Warren Buffett famously quipped that diversification is for people who don't know what they're doing. Judging by the explosive growth of S&P 500 ETFs over the past few decades, millions of investors are perfectly fine playing dumb — and their retirement accounts are thanking them for it.

After all, beating the market year after year is incredibly hard. Even Warren Buffett couldn't do it consistently. He's considered the GOAT of long-term investing for good reason. Between 1964 and 2024, Berkshire Hathaway (BRK.B) delivered an overall gain of more than 5,500,000%, or a compound annual gain of nearly 20%. By comparison, the S&P 500, the main benchmark for U.S. stocks, gained 39,000% and 10%, respectively.

Doubling the performance of the broader market over a six-decade span is an investing feat that may never be repeated. And yet, Berkshire stock still trailed the S&P 500 in 20 of those years, once by as much as 40 percentage points.

Needless to say, most professionals come nowhere close to Buffett's run. Actively managed mutual funds have a poor track record when it comes to beating their benchmarks. Over the past 20 years, 93% of U.S. large-cap stock funds lagged the performance of the S&P 500, according to S&P Global.

There are a lot of reasons that most portfolio managers can't beat the market, but perhaps the most important is that most stocks can't beat the market.

Between 1990 and 2020, more than 55% of all U.S. stocks underperformed risk-free, one-month U.S. Treasury bills, according to Hendrik Bessembinder, professor of finance at Arizona State University's W.P. Carey School of Business. These stocks didn't just lag the S&P 500; they failed to beat cash.

Even more distressing, the entirety of the $76 trillion in net global stock market wealth created over that three-decade period was generated solely by the top-performing 2.4% of stocks.

As Vanguard founder Jack Bogle liked to say: "Don't look for the needle in the haystack. Just buy the haystack!"

It took a while for the investing masses to embrace Bogle's advice, but passive investing finally came into its own. In 2006, S&P 500 ETFs collectively held about $80 billion in assets under management. Today, that figure stands at about $2.7 trillion.

Thanks to their low fees — and a remarkably resilient secular bull market — investors who've settled for "merely" market-matching returns have had a strong run these past 20 years.

The bottom line on S&P 500 ETFs?

Although the Vanguard S&P 500 ETF (VOO) is the largest S&P 500 ETF by assets under management, it didn't begin trading until 2010. Therefore, we're going to go with the granddaddy of them all — the SPDR S&P 500 ETF Trust (SPY) — to see what broad exposure to U.S. equities has done for buy-and-hold types these past two decades.

Have a look at the above chart and you'll see that if you'd put $1,000 into the SPY 20 years ago, it would today be worth more than $8,500. That's good for an annualized return of 11.2%. (The S&P 500's total return — price change plus reinvested dividends — came to 11.3% over the same span. S&P 500 ETFs trail their benchmark because of fees and cash drag from unpaid dividends.)

Since 1928, the market's rolling 20-year compounded annual returns have been as high as 17.7% (1980-1999) and as low as 2.6% (1929-1948), according to Nicholas Colas, co-founder of DataTrek Research.

"The fate of the next 20 years for the S&P 500 is largely reliant on the development of artificial intelligence and whatever innovations come after it, and the ability for U.S. companies to generate substantial profit from these technologies," he notes. "We remain optimistic and are long-term bulls on U.S. large-cap stocks."

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Google parent Alphabet (GOOGL) will replace Verizon Communications (VZ) in the Dow Jones Industrial Average (DJIA) at the opening of trading on Monday, June 29, making the 30-stock bastion of blue chip companies increasingly exposed to all things digital.

Alphabet is best known to consumers as the operator of Google and YouTube, but as S&P Global notes, GOOGL's diversified portfolio spans advertising, cloud infrastructure, artificial intelligence, hardware, self-driving cars and healthcare technology.

"Adding Alphabet will broaden and strengthen the DJIA's exposure to these dynamic areas of the U.S. economy," S&P Global said in a press release. "Its larger market capitalization and share price, together with the breadth of its businesses, make it a more representative Communication Services constituent in the DJIA."

The move refers to Alphabet's Class A shares. The Class C shares (GOOG) will not be in the Dow.

Telecom giant Verizon, which has been in the Dow since 1984, sounds like a pretty poky business by comparison. Apple (AAPL) replaced AT&T (T) in the Dow in 2015. You might notice a pattern here.

S&P Global notes that Verizon represents only one-half of one percentage point of the DJIA due to its low share price. The Dow is a price-weighted index, and "persistently lower-priced stocks have an immaterial impact on the index," S&P Global said.

As much interest as such events generate, being tapped for the Dow is more symbolic than material. The S&P 500 is the main benchmark for U.S. equity performance. That's why the total amount of money passively tracking the index comes to around $12 trillion.

For example, the largest exchange-traded fund (ETF) in the world, the Vanguard S&P 500 ETF (VOO), has more than $1.7 trillion in assets under management alone. A comparable product for the DJIA, the State Street SPDR Dow Jones Industrial Average ETF Trust (DIA), holds just $43 billion in assets under management.

Lastly, the Dow is weighted by price rather than by market cap. Although GOOGL has an outsize influence on the movements of cap-weighted benchmarks, such as the S&P 500, Nasdaq Composite and Nasdaq-100, at current prices, GOOGL will be as material to the DJIA as, roughly, Sherwin-Williams (SHW).

Nevertheless, the blue-chip average will now include many of the biggest names among tech and communication services stocks: Apple, Amazon.com (AMZN), Nvidia (NVDA) and Microsoft (MSFT), as well as Salesforce (CRM), Cisco Systems (CSCO) and International Business Machines (IBM).

Is GOOGL stock a Buy?

GOOGL joining the Dow is not in and of itself a reason to buy the Magnificent 7 stock. Nothing about its fundamentals has changed. While shares are currently in a 15% drawdown from their May peak, Wall Street remains bullish.

Of the 63 analysts covering GOOGL surveyed by S&P Global Market Intelligence, 42 rate it at Strong Buy, 14 say Buy and seven call it a Hold. That works out to a consensus recommendation of Strong Buy.

The Street's investment case for GOOGL comes down to AI. (Duh.)

"Alphabet remains, at a minimum, competitive, if not a leader, in the development of generative AI, the rapidly developing and perhaps disruptive new computing paradigm," writes Argus Research analyst Joseph Bonner, who rates shares at Buy. "We continue to like Alphabet's underlying businesses and believe that GOOGL shares are attractively valued given the company's growth runway."

The bottom line: If you liked GOOGL before its accession to the bluest of blue-chip clubs, there's no reason to change your mind. But don't buy it just because it's a better fit for the Dow Industrials than Verizon.

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Longtime shareholders in Micron Technology (MU) used to be longtime sufferers. Not anymore.

The company for decades plodded along in the volatile, low-margin business of making computer memory chips. That's a tough racket. Chips are a commodity. They're cyclical. Meanwhile, chipmakers have to constantly plow cash into research and development — to say nothing of capital expenditures — just to keep pace with peers.

Micron escaped its formerly poky past thanks to the era of artificial intelligence (AI). The ongoing build-out of AI infrastructure isn't just creating massive demand for specialized chips from the likes of Nvidia (NVDA); it's also fueling a run on companies that supply storage. Demand for Micron's wares — Dynamic Random-Access Memory (DRAM), NAND Flash memory, Solid-State Drives (SSDs) and Ultra High Bandwidth Memory (HBM) – has absolutely exploded.

The once-ugly duckling is now a swan. And with shares up more than 850% over the past year, MU stock is no longer a long-term laggard. Indeed, it's been an improbably good bet for truly patient investors.

The lone major American computer memory manufacturer is one of the industry's "Big Three." It competes on the global stage with South Korean heavyweights Samsung (SSNLF) and SK Hynix (HXSCL). And business has never been better.

That's not too shabby for a company that was founded in the late 1970s in the basement of a dental office in Boise. Along the way, Micron helped lead the way in the development of memory chips, demonstrating a particular strength in increasing density. With more than 60,000 patents, it's an engineering powerhouse.

But the grim realities of relentless R&D and capital expenditures in an industry where chip prices regularly plummet made Micron a tough stock to love. Anyone who couldn't stomach prolonged drawdowns of anywhere from 40% to 70% did not belong in the name.

The bottom line on MU stock?

Micron's red-hot run has done wonders for its returns over every standardized investing period you care to look at. For its entire life as a publicly traded company, MU generated an annualized total return (price change plus dividends) of almost 21%. That beats the S&P 500 by about 11 percentage points.

More recent results are simply stupendous. Over the past three years, MU returned 133% vs 23% for the broader market. The five-, 10- and 15-year return periods delivered massive outperformance as well.

Which brings us to what $1,000 invested in Micron stock 20 years ago would be worth today.

Have a look at the above chart and you'll see that a thousand bucks invested in MU two decades ago would today amount to almost $57,000. That's good for an annualized return of nearly 23%.

By comparison, the same sum socked away in an S&P 500 index fund would be worth about $8,600 today – or 11.4% annualized.

Will the good times keep rolling for this darling of an AI play? Wall Street sure thinks so.

"This is the memory bottleneck trade where the company can't nearly supply the backlog of orders," writes David Miller, chief investment officer at Catalyst Funds. "AI workloads need a huge amount of high bandwidth memory and storage. Micron gives you a way to play that part of the AI buildout at a reasonable forward earnings multiple."

Miller's views are widely shared. Of the 44 analysts covering MU stock surveyed by S&P Global Market Intelligence, 39 rate it at Strong Buy, nine say Buy and four call it a Hold. One analyst rates it at Strong Sell. Nevertheless, that works out to a consensus recommendation of Strong Buy, with high conviction to boot.

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Shares in Chipotle Mexican Grill (CMG) have been a long-term market beater, but there's a twist. The fast-casual food chain is a great example of what happens when a company's days of hyperfast growth have long passed.

Like McDonald's (MCD), CMG claims humble origins, starting with a single location. The first Chipotle opened in Denver in 1993 and it quickly became a hit. Founder Steve Ellis's focus on high-quality and fresh ingredients served in a fast-food format was revolutionary at the time.

The fast-casual restaurant concept was born.

Within five years, the chain operated 16 locations spread around Colorado. McDonald's – game knows game – was a minority investor. MCD's injection of capital allowed Chipotle to expand rapidly, further whetting the burger chain's appetite. Pretty soon, MCD became CMG's majority owner. By 2005, Chipotle was a national phenomenon with 500 restaurants across 25 states.

At this point, it was time for McDonald's to cash out. The CMG investment, while lucrative, was a distraction from the company's core fast-food business model. And so McDonald's spun off Chipotle Mexican Grill in an initial public offering for the ages. CMG went public in January 2006 at a price of $22 a share. It closed at $44, or a 100% gain in its first trading session.

Traders and investors would continue to enjoy outsized gains for years as the company's expansion and national impact only seemed to accelerate. Even the Great Recession couldn't slow the chain down. Indeed, the value proposition of fast-casual dining attracted cash-strapped customers away from pricier sit-down restaurants.

By 2015, Chipotle had more than 2,000 locations across 48 states. The stock was up 1,500% from the IPO closing price. And then a near-disaster struck. Shares lost almost half their value over the next two years amid multiple outbreaks of food-borne illnesses. It turned out that fresh ingredients also carried the risk of making customers violently ill from E. coli and Norovirus.

The consumer discretionary stock eventually rebounded and went on another spectacular run, but more recent returns have been disappointing. Investors were no longer willing to pay a hefty premium when growth began to slow. A stock that once traded as high as 50 to 80 times earnings estimates saw its multiple collapse by half. CMG found itself branded by some as a fading giant.

The bottom line on CMG stock?

Have a look at the below chart and you'll see that truly long-term investors in CMG are sitting on market-beating returns. As for shorter time frames, however, the results are not good.

True, for its entire life as a publicly traded company, CMG, which doesn't pay a dividend, generated an annualized total return of 19.8%. That beats the S&P 500's annualized total return (price change plus dividends) by 9 percentage points. That's a big deal.

Unfortunately, other time frames are not nearly so remunerative.

The large-cap stock lags the S&P 500 over the past one-, three-, five-, 10- and 15-year periods. Indeed, over the past 52 weeks, CMG lost more than 30% vs a gain of more than 30% for the broader market.

The past two decades have been much more kind. If you put $1,000 into CMG stock 20 years ago, it would be worth about $32,000 today. That's good for an annualized total return of 18.9%.

The same sum socked away into an S&P 500 index fund over the past two decades would be worth almost $8,000 today, or 11% annualized.

CMG stock has been a terrific buy-and-hold bet, but it appears to be heading in the wrong direction. Its days of hyperfast growth are behind it.

As for where CMG stock goes from here over the next 12 months or so, Wall Street is bullish on the name. Of the 38 analysts covering the stock surveyed by S&P Global Market Intelligence, 22 call it a Strong Buy, four say Buy and 12 have it at Hold. That works out to a consensus recommendation of Buy with high conviction.

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Question: We just retired at 67 with $4.1 million. My husband insists on keeping half our portfolio in stocks. I say it's not worth the risk. Who's right?

Answer: As of 2022, Americans ages 65 to 74 had an average of $537,560 in retirement savings, according to the Federal Reserve. If you're a 67-year-old couple with a $4.1 million nest egg, you're probably in a much stronger financial position than many of your peers.

Using the 4% rule, a $4.1 million nest egg could produce $164,000 in annual income, without accounting for inflation. But to sustain a 4% withdrawal rate, your portfolio might need a reasonable mix of stocks and bonds. If one of you isn't comfortable with that, it's an issue you'll need to resolve early on.

It might be that your husband is fine with keeping half of your retirement portfolio in stocks while you'd prefer to go all-in on cash and bonds, which come with far less risk in the context of losing principal. But it's important to recognize that not investing in stocks during retirement carries its own risks, and that, within the context of owning stocks, there's a safer way to go about it.

You're dealing with two types of risk

You might feel that investing in stocks as a retiree is risky. Your spouse might feel that not owning stocks is risky.

"You’re both right," says Jen Heerensperger, CPWA, client adviser and portfolio manager at Segment Wealth Management.

"Taking risk is the only way to outpace inflation, which, along with withdrawals, taxes and fees, can ravage a portfolio over time," Heerensperger says.

"However, she cautions, "there is an additional risk more precarious even than equity risk. That comes from your decision-making. If you cannot endure the fluctuation of value in your account, you will liquidate at the wrong time, fail to re-enter and hunker down in cash or very safe investments, significantly worse off than you were to start."

In other words, Heerensperger says, if you want safety in your portfolio, it's going to cost you something.

"You can have safety by investing in fixed income, whose returns are often just barely above inflation," says Heerensperger. But, she warns, "much of your return is comprised of interest income, which is taxed at ordinary income rates, compared to half that rate on qualified dividends from stock ownership."

Michael Boggiano, managing partner at WealthCare Financial, agrees.

"In retirement, the key is to balance between growth and safety, so in this situation, neither of you is wrong," he insists. "At 67 with $4.1 million, the biggest financial risks you face aren’t just market downturns. They are longevity risk and inflation quietly eroding purchasing power."

Avoiding stocks is an issue in both regards. If your portfolio doesn't keep growing at a decent pace, you could risk running out of money if you live a very long life. If your portfolio can't at least match inflation, you're pretty much guaranteed to lose buying power over time, especially during periods when inflation is elevated.

A safer way to hold stocks in retirement

Without stocks in your portfolio, a $4.1 million nest egg might not hold up well over time. Avoiding stocks completely in retirement is generally not recommended.

"Historically, portfolios that are too conservative struggle to keep up with inflation over a 25- to 30-year retirement," Boggiano insists.

However, he says, sequence of returns risk, such as taking withdrawals during a market downturn, can permanently damage a portfolio. The question, therefore, should really shift from "should we own stocks?" to "how can we safely own stocks?"

Boggiano explains that for many retirees, a 40% to 60% stock allocation is common and not overly risky, provided there's a disciplined structure around it.

"If you’re going to keep 50% of your retirement savings in equities, the approach matters more than the percentage," he says. "You’ll want to favor diversified lower-volatility strategies, like broad index funds, dividend-focused stocks, and quality companies. It’s also best to avoid concentrated bets or overly aggressive sectors, all while rebalancing regularly."

Put some guardrails in place

In addition to maintaining a diversified portfolio of stocks and steering clear of higher-risk investments, Boggiano recommends putting guardrails in place that might allow you and your husband to meet in the middle.

One thing he's a big fan of is a cash buffer.

"Keep enough in cash or very short-term bonds to cover your lifestyle for a few years," Boggiano says. "This keeps you from selling stocks in a downturn and helps you to ride out market volatility without panic."

Boggiano also recommends a bucket strategy for psychological and financial stability. This way, "you know your near-term income is protected, which makes it easier to tolerate stock market swings," he explains.

Boggiano's basic suggestion is as follows:

• Bucket 1 (up to three years). Cash/money market/short-term bonds
• Bucket 2 (three to 10 years). Intermediate bonds or conservative investments
• Bucket 3 (10-plus years). Stocks for long-term growth

Even within this strategy, Boggiano says, it's a good idea to plan to reduce withdrawals after a bad market year. But, he says, you can also increase modestly after strong years.

All told, Boggiano says, "With the right structure, keeping 50% in stocks can be entirely reasonable, but only if it’s supported by a thoughtful income plan and safety buffers."

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Most kitchens are well-stocked with pantry staples, the foundation of all recipes. But every good chef knows that the best meals feature a variety of flavors, including some spice. Technique is important: Too much or too little of any single ingredient can make a big difference.

The same approach applies to portfolios. Earlier this year, many U.S. investors learned that their mix was off after foreign stocks significantly outpaced U.S. shares … just as the S&P 500 stumbled badly. It quickly became clear that many investors were underexposed to foreign markets and overexposed to the United States.

In a June survey, Schwab Asset Management found that moderate-risk individual investors held just 10% of their portfolios in foreign shares; U.S. stocks, by contrast, made up 61%. In short, investor portfolios weren't diversified.

It was a comeuppance long in the making. For nearly 15 years, U.S. stocks have been the place to be. Why bother to diversify — break up your investments across a variety of stocks, bonds and other assets — when the S&P 500 is beating everything?

"It can be easy to forget the benefits of diversification in a very sharp upward-moving market," says Andrew Altfest, a certified financial planner with Altfest Personal Wealth Management in New York City.

But over time, you'll find that a mix of investments can smooth your returns, strengthen your resolve as an investor, dampen risk in your portfolio and keep you exposed to whichever corner of the market is working at the moment — no crystal ball necessary.

In a truly diversified portfolio, some investments will be in favor while others are on the outs. "You will never own only winners, but you won't get stuck with only the laggards, either," says Jeff DeMaso, editor of The Independent Vanguard Adviser.

A smoother ride

A diversified portfolio can deliver less-volatile returns, which may help you stay the course during turbulent times — and arguably, that's half the battle in achieving your investment goals.

Moderate-allocation funds, also called balanced funds because they stabilize a 60% allocation of assets to stocks with a 40% stake in bonds, have been about one-third less volatile than an all-stock portfolio over the past 10 years.

"When the stock market sells off, investors tend to sell and move into cash. The problem there is, they've divested. So, we always say, stay invested and diversify," says Alessio de Longis, senior portfolio manager and head of asset allocation at Invesco Solutions.

Indeed, diversification isn't a strategy you turn on during rough markets and switch off in roaring bull markets. "It's something you should always have in your portfolio,” says Kristy Akullian, head of iShares investment strategy for the Americas at BlackRock.

Diversification can help ward against risk, too, of which there's no shortage these days. U.S. stocks are trading at high valuations. The economy looks to be slowing. Inflation remains sticky. And uncertainty lingers about the impact of new government policies and geopolitical risks. All of these challenges are chipping away at investor confidence.

Some advisers zero in on risks as a guiding principle for diversifying their clients' portfolios. Worried about a decline in the dollar? Add non-dollar assets — foreign stocks or bonds — to your portfolio. Concerned about an inflationary shock? Fold in a stake in commodities or real estate. A recession? Insert a slug of high-quality bonds or beef up on cash.

"Since I think all of these are potential sources of risk to the stock market, I put a lot of these diversified eggs into my clients' portfolio baskets," says Paul Winter, a certified financial planner at Five Seasons Financial Planning in Salt Lake City, Utah.

Another reason to diversify is that it's impossible to predict which investment will outperform in any given year — so it pays to own a mix of several. "The point of diversification is that you don't know what is going to happen," says Thomas Martin, of Globalt Investments, an Atlanta-based investment firm, but you can be prepared just the same.

The fact is, market leadership can shift dramatically from year to year. Though large-company stocks have topped the charts in many years recently, the winning asset class in any given year is often anybody's guess.

According to the Callan Periodic Table of Investment Returns, a colorful depiction of how asset returns can vary from year to year, small-cap stocks fared best in 2020. In 2018 and 2022, cash prevailed. And emerging markets stocks were the best-performing asset class in 2017; the next calendar year, they were the worst.

While there are rules of thumb to follow, a well-diversified portfolio is "very much an art, not a science," says Winter. For example, you want to own multiple kinds of assets, but that does not mean you own everything in equal measure. "Depending on your overall allocation, you might not need to go super-deep on every category," says Roger Young, a CFP at T. Rowe Price.

The good news: This is a great time to diversify. If, like many American investors, your portfolio is heavily weighted toward U.S. stocks, it's not too late to lighten the load and find opportunities in less-expensive pockets of the market.

"U.S. stocks are near their all-time highs, and that's a lot better time to diversify than, say, back in March 2009," the market's nadir during the Global Financial Crisis, says Winter.

Stocks, bonds and alternative assets are the main elements of a diversified portfolio. But you'll want to make sure you're diversified within those types of investments, too.

In this article, we'll walk you through the ingredients of a good diversification plan, with some timely moves to make now and tips on how to maintain your portfolio. Prices, returns and other data are as of August 31.

Stocks

Stocks can be risky but also rewarding. Over the past 10 years, the S&P 500, which represents more than 80% of the total U.S. stock market, has returned a whopping 15% a year.

But the stock market doesn't move as a monolith — and within your stock holdings, you should assemble a broad mix, considering a number of factors.

Company size

The market can favor companies of a particular size — sometimes for years — depending on economic factors, industry innovations or even just market sentiment.

Over the past decade, thanks to globalization, large companies have ruled, ranking as the top-performing asset class in five of the past 10 years and among the top three performers in eight of the past 10, according to the Callan table.

"The big just got bigger," says Jake Schurmeier, a portfolio manager at Harbor Capital. That makes exchange-traded funds (ETFs) that invest in small and midsize companies, such as the iShares Core S&P Mid-Cap (IJH) and the iShares Core S&P Small-Cap (IJR) — members of the Kip ETF 20, our favorite exchange-traded funds — good diversifiers for the large-cap S&P 500.

Some strategists see an opportunity in midsize-company stocks, especially these days. The middle tier of the U.S. stock market "is uniquely positioned to capitalize on growing demand for American-made goods and infrastructure solutions in a reshoring and energy-independent economic landscape," says Dina Ting, head of global index portfolio management at Franklin Templeton.

Plus, on a price-to-earnings basis, mid-cap stocks now trade at an atypical discount to large caps.

Concentration

Large-company stocks' recent run has included the meteoric rise of tech stocks in general and anything related to artificial intelligence (AI) in particular.

A group that includes Nvidia (NVDA), Microsoft (MSFT) and Apple (AAPL), known as the Magnificent Seven, accounts for one-third of the value of the S&P 500 Index. Thus, what might look like a diversified collection of U.S. stocks is in reality an outsize bet on a dazzling few.

A simple way to mitigate such overconcentration is the Invesco S&P 500 Equal Weight ETF (RSP). In this fund, every company gets an equal share of assets. So, while Nvidia accounts for 8% of the traditional market-cap-weighted index, it makes up just 0.24% of the Equal Weight fund.

Investment style

Professional investors typically hew to a certain methodology. These approaches break down into two broad styles: value and growth. Value managers favor stocks that trade at a discount to various metrics; growth managers prefer companies that are growing faster than average.

The two styles wax and wane at different times, and the cycles tend to last for long stretches. Value won the period from the start of 2000 to 2009. But since then, growth has dominated, though it's worth noting that value stocks held up better during the most recent bear market from January to October 2022.

Because it's difficult to predict when one style is going to outperform the other, even in a bear market, it's important to maintain a toehold in both growth and value strategies.

Chances are, however, that you've got plenty of exposure to growth stocks these days. Consider adding a value-driven fund such as Dodge & Cox Stock (DODGX), a mutual fund that has outpaced the S&P 500 over the past five years, or Capital Group Dividend Value (CGDV), an ETF that has beaten the S&P 500 over the past three years.

Both are actively managed, but index-fund lovers could look at the Vanguard S&P 500 Value ETF (VOOV). The ETF holds its own among a peer group of value-oriented large-company stock funds.

Geography

You need both U.S. and non-U.S. stocks in your portfolio, although many years of U.S. out-performance made that idea unpalatable. That changed in 2025: After lagging the U.S. stock market for nine of the past 11 calendar years, the MSCI EAFE Index, a popular international-stock benchmark, is up nearly 23% so far this year, beating the S&P 500 by more than 12 percentage points.

Most strategists agree that U.S. investors need to boost their exposure to international stocks. The timing is good. A weakening dollar tends to magnify gains in foreign shares (because they translate into more dollars stateside). And foreign stocks are still cheap relative to U.S. stocks on a price-to-earnings basis, even after a strong run so far this year.

Foreign stocks include those in both developed and emerging markets. You can zoom in on a region — Europe, Asia, Latin America, say — or a single country, such as Japan, India, Germany or China. And of course, at every level, you can focus on company size or value or growth approaches.

Start with the Vanguard Total International Stock ETF (VXUS). It's an inexpensive way to get instant exposure to nearly every foreign stock in developed and emerging markets. Morningstar analyst Zachary Evens calls it "wall-to-wall foreign-stock exposure." The fund has gained 23% since the start of the year.

Add an emerging-markets index fund. The iShares Core MSCI Emerging Markets ETF (IEMG) tracks an index of 20-odd developing markets. "A weaker dollar is good for EM stocks," says Richard Cook, a portfolio manager of Cook & Bynum fund. A recent rebound in Chinese stocks — 27% of the index — has helped the fund return 18% over the past 12 months.

Baron Emerging Markets (BEXFX) — a member of the Kiplinger 25, our favorite no-load mutual funds — is actively managed, growth focused, and has gained 19% over the same period.

These days, many strategists, including T. Rowe Price's Charles Shriver, see opportunity in small, foreign companies. They typically trade at a premium to their larger brethren, but not now. And "small-cap international stocks will benefit from domestic economic growth in home countries and are less sensitive to tariffs," he says.

We have our eyes on the Avantis International Small Cap Equity ETF (AVDS) and the Dimensional International Small Cap Value ETF (DISV). The Avantis fund invests in a mix of growth and value small companies, with a focus on valuation and profitability. Over the past 12 months, it has gained 23%. The Dimensional exchange-traded fund focuses on bargain-priced small stocks in developed countries and has returned 25% over the past 12 months.

Bonds

Bonds provide ballast to the stock side of any portfolio, generally speaking, because when stocks fall, bond values tend to rise. That didn't happen in 2022, when a precipitous rise in interest rates pushed both stocks and bonds down (bond prices and yields move in opposite directions). The S&P 500 fell 18%, and the Bloomberg U.S. Aggregate Bond index sank 13%.

It was the worst year ever for bonds, but a few fixed-income sectors held up better. Bank-loan funds, for instance, lost 2% on average; short-term bond funds dipped just 5%. Ergo, in 2022, a diversified bond portfolio would have outperformed the Agg index.

Broadly speaking, there are four major bond sectors: government, corporate, securitized debt (bundled IOUs such as mortgages or auto loans, say, that are sold as a single security), and municipal bonds, which pay income that's exempt from federal and sometimes state taxes.

A diversified bond portfolio will include a mix of sectors. The Agg index, for instance, is diversified as far as sectors go: Government bonds make up just less than half of the index, corporate and securitized debt combined are another 50%, and the rest sits in cash and muni IOUs. But there are more layers of bond diversification to consider.

Credit quality

Credit ratings reflect a borrower's financial ability to repay debts. The higher the rating, the more creditworthy the issuer is, and vice versa. That's why investment-grade bonds, rated between triple-A and triple-B, are considered high quality — there's little risk of default. Debt rated between double-B and triple-C is often called junk or high yield — there's a higher risk of default, and therefore yields are higher to attract investors.

Bond portfolios should hold mostly high-quality debt at their core. The Vanguard Total Bond Market ETF (BND) and the iShares Core U.S. Aggregate Bond ETF (AGG) are the biggest index-based high-quality bond ETFs. But we prefer active strategies, such as Baird Aggregate Bond (BAGSX) and Dodge & Cox Income (DODIX). Both mutual funds are members of the Kiplinger 25.

Then consider adding lower-quality debt, which can boost the overall yield of a bond portfolio. In late August, for instance, U.S. high-yield corporate debt yielded 6.7%, and bank loans, issued by companies with low credit ratings, yielded 8.6%.

Our favorite high-yield corporate fund, Vanguard High-Yield Corporate (VWEHX), favors higher-quality, double-B junk bonds. But with economic uncertainty ahead, we're partial these days to short-term high-yield bond funds such as the Pimco 0-5 Year High Yield Corporate Bond Index ETF (HYS). Its short-term focus can help dampen default risk, a concern if the economy slows.

Duration and maturity

Investors often confuse duration, a measure of a bond's sensitivity to interest rate moves, with maturity, the length of time a bond will pay interest before it repays the principal. They're not the same, but they are connected.

Maturity plays a part in the calculation of duration. The longer the maturity, the longer the duration and the more sensitive a security is to interest rate shifts.

The typical long-term government bond fund, for example, has an average maturity of 20 years and a 16-year duration. That implies if rates were to rise by one percentage point, the net asset value of long-term government funds would decline 16%, and vice versa. Short-term government bonds have an average maturity of three years and a duration of 2.6 years.

Generally, low-duration bonds are a defensive bet when interest rates are rising, and high-duration bonds stand to benefit most when rates fall. These days, however, even though cuts in short-term rates are on the docket, a fall in long-term rates isn’t guaranteed, says Akullian, the iShares strategist. That's why she favors intermediate-maturity bonds for now.

The iShares 3-7 Year Treasury Bond ETF (IEI) sports a 4.3-year duration. Since the start of the year, it has returned more than 5%. The actively managed Vanguard Intermediate-Term Bond ETF (BIV) favors bonds with maturities of five to 10 years and has a duration of 6.1 years. Its portfolio holds government and corporate debt of medium maturities. So far this year, it has gained 6.4%.

Finally, the Fidelity Investment Grade Securities ETF (FSEC) holds mostly triple-A-rated securitized debt and has a duration of 5.5 years. Its return so far this year is 5.3%.

Geography

For much of the 2010s, foreign bonds sported negative yields. "That's a hard sell," says Schurmeier, the Harbor Capital portfolio manager. But now, foreign bonds offer positive yields, as well as a potential return boost from a weakening dollar. The Vanguard Total International Bond ETF (BNDX) holds high-quality, foreign corporate and government bonds.

Emerging-markets debt offers fatter yields, but these IOUs tend to be more volatile, too, so buyer beware. Our favorite emerging-markets bond fund, Vanguard Emerging Markets Bond (VEMBX), invests in dollar-denominated debt, which becomes easier for developing countries to repay as the dollar weakens.

Alternatives

This catch-all category includes nontraditional strategies that seek to hedge stock and bond market returns, or at least to generate returns that don't move in lockstep with them.

Alternative strategies might focus on gold, commodities, cryptocurrencies, or the debt or equity of private companies. They might employ techniques to limit losses in a downturn but crimp bull market gains. Others balance bets on undervalued stocks by short-selling overpriced names.

"Many alternative strategies weren't even a thing 10 years ago, but they are today," says Winter, the Salt Lake City CFP.

Consider carving out a small slice from the bond side of your portfolio to devote to alternative assets — no more than 5% to 10% of your overall portfolio, says de Longis. One approach to choosing an alternative strategy is to figure out what kind of risk you're trying to hedge against, such as those listed below, and invest accordingly.

Inflation

To hedge inflation, for instance, beyond the protection the stock side of your portfolio may offer, consider commodities. These funds proved their mettle in 2022, returning 16%, on average.

The First Trust Global Tactical Commodity Strategy Fund (FTGC) has outperformed its peers in four of the past five calendar years, with below-average volatility. Neuberger Berman Commodity Strategy ETF (NBCM) boasts above-average returns with below-average volatility, and its expense ratio is below average, too.

Instability

To ward against uncertainty, consider gold. "Gold is a safety net for chaos," says Schurmeier. Trade-war fears have fueled 29% gains in the iShares Gold Trust Micro (IAUM) and the SPDR Gold MiniShares Trust (GLDM, $68, 0.10%) so far this year.

Volatility

To smooth out your returns, consider one of a new breed of ETFs called defined-outcome funds.

One we're eying is the Innovator Defined Wealth Shield ETF (BALT). Using options, the fund provides a 20% buffer on losses in the S&P 500 every three months in exchange for a cap on gains. You can hold the ETF indefinitely. The 20% buffer and cap on gains resets quarterly, in January, April, July and October. The cap set in early July was 2.2% after expenses. Over the past three years, Defined Wealth Shield has returned 7% annualized with less volatility than the Agg index.

Bear in mind that diversified portfolios, in contrast to Tolstoy's happy families, are not all alike. As always, everything depends on your time horizon and your risk tolerance.

"If you're relatively young and are primarily invested in stocks, you might want to make sure your diversification is robust on the stock side, but on the bond side, your small piece in bonds could be a straightforward U.S. investment-grade type of bond fund portfolio," says T. Rowe Price's Young. Similarly, those who are nearing retirement or already retired will want to pay special attention to some inflation hedges.

Over time, your portfolio will need some fine-tuning. Some tweaks are related to age or life stage, says Christine Benz, director of personal finance and retirement planning for Morningstar.

At age 50, for instance, you'll want to de-risk your portfolio a bit around the edges. Tilt toward high-quality, large-company stocks over small-cap fare, for instance. Or favor dividend payers. By your late fifties or early sixties, start shoring up your portfolio with safer assets. On the bond side, for instance, lean into high-quality short and intermediate-term bonds and build up your cash position.

Other adjustments may be tactical, such as investing more in large and midsize companies than in small firms if a recession looms, or favoring short-term bonds over long-maturity debt when interest rates are climbing. Keep the tactical moves to no more than five to 10 percentage points up or down from your overall portfolio targets, says Invesco's de Longis. Any bigger, and you risk derailing your asset-allocation plan.

Finally, review your portfolio asset mix and rebalance, if necessary, once a year. "The more diversified your portfolio, the greater the potential benefits of rebalancing," says Winter. Just don't go overboard. Think of your portfolio like a bar of soap, suggests Benz: "The more you touch it, the smaller it's going to get."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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President Trump's 870-page tax-and-spending bill is as big as advertised. Whether it is a beautiful bill from an investment standpoint is in the eye of the beholder. Like most new legislation, the One Big Beautiful Bill Act (OBBBA) has winners and losers.

A larger tax credit, a bigger tax deduction, a more sizable write-off, a less-onerous regulation, or a booster shot from increased government spending can lift profits for companies that benefit.

On the flip side, the end of a sizable subsidy, the phasing out of a tax break or major cuts to government programs can impair sales, resulting in earnings headwinds for negatively affected companies.

Below, we list some of the biggest investment beneficiaries of Trump's Big Beautiful Bill, and some of its victims, too. Prices and returns are as of July 31.

Play offense with defense

Trump's signature legislation delivered on his promise to spend more to strengthen the military. OBBBA increases defense spending by $150 billion, pushing the U.S. defense budget for fiscal year 2026 over $1 trillion, the largest in U.S. history.

A sizable chunk of the money will go toward priorities such as the Golden Dome missile defense shield. Other imperatives include building naval ships and developing next-generation munitions and unmanned drone weaponry, as well as replenishing weapons stockpiles.

Increased military spending by European allies and unstable geopolitics add to the case for the defense sector.

You don't have to be an army general to conclude that weapons-related companies have a tailwind. "The defense industry is an overwhelming winner," said Michael Arone, chief investment strategist at State Street Investment Management.

Investors looking to boost exposure to the defense sector can mimic a precision-guided smart bomb and try to pinpoint individual stocks, or they can take a cluster-bomb approach and gain access to a wider array of munitions makers through a diversified exchange-traded fund (ETF) that tracks the sector.

Aniket Ullal, head of ETF research and analytics at CFRA Research, likes the iShares U.S. Aerospace & Defense ETF (ITA), which is up 36% this year and holds about 40 stocks, including top holdings such as GE Aerospace (GE), RTX (RTX), Northrop Grumman (NOC) and Lockheed Martin (LMT).

Another option is the Invesco Aerospace & Defense ETF (PPA), up 27% in 2025. Holdings include top defense contractors plus tech stocks with Pentagon ties, such as Palantir (PLTR), a data analytics company that uses artificial intelligence to support military operations and intelligence gathering.

Huntington Ingalls Industries (HII), a leading shipbuilder that earns 80% of its revenue from the U.S. Navy, "stands to benefit from the Department of Defense's renewed focus on expanding the Navy's fleet size," says CFRA analyst Matthew Miller, who rates the stock a Buy.

Seth Meyer, global head of client portfolio management at Janus Henderson Investors, is bullish on Howmet Aerospace (HWM). Its specialized aircraft components get kudos for being lighter, faster, stronger and more cost-effective.

Howmet's parts helped land the Apollo spacecraft on the moon and are used in military aircraft, such as Lockheed Martin's drones and F-35 fighter jet. The stock is a top-10 holding in the Janus Henderson Forty and Janus Henderson Contrarian funds.

Surf the reshoring wave

It's no secret that Trump wants companies to build their products on U.S. soil. The OBBBA offers tax incentives for firms to embrace the "Made in America" policy. "The bill is incentivizing behavior change," says Meyer.

Growth-friendly OBBBA provisions include making permanent a 100% bonus depreciation — a type of tax break that allows companies to deduct a percentage of the purchase price of eligible assets.

Companies can now deduct the entire cost (up from 40% previously) of qualifying property, such as machinery and equipment, in the year it's put into service — no need to spread deductions over multiple years and wait to realize the tax benefits.

The new law also allows full expensing of domestic research-and-development expenses in the year they occur, cutting corporate tax bills and boosting cash flow.

Another perk aimed at encouraging investment in the homeland is 100% expensing, or immediate deductions, for certain manufacturing spending, such as upgrades to factories or assembly lines.

Manufacturing and heavy-machinery businesses such as Deere (DE) and Caterpillar (CAT) will benefit if customers spend more on capital equipment due to savings on taxes, says Paul Stanley, chief investment officer at Granite Bay Wealth Management.

"If I need a new tractor, I'm going to invest while I know [the tax breaks] are on the books," he says. For broad exposure to the industrials sector, Stanley likes the iShares U.S. Industrials ETF (IYJ), a fund that owns about 200 stocks.

Among individual stocks, consider Trane Technologies (TT), best known for its energy-efficient HVAC systems, says Eric Teal, chief investment officer at Comerica Wealth Management.

Trane is likely to see higher demand from customers with more cash to plow into their business thanks to the OBBBA tax breaks, Teal says. Another plus: Trane has limited tariff risk, says Morningstar analyst Brian Bernard. (Trane is a member of the Kiplinger ESG 20, our favorite stocks and funds with an environmental, social or governance focus.)

Vulcan Materials (VMC), a producer of construction materials such as crushed stone, sand, gravel, asphalt and concrete, is a top pick of Sandy Villere, portfolio manager at wealth management firm Villere & Co. "There's going to be a big tailwind with all the incentives for U.S. manufacturing," he says.

Catch the AI train

The new law is a potential accelerant for the already fast-growing artificial intelligence business.

"Getting semiconductor production on-shore is a key strategic focus of the Trump 2.0 administration," says Meyer. The OBBBA gives semiconductor makers incentives to break ground before 2026 on new plants to build high-powered chips.

The carrot? Boosting the tax credit to 35% from 25%.

Capital Group portfolio manager Matt Hochstetler says tech stocks that can benefit include Micron Technology (MU) and Taiwan Semiconductor Manufacturing (TSM). (The latter is liable for U.S. corporate taxes and qualifies for the credit.)

There will be losers

Trump is not a big backer of clean energy. The OBBBA's December 31 phase-out of the tax credit allowing homeowners to deduct 30% of the cost of installing solar panels from federal taxes could lead to a 20% to 30% drop in home solar installations, denting the sales of U.S. solar panel makers, according to CPA firm Cerini & Associates.

And the end of the $7,500 tax credit on September 30 for the purchase of a new electric vehicle will cut into EV sales.

Sizable cuts to Medicaid are a negative for hospitals that treat low-income patients. Such hospitals may face lower revenues due to fewer patients, and they risk not getting paid by patients who lose coverage. The cuts will also harm health insurers that derive a large chunk of their revenue from Medicaid plans.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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The Federal Reserve will keep short-term interest rates unchanged when it concludes its next meeting, experts say, as solid economic growth, moderating inflation and a "low-hire, low-fire" labor market support current policy.

Of more interest is how Fed Chair Jerome Powell handles the press conference following the release of the central bank's policy statement. The Fed's independence has come under question, and Powell is set to preside over just two more meetings before his term as Fed chief ends on May 15. While Powell could remain on the Fed board for the remainder of his full term, he could also choose to step aside entirely.

As for the state of the economy, fourth-quarter gross domestic product (GDP) is tracking at a strong growth rate of 5.4%, according to the Federal Reserve Bank of Atlanta's GDPNow model.

Meanwhile, the jobs market remains sluggish but steady. As for inflation, while it's still above the Fed's long-term target, recent readings have come in better than expected. Fears of a tariff-driven surge have thus far proven unfounded.

Matthew Luzzetti, chief U.S. economist at Deutsche Bank, suggests Powell’s press conference could veer into "non-economic issues," such as current threats to the Fed's independence. On the "fundamental" side, Luzzetti expects Powell to describe policy as "well positioned," as it is plausible to argue that rates are currently neutral.

"Powell might also sound somewhat more sanguine on the labor market, while still emphasizing downside risks," Luzzetti adds.

As of this writing, market participants expect the Fed's rate-setting committee, the Federal Open Market Committee (FOMC), to stand pat on the federal funds rate.

Indeed, as of January 26, interest rate traders assigned a 97% probability to the FOMC keeping the target rate steady at 3.5% to 3.75%, according to CME Group's FedWatch.

With the Fed set to leave rates unchanged at an increasingly complex time, we turned to economists, strategists and other experts for their thoughts on monetary policy going forward. Please see a selection of their commentary, sometimes edited for brevity or clarity, below.

Fed rate decision: what the experts say

"After three straight rate cuts last year, the Federal Reserve is widely expected to keep interest rates unchanged at the next meeting. We may see another dissent (in favor of an additional cut) from Governor Miran before his term ends on January 31, but the real focus will be on Chair Powell's press conference. Investors want to know whether this will simply be a one-meeting 'pause' or the beginning of a longer hold. Right now, the economy still looks surprisingly sturdy." – Larry Adam, chief investment officer at Raymond James

"We expect the Fed to hold rates steady and present a somewhat more upbeat view about the economy through the policy statement and Chair Powell's press conference. The statement is likely to upgrade the growth assessment to 'solid,' note tentative evidence that unemployment has stabilized, and hint at an improving balance of risks to the outlook." – Matthew Luzzetti, chief U.S. economist at Deutsche Bank

"Markets are now not really expecting a Fed rate cut until June, or the first meeting after Jay Powell has left the Chair. We remain a bit more dovish than the market, expecting three quarter-point trims this year. True, real GDP growth expectations are being lifted, but it's coming from better productivity, and the job market remains sluggish while core inflation is stable to lower." – Douglas Porter, chief economist at BMO Capital Markets

"We don't expect to learn a lot at the January FOMC meeting. The Fed is on hold but remains data dependent. The balance of risks around the two mandates hasn't changed much since December. Chair Powell's press conference might be dominated by questions about politics rather than policy. On the latter, however, market pricing creates risks of a dovish surprise." – Aditya Bhave, U.S. economist at BofA Securities

"We expect no policy change in the January meeting. Our base case anticipates 25 to 50 bps of additional easing this year, moving towards neutral and generally supporting our constructive economic and market outlook." – Lauren Goodwin, chief market strategist at New York Life Investments

"While no change in interest rates is expected, markets will be highly attentive to the tone of the statement and Chair Powell's press conference. Any adjustment in how the Fed characterises inflation, labour market conditions or downside risks to growth could quickly influence rate-cut expectations. A message that reinforces patience and acknowledges cooling momentum would likely support equities and pressure the dollar, while a more cautious or hawkish tilt could revive volatility across risk assets." – Daniela Hathorn, senior market analyst at Capital.com

"We expect the Federal Reserve to hold rates steady at the January FOMC meeting, following three consecutive rate cuts in 2025, as policymakers take time to assess the impact of past easing. Assuming inflation continues to trend lower and growth remains resilient, we see room for moderate rate cuts in 2026." – Gargi Chaudhuri, chief investment and portfolio strategist at BlackRock

"The FOMC is widely expected to leave the fed funds rate unchanged at its January meeting. We expect the post meeting statement and press conference to signal maximum flexibility as the Committee strives to keep its options open. Our forecast remains for two 25 bps rate cuts at the March and June meetings, but the risks to our forecast look increasingly skewed toward later and possibly less easing this year." – Sarah House, senior economist at Wells Fargo

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Analysts have been busy updating their discounted cash flow models and price targets for Nvidia (NVDA) after the most important AI company in the world failed to give the sort of blow-out revenue guidance Wall Street has come to expect.

Indeed, shares in NVDA, the world's second most valuable publicly traded company with a market cap in excess of $3 trillion, actually stumbled after posting Q3 results.

But then these sorts of things can happen when a stock is said to be priced for perfection.

Either way, it seemed like a good time to take a look at a few of the ways in which analysts' expectations have changed for NVDA stock in light of the company's latest guidance.

First, let's have a look at NVDA's price target. Although these targets are of limited utility, they do form the basis for declaring whether a stock is a Buy, Hold or Sell.

As of now, NVDA's average price target stands at about $170, up roughly 6% from the pre-earnings release target of about $160, according to data from S&P Global Market Intelligence.

NVDA's new average price target gives shares implied upside of about 20% over the next 12 months. The old price target – based off NVDA's previous level – gave the stock implied upside of about 13%.

It's hard to believe Nvidia has become a $3 trillion company because of its potential for 13% or 20% price upside over the next year or so. Heck, the stock nearly tripled over the past 52 weeks.

Price targets. Go figure.

Perhaps relative valuation can be more helpful.

Nvidia is cheap, relatively speaking

First, a caveat about valuation. While absolutely critical, valuation tends to play out on its own time frame. This time frame can be much longer than investors expect. Keep this in mind when looking at Nvidia, as the stock usually looks expensive and yet it keeps going up.

That said, NVDA's relative valuation does look increasingly compelling by some measures these days.

For one thing, while it's true that Nvidia changes hands at nearly 35 times analysts' average next-12-months earnings per share (EPS) estimate, this multiple represents a 20% discount to its own five-year average, according to data from LSEG Stock Reports Plus.

Perhaps more importantly, after updating their models, analysts' average long-term growth forecast now stands at more than 62%, per LSEG.

These revisions make NVDA look attractively priced once you consider how fast the stock is rising relative to its growth prospects. Indeed, by at least one metric – the price/earnings-to-growth (PEG) ratio – Nvidia stock looks very cheap on a relative valuation basis.

Here's why: since NVDA stock is trading at 35 times expected earnings and has a LTG forecast of more than 62, its forward PEG is 0.6. To put that in perspective, the S&P 500 trades at a PEG of 2.1.

By this measure, NVDA trades at a 70% discount to the broader market. That's not bad, but then Nvidia and the broader market are sort of apples and oranges.

That's why we want to look at Nvidia's PEG relative to its peers and itself. This gives us an idea of what sort of premium the market has been willing to pay for Nvidia's growth prospects in the past.

And what do we find? Bulls will be happy to know that with a PEG ratio of 0.6, Nvidia stock trades at a 70% discount to the semiconductor industry average.

Even more intriguing, however, is that NVDA stock also trades at a steep discount to its own five-year average. Indeed, per LSEG Stock Reports Plus, if Nvidia's PEG "returned to historical form," the stock would trade at $349.04.

That's not a price target, mind you, it's just some modeling. But it does give NVDA stock implied price upside of about 150% from current levels.

As for Wall Street's collective wisdom on this top-rated Dow Jones stock, of the 63 analysts issuing opinions on NVDA surveyed by S&P Global Market Intelligence, 47 call it a Strong Buy, 12 have it a Buy and four say it's a Hold.

That works out to a consensus recommendation of Strong Buy, making Nvidia one of the Street's top S&P 500 stocks to buy too.

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Nvidia (NVDA) earnings have become one of Wall Street's most-anticipated events. Indeed, who can forget when the company gave jaw-dropping forward guidance in May 2023 thanks to snowballing demand for all things artificial intelligence (AI) – sending the chipmaker catapulting north of a $1 trillion market cap.

The company's fiscal fourth-quarter results were released after the market closed on Wednesday, February 26. Nvidia reported earnings of 89 cents per share on $39.3 billion in revenue, beating analysts' estimates for earnings of 85 cents per share on revenue of $38.1 billion.

Here, Kiplinger experts shared the news surrounding Nvidia's earnings report and conference call as well as our analysis.

Increased AI spending will continue to benefit Nvidia, says UBS

UBS Global Research analyst Timothy Arcuri lifted his price target on Nvidia on November 10, to $185 from $150 – representing implied upside of more than 25% to current levels. 

Arcuri expects the chipmaker to report strong results and guidance this time around, though he anticipates a decline in gross margin, to 73% from 75.1% in Q2.

The analyst believes that capital expenditures from large-scale data centers will continue to improve and he expects the gap between incremental hyperscaler spending and Nvidia's incremental data center revenue to close over the next 12 months.

"On top of this, sovereign AI represents a major demand vector for NVDA (already worth more than $10 billion in calendar year 2024) with each of the large sovereigns (particularly in the Middle East) looking to us like their spending could approach that of a big U.S. hyperscaler over the next few years," Arcuri adds. India, for one, unveiled a $1.2 billion budget for AI projects in March. 

- Karee Venema

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This will mark Nvidia's first time reporting as a Dow Jones constituent, with the semiconductor stock joining the 30-stock index back on November 8.

NVDA shares are well known for their post-earnings volatility, which could have an impact on the price-weighted Dow. Most recently, the stock sank more than 6% in August after its fiscal Q2 results and jumped 9% in May following its fiscal Q1 report.

However, as Dan Burrows, senior investing writer at Kiplinger.com, explains in his feature, "Nvidia Stock Is Joining the Dow. Is It Time to Buy?," NVDA and its $3.6 trillion market valuation will likely have a larger impact on the cap-weighted S&P 500 and Nasdaq Composite. 

Indeed, based on its current share price of roughly $150, "NVDA stock will be as important to the DJIA as, roughly, 3M (MMM)," he writes.

- Karee Venema

Will the Supreme Court allow a class action lawsuit against Nvidia to proceed?

Nvidia's earnings announcement on November 20 is (probably) the Next Big Thing for stocks, investors and hardcore artificial intelligence nerds. (We'll see whether Federal Reserve Chair Jerome Powell breaks stride this afternoon…)

Tech generally has been underperforming the broader market in recent months, but the AI story is still driving up share prices across sectors. And Nvidia's hardware is supporting a lot of the buildout and the efficiencies end-users plan/hope to realize.

Making new high after new high, NVDA stock continues to reflect almost unanimous support among market participants as well as AI utilitarians.

It's another kind of thing to appear before the U.S. Supreme Court, though, which is where lawyers for Jensen Huang's juggernaut found themselves on Wednesday.

As Ronald Mann of ScotusBlog explains, a group of Nvidia shareholders has filed a proposed class action lawsuit under the 1995 Private Securities Litigation Reform Act alleging the company and key executives "made false and misleading statements about the extent to which use in crypto mining was propping up Nvidia's chip sales."

Following oral arguments on Wednesday, "The Supreme Court seemed inclined on Wednesday to allow a lawsuit accusing Nvidia, the giant maker of computer chips, of misrepresenting its reliance on the cryptocurrency mining industry in 2017 and 2018," observes Adam Liptak of The New York Times.

And yet Nvidia still enjoys broader tailwinds: The 1995 law imposes a difficult burden on plaintiffs.

"The shareholders have a hard time showing that Huang spoke falsely when he made statements downplaying the share of NVIDIA chip sales attributable to crypto mining," Mann writes. "The shareholders do not have any documents or statements that directly show any reason to think Huang knew what share of sales were made to crypto miners."

NVDA stock was up nearly 1% an hour after Thursday's opening bell, even as the three major equity indexes were in the red.

- David Dittman

Wedbush girds for another beat-and-raise quarter  

Nvidia heads into its November 20 earnings release as one of Wall Street's top S&P 500 stocks to buy. On Thursday, Wedbush Securities analyst Matt Bryson helped explain why.

Bryson, who rates NVDA at Outperform (the equivalent of Buy), writes in a new note to clients that the pace-setting chipmaker has forced him to confront an age-old tongue twister: "How much sales acceleration can an accelerator accelerate if an accelerator can accelerate sales?"

What does that mean? Stocks move on surprises, be they to the upside or the downside. NVDA stock has tripled on a price basis over the past 52 weeks in part because it consistently delivers upside surprises on its top line. (Note that NVDA stock is also much more volatile than the broader market, but let's not get into that right now.) 

Will NVDA stock pop on its earnings report? That depends partly on delivering beat-and-raise revenue figures.

So, what's the outlook for that, in Bryson's view?

"NVDA has been consistent in delivering a revenue beat of approximately $2 billion, while guiding for $2 billion-plus in growth the past few quarters," the analyst says. "We believe NVDA will likely at least modestly exceed the pattern of 'just' beating forecasts by approximately $2 billion, as we anticipate strength in Q3 AI spend by hyperscale customers, as well as continued solid growth at non-hyperscale accounts will boost FQ3 sales."

There's a lot more to it than that, but the bottom line is Bryson lifted his target price to $160, giving NVDA stock implied upside of 10% from current levels. For context, according to S&P Global Market Intelligence, the Street's average price target stands at just $158.

If this member of the Magnificent 7 prints a big enough beat-and-raise on the top line, you can bet a lot of those NVDA price targets will be revised upwards. 

– Dan Burrows

Should you buy Nvidia stock at current levels?

"To buy or not to buy?" is a question a lot of investors have about Nvidia stock ahead of the AI chipmaker's November 20 fiscal third-quarter earnings release.

NVDA stock traded as high as $148.91 today (November 14), within 0.5% of the all-time high it hit intraday on November 8. Nvidia is the biggest company in the world based on market capitalization at $3.6 trillion, and there's some distance developing between it and No. 2 Apple (APPL) as well as No. 3 Microsoft (MSFT).

NVDA has been defying conventional ideas about "valuation" for a while now. It's also been defying conventional rules about big numbers, rising as rapidly as any company ever has up the market-cap ladder thanks to a steady stream of beat-and-raise quarterly reports.

Indeed, according to Anton Shilov of Tom's Hardware, maybe you should consider yourself lucky to still have the opportunity to consider whether you should buy Nvidia at these levels.

"At Nvidia's AI Summit in Tokyo this week," Shilov writes, citing an original report in Fortune, "Jensen Huang, chief executive of Nvidia, and Masayoshi Son, the head of SoftBank, expressed regrets that the former did not privatize Nvidia a decade ago when the latter offered him money to do so."

Huang and Son talked about privatization as well as a potential merger with Arm Limited, a move that was blocked by regulators in February 2022. Arm subsequently went public as Arm Holdings (ARM) in September 2023.

"Masa said, 'Jensen, the market doesn't understand the value of Nvidia. Your future is incredible,'" said Huang. "'Your journey of suffering will continue for some time, so let me give you the money to buy Nvidia.' He wanted to lend me money to buy Nvidia, all of it. Now I regret not taking it."

So, "to buy or not to buy" Nvidia at $149…

- David Dittman

About Elon's xAI and Its $6 Billion Nvidia Chip Buy

According to a report from David Faber of CNBC, Elon Musk's xAI is raising as much as $6 billion to buy 100,000 Nvidia chips.

"Sources told Faber that the funding, which should close early next week, is a combination of $5 billion expected from sovereign funds in the Middle East and $1 billion from other investors, some of whom may want to re-up their investments," CNBC reports. The fresh raise values xAI, which Musk founded in September 2023, at $50 billion.

Bloomberg's Ed Ludlow asks an interesting question on X, the social media platform formerly known as Twitter: "On the report that xAI is going to buy 100,000 NVDA chips… didn't Elon Musk already say that?"

The world's richest person did tease the transaction more than two weeks ago on X, retweeting an invitation from an insider to "Join the xAI compute team!" which itself was a retweet of ServeTheHome's tweet touting its tour of the xAI Colossus AI Supercluster.

"Soon to become a 200k H100/H200 training cluster in a single building," said Musk on October 28 of the facility in Memphis, Tennessee. The supercomputer is rumored to be support for Tesla's (TSLA) Full Self Driving software.

"The money will be used to acquire 100,000 Nvidia chips, per sources familiar with the situation," said CNBC on November 15. It seems "the money" – specifically, the $6 billion and where it's coming from, not so much where it's ultimately going – is indeed the story here.

Nvidia stock is down nearly 4% two hours ahead of Friday's closing bell, giving back some of the lead it had built up recently in the global market capitalization rankings. This slump comes despite the fact that Wedbush Securities analyst Matt Bryson recently bumped his price target on NVDA from $138 to $160. 

Tesla stock, meanwhile, is up nearly 3%, rising against the tide as the relationship between the electric vehicle maker's CEO and President-elect Donald Trump appears to be paying off in particular ways, most notably around EV tax credits.

- David Dittman

Related content:

• Should You Buy Tesla Stock After Trump's Election Win?
• Tesla to Launch FSD in Europe and China: What to Know

Analysts race to hike NVDA price targets 

Wall Street analysts are busy updating their models ahead of Nvidia's bellwether earnings report. This isn't unusual. If there's something striking about these revisions, it's how fast analysts are hiking their price targets on the Magnificent 7 stock.

According to data from S&P Global Market Intelligence, as of November 15, analysts' average price target stood at $159 for NVDA stock. That gave shares implied upside of about 13% over the next 12 months or so.

If investors respond to the potential for 13% price upside over the next year with a "big wow," that's understandable. After all, NVDA stock has tripled in 2024 so far alone. The Street forecasts average annual earnings growth of 35% for the next three to five years, and yet NVDA shares change hands at just 42 times expected earnings.

Mind you, this does not begin to scratch the surface of the bull case. NVDA gets a rare consensus recommendation of Strong Buy, per S&P Global Market Intelligence. It's one of the Street's top S&P 500 stocks to buy. 

Surely analysts who are so bullish on a stock see more than 13% upside in the next year or so. 

Don't worry; they probably will soon enough.

Indeed, they're already updating their price targets at an accelerating rate. The Street's average target price jumped 5% over the past week. Just have a look at the below chart.

Investors can expect more upward revisions to NVDA's target price as we get closer to its earnings report. And we will certainly see a slew of updates once the NVDA print is in. 

The bottom line: Take price targets with a grain of salt. Nvidia isn't as popular as it is because it's offering a 13% price return over the next year.

– Dan Burrows

Why are Nvidia earnings so important? 

Nvidia is the most dominant stock in the equities market, driving 20% of the S&P 500's return over the past 12 months, says BofA Securities analyst Gonzalo Asis. He adds that the chipmaker "is expected to drive nearly 25% of the S&P 500's earnings per share growth in the third quarter."

The analyst says that clues in the options market show us just how important Nvidia earnings are for investors. Indeed, Asis notes that options contracts are currently pricing in more broad-market risk for NVDA earnings (implied move of 1.15%) than they are for the upcoming monthly jobs (implied move of roughly 1.05%) and Consumer Price Index (implied move of around 0.9%) reports.

- Karee Venema

Related content:

• When Is the Next Jobs Report?
• When Is the Next CPI Report?
• What Is the VIX? This 'Fear Index' Is Used for Active Investing

Nvidia smokes the rest of the Mag 7 

The most commonly used benchmark for U.S. equity performance is the S&P 500. It's up about 23% on a price basis so far this year. The riskier and growthier Nasdaq-100 – or the 100 largest non-financial companies in the Nasdaq Composite – has gained more than 25%, while the Nasdaq Composite itself is up almost 25%.

All of these indexes are weighted by market cap, which means the stocks with the largest market values have the greatest influence on the direction of the benchmark. As some of the largest companies in the world and monopolistic AI plays, the Magnificent 7 stocks are responsible for a good chunk of the bull market's gains, and much of its buoyant sentiment. 

Just have a look at the divergence between the market-cap-weighted S&P 500 and the equal-weight version of the S&P 500 – which treats every stock, well, equally – so far this year.

Nvidia has done more than any other stock to help lift the cap-weighted gauges to record high after record high. Indeed, as of this writing, NVDA is the second most valuable publicly traded company in the world again, behind only Apple. 

In order to visualize Nvidia's outperformance relative to the other Mag 7 names that it's so happy to call its customers, we thought it would help to put all of their stocks' YTD price performance on a single chart. 

To that end, have a look below to get a sense of which Mag 7 stocks are helping the market the most this year.

– Dan Burrows 

Robotics AI: Nvidia's next big market?

Quarterly earnings reports are backward-looking but the market is forward-looking. As much as market participants care about what a company has done for them lately, what they really want to know is how much cash the company is going to throw off over the long haul.

That's why corporate guidance is often more important than whatever a firm's income statement, balance sheet and cash flow statement tell investors about a three-month period that's already in the history books.

It's also why companies that post beat-and-raise quarters tend to see their share prices pop on the news.

Nvidia stock's meteoric rise has been driven in part by the way the most important company in the AI universe keeps delivering big top-line beats. Wall Street is already braced for another one, as well as the implications for forward sales, margins and profits.

This is standard stuff. But, believe it or not, industry analysts are also paid to think well beyond the next 12 months. Their clients want detail, color and granular information, not just updates to discounted cash flow models.

They also want their analysts to offer, well, analysis.

With that in mind, here's something NVDA bulls might want to consider as the Street dives into the post-print meeting with management.

"We believe there are two bullish factors that may not surface explicitly (or even implicitly) on the earnings call but are important to NVDA's position in compute generally and its revenue growth in the next few years," writes William Stein, managing director at Truist Securities, in a note to clients.

Although current demand and investor interest around all things AI is focused on various large language models (LLMs) such as ChatGPT, Stein notes that physical AI (robotics) and data processing are rapidly emerging. This has positive implications for demand for NVDA's parallel compute technology, which accelerates traditional compute workloads.

"Second, just as NVDA ramps delivery of Grace CPU in the data-center business, we anticipate the company will announce a client CPU during 2025, opening up significant additional total addressable market," Stein adds.

The analyst rates NVDA stock at Buy with a $167 target price, giving shares implied upside of about 17% in the next 12 months or so.

– Dan Burrows

Related content:

• AI to Power the Next Generation of Robots
• 7 Best Robotics and AI ETFs

Nvidia earnings and Blackwell questions

The other big question around Nvidia's after-the-closing-bell event on Wednesday – other than the magnitude of its earnings beat and its guidance raise – is when the AI chipmaker will see a financial bounce from its new Blackwell platform.

Nvidia stock added 4.9% on Tuesday as already high expectations keep rising ahead of Wednesday night's print. Wall Street will also be looking to see what management has to say about Blackwell, particularly following a recent report in The Information that suggests the new chips are overheating when installed in high-capacity server racks.

"Supply chain data points, as well as discussions with industry participants, remain skewed positively," writes Stifel analyst Ruben Roy in a note on NVDA, "and we expect another beat/raise scenario." Roy says that "expectations are elevated" and that "our scenario appears to be widely anticipated" – adding that "our conversations suggest that a Blackwell-driven inflection to the upside is more likely an April quarter event than January."

Roy emphasizes that "the timing of expected Blackwell-based configurations has not changed in recent weeks. In aggregate, estimates have been moving higher for fiscal 2026 and fiscal 2027 and we believe that a diverse set of data points support the positive revisions." 

Concluding this morning's note, Roy reiterated his Buy rating on NVDA and raised his price target from $165 to $180. That new target suggests implied upside of about 22% to the stock's November 19 close.

- David Dittman

Nvidia stock trades lower ahead of earnings

Nvidia opened Wednesday's session lower as investors take some profits ahead of this evening's earnings announcement. Shares were down 1.2% at last check, putting pressure on all three main benchmarks.

About 15 minutes into the trading day, the Dow is down 0.1%, the S&P 500 is off 0.4% and the Nasdaq Composite is 0.5% lower.

- Karee Venema

Is Nvidia the best stock of all time? 

Nvidia was already one of the best long-term holdings of all time before the stock went on an epic run this year. Indeed, NVDA's share price had essentially tripled for the year to date on the eve of its Q3 post-market earnings release. 

But then longtime shareholders should be used to such returns by now. 

After all, from its initial public offering at $12 a share in January 1999 through December 2020, NVDA stock created $309.4 billion in shareholder wealth, according to an analysis by Hendrik Bessembinder, a finance professor at the W.P. Carey School of Business at Arizona State University. 

Indeed, per Bessembinder's findings, which account for a stock's increase in market value adjusted for cash flows in and out of the business and other factors, Nvidia was one of the best stocks of that 30-year period.

At this point readers may have noticed that it is now the year 2024 – or many years since the original study's cutoff date. 

Happily, Bessembinder updated the results. And even after missing NVDA's epic 2024 rally, this is a name that truly stands out.

After studying the return outcomes of the 29,078 publicly listed common stocks contained in the Center for Research in Security Prices database from December 1925 to December 2023, "the highest annualized compound return for any stock with at least 20 years of return data was 33.38%, earned by Nvidia shareholders," Bessembinder writes.

True, Nvidia did not generate the greatest cumulative return. That honor belongs to tobacco titan Altria (MO), which is currently one of the stocks with the highest dividend yields in the S&P 500. But when it comes to the historical record, no name beats Nvidia for generating lots of wealth really fast.

– Dan Burrows

Are expectations for Nvidia "insane"?

As LPL Financial Chief Global Strategist Quincy Krosby observes in a note on the company's fiscal third-quarter earnings announcement, there's a lot riding on Nvidia stock right now.

"With markets concerned about the latest phase of the Russia/Ukraine conflict – and with European leaders worried over Moscow's next move – Walmart's positive guidance helped support U.S. markets yesterday," Krosby writes. "But it was a parade of enthusiastic comments regarding NVDA's Q3 earnings call following [yesterday's] market close, that seemingly had the market exceptionally excited."

Krosby notes that "options markets have been pricing in a move of nearly 10% in either direction" for NVDA's share price, "underscoring uncertainty going into this afternoon's earnings report (the average has been around 9%)."

NVDA has moved up from its intraday lows but is still down about 1.9% at $144.28 a little more than two hours before management reports results. 

Krosby highlights "a wide-reaching narrative over whether NVDA can once again surpass analyst expectations" as valuations – NVDA's as well as the broader market's – continue to climb. The strategist would also like to know more from Nvidia management about "a conspiracy theory making the rounds that a story was planted to shed doubt on the long-awaited Blackwell chip, suggesting that it overheats within the servers." We discussed yesterday that this story may or may not have been "planted" in The Information.

The bottom line here is "the options market is reflecting swings in the stock price following release of the numbers and during the conference call with the CEO." As Krosby concludes, "The market is hoping for not just strong guidance but 'insane' guidance that's not yet priced in."

Stay tuned.

- David Dittman

Nvidia's third-quarter results are out

For the three months ended October 27, the chipmaker reported earnings of 81 cents per share – up 19% quarter over quarter and more than doubling on a year-over-year basis. Revenue arrived at $35.1 billion, a 17% increase over Q2 and 94% over the year prior.

Data center revenue, which houses the company's AI segment, came in at $30.8 billion, marking a 17% improvement over the second quarter and rising 112% YoY. Automotive revenue also saw a notable year-over-year increase, jumping 72% to $449 million.

Analysts tracked by S&P Global Market Intelligence expected earnings of 75 cents per share on revenue of $33.1 billion.

The company also said it initiated $11 billion in stock buybacks in Q3 and paid out $245 million in dividends.

At last check, NVDA shares are down 3.4% in after-hours trading.

- Karee Venema

Nvidia gives strong fiscal Q4 guidance, talks Blackwell shipmets

For its fiscal fourth quarter, Nvidia is calling for revenue of $37.5 billion, plus or minus 2%. This compares to Wall Street's forecast for Q4 revenue of $37.0 billion.

The company had the following to say about its highly anticipated Blackwell chips:

We completed a successful mask change for Blackwell, our next Data Center architecture, that improved production yields. Blackwell production shipments are scheduled to begin in the fourth quarter of fiscal 2025 and will continue to ramp into fiscal 2026. We will be shipping both Hopper and Blackwell systems in the fourth quarter of fiscal 2025 and beyond. Both Hopper and Blackwell systems have certain supply constraints, and the demand for Blackwell is expected to exceed supply for several quarters in fiscal 2026.

- Karee Venema

Nvidia earnings call highlights

On Blackwell: Nvidia Chief Financial Officer Colette Kress said production is in "full swing," and underscored "staggering demand" for the new AI chips. She also said margins will likely rise as Blackwell production accelerates to meet demand.

Nvidia CEO Jensen Huang said the company will deliver more Blackwell chips in the fourth quarter than previously anticipated and that execution is "going well."

Kress added that fourth-quarter revenue from Blackwell chips could top prior estimates of "several billion dollars."

On Trump: Huang said that the company will take things one quarter at a time, but will "fully" comply with regulations. "Whatever the new administration decides we will of course support the administration."

On AI and robotics: Huang said AI has created "a new industrial revolution" that is currently underway. "There are more foundation model makers now than there were a year ago. The computing scale of pre-training and post-training continues to grow exponentially. There are more AI native startups than ever, and the number of successful inference services is rising."

He added that "the age of robotics is coming" and that "Nvidia's expertise, scale, and ability to deliver full stack and full infrastructure let us serve the entire multi-trillion-dollar AI and robotics opportunities ahead, from every hyperscale cloud, enterprise private cloud, to sovereign regional AI clouds, on (premise) to industrial edge, and robotics."

- Karee Venema

Data center revenue growth is sustainable, says Third Bridge 

Third Bridge analyst Lucas Keh thinks the quarter-to-quarter revenue growth rate in Nvidia's data center segment is sustainable over the next several quarters amid growing demand for AI chips from cloud providers.

Keh points to an increasing concentration in revenue from public cloud companies – now half of total revenue – as a positive sign of hyperscaler adoption for Blackwell, despite the delays.

He also says that the company attributed a decline in data center GPU margins "to a shift from customers from H100-based systems to more complex solutions like B200 and H200." This could suggest that Nvidia will not price Blackwell as aggressively "initially to spur adoption against competitive threats in the market like Advanced Micro Devices (AMD)."

- Karee Venema

NVDA stock is lower in Thursday's pre-market trading

Nvidia stock fell by more than 5% in Wednesday's extended trading in reaction to the chipmaker's fiscal Q3 results. In Thursday's pre-market session, shares were off a more modest 0.8%.

- Karee Venema

Nvidia stock swings higher

I spoke too soon. With about 20 minutes to go until Thursday's opening bell, Nvidia stock has swung higher, now set to start the day up nearly 2%. As a result, the Dow, S&P 500 and Nasdaq Composite are all poised to open in the green.

"There is nothing wrong with NVDA," says Eric Clark, portfolio manager of the Rational Dynamic Brands Fund. Clark suggests "investors use any weakness to buy the stock" because demand for Blackwell chips will eventually be satisfied and any slight misses in the company's financial results will turn into big beats yet again."

- Karee Venema

Nvidia drops back into the red in mid-morning trading

Nvidia's brief pop higher at the open didn't last long, with shares quickly sinking back into negative territory. At last check, NVDA stock was down 2.8%.

- Karee Venema

Downside for Nvidia

Nvidia stock can go down, of course, and it's happening today. NVDA gapped up at the open and reached $152.89, a new all-time high, but slipped to an intraday low of $140.70 by 10:30 am Eastern time.

NVDA is trading toward $144 around the noon hour, down a little over 1%. Still, strength elsewhere, notably in Salesforce (CRM), has the Dow Jones Industrial Average, as well as the S&P 500, in positive territory, even as the Nasdaq Composite lags.

Both analysts and investors are still reacting to Nvidia's fiscal third-quarter results and management's fourth-quarter guidance. Wall Street appears generally pleased with reported numbers while perhaps only "whelmed" by management's forecast.

CEO Jensen Huang, addressing directly one of the major questions about Nvidia's immediate future during management's earnings conference call, said that Blackwell production "is in full steam."

During the earnings call, Huang said the company will deliver more Blackwells than previously estimated this quarter. 

 The Information reported last weekend that the new chips were overheating when installed in high-capacity server racks, requiring design changes. They may not be as excited about what's to come as they have been in the past, but even skeptics see limited downside from here for Nvidia stock. 

Consider D.A. Davidson Head of Technology Research Gil Luria. "Despite demand in the near term continuing to be strong, we still believe a decline in demand for Nvidia compute is inevitable as customers begin to scrutinize their return on investment on AI compute," Luria wrote in a research note this morning. He reiterated his Neutral (Hold) rating on NVDA stock but raised his price target from $90 to $135. That's not a bad floor given the stock’s new all-time high.

- David Dittman

Is Nvidia stock on sale? 

Analysts are busy updating their discounted cash flow models and price targets for Nvidia after the most important AI company in the world failed to give the sort of blow-out revenue guidance Wall Street has come to expect.

Indeed, shares in NVDA, the world's most valuable publicly traded company with a market cap in excess of $3 trillion, actually stumbled after posting Q3 results. 

But then these sorts of things can happen when a stock is said to be priced for perfection.

Either way, it seemed like a good time to take a look at a couple of ways in which analysts' expectations have changed for NVDA stock in light of the company's latest guidance.

First, let's have a look at NVDA's price target. Although these targets are of limited utility, they do form the basis for declaring whether a stock is a Buy, Hold or Sell. 

As of now, NVDA's average price target stands at $170, up roughly 6% from the pre-earnings release target of $161. NVDA's new average price target gives shares implied upside of about 17% over the next 12 months. The old price target – based off NVDA's previous level – gave the stock implied upside of about 13%.

It's hard to believe Nvidia has become a $3 trillion company because of its potential for 13% or 17% price upside over the next year or so.

Price targets. Go figure.

Perhaps relative valuation can be more helpful. 

NVDA's relative valuation does indeed look more attractive by some measures. Please note, however, that NVDA stock often looks expensive and yet it keeps going up.

Valuation, while critical, plays out on its own time frame. These time frames can be much longer than investors expect.

But getting back to Nvidia. After updating their models, analysts now forecast NVDA to generate average annual earnings growth of about 38% over the next three to five years, up from 35% a day ago. 

This, in turn, makes NVDA look much cheaper when you look at how fast the stock is rising relative to its growth prospects. Indeed, Nvidia stock changes hands at about 38 times estimated next-12-months earnings. 

What does this mean? By at least one metric – the price/earnings-to-growth (PEG) ratio – Nvidia stock looks very cheap on a relative valuation basis.

Here's why: since NVDA stock is trading at 38 times expected earnings and has a LTG forecast of 38, its PEG is 1.0. To put that in perspective, the S&P 500 trades at a PEG of more than 2.0. 

By this measure, NVDA trades at more than a 50% discount to the broader market. That's not bad, but then Nvidia and the broader market are sort of apples and oranges.

That's why we want to look at Nvidia's PEG relative to itself. This gives us an idea of what sort of premiums the market has been willing to pay for Nvidia's growth prospects in the past.

And what do we find? Bulls will be happy to know that with a PEG ratio of about 1.0, Nvidia stock trades at a steep discount to its own five-year average. Indeed, per LSEG Stock Reports Plus, if Nvidia's PEG "returned to historical form," the stock would trade at $349.04.

That's not a price target, mind you, it's just some modeling. But it does give NVDA stock implied price upside of more than 140% from current levels.

– Dan Burrows

Nvidia ekes out modest gain after earnings

In Wednesday's intraday session, Nvidia was down by as much as 3.4% and up by nearly 2%. Shares eventually settled with a modest 0.5% gain.

Read more: Stock Market Today: Stocks End Higher in Whipsaw Session

Huang talks DeepSeek

Nvidia CEO Jensen Huang last week commented on DeepSeek, a cheap AI model from a Chinese startup that sparked a massive selloff in tech stocks last month. Speaking with DDN CEO Alex Bouzari, Huang suggested the market's reaction to DeepSeek's R1 model was a bit of an overreaction. 

"Reasoning is a fairly compute-intensive part. The market responded to R1 as in 'Oh my gosh, AI is finished. It dropped out of the sky, we don't need to do any computing anymore.' It's exactly the opposite," Huang said, noting that the release of the new open-source AI model is "incredibly exciting."

"It's making everybody take notice that, okay, there are opportunities to have the models be far more efficient than what we thought was possible," the CEO added. "And so it's expanding, and it's accelerating the adoption of AI."

Still, expectations for Nvidia's fiscal fourth-quarter results have been lowered heading into the print as a result of DeepSeek jitters, which means we're unlikely to see a major upside reaction in the shares, says Stifel analyst Ruben Roy (Buy).

However, Roy notes that the near-term impact from DeepSeek will be minimal given the massive spending levels many large-cap companies announced this earnings season. "Rather, we continue to anticipate potential impacts of DeepSeek playing out over the next several years as AI players re-evaluate model development practices," he adds.

Roy remains Buy-rated on the blue chip stock, saying that "the underlying trends in AI infrastructure spend continue to bode well for NVDA."

- Karee Venema

Fireworks alert

Wedbush analyst Daniel Ives is known for being bold in both attire and opinion, and his often stunning sartorial choices match well the performance of a stock he's touted just about all the way during a historic climb up the market-cap ladder.

"This is a massive week ahead for tech stocks and the global markets as the Godfather of AI Jensen and Nvidia are on deck reporting earnings Wednesday after the bell," Ives writes in a Monday note. "With market jitters abounding for macro, Trump policy worries, Fed/inflation, DeepSeek, and a myriad of other issues … the most important company for the tech sector and AI Revolution continues to be Nvidia."

And the analyst expects Nvidia to deliver "another robust performance and 'clear beat and raise special'" that "should calm the nerves of investors." 

Ives says CEO Jensen Huang will talk about "massive demand drivers from Blackwell and AI capex" amid "this fourth Industrial Revolution." He notes that the Magnificent 7 have committed to $325 billion of capex in 2025, a year-over-year increase of approximately $100 billion – "and enterprise-driven demand is accelerating as more companies and governments head down the AI yellow brick road."

The analyst includes this nugget: "After speaking with many enterprise AI customers we have seen NOT ONE AI enterprise deployment slow down or change due to the DeepSeek situation. No customer wants to 'lose their place in line' as it is described to us for Nvidia's next-gen chips."

Huang will host a conference call to discuss Nvidia's fiscal 2025 fourth-quarter results on Wednesday at 5 pm Eastern Time, during which Ives says "the Blackwell ramp will be front and center." Like Ives, we'll be "very closely watching the fireworks" and live-blogging the Nvidia conference call on Wednesday."

The bedrock of this bull market in 2025 is built around the AI Revolution spreading to the second and third derivatives across software, consumer tech, and infrastructure," Ives concludes, "but it all starts with Nvidia."

- David Dittman

Will Nvidia earnings be the next market catalyst?

The stock market's next move may very well be determined by the reaction to Nvidia's earnings report, says Clark Bellin, president and chief investment officer at Bellwether Wealth. This is because earnings and artificial intelligence are two of the "most important factors for markets right now." (Inflation, he adds, is the third.)

So far for the year to date, Nvidia shares have lagged the broader market – and are currently down compared to their December 31 close vs positive returns for the Dow Jones Industrial Average, S&P 500 Index and the Nasdaq Composite.

"Blowout earnings from Nvidia … could add upward momentum to stocks," Bellin adds.

- Karee Venema, senior investing editor

Should you buy Nvidia before earnings?

Nvidia stock shed more than 10% in January in reaction to DeepSeek. While shares have recovered most of their early 2025 losses, they are down roughly 6% this week at last check after Bloomberg reported the Trump administration is preparing to broaden restrictions on the type of chips the company can export to China without a license. The administration is also considering "tightening existing curbs on the quantity of AI chips that can be exported globally without a license," according to Bloomberg.

Should investors be worried about more selling or is now the time to buy the dip on the chipmaker?

Only time will tell, but Mary Ann Bartels, chief investment strategist at Sanctuary Wealth, thinks that Nvidia is in a consolidation phase that could last six to 12 months. Still, the strategist believes the stock remains in a bull trend. 

And for investors wanting to gain exposure to longer-term AI growth – the market is expected to grow at a 27.7% compound annual growth rate through 2030, according to Statista – now could be the time to strike on NVDA given its current valuation. Specifically, the stock is trading at 30.4 times forward earnings, well below its five-year average of 40.7, per Morningstar.

- Karee Venema, senior investing editor

Nvidia and the AI monetization phase

Wedbush analyst Daniel Ives reiterated his optimism for NVDA on Tuesday morning, adding a new introduction and restating the data resulting from his channel checks ahead of Nvidia Day.

"Tomorrow is a massive day for the global markets," Ives writes, "as the Street awaits Nvidia earnings to gauge the demand trajectory of the AI Revolution." Investors, traders and speculators on and off Wall Street are wondering "if another '$2 billion beat and $2 billion raise' is in the cards for the Godfather of AI Jensen and Nvidia."

Nvidia stock was down more than 3% Tuesday morning, jockeying with Amazon.com (AMZN) in and out of the Nos. 29 and 30 spots in the Dow Jones Industrial Average. 

"The market is heavily skewed negative right now around tech sentiment with any whisper of worries/concern from DeepSeek to Microsoft (MSFT) CapEx causing a brutal ripple impact across the tech ecosystem," Ives observes.

He has an Outperform rating on NVDA and a 12-month target price of $550 for the AI stock. "We have been monitoring dozens of large companies/CIOs that have embarked down the AI path in 2025 to gauge enterprise AI spending, use cases, and which vendors are separating from the pack in the AI Revolution," the analyst explains in his twin notes.

Ives estimates that AI now accounts for "roughly 10% of many IT budgets for 2025 … and in some cases up to 15%," noting that "many CIOs have accelerated their AI strategies" over the next six to nine months. "Monetization of this key theme is starting to become a reality across many industries," he concludes.

- David Dittman

Will Nvidia's guidance be conservative? 

Morgan Stanley analyst Joseph Moore thinks fundamentals have improved in recent weeks as Hopper demand has firmed and expects Nvidia to report full-year earnings of $2.94 per share – roughly in line with Street estimates.

However, Moore believes Nvidia's guidance for fiscal 2026 will be conservative due to uncertainty around potential export controls. "Export controls have been a challenge since last year's restriction on processing power to China," he says. 

While Moore initially believed these restrictions would have a limited impact, the success of DeepSeek suggests "the government is likely to be more restrictive, but we don't know what that looks like." He feels these export controls could create "a meaningful headwind to second-half results."

Still, Nvidia remains a top stock pick for Moore on expectations the Blackwell cycle will drive notable upside for the chipmaker.

- Karee Venema

The whole market Is watching

Welcome to Nvidia Day. Equity futures are indicating a positive open a little less than two hours before the opening bell rings to start what promises to be a fascinating trading session ahead of perhaps the most consequential after-market earnings announcement of the 21st century. That sounds like a lot, but Nvidia is literally everywhere. 

"In case you're not keeping up with the index weightings," writes All Star Charts founder and chief market strategist J.C. Parets in a note previewing the event, "here's the cheat sheet…" Parets explains that Nvidia equals 17.9% of the Semiconductors Index Fund (SMH), 7.4% of the Nasdaq100 Index Fund (QQQ), 12% of the S&P Technology Index Fund (XLK), 9.3% of the Russell 1000 Growth Index Fund (IWF), "and a lot more ... This is a very big deal." 

Parets implores his readers to "look at the Semiconductors Index relative to the S&P 500 potentially completing a massive top." 

A technical analyst, Parets will be watching the reaction and how Nvidia's conference call impacts the broader market. "If we lose semis," Parets concludes, "then bull market canceled. It's that simple."

Note that we'll be live-blogging here beginning right after the closing bell and continuing through the conclusion of Nvidia's conference call.

- David Dittman, investing editor

Experts weigh in on Nvidia ahead of earnings

All eyes are on Nvidia today as the chipmaker prepares to report earnings after the close. Many of Wall Street's top minds are chiming in ahead of the print. Here's some of what they're saying:

"We expect a narrower earnings beat from Nvidia, but a beat nonetheless, and that comes even with the recent DeepSeek fears, which we believe are already priced into Nvidia's current stock price and will have little influence on Wednesday's earnings report. We expect the stock to rally post-earnings, as it's been some time since Nvidia has made a new record high, and its earnings and guidance justify continued momentum in the stock." - Chris Brigati, Chief Investment Officer at SWBC

"Nvidia's earnings will be a defining moment, not just for itself but for the entire tech sector. Given the sky-high expectations, the AI giant must deliver exceptional results to keep the bulls alive. But mounting competition and supply constraints could complicate the narrative." - Lukman Otunuga, Senior Market Analyst at FXTM

"Nvidia is likely to post strong earnings again, but the stakes are lower than they have been in previous quarters. The company is now selling at a valuation much lower than the broad semis index, which gives them some room for error." - Scott Helfstein, Head of Investment Strategy, Global X

"This week, all eyes will be on Nvidia as investors expect to see another quarter of strong earnings. Major tech companies have recently pledged to increase spending on AI, but breakthroughs in AI like DeepSeek may disrupt how that spending is divided, potentially at the expense of the hardware suppliers." - Jason Pride, Chief of Investment Strategy & Research, and Michael Reynolds, Vice President of Investment Strategy at Glenmede 

"All eyes will be on Blackwell momentum and the ramp of its most premium GB200 configuration, with the NVL72 GPU rack likely to see orders push into April/July quarters due to well-known delays/overheating issues. Higher spend by hyperscalers and gross margin expansion as Blackwell ramps are positives, with Blackwell revenue to cross Hopper in Apr-Q. We will be closely watching NVDA's commentary on market concerns tied to compute demand post-DeepSeek, potential excess capacity by the second half, and possibly more aggressive China export restrictions." - Angelo Zino, Senior Equity Analyst at CFRA Research

- Karee Venema, senior investing editor

NVDA gaps up at the open

It's one of those days that brings together investors, traders and speculators of every stripe, with different and even competing interests, like a Super Bowl for financial markets, only every quarter.

For the record, Nvidia opened at $129.99 on Wednesday, up 2.7% from its closing price on Tuesday and continuing the short-term trend established in pre-market trading.

NVDA was down 3.1% on Monday and lost another 2.8% yesterday. It's traded as high as $132.15 early Tuesday and as low as $129.05. That range is likely to broaden – upside, downside, perhaps both – during regular hours and then in the after-market session once the numbers come out.

Investors are concerned today about Nvidia's growth trajectory. Traders and speculators are focused on price action, pure and simple.

Over the long, long term, what they all have done and continue to do in terms of price discovery, etc., has driven that ultra-comforting up-and-to-the-right trend. That big move is made up of many days like today – maybe not many days like today, but things like this do happen. 

At the same time, the way the market is right now – still poised near all-time highs basically on the strength of the AI trade but with more and more questions about the stability of the earnings landscape – Nvidia merits additional scrutiny.

Nvidia Day is exciting. It's important to appreciate that the market has been pricing in since ChatGPT's release in 2022 what Wedbush analyst Daniel Ives describes as a "4th Industrial Revolution."

That seems like a long-term thing. Nevertheless, this is an expectations game, and expectations for Nvidia are really high.

My Nvidia scorecard

 Having completed a semi-comprehensive cross-check of financial media and publicly available Wall Street analysis, here are five things the market will tune in to this evening when Nvidia reveals its results and Jensen Huang opens up the conference call for questions and answers… 

Expectations: Analysts expect Nvidia to report revenue growth of 72% to $38.1 billion and adjusted earnings per share of 85 cents. Wall Street wants to see fiscal 2026 first-quarter guidance of $42.1 billion for revenue and 91 cents for adjusted EPS.

Blackwell: A – perhaps "the" – major question is how quickly Nvidia can ramp up production of its GB200 NVL72 Blackwell Server system. That sounds like a good problem for a business to have, all else equal. NVDA stock will be sensitive to commentary on both sides of the equation: supply and demand.

Moat: This is a word more commonly associated with mature businesses as opposed to those building the infrastructure for a "4th Industrial Revolution." It could be, however, that Nvidia's technology stack already makes its semiconductor leadership defensible for the long term.

DeepSeek: Huang has already offered his take on the "cheap" large language model from a Chinese startup that catalyzed a broad market sell-off in late January: He expects DeepSeek will accelerate adoption of AI and drive demand for the kind of computing power only Nvidia supports.   

Trump: According to Bloomberg, "Donald Trump's administration is sketching out tougher versions of U.S. semiconductor curbs and pressuring key allies to escalate their restrictions on China's chip industry." China's share of Nvidia's total revenue has already declined from about 25% to below 15%. 

With about two hours to go until Nvidia reports its fiscal 2025 fourth-quarter results, NVDA stock is up about 4%, having traded as high as $133.73.

 - David Dittman, investing editor 

What time will Nvidia earnings be released?

Nvidia earnings will be released after the stock market closes on Wednesday. While some companies release their quarterly report right at 4 pm Eastern Standard Time, the typical time frame is between 4:00 and 4:30 pm. According to NVDA, its results will come through "at approximately" at 4:20 pm.

The conference call is scheduled to begin at 5 pm Eastern Standard Time.

 Nvidia's numbers are in

For the three months ending January 26, Nvidia reported earnings of 89 cents per share, up 71% year over year, on revenue of $39.3 billion (+78% YoY).

Data center revenue surged 93% year over year to $35.6 billion, while automotive revenue jumped 27% to $570 million. Gaming revenue, on the other hand, slumped 11% to $11.4 billion.

For its full fiscal year, Nvidia said earnings more than doubled from the year prior, to $2.99 per share. Revenue jumped 114% to $130.5 billion.

For its fiscal first quarter, the company expects revenue of $43.0 billion.

- Karee Venema, senior investing editor

Did Nvidia do enough?

Nvidia beat expectations on the top line by $1.2 billion, and guidance for fiscal 2026 first-quarter revenue exceeded the Wall Street forecast by $900 million. 

That's a little shy of the ambitious "$2 billion and $2 billion" benchmark set down by Wedbush analyst Daniel Ives in pre-earnings notes over the last couple of days.

NVDA stock popped up from a $131.28 closing price to $136.60 in the after-market right after the release before settling in the $130s about 10 minutes ahead of the company's conference call.

"Demand for Blackwell is amazing," said Nvidia CEO Jensen Huang in a statement announcing results and offering guidance, "as reasoning AI adds another scaling law."

The "Godfather of AI," as Ives has dubbed Huang, said Nvidia has "successfully ramped up the massive-scale production of Blackwell AI supercomputers, achieving billions of dollars in sales in its first quarter."

Huang added that "AI is advancing at light speed as agentic AI and physical AI set the stage for the next wave of AI to revolutionize the largest industries."

Nvidia's Blackwell deployment is going well

CFO Colette Kress said Nvidia's Blackwell deployment is "the fastest ramp in the company's history," adding that "Blackwell is in full gear." NVDA stock is rising in after-market trading.

Nvidia is expanding supply quickly, and customers are "racing to train… the scale of training and post-training is massive… inference demand is expanding."

Kress explained that the "growing complexity of inference at scale" as well as the desire to "boost performance and slash costs" supports rising demand. "Blackwell addresses the entire AI market," Kress said, "and accelerates every AI model, ensuring large investments across market environments."

Nvidia's AI moat

"Moats" are things investors like Warren Buffett enjoy: Strong businesses with solid protections against potential competitors.

It's early in the AI Revolution. But the on-the-ground environment CFO Colette Kress described during the company's conference call sounds like one Nvidia itself made and that it's well positioned to defend.

"Blackwell is a customizable AI architecture," Kress said, and Nvidia "exceeded expectations in ramping up during the fourth quarter, "delivering several architectures."

Customers are "racing to build out" Blackwell infrastructure.

Millions of times more compute

"Hundreds of thousands – millions of times – more compute" is in our future. The question is how do you design such architecture?" asked Jensen Huang during his answer to the first question in the Q-and-A session.

Huang said "Blackwell was designed with reasoning models in mind," adding that "our architecture is fungible." 

The CEO added that he sees "much more concentration on a unified architecture than ever before."

CFO Colette Kress reiterated that Blackwell's ramp-up will result in a margin expansion during the fiscal year.

Huang said he's "more enthusiastic about the ramp-up" than he was at CES in January. "We've shipped a lot more," he said. "And we have customers who are anxious and impatient to get their Blackwell systems."

That's another good problem to have.

"We're everywhere"

"Nvidia's architecture is general," said Jensen Huang during Nvidia's fiscal 2025 fourth-quarter conference call. "And we're great at all of it.

"We're really good from end to end – from data processing to reinforcement learning in post-training all the way to inference.

"We're general, we're end to end, and we're everywhere." Huang said Nvidia's performance and its rhythm are "so incredibly fast. Data centers are fixed in size or fixed in power, so our speed translates directly to better revenue.

"That's incredibly valuable to companies building these things – fast ROIs."

Nvidia, DeepSeek and tariffs

It wasn't until the very last minutes of Nvidia's conference call that DeepSeek and tariffs turned up, and the former was first mentioned by Jensen Huang in terms of what the cheaper model will do for the proliferation of AI and "igniting excellent innovation."

"It's a world-class open-source model," Huang said.

And CFO Colette Kress said tariffs are "at this point a little bit of an unknown until we understand" the Trump administration's plan, including timing and magnitude.

"We will always follow export controls and tariffs," Kress said.

We've only just begun the AI revolution

"Demand for Blackwell is extraordinary," CEO Jensen Huang said at the top of his closing remarks at the end of Nvidia's conference call, "and AI is evolving beyond perception."

Despite Huang's persistent optimism, NVDA stock slipped to $130.74 by the conclusion of the conference call from as high as $136.60 right after the earnings announcement.

"It is fairly safe to say AI has gone mainstream," he said during his remarks. "It's being integrated into every application. We're at the beginning of this new transition, and all software is going to be infused with AI."

According to Huang, "No software tool has been able to meet as much of the world's GDP as AI has. That's the context. And we're really just in the beginning."

Now let's see what happens with NVDA stock on Thursday…

Nvidia to $180?

Nvidia earnings were "outstanding," but were released during "an extremely jittery stock market," says James Demmert, chief investment officer at Main Street Research. As such, he is taking the chipmaker's relatively modest post-earnings move with "a grain of salt." 

Indeed, NVDA is set to open Thursday with a less than 2% gain – a far cry from the massive post-earnings moves the market is accustomed to. 

According to Market Chameleon, Nvidia has averaged a 5.8% gain in the session immediately following its past 12 earnings releases (not including last night's print).

Demmert remains bullish on Nvidia and says that when the stock's price-to-earnings ratio has hovered near 31 – as it is now – this has historically preceded big pops in the share price. "We have a price target of $180 on the shares for the end of 2025," he adds, which implies expected upside of 44% to NVDA's February 26 close at $131.28. 

- Karee Venema, senior investing editor

What the experts are saying about Nvidia earnings

 Several of Wall Street's top minds were quick to weigh in after Nvidia's earnings report. Here's some of what they're saying:

"In a transitional quarter, where Hopper was two-thirds of data center revenue and they were wrestling with 'unprecedented complexity' of new Blackwell form factors, the company still grew 18% quarter over quarter, beat guidance by almost $2 billion – which has become routine, but worth repeating that no semiconductor company ever did that before Nvidia started doing it – guided for strong growth again, and returned to very positive language around 'amazing' levels of Blackwell demand." – Joseph Moore, equity analyst at Morgan Stanley

"There were maybe a couple things to pick at, but we see the results/guidance/commentary as good enough to keep the debate moving in a positive direction – especially ahead of [the company's] GTC [conference] in a few weeks. The most important thing is that Blackwell is ramping ahead of plan (even better than our $9 billion preview which was high-on-Street) and we also like that the company was willing to put a stake in the ground on opex growth this year – historically a strong indicator of confidence in growth headroom." – Timothy Arcuri, analyst at UBS Global Research

"We saw few (if any) blemishes in NVDA's quarter or outlook, with both our fiscal year 2026 and fiscal year 2027 estimates lifting following the call. And with seemingly only good news ahead: the March GTC conference, ramping Blackwell projects → accelerating revenue growth, and large sovereign investments that could/should boost the intermediate-term outlook; we see numerous catalysts that should bolster the stock." – Matt Bryson, analyst at Wedbush 

- Karee Venema, senior investing editor

Nvidia turns lower on gross margin concerns 

After opening Thursday's session up nearly 3%, Nvidia stock has since turned lower – down 3.4% at last check – on concerns around the company's gross margins. Specifically, the chipmaker forecast fiscal first-quarter gross margins of 71% – lower than the 73.5% reported in fiscal Q4 and the 72.1% analysts are calling for.

Bernstein analyst Stacy Rasgon says this is a result of the company's focus "on the ramp of Blackwell and putting it into the hands of customers rather than optimizing gross margins in this phase." He calls this a "nitpick" concern and adds that management expects margins to move back into the mid-70s by the end of the current fiscal year.

- Karee Venema, senior investing editor

Nvidia bumps Salesforce from the No. 30 Dow position 

Nvidia's early morning reversal quickly had the blue chip replacing Salesforce (CRM) as the worst Dow Jones stock on Thursday. Still, CRM remains in second-to-last place on the 30-stock index following its own earnings report. 

While the cloud-based software company reported higher-than-expected fiscal fourth-quarter earnings of $2.78 per share, its $9.99 billion in sales missed analysts' estimates. Additionally, Salesforce's fiscal first-quarter and full-year guidance came up short of Wall Street's forecasts.

Similar to Nvidia, most analysts remain bullish on CRM. The quarterly results "saw Salesforce put up solid results against core investor KPIs," says Morgan Stanley analyst Keith Weiss, but forex headwinds took "a bit out of headline numbers and consensus estimates."

And the company's guidance creates "an 'appropriately conservative' baseline for growth and margins," with significant room for upside to free cash flow and the share price thanks to growth in Agentforce, its AI platform, Weiss adds.

"With almost 40% upside to our unchanged $405 price target, we would be strong buyers of Salesforce ahead of these potentially improving numbers and investor sentiment," the analyst concludes.

- Karee Venema, senior investing editor

Read more about Saleforce's earnings report.

Nvidia takes one on the chip

Nvidia stock closed just above its intraday low at $120.15, down 8.5%. It's the worst one-day decline since the January 27 DeepSeek sell-off, when NVDA was down 17%.

And it's the worst post-earnings announcement performance since February 17, 2022, when the AI stock shed 7.6%.

Nvidia gapped up at the open to $135 – it got as low as $120.01 late in the day for a top-to-bottom slide of 11% – but that was as high as it got during a volatile session.

It's a fragile market right now, with rising uncertainty about inflation and growth exacerbated by the effects of a new Trump administration in Washington, D.C.

As Karsihma Vanjani of Barron's reports, "Uncertainty is at an almost unprecedented level." Vanjani cites the 30-day moving average for the Economic Policy Uncertainty Index, which "hit 334 on Wednesday, after reaching 325 on Tuesday and 327 on Monday."

During the pandemic the index – which aggregates newspaper headlines, disagreements among economic forecasters, and the number of expiring federal tax provisions – soared above 500.

Other than that, Vanjani notes, "These levels are the highest on record, dating back to 1985." 

As mesmerizing as Jensen Huang can be, his certainty about the trajectory of the AI revolution and his company's tip-of-the-spear position wasn't enough to captivate investors as well as traders and speculators looking to lock in gains on existing positions.   

Both the CEO and CFO Colette Kress sound convinced Nvidia's business is optimized for an AI revolution that is still in its earliest stages. And their financial numbers – including early Blackwell results – provide substantial supporting evidence.

"We still believe that the chips, boards, and systems ramp wasn't as smooth as might have been hoped," writes Wedbush analyst Daniel Ives in a post-Nvidia Day note. "But it's hard to argue these issues had a discernible impact on NVDA's trajectory other than perhaps moving some revenue between quarters."

Ives reiterated his Outperform rating (which means Buy) and his 12-month price target of $175.

"Given the quarter's strength, a lack of any meaningful concerns and what looks to be extremely clear sailing ahead," the analyst explains, "we see no reason to shift our positive outlook on NVDA."

Thank you for joining us for another Nvidia Day. That's it for us this time around. We'll see you again in May.

- David Dittman, investing editor

Berkshire Hathaway (BRK.B) was once again a net seller of stocks in its most recent quarter. But if you think Warren Buffett, who will step down as CEO at the end of 2025, has caught the "AI is a bubble" bug, think again.

The Oracle of Omaha has been easing off equities and hoarding cash for quite a while. In the past three years, Berkshire was a net seller of stocks to the tune of $190 billion. Also noteworthy is that Berkshire hasn't engaged in stock buybacks since May 2024.

As a result, Buffett is running a sort of "barbell" portfolio. Berkshire, with a market cap of more than $1 trillion, holds $280 billion in stocks and a whopping $380 billion in cash.

Berkshire's cash pile has been boosted by comparatively high short-term interest rates, as well from pruning its portfolio. Buffett once again pared BRK.B's stakes in major long-term holdings such as Apple (AAPL), Bank of America (BAC) in the most recent quarter.

The Apple sales are particularly noteworthy. Not too long ago, the iPhone maker accounted for roughly 40% of Berkshire U.S. equity portfolio. Today, it's closer to 23%.

For some folks, these are highly disquieting developments. When one of the greatest investors of all time is selling massive amounts of stock in some of his favorite names, it's understandable if people believe they would feel better about it if only they knew why.

First things first, however. Buffett took pains to explain to Berkshire shareholders at their annual meeting in May that the iPhone maker is still, er, the Apple of his eye. (It would have been embarrassing not to, considering Apple CEO Tim Cook attended the event in person.)

If Buffett has a problem with AAPL, it's that the value of Berkshire's stake has grown tremendously at a time when he expects corporate tax rates to rise, probably sometime in the not-too-distant future.

As Buffett told the Berkshire faithful in August 2024: "If I'm looking at a 21% rate this year and then we're [paying] a lot higher percentage later on, I don't think you'll actually mind the fact later on that we sold a little Apple this year."

Perhaps the same thinking informed Berkshire's paring of its stake in Bank of America. The fact that owning more than 10% of a publicly traded company's shares triggers disclosure requirements large shareholders would rather avoid for as long as possible is another reason to bring one's ownership below a regulatory threshold.

What we know is that Buffett has been a net seller of equities for 12 consecutive quarters. Share repurchases have ground to a halt, too. For context, Berkshire repurchased more than $9 billion worth of BRK.B stock in all of 2023.

This is not the sort of behavior one typically sees in someone with excessive confidence in equity prices.

What gives?

Buffett stocks sales: An expert's take

If Warren Buffett is selling stocks and not buying back his own, that might tell us something about the Oracle of Omaha's view of the market, writes Nicholas Colas, co-founder with Jessica Rabe of DataTrek Research.

As a multidecade market watcher and market participant, Colas posits three potential explanations for Buffett's "unusual activity."

The first explanation is that Buffett is calling a top. "Buffett sees stocks as overvalued, including his own, and therefore susceptible to a deep correction or outright bear market," Colas writes.

It's interesting that Berkshire holds $380 billion in cash. "That’s a lot of firepower if markets see a sustained drop," notes Colas. "While Berkshire is not especially expensive, its multiple may be worrisome to a value investor."

Don't forget that Buffett likes nothing more than to be greedy when others are fearful. If stocks crash, Berkshire will be able to go shopping for assets at deep discount prices.

M&A on tap

Then there's the possibility that Berkshire is amassing cash to effect a truly whale-sized deal. "Berkshire may have identified one or more large acquisitions and is raising capital for those purchases," Colas writes. He adds that BRK.B's $380 billion in cash would comfortably buy all of Coca-Cola (KO) or Goldman Sachs (GS).

Colas emphasizes that the latter two are only examples, not risk arbitrage trading ideas. They do make sense, however. Coca-Cola, a Buy-rated Dow Jones stock, has been a core Berkshire holding for four decades.

As for Goldman Sachs, Berkshire has been a major shareholder in the past. (Recall that Buffett gave GS an injection of capital during the Great Financial Crisis.)

Passing the baton

Lastly, Colas postulates that it's possible Buffett is simply preparing the company for his departure as CEO. (He will stay on as chairman.)

Perhaps Buffett "wants to clear the decks for his successors to remake Berkshire's portfolio and rethink the company's stock repurchase program," Colas says.

"At 95 years old, he has certainly earned the right to ride off into the sunset as one of the greatest investors of all time."

The bottom line

The most important takeaway from Colas' note: "We wouldn't read too much into Buffett's latest moves since there is more than one logical explanation for his actions."

Let's pause on that for a moment, because it's important. As folks have noted before, if copying Warren Buffett's buys and sells was all it took to become the next Warren Buffett, there would be a lot more Warren Buffetts in the world.

As far as we know, there is still only one.

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Tesla (TSLA) stock soared on the outcome of the 60th U.S. presidential election, helped in no small part by CEO Elon Musk's ardent support of Donald Trump, now the 45th and the 47th man to win the White House.

Few things have greater allure for investors than the sight of rising prices, which leads to the question: should you buy Tesla stock?

To answer this question, it helps to look around one's physical environment. Are you reading these words at a desk with, say, six monitors displaying changes in asset prices across the globe in real time? Are these numbers fluctuating between the colors of red and green?

If the answer is “no,” then no, you should not buy Tesla stock based on the outcome of the election. After all, the idea is to buy low.

Besides, retail investors who own diversified funds that track the S&P 500, the Nasdaq Composite and the Nasdaq-100 probably have enough exposure to TSLA already. The electric vehicle maker's market cap of more than $920 billion gives it ample weight in these benchmarks.

TSLA stock: The Street weighs in

But let's say you are a stockpicker. Is Tesla a buy at current levels?

Certainly industry experts who cover the stock intensely should know. The problem here is that Wall Street is heavily split on the name.

Of the 52 analysts covering TSLA stock surveyed by S&P Global Market Intelligence, 12 rate it at Strong Buy, six say Buy and 19 have it at Hold. Furthermore, four call TSLA a Sell and seven say it's a Strong Sell.

This works out to a consensus recommendation of Hold. Meanwhile, the Street's average price target of $222.96 gives Tesla stock implied downside of more than 20% from current levels.

Part of the bear case on Tesla stock has always been its valuation, but that hasn't really worked out so far. The stock always looks expensive. Indeed, TSLA trades at 115 times expected earnings per share. And it has always been volatile. It sports a five-year beta of 2.3 and suffered a maximum all-time drawdown of 73%.

Volatility is a proxy for risk because it increases the odds of buying high and selling low.

And yet, despite these issues, Tesla stock has been a massive market-beater over the longer term. True, TSLA lags the S&P 500 badly over the past one- and three-year periods, but beyond that it has generated outstanding outperformance. Heck, over the past five years, TSLA beats the broader market by about 50 percentage points on an annualized total return basis.

On the other hand, as every prospectus says, past performance is not a guarantee of future returns.

If you were a Tesla bull before Tuesday night, hey, don't let the dream die. But adding exposure to Tesla stock when it's popping on knee-jerk trading action is generally not part of a sound investment process. At least not if you're not a professional.

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Whether your preferred cliche is "talk about buying high" or "better late than never," Nvidia (NVDA) will at long last replace Intel (INTC) in the Dow Jones Industrial Average.

Oh, and by the way, Dow (DOW) is getting the boot too. It will be swapped out of the venerable blue-chip average for Sherwin-Williams (SHW). The NVDA and SHW changes will take place before the market opens on November 8.

As much interest as such events generate, being tapped for the Dow is more symbolic than material. After all, the S&P 500 is the main benchmark for U.S. equity performance. That's why many trillions of dollars are invested in products that track the index.

For example, the largest exchange-traded fund (ETF) in the world, the SPDR S&P 500 ETF Trust (SPY), has more than $590 billion in assets under management alone. A comparable product for the DJIA, the SPDR Dow Jones Industrial Average ETF Trust (DIA), holds less than $39 billion in assets under management.

Also know that, unlike the S&P 500 or the Nasdaq Composite, the Dow is weighted by price rather than by market cap. Although Nvidia has an outsized influence on the movements of the cap-weighted benchmarks, at current prices NVDA stock will be as important to the DJIA as, roughly, 3M (MMM).

There's also the fact that it would have been nice if the keepers of the Dow had made this move sooner rather than later. Once Nvidia split its stock last spring, it became a good fit for the Dow.

Intel, on the other hand, has been dead weight on the Dow for decades.

Indeed, NVDA lapped INTC a long time ago as a credible representative of the semiconductor sector in a concentrated portfolio. (Recall that the Dow comprises just 30 stocks.)

True, NVDA's share price pre-split made it essentially ineligible for Dow membership, but it's impossible not to look back at the charts and wonder what could have been. The bottom line is that the Dow would be higher today had NVDA been a component rather than INTC.

Nvidia for the long run

As we have noted, anyone who put $1,000 into Intel stock 20 years ago has endured a destruction of their capital. Nvidia, on the other hand, has been among the greatest wealth creators of the past several decades. Have a look at what $1,000 invested in Nvidia stock 20 years ago would be worth today. If you wish you had a time machine, you are not alone.

Suffice to say the DJIA's performance would have been better with Nvidia in it. But that wasn't possible. So, is this better late than never?

That's harder to say. Ordinarily, one wants to buy low. Nvidia is up 178% so far this year on a price basis. Heck, shares have gained nearly 30% over the past three months. There's another Wall Street cliche about the easy money already having been made. And it is always true that past performance is not a guarantee of future results.

Either way, the DJIA is certainly more representative of whatever it's supposed to represent with NVDA in it rather than INTC. But apart from having the imprimatur of the editors of the Dow, nothing fundamental has changed.

This fact by itself should be of enormous comfort to Nvidia bulls, of which there are legions on the Street. Of the 62 analysts issuing opinions on NVDA stock surveyed by S&P Global Market Intelligence, 48 rate it at Strong Buy, 10 say Buy and four call it a Hold. That works out to a rare consensus recommendation of Strong Buy. Indeed, Nvidia routinely makes the list of analysts' top S&P 500 stocks to buy.

As to whether you should add to your exposure to Nvidia stock based on its inclusion in the Dow, the answer is no. If you own diversified funds or ETFs tracking, for example, the S&P 500, Nasdaq Composite or Nasdaq-100, you already own Nvidia – and it's probably enough.

As exciting and enviable as Nvidia's position in artificial intelligence (AI) may be, it is ultimately a chip maker. The chip industry is cyclical, and no stock has ever gone up in a straight line.

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Whether you like it or not, members of Congress are allowed to buy and sell stocks. True, federal law prohibits them from using "nonpublic information derived from their official positions for personal benefit," and they're required to disclose their trades.

That said, it's understandable if folks don't quite trust politicians to be on the up and up when their personal fortunes might appear to be in tension with their duties as elected representatives.

Perhaps this is unfair; even cynical. But to modify a famous quote from Upton Sinclair, it's difficult to get a person to understand something when that person's salary depends upon the person not understanding it.

Take, for instance, the uproar around President Donald Trump, who said shortly before announcing a reversal on reciprocal tariffs that it "is a great time to buy stocks."

The reversal sparked a historic stock market rally and has some high-profile Democrats questioning if anyone in the Trump administration profited off the announcement.

Disclosure rules are supposed to help mitigate this problem. Thanks to these requirements, the public can follow what members of the House and Senate are doing with their investments.

Before we go further, please note that this activity shouldn't be used for trading purposes.

After all, insider buying and selling at publicly traded companies is voluminously disclosed and analyzed, but it doesn't really tell us much. That's because insiders – the executives and board members who know what's going on – can sell for any number of legitimate reasons, from paying tuition to portfolio diversification.

When it comes to stocks, insider buying is actually a more useful piece of information. And even then, it's not exactly a screaming buy signal.

Using insider activity among members of Congress as the basis for some kind of trading system is not a rigorous idea.

With those caveats out of the way, it is indeed interesting to see which stocks, bonds and private investments are most popular with members of the House and Senate. Perhaps more interesting is how certain pols churn their portfolios, which is to be avoided if you're a retail investor.

Have a look at the below table to see which politicians were the most active traders by volume over the past 90 days, according to data from Capitol Trades.

Stocks politicians are buying and selling

Look past the municipal debt and investments in limited liability companies, and you can see that pols are pretty normal when it comes to their buys. Top-rated Dow Jones stocks, mega-cap tech names and reliable and rising dividend-payers routinely make the list of our representatives favorite names.

Both sides of the aisle like many of the hottest stocks, including Apple (AAPL), Amazon.com (AMZN), Oracle (ORCL) and Broadcom (AVGO) these days – but then so does pretty much everyone else.

Interestingly, as much as Representative Ro Khanna (D-Calif.) is associated with tech investing, a number of his most recent biggest buys were stalwart blue chips such as JPMorgan Chase (JPM), the nation's biggest bank by assets, and Warren Buffett's Berkshire Hathaway (BRK.B).

Meanwhile, in addition to buying shares in speculative artificial intelligence (AI) firm BigBear.ai Holdings (BBAI), Representative Lisa McClain (R.-Mich.) also picked up Air Products and Chemicals (APD), which happens to be one the best dividend stocks for reliable dividend growth.

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Microsoft (MSFT) knows how to keep long-term investors happy. The tech giant is returning another $60 billion in cash to shareholders through a new stock buyback plan and raised its dividend by more than 10%.

Microsoft's share repurchase program, which has no expiration date, replaces its previous $60 billion authorization announced four years ago. Meanwhile, investors also cheered the news that shareholders of record as of Nov. 21 will receive a quarterly dividend of 83 cents per share, up from the current 75 cents a share.

Microsoft disbursed nearly $22 billion in dividends over the past 12 months and still had levered free cash flow of $56.7 billion. Even better for long-time dividend-growth investors, Microsoft has hiked its payout every year for more than two decades. If it can keep its streak alive, Microsoft will be eligible for inclusion in the S&P 500 Dividend Aristocrats, which are some of the best dividend stocks for reliable and rising payouts.

Please note that although the share repurchase program matches Microsoft's largest-ever authorization, $60 billion represents only about 1.8% of its massive $3.22 trillion market cap.

Shares in Microsoft, the world's second most valuable publicly traded company after Apple (AAPL), were actually lagging the broader market by about 3 percentage points on a price basis for the year-to-date through September 17. 

But as a long-term holding, MSFT stock is hard to beat. Indeed, anyone who put $1,000 into Microsoft 20 years ago would be very pleased with their returns today.

Wall Street loves MSFT stock

Wall Street analysts were already plenty bullish on the Magnificent 7 stock before it announced its plans to return more cash to shareholders. Only three Dow Jones stocks garner Strong Buy consensus recommendations, according to data from S&P Global Market Intelligence. 

Of the 56 analysts issuing opinions on Microsoft stock, 40 call it a Strong Buy, 14 have it at Buy and two rate it at Hold. Only UnitedHealth Group (UNH) gets a higher rating from industry analysts than MSFT.

Meanwhile, with an average target price of $502, the Street gives MSFT stock implied price upside of 16% over the next 12 months or so. 

Analysts' bullishness on Microsoft stems largely from its enviable position in generative artificial intelligence (AI). 

As the "leading generative AI enabling provider," Microsoft offers the most "comprehensive end-to-end AI tooling stack and cutting-edge front-end generative AI applications across its entire portfolio of products," notes the software team at Truist Securities, which rates shares at Buy.

"Microsoft is expected to be a leading benefactor of AI workloads across each layer of the generative AI value chain," says Truist. "From increased data storage and high-performance compute to additive workloads across their PaaS portfolio. Additionally, their Copilot products are expected to add fuel to expansions and upsells across their application portfolio."

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The Federal Reserve is going to cut interest rates at the next Fed meeting, experts say. Only the size and pace of the central bank's easing campaign remain in doubt.

To recap: the worst bout of inflation to hit the U.S. economy since the Carter and Reagan administrations compelled the central bank's rate-setting committee to raise the short-term federal funds rate to a 23-year high. It has been sitting at a target range of 5.25% to 5.5% for more than a year. Inflation peaked more than a year ago but remains sticky, making the rate-setting committee, the Federal Open Market Committee (FOMC), cautious about easing too soon. 

However, the Fed has a dual mandate. In addition to stable prices, it is supposed to support maximum employment. And, alas, the lagged effects of restrictive monetary policy are beginning to show up in the labor market. Fed Chief Jerome Powell has always said the FOMC would be data dependent, and he acknowledged risks to the jobs side of the mandate at the July Fed meeting. Powell doubled down on his dovish turn at Jackson Hole in August.

Unless it's an emergency, the Fed doesn't make changes to policy without telegraphing them well in advance. A rate cut at the next Fed meeting isn't a certainty, but it would be a shock if the FOMC stood pat. 

A rate cut is coming

"History back to 1990 supports the idea that an initial Fed rate cut of 50 basis points signals an imminent recession (2001 and 2007)," write Nicholas Colas and Jessica Rabe, co-founders of DataTrek Research, in a note to clients. "Initial cuts of 25 basis points (1995, 1998, 2019) do not carry that baggage. Powell and the FOMC know this history."

Colas and Rabe expect a quarter-point cut, or 25 basis points (0.25%), at the next Fed meeting. However, a cut of 50 basis points (bps) remains very much in play. 

As of September 16, interest rate traders assigned a 61% probability to 50 bps of cuts, according to CME Group's FedWatch Tool, up from 50% the previous session. Meanwhile, the probability of a quarter-point cut fell to 39% from a coin flip.

It's also important to know that market participants might have a bit of a blind spot as they head into the next Fed meeting. After all, we're set to get a new Summary of Economic Projections (SEP), also known as the dot plot. This collection of forecasts from Fed governors and presidents tends to upset the market's previous assumptions.

The bottom line is that regardless of how much the Fed cuts at its next meeting, the race is already on to predict the trajectory of future reductions to borrowing costs. 

With the Fed set to pivot, we turned to economists, strategists, investment officers and other experts for their thoughts on monetary policy going forward. Please see a selection of their commentary, sometimes edited for brevity or clarity, below.

Fed rate cuts: what the experts say

"We interpret comments from Fed officials just ahead of the blackout period to mean that the FOMC is more likely to cut by 25 bps than 50 bps. We think a 50 bps cut would be a sensible precaution against further labor market softening, but the Fed leadership has communicated a sufficiently dovish reaction function for the bond market to price cuts between 25 bps and 50 bps for several meetings, which also lowers borrowing rates and eases financial conditions today." – Jan Hatzius, chief economist at Goldman Sachs

"The Fed has the green light to cut 25 bps given that the August CPI report was in line with expectations. It's possible that some will be disappointed that there wasn't a lower-than-expected inflation reading, which might have given the Fed more room to cut 50 bps, but most of the Fed speakers have already telegraphed their desire to start slowly and not begin with a jumbo cut. Going forward, the risks are clearly weighted toward slowing growth and a deteriorating labor market, and that's why there are still four 25 bps cuts priced in with only three meetings left in the year (i.e. implying at least one of the three meetings would have a 50 bps), but if the economy continues to slow – and not drop into an abrupt recession – the Fed will be able to cut at a measured, 25 bps-per-meeting pace." – Chris Zaccarelli, chief investment officer at Independent Advisor Alliance

"The Fed probably should cut 50 bps next week … 

As the Fed themselves have said, inflation risks are moving into the rearview mirror, and they do not want to see further labor market weakness. Though strong wage growth suggests the bottom has not yet fallen out of the labor market, jobs creation has declined quickly. In an environment where policy is already restrictive by around 200 bps, moving more quickly towards neutral is a highly reasonable stance, in our view.

... but unless we see a downside surprise on inflation, my base case is that they'll cut 25 bps." – Lauren Goodwin, economist and chief market strategist at New York Life Investments

"Following the payrolls report last week, we updated our Fed call. We now expect the Fed to cut rates by 25 basis points (bps) per meeting starting next week and until March 2025. After these cuts, we think the Fed will be more gradual and resort to one cut per quarter. We still see outsized recession-like cuts as unlikely unless the economy materially deteriorates." – Antonio Gabriel, global economist at BofA Securities

"August's CPI report cemented market expectations that the FOMC will ease by 25 bps at its next meeting. The implied probability of a 25 bps move jumped to 83% from 66% shortly after the August core CPI print. We think investors are now well positioned for September's meeting, but we still see a strong chance of 50 bps cuts in both November and December." – Ian Shepherdson, chairman and chief economist Pantheon Macroeconomics

"Stable producer prices should drive investment and that will drive the economy. It is time for the Fed to cut, but they may well take it slow and steady. That seems to be their operating model. A 25 bps cut in September is the most likely outcome." – Scott Helfstein, head of investment strategy at Global X 

"The Federal Reserve is set to start shifting policy and lower rates at their next meeting. The big question will be whether the Fed cuts by 25 bps or 50 bps, and it'll likely come down to Chair Powell as to whether they go big to get ahead of clearly slowing labor market trends." – Sonu Varghese, global macro strategist at Carson Group

"The Fed is weighing the stickiness of service price inflation on the one hand against the softening of the job market on the other hand. The tradeoff makes them more likely to cut rates by a quarter percent at next week's decision than make a larger half-percent cut." – Bill Adams, chief economist at Comerica Bank

"Inflation trends will give the Fed the opportunity to pivot toward the employment mandate for the rest of this year. Given the stickiness of services inflation, the Fed will likely cut by 25 bps in the upcoming meeting and reserve the potential for more aggressive action later this year if we have further deterioration in the job market." – Jeffrey Roach, chief economist at LPL Financial

"Sticking the landing on rate policy is important to the Fed, but so is controlling the narrative and maintaining the central bank's credibility. With that in mind, there was nothing in the August inflation report that was likely to sway policymakers from the measured quarter-percent cut that they've been guiding expectations toward for some time." – Jim Baird, chief investment officer at Plante Moran Financial Advisors

"We find ourselves at a point where the markets are pricing in an aggressive policy rate cutting cycle, which to us appears to be overdone relative to what the Fed has suggested would be appropriate and relative to the underlying economic conditions at this stage. So, while we're quite certain that the Fed will commence with its rate cuts at its next meeting, there are several significant unknowns that cloud the extent and speed of rate cuts. From election/policy uncertainty for 2025, U.S. debt/Treasury supply dynamics and a particularly impactful period for volatile seasonal factors in economic data, there is a good deal we don't now know about the year ahead." – Rick Rieder, chief investment officer of global fixed income at BlackRock and head of the BlackRock global allocation investment team

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American Airlines (AAL), Etsy (ETSY) and Bio-Rad Laboratories (BIO) will be dropped from the S&P 500 later this month to be replaced by Palantir Technologies (PLTR), Dell Technologies (DELL) and Erie Indemnity (ERIE).

Shares in the latter three companies popped on the news Monday, but it remains to be seen whether they're buys beyond the initial catalyst of being tapped to join the most widely tracked equity index. 

Meanwhile, it's not surprising to see AAL, ETSY and BIO get the boot, as they were among the smallest and least material holdings in the S&P 500. 

Stocks tend to get a lift from inclusion in the S&P 500 because many trillions of passive dollars are held in products that track the index. The SPDR S&P 500 ETF Trust (SPY), the largest exchange-traded fund (ETF) in the world, has more than a half-trillion dollars in assets under management all by itself. The bottom line is that loads of funds and ETFs now have to pick up shares in PLTR, DELL and ERIE. 

The changes "ensure each index is more representative of its market capitalization range," S&P Dow Jones Indices said in a statement. "The companies being added to the S&P 500 are more representative of the large-cap market space."

Tech stocks CrowdStrike (CRWD) and GoDaddy (GDDY) were added to the S&P 500 early this year. However, the collective market caps of the S&P 500's newest tech names won't move the needle all that much in a cap-weighted index dominated by Magnificent 7 stocks such as Microsoft (MSFT), Apple (AAPL) and Nvidia (NVDA).

Analysts' takes on PLTR, DELL, ERIE

Palantir is a tech company that specializes in big data analytics. With customers including the U.S. intelligence community and Department of Defense, its operations can be somewhat opaque. