quantum processing units (QPUs) and Advantage quantum systems to support those services. It also provides those services remotely through its cloud-based Leap platform, which can be integrated into public cloud platforms like Amazon Web Services (AWS) and Microsoft Azure.

More than 100 major customers — including Deloitte, Mastercard, Volkswagen, Lockheed Martin, and Accenture — are already using D-Wave’s services. However, most of those customers are still running its low-revenue pilot and research programs on Leap instead of using its tools to overhaul their businesses.

How fast is D-Wave growing?

D-Wave still generates most of its revenue by selling its Advantage quantum systems, but those sales cycles are long and unpredictable. That’s why its sales surged in 2022 and 2023, flatlined in 2024 as its system sales stalled out, but surged again in the first half of 2025.

Data source: D-Wave Quantum. YOY = Year-over-year.

However, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) stayed negative as its net losses widened. Like most of its quantum computing peers, it’s expected to stay unprofitable for the foreseeable future as it scales up its business.

For 2025, analysts expect D-Wave’s revenue to surge 178% to $24.6 million. A lot of that growth will be driven by the rollout of its new 4,400 qubit Advantage2 quantum system, which solves 3D lattice problems roughly 25,000 times faster than its first-gen system while consuming less power. Its rising sales of those systems should reduce its dependence on its cloud-based services. Analysts expect D-Wave’s revenue to rise 56% to $38.3 million in 2026, and increase another 85% to $71 million in 2027. We should take those estimates with a grain of salt, but they imply that it can eventually grow into its frothy valuations.

Is it the right time to buy D-Wave’s stock?

D-Wave’s stock is expensive. It will likely keep diluting its investors with more stock offerings as long as it remains unprofitable, and it’s unclear if it can keep selling enough Advantage2 systems (which cost $20-$40 million each) for economies of scale to kick in. But in the long run, D-Wave’s focus on mainstream computing applications could give it an edge against other quantum computing companies that focus on experimental applications. So while I certainly wouldn’t invest my life savings in D-Wave’s stock, I’d be willing to nibble on it today and accumulate more shares if it successfully expands its fledgling business.

For 90 years, Social Security has provided millions of Americans with a financial lifeline in retirement, helping to keep many Americans above the poverty line. That’s why deciding when you want to claim benefits is such a crucial decision because it permanently affects how much you’ll be receiving in monthly benefits.

As of the end of 2024, the average monthly benefit for someone aged 70 was $2,148.12, or approximately $25,777 annually. For men, the average benefit at that age is $2,389.95, and for women, it’s $1,909.42 (the difference is due to the disparity in lifetime earnings).

Image source: Getty Images.

How claiming at 70 affects your monthly benefit

For anyone born in 1960 or later, your full retirement age (FRA) is 67. This is the age at which you can receive your full monthly benefit amount, known as your primary insurance amount (PIA). Starting at your PIA, the Social Security Administration calculates your monthly benefit based on whether you claim before or after your FRA.

By delaying benefits past your FRA, you increase your monthly benefit by 2/3 of 1% monthly, or 8% annually. You can delay benefits and receive this increase until you reach age 70; after that, your monthly benefit is no longer increased, so that’s realistically the latest age you should claim benefits.

For example, if your PIA was $2,000 at your FRA (assuming it’s 67), delaying benefits until 70 would increase your monthly amount by 24%, taking it to $2,480. This increase, along with the annual cost-of-living adjustment (COLA), is why the average benefit is higher at 70 than at younger ages.

The artificial intelligence (AI) boom has been fueled by large tech companies developing impressive AI models that can handle increasingly complex tasks. But a sometimes overlooked aspect of AI are the companies that manufacture complex processors that make those models possible.

Two such semiconductor manufacturing companies are ASML (ASML -2.78%) and Taiwan Semiconductor Manufacturing (TSM -3.05%), often referred to as TSMC. While both have their strengths, which one looks like the better stock right now? Here’s what’s happening with each, and which one is likely the better AI stock.

