money

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

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

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

Image source: Netflix.

Netflix is worth the premium price

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

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

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

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

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

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

A dividend play in the semiconductor space

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

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

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

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

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

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

Is past and present stock market performance a good predictor of how the market will perform in the future? It can be sometimes. Otherwise, no one would bother incorporating historical stock data into models that attempt to project future performance.

With that in mind, investors might want to pay attention to what’s going on now with the S&P 500 (^GSPC 1.56%) in relation to what it’s done in years past. The benchmark index is poised to do something that’s only happened 11 times in 100 years. And it could signal a big move for the stock market in 2026.

Image source: Getty Images.

The third time’s the charm

The S&P 500 soared 26% in 2023. It followed with a 25% gain in 2024. As of the market close on Oct. 10, 2025, the S&P is up a little over 11%. As things stand right now, it’s on course to finish the year with a double-digit percentage gain for the third consecutive year.

Such an achievement is rarer than you might think. Over the last 100 years, the S&P 500 has delivered double-digit returns for three consecutive years only 11 times. Technically, the index has only existed in its current form, including 500 companies, for 68 years. However, the S&P 500’s predecessor — the S&P 90 — dates back to 1926.

Granted, the stock market could end 2025 on a negative note. President Trump’s latest threat of additional 100% tariffs on all Chinese imports, on top of 30% tariffs already in place, is causing significant angst among investors.

It doesn’t help matters that the S&P 500 has been trading at record highs. The Buffett indicator, a ratio of total U.S. stock market capitalization to GDP, is well above a level that its namesake, legendary investor Warren Buffett, has said was “playing with fire.”

However, even if the S&P 500 falls over the next few weeks, a rebound to get the index back into double-digit gain territory would still be quite possible. Stocks often enjoy momentum at the end of a year thanks to a phenomenon known as the Santa Claus rally.

A history of big moves following three double-digit years

What could a third consecutive year of double-digit gains for the S&P 500 potentially mean for stocks in 2026? History shows that big moves often follow.

In three of the 11 cases over the last 100 years where the S&P jumped by double digits for three years in a row, the trend soon came to an abrupt end. For example, the S&P 500’s predecessor began with a bang in 1926, racking up three back-to-back double-digit returns. However, any student of history knows what happened in 1929: The stock market crash in October of that year brought a screeching halt to the previous momentum. The S&P finished the year down 8% and continued to decline for the next three years.

More recently, the index generated strong double-digit returns in 2019, 2020, and 2021. But the S&P 500 plunged 18% in 2022 as the Federal Reserve cranked up interest rates.

In four of the 11 cases, though, the strong momentum extended into a fourth year. The first occurrence came during World War II. The S&P soared 20% in 1942, followed by a gain of nearly 26% in 1943 and a 36% jump in 1944. The best was yet to come, with the index skyrocketing 36% in 1945 as the war ended.

Another great example of a three-year streak continuing into a fourth year was during the heady dot-com boom of the 1990s. The S&P 500 delivered returns of 22% or more in 1995, 1996, and 1997. It slowed only slightly in 1998, with a nice gain of 21%.

^SPX data by YCharts

How will the S&P 500 perform in 2026?

History shows that big moves are common after three consecutive years of double-digit gains by the S&P 500. Unfortunately, stocks tumble nearly as often as they jump in the following year. How will the S&P 500 perform in 2026? It’s impossible to know for sure.

What is possible to know, though, is that the S&P 500 has always risen over the long term in the past. The Rolling Stones weren’t talking about the stock market when they sang “Time Is on My Side,” but their premise definitely applies to investing. Regardless of what the S&P 500 does next year, investors who maintain a long-term perspective are likely to make money.

Dollar Tree (DLTR 5.68%) stock has been doing fairly well this year, up 17% entering trading this week, which is better than the S&P 500‘s gain of 11%. But in recent weeks, Dollar Tree’s stock has been in a tailspin, reaching levels it hasn’t been at in months. It recently was down about 26% from its high of $118.06.

What’s behind the stock’s sharp sell-off, and could there be more trouble ahead for Dollar Tree investors? Here’s what you need to know about why it’s been doing so poorly, what could impact its future performance, and whether it’s worth buying the retail stock on the dip.

Image source: Getty Images.

The sell-off began after its second-quarter results came out

On Sept. 3, Dollar Tree released its second-quarter results for fiscal 2025. That day, the stock would fall by more than 8% and its decline would continue in the following weeks.

Overall, the quarter wasn’t a bad one for Dollar Tree. Same-store net sales rose by 6.5% for the period ending Aug. 2 and operating income of $231 million rose by 7% year over year. Investors, however, may have been worried about what lies ahead for the business in upcoming quarters.

On the company’s earnings call, CEO Michael Creedon did allude to tariff risk ahead.

“The timing of the impacts of tariffs and our mitigation activities played out differently than we originally anticipated, with some of the net positive benefits of our mitigation initiatives coming earlier in Q2 and the tariff impacts shifting to later in the year,” he said. 

Tariffs have been a big concern for investors this year and while Dollar Tree is planning to mitigate those potential headwinds as best as it can, it could mean that worse results may be on the horizon for the discount retailer. A big test may be looming for the company when it reports results later this year, and investors may be hesitant to hold on to the retail stock given the uncertainty.

Why it may not be all bad news for Dollar Tree investors

Although tariffs may negatively impact Dollar Tree’s top and bottom lines, the company is giving itself more of a buffer these days by introducing a greater variety of products that are priced between $3 and $5. While the vast majority of its products still cost consumers less than $2, the expansion into higher-priced items can help it appeal to a wider range of shoppers.

During the quarter, Creedon said that households earning $100,000 or more were a “meaningful portion of our Q2 growth,” and that’s been part of an emerging trend for Dollar Tree as consumers look for ways to trim their budgets.

Dollar Tree is in a good position where both low-income and high-income shoppers may see a reason to go to its stores. With a solid comparable store growth rate, it’s proving that the business may be more resilient than other retailers.

Is Dollar Tree stock a good buy?

The decline in Dollar Tree’s stock in recent weeks doesn’t put it anywhere near its 52-week low of $60.49, but it does bring its price-to-earnings multiple down to around 17. That’s well below where the average S&P 500 stock trades — a multiple of nearly 26.

Tariffs may be a concern for the company in the short term, but over the long run it’s not likely to weigh on the business because policies may change and Dollar Tree will have more time to adapt. The stock’s reasonable valuation combined with the company’s continued strong results makes it a solid investment to consider today.

In this podcast, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss:

• ChatGPT gets apps.
• App opportunities.
• A trillion-dollar question for ChatGPT.

To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. When you’re ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

This podcast was recorded on Oct. 08, 2025.

Travis Hoium: Is artificial intelligence in need of an app store? Motley Fool Money starts now. Welcome to Motley Fool Money. I’m Travis Hoium. I’m joined by Lou Whiteman and Rachel Warren. We’ve got to get to the big news of the week. We’ve got a couple of days to process this, that is OpenAI introducing apps. They have tried some of these things before, plug-ins, custom GPTs to varying levels of success, but obviously they’re going in a different direction now. But this was I thought a really interesting announcement because the vision here is a lot bigger than just being an AI tool. It’s being the operating system of your life, if you will. There are companies involved who are willingly building apps, companies like Zillow, Expedia, Booking.com. Rachel, what are you taking away from this and what should investors know about OpenAI’s move into apps? It’s not quite an app store, but they are making apps.

Rachel Warren: Yeah, it’s interesting. I think you can see how a lot of the efforts that they have leveraged in the past maybe have led them to this point. I want to talk a little bit about how this app store works and why I also do think this could be really different from what we’ve seen in OpenAI in the past. Their app store, is this new platform, it’s integrated directly within ChatGPT, and it basically allows users to interact with third party apps using conversation natural language. For instance, you could ask ChatGPT to create a playlist with Spotify or find houses for sale with Zillow and then those apps are activated from directly within the ChatGPT conversation. Instead of having to leave the chat to use another service, those apps run directly in the thread. I think the idea is to simplify the user experience. At launch they’re partnering with some really big companies, with Spotify, Booking.com owned by Booking Holdings, Expedia, Zillow, Figma which is newly public, as well as private companies like Canva. I think it’s interesting to note, their past attempts like plugins that you alluded to. These had been limited text-based access. They were really rigid invite-only systems for developers. The chat interface was really cumbersome. Importantly, monetization wasn’t really a core feature there. Now, these new apps, I think, are very much designed to be a funnel toward monetization where OpenAI could make money from more of a revenue sharing model. It’s really interesting to see what they’re doing with this.

Travis Hoium: Lou, is this the way that we’re going to be using AI in the future? The vision here I think is, look on an iPhone or something or another smartphone. You’re going to download apps and then you’re going to actually interact with the app. You’re not really calling them from something like Siri, but this is taking that to the next level and going, hey, Zillow why don’t you just build for this AI chatbot and we’ll just call your information. Is that the way that we’re going to go in the future?

Lou Whiteman: Maybe. I will say this, if it works as good as the demo, it’s gold. But I’ve learned I think we’ve all learned not to just buy the demo. What I worry about here is there’s a garbage in garbage out problem, I think, because AI isn’t actually smart, it’s just trained on data. Just to pick on one, Zillow, their walkability score is the biggest, I shouldn’t call it garbage so I’ll just call it sub-par. [LAUGHTER] You can’t actually know whether or not a house, you can walk around it from the walkability score. In the example of give me a house that I can walk you to restaurants from, if it’s based on the Zillow walkability score, I think it’s going to be sub-human responses. I think there’s a trillion of these problems to be worked out. I think there’s all sorts of questions that we can get to later about Walled Gardens versus everybody there and how you make this work. To me, I want to get excited. It looks really good on paper, but I wonder if this is one of these things that’s always going to look better on paper than it is in real world execution.

Travis Hoium: According to some interviews by Sam Altman in the past couple of days, the vision here is bigger, and it will all make sense in a few months. Maybe we need to hold a little bit on what the full vision is. But I think what was interesting with these apps and one of the reasons that this is pertinent to us as investors, I think it’s from a disruption angle. If you think about the biggest disruptions are moving to a different technology paradigm, so the PC. You have opportunity and disruption, the Internet opportunity disruption, mobile devices, same thing. If ChatGPT becomes the way that we interact with technology, now you don’t have Zillow as an aggregator. You don’t have booking.com as an aggregator. You have ChatGPT in the power position. Altman even said, we could have just who had gone out and called all the information that Zillow was calling, but we wanted to work with these partners like he’s being some philanthropist with the technology. But this is, I think, a risk for a company is if you’re losing that direct customer relationship and you’re giving it to ChatGPT, is this a good thing, even if you’re partnering with the leading AI company today, Lou?

Lou Whiteman: There’s so much here, so much unpacked. For one, the big thing is, before we even get into the brands, it’s privacy. OpenAI has a ton of data. Can OpenAI just ring off my wanting to book a trip without telling every other partner they have? Hey, Lou is going to be in Toronto next week. Why don’t you sell him stuff, things like that. There’s all sorts of just on that layer. I like only Expedia knowing if I’m going to Toronto. But the bigger thing here, this whole idea of the OpenAI as the new Windows. Windows became Windows because it worked with everything. That was it, whatever you wanted to build, you could do. There’s a chicken and the egg problem here. You need customers, you need a ton of customers to attract every retailer to come on board or every website to come on board, but you need retailers to lure the customers. In theory, yes, there is a perfect world here where it’s just I go to my OpenAI, and that’s all I ever need. But how we get there is a bear.

Travis Hoium: Yeah, Rachel, this does seem like an area where it’s possible for disruption if this vision works. But it’s pretty unclear exactly how this is going to play out, given the massive size of this vision, not only from a technology standpoint but also from a financial standpoint.

Rachel Warren: Yeah, I want to stress that I think there’s room for multiple winners here. You know, I don’t think OpenAI comes in, and then that standard business model from some of these flagship players just goes out the window. As you noted, it’s very early days. We’re still waiting to see how exactly is OpenAI going to monetize this? Are consumers going to adopt this at a broad scale. But I do think it is interesting to look at the Bear thesis for a minute. Who could face disruption here if this type of platform ecosystem really takes off? Obviously the most significant disruption, which is what you alluded to, would be companies whose core business is providing a user interface for specific tasks. You could think about how Apple, Alphabet Google, Microsoft, which obviously control their respective ecosystems could face market threats. Of course, there’s other companies you think of the Adobes and sales forces of the world. They’re already experiencing some market skepticism amid the AI revolution. Then there’s the traditional search engine business, which of course is dominated by Google. Could that be disrupted? OpenAI’s approach has been to collapse the search to convert process. That could allow in this new app store, users to interact with services directly within ChatGPT. You could even think about how companies like Uber or DoorDash, who have really built their value on having users interact with their specific app to book a service could face some threats, but I don’t think the actual reality is going to be this bleak. Honestly, I think more likely than not, if this new use case for AI succeeds, we’ll probably see consumers adopt it as one other tool in their vast toolkit in the digital age. I don’t think strong companies with robust competitive advantages are going anywhere. If anything, maybe they can use this type of tool to play to their strengths if they execute it right.

Travis Hoium: We’re going to talk about that potential widening the funnel in just a moment. You’re listening to Motley Fool Money.

Widening the funnel for some of these applications. Some that were announced as apps that are coming soon, Peloton, DoorDash, Target, it is possible that ChatGPT allows more customers to interact with these applications than they had previously. If you’re not somebody who has downloaded the Peloton app and signed up for Peloton, you don’t have access to that. Same thing with Target. Maybe you don’t shop at Target, but maybe just having a conversation with ChatGPT is a good way for them to broaden out and get more customers. Is that possible that some of these applications, at least, are going to see this as a way to bring more customers to them? It’s an opportunity instead of a threat, Rachel, because I think there’s always two sides to the coin here, and one of the things we’re going to talk about in a minute is how in the world does ChatGPT make money? Well, if you have a business that makes money and your problem is customer acquisition, maybe ChatGPT answers this for you.

Rachel Warren: Yeah, I do think it could widen the funnel. I also think an important point to make is, you see all of these major companies that are onboarding in the very early launch of this app store. I don’t think these companies would be coming to the table with OpenAI if they thought this was just going to cannibalize their business. I think they see this as an opportunity.

Travis Hoium: That’s usually the way that disruption works, to be fair. [LAUGHTER] As you see it, Disney sold their content to Netflix and basically armed the rebels.

Rachel Warren: To play the bull case here, I do think that a lot of these companies and others might view this integration into the OpenAI app ecosystem as an opportunity to widen their user funnel. The thing is, AI can commoditize very basic functions, but I think these companies are thinking that they can leverage OpenAI’s platform to maybe deliver more integrated, personalized, or even efficient experiences that would draw users back to their core services and data. You can actually take Zillow as an example, which Lou was talking about earlier. Say a user uses ChatGPT to find homes near a certain location. Let’s say they want to get the estimate valuations. They want to view the 3D virtual tours. They want to connect with a Zillow premier agent. They have to then go back to that app ecosystem. That could make them more of a gateway to some of that high value data. That’s just one example. I do think there could be a competitive opportunity for companies that play this right. I just think it’s too soon to know for sure what this is going to look like. I think it’s also fair to say to your point, Travis, there might be companies that are onboarding to this because they fear getting left behind. That’s also potentially a factor at play.

Lou Whiteman: Two thoughts here. For one, the idea of, so I’m not a Peloton customer. I maybe put in something in OpenAI, how can I get in shape? Then, am I going to get spammed with Peloton? [OVERLAPPING] I keep going back to this because this all just rings as something that sounds so much better on stage than it does in execution. I’ll give you another example of this. Who is the gatekeeper here? Booking and Expedia are both partners right now. If I want to fly to Minnesota, who gets that business? Who decides that? Is that a competitive auction thing? Because if it is, and it gets expensive, [OVERLAPPING].

Travis Hoium: As it works right now, you would have to specifically call booking.com. [OVERLAPPING]

Lou Whiteman: But if you do that, you’re not broadening the funnel. I’m already a relationship. If DoorDash and Instacart are both in this system, and one day, I say, I need milk. How does that work? There’s a lot of ways that, yes, in theory, if they can work all of this out, it is intriguing. But there’s all sorts of, I keep thinking of that meme where it’s like, step 1, do this. Step 2, 3, and 4 is blank, and step 5 is profit. There’s a lot of blanks in that middle right now as far as figuring out the economics here, who gets paid what and how it all works out. I get the vision, I just keep coming back to these execution things and wondering.

Travis Hoium: Well, that’s a question I think we should dive into a little bit is is this a TenX improvement? The concept for a lot of disruptions and moving people from what they’re doing today to doing something else is that it has to be 10 times better. If you go back to the advent of the PC. You’re moving from doing math, for example, on paper to doing it on a computer, way easier. The Internet, now suddenly the encyclopedias that we had at home you can just find all that information online. Mobile devices, now that all that information is just in your pocket. All these are easily TenX improvements. Is going to one app, and this is where maybe we’ll find out more about what the hardware future for OpenAI looks like over the next couple of months. But I do think that is a question, Lou is this the improvement in our lives that is going to necessitate us actually adopting OpenAI as our do everything application instead of the way that we’re doing things today.

Lou Whiteman: Yeah, and another point on this. If we get into retail in a second, we can do more. But look, most shopping is not as exciting as what these presentations would say. Most shopping is, I need a gallon of milk, I need something. It’s not I want to explore new fashion trends. I don’t know if that we need a killer app for all of this. I see the use case, I see the concept, the execution, it’s just the actual day to day implementation for us normies. I don’t know how you get there.

Travis Hoium: Let’s talk about one of those dark horses, Rachel. I thought it was interesting that Target was listed as one of their apps that’s coming soon. Every one of these other companies is a tech company. I guess all trails would be maybe not quite as much of a tech company. But there you have a retailer that’s struggling in the big box retail space. Maybe this is a way to attract some new customers. Could there be some dark horses here where you extend the long term? We’ve gone, especially in retail, I think that’s maybe the best example is that Amazon has sucked all the oxygen in the room because you choose to go to the Amazon app. Well, Amazon, guess what? They don’t want to be on ChatGPT and be disaggregated. Does that present an opportunity for companies that can, like you said earlier, go, hey, I’m not only not going to be left behind, but I’m going to take advantage of this because I don’t have the same digital footprint as a company like Amazon.

Rachel Warren: I do think there’s an opportunity there for companies like Target that are worth the classic brick and mortar that also have a strong online presence and others. But I think a lot of the utility of this goes back to how useful it is to the consumer. I think the core idea here is that if you are, say, shopping, you’re on ChatGPT rather than having to go and open up a series of different apps to find the things you want. You can tell ChatGPT to open up a specific app and search for the thing that you want within that user interface. I do think that’s something that is compelling to a consumer, particularly those of us who are on our phones, on our devices a lot. For Target’s part, as you mentioned, they’ve had a very rough few years, particularly coming out of the pandemic, as well as a host of other issues that have been very specific to them and they have also been, I think, very much adopting a lot of different AI tools into their overall business. They already use generative AI, for example, to improve a lot of their product display pages on their website. They had last year introduced a proprietary generative AI chatbot for store employees called Store Companion. I do think they could use some of that standoff attitude that Amazon has leveraged in the past and instead really focus on key areas where they can build competitive differentiation. I do think that could provide a seamless, more personalized experience. Does this save a company like Target from some of its current woes? No, but does it provide perhaps a more unified ecosystem that gets more eyeballs to its platform from users? I think that’s possible.

Lou Whiteman: I don’t want to pick on Target here because I enjoy Target, but Target is a destination for pragmatists, not for dreamers. I don’t know, back to my other point, Target is where you go when you need dog food or toilet paper or something. I don’t know if I need an AI customized experience for that. I’m not sure I’m ever going to be like, I’m hunting for some nice gift from my wife.

Rachel Warren: Some of us ladies are at Target dreaming as we walk through the aisles, Lou. You have no idea [LAUGHTER].

Lou Whiteman: Maybe so, but I don’t know. I like their curbside drop off and delivery. I think they’ve done good things. I keep going back to this, and I hate to be such a wet blanket, but it feels like a solution in search of a problem for Target here.

Travis Hoium: We’ll see out to see how this plays out and as this vision rolls out, especially with potentially new devices, maybe that will change the game. Next, we’re going to ask the trillion dollar question, and that is how in the world does OpenAI and all of their partners pay for this? You’re listening to Motley Fool Money.

Welcome back to Motley Fool Money. Look, here’s the trillion dollar question for OpenAI. We are through all their partners, spending somewhere around $1 trillion, probably more than that at this point. How are they going to pay for all this, are these apps going to be part of that solution? If you squint, you can see a monetization strategy, but it’s not really clear yet, Lou. Is this going to be the key to the future of OpenAI becoming that company that can pay for tens of billions of dollars of compute each year.

Lou Whiteman: Travis, let’s be clear here. Sam Altman says he’s focused on the customer experience and not monetization. Obviously, yeah, but come on. I do think back to a point you made about, is this a leap step forward or incremental? How do you turn this into a big moneymaker, if it is incremental? I come back to the chicken and the egg question. If you want to make money off of the consumer signing up for premium OpenAI, you darn well better have a lot of retailers, a lot of partners. But how do you get those retailers of partners if you don’t have a lot of people signed up. There is experimentation, maybe there’s losses. That’s why you focus on the customer experience now. Are we headed to Walled Gardens? Am I really going to want to use this if I can get Target but not?

Travis Hoium: It seems like that’s what OpenAI wants to build, even though they’re saying that’s not what they want to build.

Lou Whiteman: Right, well, by default. I think OpenAI would like to be so present everywhere that every retailer just has to be on it the way every retailer is. But right now I can get a Google search and see the world. Until maybe there is just a specialized thing like, I want to use Booking, and I know Booking is on here, and I like the interaction, so I will opt in that way, but that’s not the way to riches. I think there’s again, if this becomes an open field where everything’s involved like Google, I don’t know if OpenAI has the advantage there. I don’t know if commoditization is their friend and if it becomes harder to charge on the back end, so that’s, I think, why they would like just partners opting in. But I think that just makes it harder to get consumer adoption. I think it’s really, really hard to make this pay off in a big way. It could be a side feature, but this is not a core business here for the way they’re spending.

Travis Hoium: What do you think, Rachel? Is this the preview of how is the going to make money? Is it big enough?

Rachel Warren: I think it’s way too early to say. I think, honestly, OpenAI is trying to figure out their monetization strategy at this point. I think that’s fairly obvious. If you think about some of their most advanced models, like Sora. The huge challenge there, training and running those models, that requires enormous investment in computing, power, data centers, and now you have the new app store and the goal seeming is to take a commission on sales from commerce queries, rather than maybe relying on that traditional ad system. I saw one report that suggested there could be something like a 2% affiliate fee in the works, and then you’ve got, of course, this very high investment Sora product, and they’re reportedly moving toward a tiered subscription model.

Travis Hoium: Now, a 2% affiliate fee sounds like a lot. But if you look at how much companies spend [OVERLAPPING] on things like Meta ads. It’s significantly more than that. The customer acquistion cost can be 20, 30% of a purchase price.

Rachel Warren: That’s where you look at all this and you dig beneath the surface a bit, and it’s still really unclear how much of a revenue producing venture are these new initiatives going to be, much less driving the company toward profitability. Obviously, the most significant and immediate source of revenue is likely to be enterprise partnerships, and they do continue to raise massive funding rounds. I think they’re working on their monetization strategy, and they’re seeing what sticks. I think that’s really important to take away from all these recent announcements that we’ve been seeing.

Lou Whiteman: I think one filter to just as you look at all this, remember, OpenAI needs this more than their rivals. Meta has that fire hose of revenue coming in to fund this. Alphabet has Google funding this. OpenAI is the one here as an official nonprofit that, A, they aren’t subject to the same SEC rules, so they can do more of the Silicon Valley fake until you make it. I don’t mean that as against them, I think, as they should.

Travis Hoium: But it worked.

Lou Whiteman: Right, and that should be their strategy, but also they need to be saying, look at us, look at what we’re doing. It’s a neat vision of the future. I don’t think it’s a slam dunk they get there, as I look at this, it looks like a company that is wish casting as much as they are implementing. Part of wish casting is, like you said, Travis, see what happens and stick with what works.

Travis Hoium: I have heard you said that they have to keep spending because if they fall behind, they’re done. They have to keep up with the Alphabets, the Metas, everybody that’s investing tens of billions of dollars, so that’s why this vision keeps getting bigger. Maybe there is a pot of gold at the end of the rainbow, but we will see. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don’t buy or sell stocks based solely on what you hear. All personal finance content follows the Motley Fool’s editorial standards and is not approved by advertisers. Advertisements are sponsored content provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Lou Whiteman, Rachel Warren, Dan Boyd, behind the glass, and our entire Motley Fool team, I’m Travis Hoium. Thanks for listening to Motley Fool Money. We’ll see you here tomorrow.

The artificial intelligence (AI) revolution is transforming every corner of the global economy. Nvidia, the company at the center of this revolution, continues to be a Wall Street favorite for all the right reasons. As an undisputed leader in accelerated computing, the company’s hardware and software power much of the world’s AI infrastructure buildout.

Shares of Nvidia have already surged over 43% so far in 2025. However, despite the massive demand for its Blackwell architecture systems, software stack, and networking solutions, the stock may grow quite modestly in future months. With its market capitalization now exceeding $4.6 trillion and shares trading at a premium valuation of nearly 30 times forward earnings, much of the optimism is already priced in.

Memory giant Micron (MU 6.12%), on the other hand, is still in the early stages of its AI-powered growth story. Shares of the company have surged nearly 128% in 2025, which highlights the increasing investor confidence in its high-bandwidth memory and data center portfolio. Yet, Micron could still offer investors higher returns in 2026, while riding the same AI wave. Here’s why.

Image source: Getty Images.

Lower customer concentration risk

Wall Street has been highlighting one significant underappreciated risk for Nvidia. Nvidia’s revenues depend heavily on a few hyperscaler customers, with two accounting for 39% and four accounting for 46% of its revenues in the second quarter of fiscal 2026 (ending July 27, 2026). Many of these hyperscaler clients are developing proprietary chips, which may offer a price-performance optimization in their specific workloads. This may reduce their dependence on Nvidia’s chips in future years.

Micron’s revenue base is significantly more diversified than Nvidia’s. The company’s largest customer accounted for 17% of total revenue, while the next largest contributed 10% in fiscal 2025 (ending Aug. 28, 2025). The company has earned over half of its total revenues from the top 10 customers for the past three years. The company has a reasonably broad customer base, including data center, mobile, PC, automotive, and industrial markets.

Hence, compared with Nvidia, Micron’s lower concentration risk makes it more resilient in the current economy.

HBM demand and AI memory leadership

Micron’s high-bandwidth memory (HBM) products, known for their superior data transfer speeds and energy efficiency, are being increasingly used in data centers. HBM revenues reached nearly $2 billion in the fourth quarter of fiscal 2025, translating into $8 billion annualized run rate.

Management expects Micron’s HBM market share to match its overall DRAM share by the third quarter of fiscal 2025. The company now caters to six HBM customers and has entered into pricing agreements covering most of the 2026 supply of HBM third-generation extended (HBM3E) products.

Micron has also started sampling HBM fourth-generation (HBM4) products to customers. The company expects the first production shipment of HBM4 in the second quarter of calendar year 2026 and a broader ramp later that year.

Beyond HBM, Micron’s Low-Power Double Data Rate (LPDDR) memory products are also seeing strong demand in data centers. The data center business has emerged as a key growth engine, accounting for 56% of Micron’s total sales in fiscal 2025.

Hence, Micron seems well-positioned to capture a significant share of the AI-powered memory demand in the coming years.

Valuation

Micron appears to offer a stronger risk-reward proposition than Nvidia, even in the backdrop of accelerated AI infrastructure spending. The company currently trades at 12.3 times forward earnings, significantly lower than Nvidia’s valuation. Hence, while Nvidia’s premium valuation already assumes near-perfect execution and continued dominance, Micron still trades like a cyclical memory stock. This disconnect leaves room for modest valuation expansion to account for Micron’s improving revenue mix toward high-margin AI memory products.

Wall Street sentiment is also increasingly positive for Micron. Morgan Stanley’s Joseph Moore recently upgraded the stock from equal-weight or neutral to overweight and raised the target price from $160 to $220. UBS has reiterated its “Buy” rating and increased the target price from $195 to $225. Itau Unibanco analyst has initiated coverage for Micron with a “Buy” rating and target price of $249.

Analysts expect Micron’s earnings per share to grow year over year by nearly 100% to $16.6 in fiscal 2026. If the current valuation multiple holds, Micron’s share price could be around $204 (up 6% from the last closing price as of Oct. 9), with limited downside potential. But if the multiple expands modestly in the range of 14 to 16 times forward earnings, shares could fall in the range of $232 to $265, offering upside of 20% to 37.8%.

On the other hand, there remains a higher probability of valuation compression for Nvidia, leaving less room for growth. With diversified customers, increasing AI exposure, and reasonable valuation, Micron may prove to be the better semiconductor pick in 2026.

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Identifying companies that are well positioned to serve a massive growth opportunity can help you land those elusive multibaggers. All you need is one growth stock to work out better than you could have imagined to change your life. Focusing on the companies that are helping build the future, and showing strong growth because of it, can steer you toward the right stocks.

To help you in your search, here are two growing companies playing important roles in the global adoption of artificial intelligence (AI).

Image source: Getty Images.

1. SoundHound AI

SoundHound AI (SOUN 10.20%) has seen its stock skyrocket 455% over the last three years (at the time of this writing). Businesses are turning to it for AI-powered voice assistants, a technology SoundHound has been investing in for 20 years. It has gained a strong foothold in the restaurant industry, with Red Lobster recently partnering with SoundHound on AI-powered phone ordering. But the company has set its sights on serving all enterprises, which could spell monster returns for investors.

SoundHound AI was recently named a leader in the IDC MarketScape for Worldwide General-Purpose Conversational AI Platforms 2025 Vendor Assessment. Its growing revenue indicates a business with huge momentum. Revenue more than tripled in Q2 to nearly $43 million. That brings its trailing-12-month revenue to $131 million, up 137% year over year.

While acquisitions have partly boosted its growth, SoundHound AI has a fundamentally profitable business model. Over the long term, it can monetize its technology through royalties, subscriptions, and advertising. Management expects to be profitable on an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) basis at the end of 2025.

SoundHound is making great progress expanding beyond the restaurant market. In the second quarter, it made deals with companies across healthcare, retail, and financial services.

As it grows, SoundHound AI is building a strong competitive advantage built on data. It recently exceeded 1 billion queries per month on its platform. This data can help improve its AI capabilities and reflects its growing presence across multiple industries.

SoundHound’s stock has a relatively low market cap of nearly $8 billion at the time of writing. The addressable market it is tapping into is estimated well above $100 billion, so this is a stock that could be worth significantly more in 20 years than it is today.

Image source: Getty Images.

2. Cloudflare

More than 20% of all websites use Cloudflare (NET 4.01%). It acts as a security check between a visitor and a company’s website. The stock has soared 292% over the last three years, but as the company pivots to meeting demand for AI-driven web traffic, investors could see a lot more gains over the long term.

Cloudflare’s main competitive advantage is an extensive global network that covers over 335 cities. This allows it to deliver efficient and scalable service to internet service providers. As it adds more servers to the network, the company’s competitive moat widens from greater efficiency.

Cloudflare has consistently delivered year-over-year growth of about 25%. In Q2, its revenue grew 28% over the year-ago quarter, and this momentum should continue as AI begins to introduce a whole new avenue of growth for the company.

It just signed a $15 million deal with a rapidly growing AI company for its Workers AI product. This service allows companies to run AI models on edge computing devices on the company’s network. Cloudflare has relationships with several leading AI companies, which positions it well for growth as AI agents and models begin to generate an increasing amount of web traffic. Management is enthusiastic to leverage this competitive position to serve new opportunities, such as autonomous transactions completed online between AI agents.

Analysts expect the company’s earnings to grow at an annualized rate of 24%. With AI enhancing its growth prospects, Cloudflare should be a solid growth stock to hold for many years.

A second analyst price target raise in nearly as many trading days was the catalyst igniting the stock of Murphy Oil (MUR 7.51%) on Monday. Bullish investors traded the company’s shares up by almost 8% on the day in response, a rate that trounced the 1.6% increase of the S&P 500 (^GSPC 1.56%).

A raiser and holder

Monday’s raiser was Roger Read from top U.S. bank Wells Fargo. Well before market open, Read changed his Murphy Oil price target to $28 per share from $26.

Image source: Getty Images.

He remains cautious on the stock, however, as he maintained his equal weight (hold, in other words) recommendation on it.

According to reports, Read wrote in his update that the company is expecting to deliver impressive operational and financial results for its third quarter (it’s scheduled to unveil those numbers on Oct. 30). The analyst expressed some concern about certain areas, such as the company’s 2026 guidance.

Industrywide adjustments

Previous to that, last Thursday, Bank of Nova Scotia also enacted a price target raise while maintaining its equivalent of a hold recommendation. The Canadian lender increased its fair-value assessment on Murphy Oil to $30 per share from $26, as part of a broader set of price target adjustments to U.S. oil stocks.

Every October, the Social Security Administration (SSA) announces the cost-of-living adjustment (COLA) for the upcoming year.

Up until recently, that announcement was supposed to be around Oct. 15 — right after the Bureau of Labor Statistics (BLS) releases September’s inflation report. But with the federal government closed until further notice, it seemed as if that report wouldn’t be released anytime soon.

New information from the BLS, however, suggests we could be getting the COLA announcement sooner than expected. Here’s when it might be coming, what it might be, and how that might affect your retirement.

Image source: The Motley Fool.

When will the new COLA be released?

The SSA calculates the COLA by averaging Consumer Price Index data from July, August, and September. That average is compared to the figure from the same period the year prior, and if it’s higher, the percentage difference will be next year’s COLA.

Before the government shut down, the BLS was expected to release September’s Consumer Price Index data on Oct. 15. But with that office almost entirely furloughed, it was unlikely the report would be published before the government reopened.

However, on Oct. 10, the BLS published an update noting that September’s inflation report would be released on Oct. 24. Generally, the SSA announces the new COLA almost immediately after the BLS inflation report is published.

What might next year’s adjustment be?

We won’t know the official 2026 COLA until the SSA makes the announcement later this month, but nonpartisan advocacy group The Senior Citizens League has estimated that it will land at 2.7%.

That figure is based on already available inflation data, as well as the projected data from September. If September’s numbers are significantly different from the estimates, the COLA may be higher or lower than predicted.

The average retired worker collects just over $2,000 per month in benefits, according to August 2025 data from the SSA. A 2.7% COLA, then, would amount to a raise of around $56 per month.

While any boost in benefits is helpful to a degree, for many retirees, next year’s COLA may be underwhelming. Inflation has stayed stubbornly high throughout the year, and tariffs have also taken a bite out of many retirees’ budgets.

Medicare Part B premiums are also expected to increase from $185 per month this year to a projected $206.50 per month in 2026, according to this year’s Medicare Trustees Report. Because Medicare premiums are typically deducted from Social Security checks, that $21.50 monthly increase will eat up a significant chunk of the COLA raise for the average retiree.

What does this mean for retirees?

It doesn’t hurt to keep an eye out for the COLA announcement to help budget for 2026, but for the most part, retirees may want to avoid relying too heavily on this adjustment to make ends meet.

Again, any extra cash can help pay the bills, especially with many older adults stretched thin financially right now. But with Social Security not going as far as it used to, it may be wise to start finding ways to reduce your dependence on your benefits.

According to a report from The Senior Citizens League, Social Security benefits lost around 20% of their buying power between 2010 and 2024. If you can swing it, finding a source of passive income or going back to work temporarily could have a bigger impact on your budget than any COLA.

This won’t be possible for everyone, but if you can beef up your savings even slightly, you won’t need to worry quite as much about future COLAs falling short. No matter where the 2026 adjustment lands, it’s wise to keep realistic expectations about how far that money will go.

On Thursday, Bartlett & Co. Wealth Management LLC disclosed that it reduced its position in TJX Companies (TJX 0.67%), selling shares for an estimated $2.5 million based on the average price for the quarter ended September 30.

What Happened

Bartlett & Co. Wealth Management reported in a Securities and Exchange Commission (SEC) filing released on Thursday, that it reduced its holdings in TJX Companies (TJX 0.67%) by 19,095 shares. The estimated value of the shares sold was approximately $2.5 million based on the average price for the quarter ended September 30.

What Else to Know

This was a sell, leaving Bartlett’s TJX stake at 2% of the fund’s 13F reportable assets under management.

Top holdings after the filing:

• NASDAQ:MSFT: $508.1 million (6.4% of AUM)
• NASDAQ:GOOGL: $442.8 million (5.6% of AUM)
• NASDAQ:AAPL: $434.3 million (5.5% of AUM)
• NYSE:BRK-B: $399.9 million (5.1% of AUM)
• NYSE:PG: $332.4 million (4.2% of AUM)

As of Monday afternoon, shares were priced at $141.77, up 23% over the past year and well outperforming the S&P 500’s nearly 14% gain.

Company Overview

Company Snapshot

• TJX Companies offers off-price apparel, footwear, accessories, and home fashions through brands including T.J. Maxx, Marshalls, HomeGoods, Sierra, and Homesense.
• It operates a high-volume, value-driven retail model focused on sourcing branded merchandise at significant discounts and selling through a broad store network and e-commerce platforms.
• The company serves value-conscious consumers in North America, Europe, and Australia, with a diversified portfolio and substantial e-commerce presence.

TJX Companies is a leading global off-price retailer with a broad geographic reach and a focus on delivering branded merchandise at value prices, supporting consistent revenue growth and profitability.

Foolish Take

Bartlett & Co. Wealth Management’s $2.5 million trim of its TJX Companies position might reflect a modest rebalancing rather than a loss of conviction in one of retail’s most resilient players. Even after the sale, TJX remains one of Bartlett’s top consumer holdings, backed by a track record of consistent growth and a loyal value-oriented customer base.

TJX has outperformed much of the retail sector this year, with shares up more than 20% year-over-year following strong fiscal second-quarter results. The off-price retailer reported 7% revenue growth to $14.4 billion and earnings per share up 15% to $1.10. Comparable store sales rose 4%, led by strength at HomeGoods and international banners. The company also raised full-year guidance for profit margin and EPS, projecting continued growth through the holiday season.

With a global footprint exceeding 5,100 stores, TJX’s mix of flexibility, scale, and customer loyalty continues to drive performance. For Bartlett, the reduction likely reflects profit-taking after a sustained run rather than a bearish view on the retailer’s fundamentals.

Glossary

13F reportable assets under management (AUM): The total value of securities a fund must report quarterly to the Securities and Exchange Commission (SEC) on Form 13F.

Position: The amount of a particular security or asset held by an investor or fund.

Top holdings: The largest investments in a fund’s portfolio, usually by market value or percentage of assets.

Outperformed: Delivered a higher return compared to a specific benchmark or index over a given period.

Off-price retailer: A retailer selling branded goods at prices lower than traditional retail stores, often through discount sourcing.

Stake: The ownership interest or investment a person or entity holds in a company.

Value-driven retail model: A business approach focused on offering products at lower prices to attract cost-conscious consumers.

TTM: The 12-month period ending with the most recent quarterly report.

Fund: A pooled investment vehicle managed by professionals, investing in various assets on behalf of clients.

Trade: The act of buying or selling a security or asset in the financial markets.

Louisbourg Investments increased its stake in ATS Corporation (ATS 2.97%), buying 113,773 shares in the third quarter for an estimated $3.3 million.

What Happened

According to a filing with the Securities and Exchange Commission released on Thursday, Louisbourg Investments added 113,773 shares of ATS Corporation (ATS 2.97%)in the third quarter. The estimated transaction value was $3.3 million based on the average price during the period. The fund held 215,295 shares, with a position value of $5.6 million, at the end of the quarter.

What Else to Know

The ATS Corporation stake is now 1.2% of Louisbourg Investments’ 13F reportable AUM.

Top holdings after the filing:

• NYSE:CNI: $28.5 million (6.2% of AUM)
• NASDAQ:SHOP: $15.1 million (3.3% of AUM)
• NASDAQ:MSFT: $13.3 million (2.9% of AUM)
• NYSE:WPM: $12.7 million (2.8% of AUM)
• NYSEMKT:IVV: $12.3 million (2.7% of AUM)

As of Monday afternoon, ATS Corporation shares were priced at $26.09, down 13% over the past year and well underperforming the S&P 500’s 13% gain in the same period.

Company Overview

Company Snapshot

• ATS provides automation solutions, including planning, design, build, commissioning, and servicing of automated manufacturing and assembly systems, as well as software and digital factory management tools.
• It generates revenue through turnkey automation projects, pre- and post-automation services, contract manufacturing, and value-added engineering and integration services across multiple industries.
• The company serves clients in life sciences, transportation, consumer products, food and beverage, electronics, nuclear, packaging, warehousing, distribution, and energy sectors worldwide.

ATS Corporation provides automation solutions to a broad range of industries worldwide. The company leverages advanced engineering and digital solutions to deliver end-to-end automation systems for complex manufacturing environments. Its focus on innovation, service, and integration enables customers to drive operational efficiency and sustainable production improvements.

Foolish Take

Louisbourg Investments’ $3.3 million purchase of 113,773 shares of ATS Corporation signals growing confidence in the Canadian automation company despite a rocky year for the stock. The new stake lifted ATS to about 1.2% of Louisbourg’s portfolio—a smaller weight than core holdings like Canadian National Railway and Shopify but one that adds industrial diversification to an otherwise tech-heavy mix.

ATS shares have fallen roughly 13% over the past year as margin pressures and leadership changes weighed on sentiment. In its latest quarter, the company reported 6% revenue growth to $736.7 million, driven by acquisitions and a strong backlog in life sciences and food automation. However, net income slipped to $24 million from $35 million a year ago, and adjusted EBITDA margin narrowed to 13.8% from 15.3%. Still, a $2.1 billion order backlog suggests solid demand and visibility ahead.

For Louisbourg, the position may represent a long-term bet on automation as manufacturers invest in efficiency and reshoring capacity. Compared to its larger tech holdings like Microsoft and Shopify, ATS adds a cyclical but strategic growth complement with exposure to high-value industrial innovation.

Glossary

13F reportable AUM: The portion of a fund’s assets under management disclosed in quarterly SEC Form 13F filings.
AUM (Assets Under Management): The total market value of investments managed by a fund or investment firm.
Turnkey automation projects: Complete automation solutions delivered ready for immediate use by the client.
Contract manufacturing: Outsourcing production to a third-party company that manufactures products on behalf of another firm.
Value-added engineering: Engineering services that enhance a product’s functionality, efficiency, or performance beyond basic requirements.
Integration services: Services that combine different systems or components into a unified, functioning whole.
Commissioning: The process of testing and verifying that a new system or equipment operates as intended before full operation.
Digital factory management tools: Software solutions designed to monitor, control, and optimize manufacturing operations digitally.
TTM: The 12-month period ending with the most recent quarterly report.

Energy Fuels (UUUU 17.87%) stock, involved in mining both uranium and rare-earth metals, soared 18% through 10:35 a.m. ET Monday after China threatened to throttle rare-earth exports to the United States.

President Donald Trump reassured investors that China isn’t serious, and everything “will all be fine.” Not everyone seems 100% convinced, however, and shares of pretty much every stock having anything to do with rare-earth materials — Energy Fuels included — is rising on elevated risk to the supply chain.

Image source: Getty Images.

Bad news for US is good news for UUUU

London’s Financial Times reports that the U.S. Defense Department will build a $1 billion stockpile of critical minerals to ensure supply chain continuity for defense systems.

Jamie Dimon, CEO of investment bank JPMorgan Chase (JPM 2.36%), is adding fuel to the fire. He commented that it is “painfully clear that the United States has allowed itself to become too reliant on unreliable sources of critical minerals, products and manufacturing — all of which are essential for our national security,” and the JPM CEO says his bank plans to invest $10 billion, in loans and direct investments, over the next decade, to support several critical sectors: defense and aerospace, artificial intelligence and quantum computing, energy technology, and supply chain and advanced manufacturing.

Is Energy Fuels stock a buy?

Dimon’s prediction aligns well with news last week that Energy Fuels is raising $700 million in convertible debt. Even with $115 million in annual cash burn, Energy Fuels’ move last week gives the company six extra years to grow its rare-earth and uranium businesses and reach profitability.

Valued at more than 200 times next year’s earnings, Energy Fuels isn’t a buy just yet, but the picture is at least getting clearer.

Earnings season is right around the corner, and several of tech’s biggest names look to keep their momentum going. Each of these companies posted strong results last quarter, and there are good reasons to believe that strength can continue into the final stretch of the year. These stocks look attractive, not just heading into earnings, but for the long haul as well.

1. Nvidia

Nvidia (NVDA 2.87%) has been at the center of the artificial intelligence (AI) boom, and last quarter’s results showed just how strong demand for its chips has been. Its data center revenue surged 56% year over year, despite the company lacking access to the Chinese market, as companies and governments around the world continue to rapidly build out their AI infrastructure.

That trend does not look like it’s slowing, with cloud computing companies continuing to spend big on data center infrastructure and Oracle announcing massive AI data center spending plans. Nvidia, meanwhile, continues to dominate the AI infrastructure market, where its graphics processing units (GPUs) are used to power AI workloads and have an over 90% market share. Its CUDA software platform continues to give it a wide moat in the space, as most early AI code was written on it, and developers favor it.

With data center spending remaining strong and AI demand still outpacing supply, Nvidia’s growth trajectory looks intact. The company has already proven that it can deliver consistent upside surprises, and it’s positioned better than any of its peers to capture profits from the next leg of the AI infrastructure buildout.

2. Meta Platforms

Meta Platforms (META 1.25%) has transformed itself into one of the biggest AI beneficiaries in tech, and that evolution showed up clearly in its last earnings report. The company posted 22% revenue growth in the second quarter, driven by an increase in ad impressions and higher prices. The number of daily active users across its family of apps also climbed by 6% year over year to 3.48 billion, proving that it can still draw in new users despite the maturity of its platforms.

AI has been the key driver behind Meta’s resurgence. It has been using AI to improve how its algorithms recommend content, which is keeping users more engaged. That, in turn, increases the amount of ad inventory it can sell. At the same time, its AI tools for advertisers are helping companies create and target their marketing campaigns more effectively, which boosts Meta’s ad pricing power.

Meanwhile, it is just starting to introduce ads to its biggest untapped assets, WhatsApp and Threads, both of which have huge growth potential. All these things should help keep the company’s earnings momentum going.

Meta also isn’t sitting still when it comes to innovation. It recently debuted its new Meta Ray-Ban Display glasses, sales of which could give its Q4 revenue a boost. These augmented reality glasses could also be a precursor to its eventual vision for things like “superpersonal intelligence” and the metaverse, which are longer-term bets.

Image source: Getty Images.

3. Microsoft

Microsoft (MSFT 0.77%) capped off its fiscal 2025 with one of its best quarters in years, showing just how well it’s executing across both cloud computing and AI. In its fiscal Q4, which ended June 30, revenue from its Azure cloud platform jumped by 39%, marking its eighth straight quarter of growth above 30%. Meanwhile, its Intelligent Cloud division as a whole grew by 26% to nearly $30 billion. That strength is being driven by companies accelerating their AI spending, with Azure being one of the biggest beneficiaries.

Meanwhile, Microsoft’s early investments in OpenAI continue to give it an edge. Its Copilot AI tools, now integrated across Office products, are increasingly being adopted by enterprises to increase worker productivity. These products are still in their early innings, which means there’s plenty of runway for growth left. Revenues from Microsoft 365 rose more than 20% last quarter, and even the company’s personal computing segment saw renewed growth, led by Xbox and search advertising.

Microsoft is spending aggressively to expand its data center capacity to meet the flood of AI demand, which should keep growth strong in the quarters ahead. With Azure continuing to increase its sales in a rapidly growing cloud market, and with Copilot adding a valuable new layer of recurring revenue, Microsoft looks like one of the most reliable performers heading into this earnings season and a top long-term holding for investors.

Are all dividend funds the same? They often are, even if each one is structurally and strategically unique. There’s only so much difference possible when a company and its stock’s primary purpose is just generating cash flow.

And yet, owners of the Schwab U.S. Dividend Equity ETF (SCHD -1.70%) know all too well that dividend-oriented exchange-traded funds can at times be considerably different than one another. Their fund has measurably underperformed other dividend ETFs like the Vanguard Dividend Appreciation ETF, the iShares Core Dividend Growth ETF, and Vanguard High Dividend Yield ETF over the course of the past three years. Indeed, the disparity’s been wide enough to leave them wondering if they made a mistake that should be corrected as soon as possible.

Well, they didn’t make the wrong choice, so there’s no correction to be made. The very reason this dividend ETF has underperformed of late, in fact, is the very same reason income-seeking investors might want to buy the Schwab U.S. Dividend Equity ETF now.

The same, but different — and more different than the same

What’s Schwab’s U.S. Dividend Equity ETF? It’s meant to mirror the performance of the Dow Jones U.S. Dividend Index, which, just as the name suggests, is dividend-focused. So is the Morningstar US Dividend Growth Index that serves as the basis for iShares’ Core Dividend Growth ETF, though, along with the Vanguard Dividend Appreciation ETF’s underlying S&P U.S. Dividend Growers Index, for that matter.

They’re not all the same, though. And it matters.

Take a comparison of the S&P U.S. Dividend Growers Index behind Vanguard’s Dividend Appreciation fund to the iShares Core Dividend Growth ETF’s Morningstar US Dividend Growth Index as an example. The former consists of U.S.-listed companies that have raised their dividend payments for at least the past 10 years, but it excludes the very highest-yielding tickers (on concerns that the high yields are unsustainable). The latter only requires five years of uninterrupted dividend growth, although it also generally excludes stocks with suspiciously high yields.

End result? The Vanguard fund’s top three holdings right now are Broadcom, Microsoft, and JPMorgan Chase, while the iShares ETF’s biggest three positions at this time are Apple, Microsoft, and Johnson & Johnson. They’re more different than alike, even if there is some overlap.

Image source: Getty Images.

The Vanguard High Dividend Yield ETF’s underlying FTSE High Dividend Yield Index, by the way, currently holds Broadcom, JPMorgan, and Exxon-Mobil as its top three positions — three names that offer the high yield that the index prioritizes. Even so, the fund’s trailing yield is a modest 2.45% at this time, versus the iShares ETF’s yield of 2.2% and the trailing dividend yield of 1.6% currently offered by the Vanguard Dividend Appreciation fund.

Where does Schwab’s U.S. Dividend Equity ETF stand? The Dow Jones U.S. Dividend Index’s biggest three positions right now are AbbVie, Lockheed Martin, and Cisco Systems, followed closely by Merck and ConocoPhillips. In fact, you won’t start seeing any serious overlap between this fund and the other three dividend ETFs in focus here until those positions are so small that they don’t really matter.

That’s why this ETF has underperformed the other three funds in question since early 2023; it’s not holding many of the market’s most popular growth names right now. Indeed, it currently holds a bunch of the market’s least popular value stocks.

SCHD Total Return Level data by YCharts

But that’s exactly why income-minded investors might want to dive into the Schwab ETF at this time, particularly in light of its sizable trailing dividend yield of right around 3.7%.

What went wrong for dividend-paying value names?

In retrospect, the fund’s recent underperformance actually makes a lot of sense. The few technology stocks that pay any dividend at all have performed exceedingly well since the launch of OpenAI’s ChatGPT in November 2022, setting off an artificial intelligence arms race that sent a bunch of these stocks sharply higher. The dynamic was also bullish for financial stocks like JPMorgan, which helps companies raise funds or make the acquisitions they need to take full advantage of the AI revolution.

At the other end of the spectrum, most of the Schwab U.S. Dividend Equity ETF’s holdings have been on the wrong side of one force or another. Regulatory headwinds and the impending expiration of key patents have proven problematic for pharmaceutical outfits AbbVie and Merck, for instance.

Inflation and the subsequent rise in interest rates are another one of these forces, and arguably the biggest. Although both have historically been more of a challenge for growth stocks than value names, in this instance, the opposite has been (mostly) true.

Just bear in mind how incredibly unusual the past three years have been. The bulk of growth stocks’ leadership has been fueled by the aforementioned advent of artificial intelligence, creating a secular growth opportunity that wouldn’t be stymied by any economic backdrop.

Also know that the so-called “Magnificent Seven” stocks have done the vast majority of the market’s recent heavy lifting, so to speak, fueled by AI. Data from Yardeni Research suggests that without the help of these seven tech-centric tickers, the S&P 500‘s would be about one-third less than what it’s actually been since early 2023.

It would also be naïve to pretend that value stocks like Merck, Cisco, and ConocoPhillips just haven’t offered the excitement that most investors have craved in the post-pandemic, AI-centered environment.

Here comes the pendulum

As is always the case, though, the cyclical pendulum will eventually swing back the other way. And that’s likely to happen sooner or later. As number-crunching done by Morningstar analyst David Sekera recently prompted him to note, “By style, value remains undervalued, trading at a 3% discount, whereas core stocks are at a 4% premium and growth stocks are at a 12% premium.” He adds, “Since 2010, the growth category has traded at a higher premium only 5% of the time.”

This dynamic, of course, works against dividend ETFs’ growth names, and works for dividend ETFs like the Schwab U.S. Dividend Equity ETF, which almost exclusively holds value stocks. The market just needs a catalyst to start such a shift.

That may be in the offing, though. JPMorgan CEO Jamie Dimon recently lamented in an interview with the BBC, “I am far more worried about that [a market correction] than others… I would give it a higher probability than I think is probably priced in the market and by others.” And this worry follows Federal Reserve Chairman Jerome Powell’s recent comment that U.S. stocks are “fairly highly valued.” That’s a screaming red flag from someone who makes a point of maintaining composure and not inciting panic.

Sure, such a setback could undermine the Schwab U.S. Dividend Equity ETF as much as it does any other stock or fund. That’s not the chief concern of any correction, though. It’s what happens afterward. That bearish jolt may well inspire investors to rethink everything about the risks they’ve been taking, souring them on tech names and turning them onto value names that also dish out above-average income.

You’ll just want to be positioned before it all starts to happen.

One of the great things about equity markets is that excellent stocks can be had at almost any price, making them accessible to most people. Even with $100, it’s possible to find outstanding, growth-oriented companies to invest in. Of course, what qualifies as “the smartest” stock to buy with any amount of money will differ from one investor to the next, depending on factors such as risk tolerance, goals, and investment horizon.

One growth stock trading for well below $100 that can meet many investors’ demands is Novo Nordisk (NVO -2.96%). Here is why the Denmark-based company is an excellent stock to buy right now.

Image source: Getty Images.

A wonderful contrarian opportunity

Quality growth stocks tend to be highly sought after. There is often a higher demand for shares of these companies than are available. That’s why their prices rise. Sometimes, though, these otherwise excellent companies encounter challenges that lead to a sell-off, providing investors with a wonderful opportunity to pick up their shares at a discount.

In my view, that’s what we have with Novo Nordisk. True, the company has faced some challenges, and it has paid for them as shares have remained southbound for over a year. Its financial results haven’t been as strong as expected. It hit a series of surprising clinical setbacks while losing market share to its rival, Eli Lilly.

However, Novo Nordisk’s prospects remain very strong. Novo Nordisk’s claim to fame is that it has been a major player in the diabetes drug market for decades. That remains the case. As of May, it had a 32.6% share of the diabetes market and a 51.9% share of the GLP-1 space. While its hold in these fields declined compared to last year, it remains a dominant force in both.

Novo Nordisk also continues to post competitive financial results for a pharmaceutical giant. The company’s sales for the first half of the year increased by a strong 16% year over year to 154.9 billion Danish kroner ($24.2 billion).

Further, the diabetes and obesity drug markets are rising fast due to several factors. Both conditions have skyrocketed in recent decades, and drugmakers are now developing highly innovative therapies to address them. Novo Nordisk is still at the forefront of this race. Even if the company has a smaller slice of the pie, that’s not a significant problem if the pie is substantially larger.

Can Novo Nordisk continue to launch innovative medicines and stay ahead of most of its peers, excluding Eli Lilly? The company’s pipeline suggests that it can, and could even catch up with its eternal rival. Consider Novo Nordisk’s potential triple agonist (a medicine that mimics the action of three gut hormones), UBT251.

In a 12-week phase 1 study, UBT251 resulted in an average weight loss of 15.1% at the highest dose. The usual caveats regarding early-stage studies apply. Still, UBT251 looks promising, especially since there is no single triple agonist approved for weight loss yet. And that’s just the tip of the iceberg. Novo Nordisk has several other exciting candidates through all phases of clinical development. And those that have already passed phase 3 studies, such as CagriSema, should generate massive sales for the drugmaker.

According to some projections, CagriSema could rack up $15.2 billion in revenue by 2030. Ozempic and Wegovy, Novo Nordisk’s current bestsellers, should also remain among the top-selling medicines in the world through the end of the decade. So, Novo Nordisk’s medium-term outlook seems promising.

There are more reasons to buy

Novo Nordisk appeals to growth-oriented investors, but it is also a great pick for dividend seekers and bargain hunters. For those seeking income stocks, the Denmark-based drugmaker is a great choice, given its strong track record. The company’s forward yield is not exceptional at 2.9% — although that’s much better than the S&P 500‘s average of 1.3% — but Novo Nordisk has consistently increased its dividends over the past decade.

NVO Dividend (Annual) data by YCharts

Finally, Novo Nordisk’s shares are trading at 14 times forward earnings, whereas the average for the healthcare industry is 17.3. Even with the challenges it has faced recently, Novo Nordisk’s strong pipeline and lineup, solid revenue growth, and excellent prospects in diabetes and weight management make the stock highly attractive. The company’s shares are changing hands for about $59, so $100 can afford you one of them.

Artificial intelligence (AI) stocks may have gotten most of the attention from investors over the last few years, but some of the period’s top-performing stocks don’t hail from the AI space — at least, not directly.

Instead, they represent emerging technologies like quantum computing, electric vertical takeoff and landing (eVTOL) aircraft, small modular nuclear reactors, and rockets and satellites. The artificial intelligence boom has provided a halo effect to other emerging technologies, as growth investors have become particularly keen to find those that might power the next breakout trend. Investing early in the company that may launch the next ChatGPT would produce huge returns, the thinking seems to go.

Thanks to the speculative optimism about their potential, many of these tech stocks have delivered returns of more than 1,000%, outperforming even Nvidia. However, few hot growth stocks have beaten AST SpaceMobile (ASTS -5.49%), which is building a satellite-based broadband network.

While it has yet to generate meaningful revenue, excitement around the business and its potential have surged recently as it has forged new agreements with customers. 

ASTS data by YCharts.

Over just the last 18 months, a $1,000 investment in AST SpaceMobile would have grown into a stake worth more than $35,000. But with that climb behind it, is it too late to buy the stock? 

What is AST SpaceMobile?

AST SpaceMobile is sometimes lumped together with other space and rocket companies like Rocket Lab, Planet Labs, and SpaceX and its Starlink subsidiary, but the company says its technology can be used with existing unmodified smartphones and operates within the low- and mid-band spectrum used by mobile network operators. That contrasts with existing space-based telecom services that are intended for low-data-rate applications, such as emergency service.

The company is building the first global cellular broadband network to connect with everyday smartphones. It intends for the technology to be used for commercial and government purposes, and is designed to reach places that are not covered by terrestrial cell towers.

It is deploying a constellation of low-Earth-orbit satellites and partnering with other telecoms to provide service to users. Founded in 2017, AST SpaceMobile launched its first test satellite in 2019 and now has a total of six satellites in orbit. It aims to have 45 to 60 satellites in orbit by 2026, serving the U.S., Europe, Japan, and other markets.

AST SpaceMobile has signed partnership deals with several global telecom companies, including AT&T, Vodafone, and Rakuten, and the stock just jumped on news that it had its expanded partnership with Verizon, adding to an earlier $100 million commitment from the telecom giant. According to the new agreement, Verizon will integrate AST SpaceMobile’s satellite network with Verizon’s 850 MHz spectrum across the country, allowing Verizon’s service to reach remote areas it doesn’t currently cover.

Image source: AST SpaceMobile.

Is AST SpaceMobile a buy?

The company expects to start booking meaningful revenues in the second half of the year. Management forecasts $50 million to $75 million in sales in the second half of 2025 as it deploys intermittent service in the U.S. That will soon be followed by service coming online in other markets like the U.K., Japan, and Canada.

Management hasn’t given a forecast for 2026, but investors expect its financial momentum to continue to build as new satellites go into service. The Wall Street consensus now predicts $254.9 million in revenue in 2026.

The company’s momentum, partnerships, and satellite deployments all sound promising, but much of its expected future success is already baked into the stock price.

AST SpaceMobile’s market cap has already soared to $31 billion, a huge number for a company that has yet to generate significant revenues. Notably, it also competes in an industry — internet connectivity — with notoriously low valuations. Verizon has a market cap of $172 billion, even though it generated nearly $20 billion in profits over its last four quarters. Internet service providers carry similarly underwhelming valuations. For example, broadband and cable service provider Charter Communications has a market cap of $36 billion, and it brought in $5 billion in net income over the last year.

The size of AST SpaceMobile’s total addressable market isn’t fully clear, though management says the global wireless services market produces over $1.1 trillion in annual revenue.

AST SpaceMobile is competing globally, which differentiates it from domestic services like Verizon. However, as it’s currently structured, the satellite company essentially aims to be a subcontractor for larger telecoms, and the telecom industry is decidedly unexciting, according to investors. As long as it’s beholden to that low-valuation ecosystem, it’s difficult to picture how the company could deliver the kind of blockbuster returns that investors seem to expect, especially considering that telecom is a mature industry.

At $31 billion, AST SpaceMobile’s market cap seems to have gotten well ahead of the reality of the business, especially as commercialization could present unforeseen challenges. In the near term, the stock could move higher if it signs more partnerships or announces other promising news, but given the sky-high valuation, the stock now looks overheated.

With AST SpaceMobile, investors are playing with fire at this point. Eventually, they’ll get burned.