Image source: Getty Images.

ASML’s opportunities and risks

ASML has a unique angle in the processor manufacturing market through its extreme ultraviolet (EUV) lithography system that’s used to make AI processors. These machines are very complex and not easily replicated, which is why ASML is one of the few companies in the world with these machines. This means that any semiconductor manufacturing company that needs one of these machines has to come to ASML for it.

Despite this opportunity, it’s not all sunshine and rainbows for ASML’s business. The company is reeling from President Donald Trump’s tariffs, and management said recently that potential growth in 2026 will be affected by them. ASML CEO Christophe Fouquet said on the Q2 earnings call: “We continue to see increasing uncertainty driven by macroeconomic and geopolitical developments. Therefore, while we still prepare for growth in 2026, we cannot confirm it at this stage.”

That’s a shift from management’s previous stance that the company would grow significantly this year and next. The company also lowered its estimated sales for this year to about 32.5 billion euros, down from its previous estimate of up to 35 billion euros.

That uncertainty has caused ASML’s shares to plunge recently, dropping 13% over the past 12 months. And with investors still unsure how tariffs will impact the company over the next couple of years, they’re right to be a little wary.

TSMC’s advantages and challenges

Taiwan Semiconductor also has a unique position in the AI space. The company is the leading manufacturer of AI processors, with an estimated 90% of the advanced processor market. This means that when AI giants, including Nvidia, need AI processors made, Taiwan Semiconductor is often their first choice.

This demand continues to fuel growth for the company, and TSMC’s management estimates that AI sales will double this year. The company is already well on its way, with revenue rising by 38% to $30 billion in Q2. TSMC’s bottom line is impressive as well, with earnings rising 61% to $2.47 per American depository receipt (ADR).

And while ASML is experiencing some turbulence with its business, TSMC is still going strong. Taiwan Semiconductor CEO Wendell Huang said, “Moving into third quarter 2025, we expect our business to be supported by strong demand for our leading-edge process technologies.”

Continued demand for AI processors has resulted in TSMC’s share price climbing about 40% over the past 12 months, which is significantly better than the S&P 500‘s gains of 15% over the same time. While some investors are concerned about when the AI boom will be over, it’s certainly too early to call it now.

The verdict: Taiwan Semiconductor is the better AI stock

Taiwan Semiconductor is increasing sales and earnings at a healthy clip, has a corner on AI processor manufacturing, and continues to benefit from an expanding AI market. While ASML is a strong contender, the company’s recent tariff uncertainty and lowered sales expectations aren’t great news for investors.

ASML stock is also slightly more expensive than TSMC’s at the moment, with a price-to-earnings (P/E) ratio of about 28, compared to Taiwan Semiconductor’s 26. I think both companies could be good long-term AI investments, but for all the reasons above, I think Taiwan Semiconductor deserves the win in this matchup.

One of the biggest expenses you might face in retirement is healthcare. And it’s an expense that you may only be able to do so much to reduce.

If you’re tired of paying huge property taxes and spending a lot to maintain a larger home, you can always downsize. If you don’t want to bear the expense of a car, you could move to an area that’s walkable.

Image source: Getty Images.

But if you need to take certain medications to protect your health, you may not get much of a say in the matter. And if you have a medical condition that involves follow-up appointments, skipping them to save on the costs may not be an option (or at least not a wise one).

That’s why it’s so important to make sure you’ve chosen a suitable Medicare plan. The right plan could lead to big savings on health-related costs, not to mention make it easier to get the care you need.

Why you may be unhappy with your Medicare coverage

There are plenty of reasons why you may be less than pleased with your Medicare plan choice. If you have Medicare Advantage, you may be frustrated by:

• Limited provider networks, making it harder to see the doctors you prefer
• Prior authorization, which could delay your care
• High rates of denial, which could be stressful and lead to sub-optimal care
• Hefty out-of-pocket costs, which you could face even if your plan itself comes with a low or even $0 premium

Meanwhile, if you have Medicare Part D, you may be unhappy due to:

• High out-of-pocket costs for the specific medications you take
• Difficulty understanding your plan’s formulary and rules

All of these are valid reasons for wanting to ditch your Medicare plan. And soon enough, you may get that opportunity.

Relief is in sight

Though you may be stuck with your Medicare plan for the time being, soon enough, you should have an opportunity to make a change for the new year. Medicare’s fall open enrollment period is set to begin next month — specifically, on Oct. 15. Between then and Dec. 7, you’ll be able to make changes to your Medicare coverage.

During open enrollment, you can:

• Switch from your current Medicare Part D drug plan to another
• Switch from your current Medicare Advantage plan to another
• Sign up for Medicare Advantage for the first time
• Dump Medicare Advantage and switch over to original Medicare (and get a Part D drug plan to go with it)

It pays to explore your plan choices during open enrollment. But ahead of that, make a list of the issues you have with your current Medicare plan so you can make sure any new plan you get does a good job of addressing them. If high medication copays are a problem, for example, then you’ll want to find a Part D plan that treats the drugs you take more favorably.

One thing you don’t want to do, though, is rush through open enrollment if you’re dissatisfied with your current Medicare plan. Mark Oct. 15 on your calendar so you can begin pursuing other options as soon as possible and have ample time to analyze them.

In crypto, it’s a truism that wherever liquidity sits, the biggest money will congregate. Scale makes every transaction cheaper, cleaner, and safer to execute, and given that crypto markets are only now starting to become liquid enough for financial institutions to really engage with deeply, there’s simply no way to beat it.

That’s one big reason to buy Ethereum (ETH 0.13%) today. Let’s take a closer peek at the most important asset class that’s providing the liquidity to this chain to see why it’s worth buying.

Image source: Getty Images.

This liquidity base is hard to ignore

Ethereum is home to the deepest pool of fiat currency-pegged stablecoin liquidity in crypto. If you want exposure to one of the networks that global finance is most likely to use, buying the network that already holds the most dollars is a good move.

Stablecoins are crypto tokens designed to hold a steady value, typically $1. They’re the grease for nearly everything in decentralized finance (DeFi), from lending to trading, payments, and settlement.

By value, Ethereum hosts the largest stack of stables in the industry, with roughly $146 billion in stablecoin value on its base layer alone, far ahead of all of the runner-up chains. To put that into context, Tron holds about $82 billion in stables, and Solana holds about $12 billion.

So Ethereum’s broader ecosystem commands the largest on-chain dollar float by a wide margin. That helps explain why its DeFi total value locked (TVL) also leads all other networks. It’s also why new DeFi projects have a big incentive to operate on the chain. If you want your project to bring in a lot of revenue, positioning it on the network where the most money is parked and flowing is an obvious move.

In other words, the biggest pools of tokenized cash beget more inflows of value seeking to capture a portion of that cash, making a virtuous cycle of sorts.

Big money is coming, but competition remains an issue

For a pension fund or asset manager, moving capital with size through thin pipes is operationally risky and expensive. Liquidity lowers slippage and simplifies post-trade workflows, saving costs.

On that front, stablecoin settlement is scaling rapidly, with $27.6 trillion in transfer volume across various major blockchains in 2024.

That matters because these dollars need a home with reliable rails. Overall, there’s thus a good chance that at least some financial institutions will flock to do business on Ethereum. And the institutional inflows are another facet of why stablecoins are such an important part of the investment thesis for buying the coin.

But Ethereum’s victory over the long term is not assured, as its biggest competitive threats are real. Tron dominates retail peer-to-peer stablecoin flows in several regions, and it often processes more transfer volume than Ethereum for those use cases. If those flows become the benchmark for liquidity for financial institutions, Ethereum’s lead could compress over time.

In contrast, Solana’s high speed and low fees make it a formidable venue for certain stablecoin-heavy applications as well, which ensures that some liquidity will continue to be siphoned from Ethereum. Assuming that low-latency payment apps become a larger share of on-chain finance, Solana could take larger slices at the margin, even if Ethereum remains the anchor for institutional purposes. It could also just attract those institutions to its chain directly, so it’s a major threat.

Nonetheless, Ethereum is still worth buying today, and it has a long runway for growth in stablecoins and DeFi, among many other segments that operate on its chain.

If stablecoins keep growing and institutions continue to prefer the deepest, most connected liquidity pools — and both of those things are very likely to continue — Ethereum is positioned to benefit for years. The precise mix of venues, applications, and assets will ebb and flow, but the center of financial gravity is already likely set, at least for now.

Shares of Dollar General (DG -2.64%) are up around 45% so far in 2025. But they are also down more than 55% from their 2022 peak. The retailer’s strong second-quarter-2025 earnings update shows that the turnaround is still going strong. Here’s why I’m excited about Dollar General stock after reading its most recent earnings update.

What does Dollar General do?

Dollar General, as its name implies, is a dollar store. The term is a bit misleading, however. It sells a variety of products, from everyday necessities to clothing and seasonal items, at low prices. For example, it may sell a name brand consumer staples product, like toilet paper, just like another store, but the size of the product might be smaller. Buying a single roll is simply cheaper than buying 20 in a multipack from a club store, even if the per-roll cost from the club store is ultimately a better deal.

Image source: Getty Images.

Dollar General leans into its role of serving less affluent customers with its choice of store locations. The retailer purposely operates relatively small stores in mostly rural areas that are underserved by larger competitors. This makes it more convenient for a customer to stop by a Dollar General store than to drive to a big-box store, even though it might be cheaper to buy from the big box store.

Although Dollar General’s stores are kind of small, the company is actually quite large. It operates over 20,700 Dollar General, DG Market, DGX and pOpshelf stores across the United States (it also operates Mi Súper Dollar General stores in Mexico). It expects to complete over 4,800 real estate projects in fiscal year 2025. That list includes capital investments like renovating older stores but also the addition of as many as 575 new stores in the United States and 15 in Mexico.

DG data by YCharts

Dollar General is turning things around

Although the stock has risen dramatically in 2025, that has erased only a small portion of the decline since late 2022. And that’s the opportunity for long-term investors. But the really big news from the second-quarter earnings update was the company’s financial and operational performance. A look at some income statement highlights tells a very exciting story.

Specifically, sales increased 5.1% year over year, hitting $10.7 billion. However, the real star was same-store sales, which measures the performance of existing locations. That metric rose 2.8%, driven by rising traffic (1.5 percentage points of that total) and an increase in the amount spent by customers on each visit (1.2 percentage points). To put that in plain English, more customers are showing up, and they are spending more.

Earnings for the quarter came in at $1.86, up 9% over the same quarter in 2024. And, notably, earnings came in well above Wall Street analyst expectations, beating consensus by roughly 18%. A big help to the bottom line was the company’s ability to increase its gross margin by 137 basis points year over year, led by less shrinkage, higher inventory markups, and less inventory damage.

This is all very good news and shows that the company’s turnaround effort is working. But the best part of the story is that management updated its full-year 2025 guidance, suggesting that the turnaround is set to continue. Previously, sales were projected to rise between 3.7% and 4.7%. Now they are expected to jump 4.3% to 4.8%. Same-store sales were updated similarly, with a slight increase on the top end and a material change at the low end of the guidance range. Basically, the worst-case scenario that management envisioned appears to be off the table.

There could be more upside from here

My excitement is tempered by the fact that Dollar General’s stock price has risen a great deal in a very short time. Wall Street appears to be aware of the positive reversal in the business dynamics. But that doesn’t change the fact that the stock remains well off its highs, hinting that there could be more room for recovery ahead. Perhaps it won’t happen as quickly as the initial turnaround, but if you think in decades and not days, Dollar General and its still-historically-high 2.1% dividend yield could be a good stock for a deep dive today.

I’m on a mission to reach financial freedom through passive income. My goal is to build multiple income streams that combine to eventually cover my basic living expenses, thereby eliminating the stress of having to earn money to meet my financial needs.

Every week, I aim to make progress toward this financial goal. This time, I plan to invest $250 into three leading dividend stocks: Coca-Cola (KO 0.94%), Camden Property Trust (CPT 1.12%), and W.P. Carey (WPC 0.90%). I believe these companies offer great potential to help me achieve my passive income ambitions.

Image source: Getty Images.

Satisfying income-seeking investors for decades

Coca-Cola has a terrific record of paying dividends. The global beverage giant has paid dividends for over a century, while increasing its payout for 63 consecutive years. That qualifies it for the elite group of Dividend Kings, companies that have had 50 or more consecutive years of annual dividend increases. Coca-Cola has been growing its payout at a low- to mid-single-digit rate in recent years.

The iconic beverage company’s dividend currently yields about 3%. That’s more than double the S&P 500‘s dividend yield, which is around 1.2%.

Coca-Cola generates significant cash flow, enabling it to reinvest in growing its business while paying its lucrative dividend. The company expects its capital investments to drive 4%-6% annual organic revenue growth over the long term, which should support mid- to high-single-digit annual earnings-per-share growth. Coca-Cola also has an A-rated balance sheet, giving it the financial flexibility to make acquisitions as attractive growth opportunities arise. Since 2016, a quarter of the company’s earnings growth has come from acquisitions. Those drivers should enable Coca-Cola to continue growing its cash flows and dividends.

Cashing in on demand for rental housing

Camden Property Trust is a real estate investment trust (REIT) focused on owning multifamily properties. The landlord owns nearly 60,000 apartment units across 15 major markets in the southern half of the country. It invests in metro areas benefiting from strong employment and population growth trends. That drives demand for rental housing.

The REIT has paid a stable and steadily rising dividend over the past decade and a half. While Camden hasn’t increased its dividend every single year, it has been on a steady upward trajectory since the REIT reset its dividend during the financial crisis. The company’s payout currently yields around 3.8%.

Camden expects to deliver consistent earnings and dividend growth in the future. Its apartment portfolio should benefit from strong demand for rental housing, which should keep occupancy levels high while driving steady rent growth. Camden also has a strong financial profile, enabling it to invest in expanding its portfolio by acquiring stabilized apartment communities and starting new development projects. These growth drivers should enable Camden to continue increasing its dividend.

Building back better

W.P. Carey is a diversified REIT. It owns operationally critical commercial real estate (retail, industrial, warehouse, and other properties) across North America and Europe, secured by long-term net leases with built-in rental escalation clauses. These properties produce very stable rental income that rises each year.

The REIT has increased its dividend every single quarter since resetting the payment at the end of 2023. W.P. Carey realigned its dividend with its expected cash flows after exiting the office sector by selling and spinning off those properties. That strategy shift enabled the company to focus on properties with better long-term growth potential.

W.P. Carey has been steadily rebuilding its dividend (which currently yields 5.4%) and its portfolio. It spent $1.6 billion on new property investments last year and is on track to invest at a similar rate this year. That should enable it to grow its cash flow per share at a mid-single-digit annual rate, supporting a similar dividend growth rate.

Ideal passive income stocks

Coca-Cola, Camden Property Trust, and W.P. Carey are excellent fits for my passive income investment strategy. They pay dividends with above-average yields that steadily grow. As a result, they enable me to generate an attractive and growing stream of dividend income. Investing an additional $250 in these stocks this week will add nearly $10 to my annual passive income total, bringing me a little closer to achieving financial independence.

In the tech and business world, no topic has been harder to avoid than artificial intelligence (AI). Over the past couple of years, it has been the topic. With this surge in interest has come a rise in the valuations of many tech stocks as investors rush to capitalize on new growth opportunities.

No two companies have benefited more from the AI hype than Nvidia (NVDA -3.38%) and Palantir (PLTR -0.89%). It has propelled Nvidia to the world’s most valuable public company and pushed Palantir’s stock price up over 810% since the beginning of 2024.

Both companies have produced generational returns, but if you had to choose one of the growth stocks to invest in, which is the better choice?

Image source: Getty Images.

What Nvidia has going for it

Nvidia is undoubtedly one of the most important companies in the AI world. It produces graphics processing units (GPUs) that power data centers, making it possible to train, deploy, and scale AI as we know it today. In its latest quarter, Nvidia’s data center revenue increased 56% from a year ago to $41.1 billion (88% of its total revenue).

Nvidia makes GPUs for gaming consoles, automotive applications, and networking, but data centers are its bread and butter. The company plans to go all in on becoming an AI infrastructure company.

This pivot has worked out in Nvidia’s favor and is expected to continue doing so, as the company anticipates AI infrastructure spending to increase between $3 trillion and $4 trillion over the next five years from some of AI’s largest spenders, including the “Magnificent Seven” stocks. Nvidia expects it can capture up to 70% of this spending.

What Palantir has going for it

Palantir is a software company that uses AI to turn vast amounts of data into actionable insights. It’s not as important to the AI ecosystem as Nvidia, but its use cases are continuously growing, which has fueled its growth over the past couple of years. Palantir’s initial focus was on government entities, such as the Department of Defense, CIA, and FBI, but it has expanded and shown it can be successful in the commercial sector, too.

Its U.S. government segment is still the bulk of its revenue (42% of total revenue), but its U.S. commercial segment is its fastest-growing segment. In the second quarter, U.S. commercial revenue grew 93% year over year to $306 million. The growth of both segments helped Palantir achieve its first billion-dollar quarter, more than doubling its revenue from just three years ago.

PLTR Revenue (Quarterly) data by YCharts

Palantir’s AI Platform (AIP) is responsible for its recent commercial success. As it continues to gain adoption across various industries, Palantir should see its revenue base diversify, enhancing its long-term appeal.

What downsides does each company have?

Nvidia’s largest “roadblock” is that it’s in the middle of a volatile relationship between the U.S. and China. The Trump administration imposed a ban on sales of the H20 chip (Nvidia’s China-compliant AI chip) to China in April, but reversed the decision in July after Nvidia agreed to pay the government a 15% tax on AI chip revenue generated in China (the deal is in place, but has not yet been finalized). It’s worth keeping an eye on how this plays out.

Palantir’s downside is its reliance on U.S. government contracts. These contracts can provide lucrative opportunities, but they can also be subject to changing government budgets and political priorities. As volatile as the current political environment is, it wouldn’t be far-fetched for some of these contracts to be restructured or canceled completely. Palantir’s commercial business is growing, but it still relies on U.S. government contracts to keep the lights on.

You can’t ignore how each company is valued

Although both companies have great growth prospects, you can’t decide on which is the better one to own without looking at their valuations. As of Aug. 28, Nvidia is trading at 41 times its forward earnings, while Palantir is trading at 242 times its forward earnings.

NVDA PE Ratio (Forward) data by YCharts

Nvidia’s 41 forward P/E ratio is expensive by most standards, but Palantir’s valuation is one of the highest in history. It has gotten to the point where an Economist article mentioned that Palantir “might be the most overvalued firm of all time.”

When I think of which is the better stock to own, I think about which one has more margin for error because growth stocks are known for being volatile — especially ones propped up by AI hype. Nvidia has little room for error with its valuation, but Palantir has virtually no room for error at its current valuation.

In my opinion, that makes Nvidia the better choice between the two.

Billionaire Steve Mandel and his hedge fund Lone Pine Capital have been a great one to follow for individual investors. Although some hedge funds have a poor record of underperforming the broader market, Mandel has substantially outperformed the market over the past three years. So, when he makes a move in his portfolio, investors should pay attention.

One thing Mandel did during Q2 was sell off some of his Microsoft shares. Although it wasn’t a massive move, the hedge fund reduced its position by about 5%. Then, Mandel used some of those funds to invest in another promising AI stock that has increased in value by nearly 800% over the past decade.

That stock? Amazon (AMZN -1.16%).

Image source: Getty Images.

AWS is the best reason to invest in Amazon right now

Amazon may not be the first company that comes to mind when you think about AI. Instead, it probably seems more like an e-commerce investment. While that sentiment is true for the consumer-facing portion, the reality is that a large chunk of Amazon’s profits comes from AI-related revenue streams.

The biggest is from Amazon Web Services (AWS), its cloud computing arm. Cloud computing firms are having a strong year, thanks to the massive demand generated by AI workloads. Because more companies can’t justify spending millions (or even billions) of dollars on a data center dedicated to training AI models, it’s far more reasonable to rent computing power from a firm that already has the capacity. That’s the idea behind cloud computing, and it has translated into strong growth for the business unit.

In Q2, AWS’s sales rose 17% to $30.9 billion. That’s strong growth, but it is a bit slower than its peers, Microsoft Azure and Google Cloud, which each grew revenue by more than 30% in Q2. However, AWS is much larger than both of these units, so it shouldn’t surprise investors that AWS is growing at a slower rate. AWS accounted for about 18% of Amazon’s total revenue in Q2, but it made up 53% of its operating profit. That’s because AWS has far superior margins compared to its commerce business units, making AWS a critical part of the Amazon investment thesis.

AWS is experiencing a significant boost from AI, making it a strong stock pick in this space.

But Microsoft is also a solid AI pick, so why is Mandel moving from Microsoft to Amazon?

Amazon’s stock looks more promising over the long term

From a valuation perspective, both companies trade at fairly expensive levels for their growth. However, they’re both priced about the same from a forward price-to-earnings (P/E) standpoint.

AMZN PE Ratio (Forward) data by YCharts

One thing Amazon has going for it that Microsoft doesn’t is the steady upward pressure on Amazon’s margins. Thanks to AWS and its advertising service business units being the fastest growing in Amazon, its margins are steadily improving. Although Amazon’s revenue growth rate appears to be somewhat slow, its operating income growth rate is actually quite rapid.

AMZN Revenue (Quarterly YoY Growth) data by YCharts

This trend still has years to unfold, which is a solid reason to transition from Microsoft to Amazon. I believe this will be a winning trade over the long term, as Amazon’s profits are expected to grow at a significantly faster rate than Microsoft’s, resulting in the stock outperforming its peer over the long term due to their similar valuations.

However, both stocks are still solid AI picks, and you can’t go wrong with either one.

The U.S. gross domestic product grew 3.3% year over year in the second quarter. That number shows the resilience of the U.S. economy despite higher interest rates and global macroeconomic uncertainty.

In such an environment, investors can particularly benefit from putting their money into companies with scale, durable cash flows, and the ability to ride secular tailwinds.

Image source: Getty Images

Here’s why these two stocks fit the criteria, making them wise buy-and-hold choices for the long term.

1. Nvidia

Nvidia (NVDA -3.38%) has firmly established itself as the leading player in artificial intelligence (AI) infrastructure, as it accounts for nearly 92% of the data center GPU market. That dominance has been the foundation of its robust financial performances of recent years. In its fiscal 2026 second quarter (which ended July 27), Nvidia reported revenues of $46.7 billion, up 56% year over year and exceeding guidance, while its GAAP (generally accepted accounting principles) gross margin was 72.4%. Management now expects fiscal third-quarter revenue to reach $54 billion, plus or minus 2%, driven by increasing demand for its Blackwell-architecture GPUs.

Nvidia estimates that between $3 trillion and $4 trillion will be invested in AI infrastructure by the end of 2030. En route to that total, it expects hyperscalers and enterprises to invest nearly $600 billion in data center infrastructure and computational technologies in calendar 2025, nearly double the amount that was invested in 2023. Nvidia’s Blackwell-based AI systems, such as the GB200 NVL System and GB300 platform, are increasingly being used by cloud service providers and consumer internet companies to train and power large AI models.

Nvidia’s proprietary Compute Unified Device Architecture (CUDA) software stack can be used to optimize its hardware for specific AI workloads. CUDA has become the industry standard, used by over 5 million developers. Nvidia has also strengthened its position in networking solutions, where its record quarterly revenue of $7.3 billion was driven by demand for Spectrum-X Ethernet, InfiniBand, and NVLink from customers building massive AI clusters. The company also highlighted that networking is now a $10 billion-plus annualized revenue business for it, underlining its importance as data centers evolve into AI factories.

Although U.S. restrictions on exporting the highest-end GPUs to China have been a headwind for the company, Nvidia is responding by adapting versions of its Blackwell chips (B30A ) that adhere to the new regulations and seeking regulatory approvals for broader deployments. It has already done this with its previous Hopper architecture, creating the H20 for Chinese customers. The company estimates the Chinese market opportunity to be nearly $50 billion in 2025.

Nvidia has also continued to reward its investors. In its fiscal second quarter, it returned $10 billion to shareholders through buybacks and dividends, and the board authorized an additional $60 billion stock repurchase program.

Trading at about 39.5 times expected forward earnings, Nvidia’s stock is quite expensive. However, that valuation seems justified considering its robust financials and unmatched AI ecosystem.

2. Alphabet

Alphabet (GOOG 0.56%) (GOOGL 0.63%) has firmly established itself as a dominant technology powerhouse, with a leadership position in digital advertising and rapidly expanding presences in cloud computing and artificial intelligence. In the second quarter, it reported revenues of $96.4 billion, up 14% year over year, and operating income of $31.2 billion. Those results underscore the scalability and profitability of its business model. The company also had $95 billion in cash and securities on its books at the end of the quarter, giving it the flexibility to keep investing in growth while returning capital to shareholders.

Alphabet’s core advertising businesses have demonstrated remarkable resilience. Google Search continues to provide more than half of total revenues, with AI-enhanced search features such as AI Overviews, AI Mode, and Lens offering new ways for users to access information. This has helped deepen user engagement and improve monetization. YouTube generated nearly $9.8 billion in advertising revenues in the second quarter, while subscriptions added another layer of recurring revenue streams.

Google Cloud accounted for a 13% share of the global spending on cloud infrastructure services in the second quarter, up 1 percentage point year over year. Google Cloud is benefiting from a growing demand for AI infrastructure and generative AI services worldwide. Google Cloud revenues were up 32% to $13.6 billion.

Alphabet has also successfully integrated advanced AI technologies across its entire ecosystem to improve productivity and efficiency, and create better user experiences. Its Gemini models are powering Search, Gmail, Workspace, and Maps. This is helping it hold onto its user base and improve avenues for monetization. Alphabet is also investing in other opportunities such as autonomous driving through its Waymo, healthcare, and quantum computing units — giving investors exposure to next-generation technologies.

It has been returning significant capital to shareholders, including nearly $16.1 billion returned through share buybacks and dividends in the second quarter.

Despite a resilient advertising business, a fast-growing cloud division, and deep AI integration, Alphabet trades at 18.3 times forward earnings, lower than its five-year average of 23.9.

Risks such as increased regulatory scrutiny, a looming court ruling in a major anticompetition case, rising competition in digital advertising, and concerns about the long-term impact of AI on search monetization may be among the reasons why the stock trades at a discounted valuation. Yet this very discount provides investors with the opportunity to buy shares of a dominant, cash-rich business with an AI-enabled platform at a reasonable price.

Considering these factors, Alphabet stock looks like an attractive stock to buy now and hold for the foreseeable future.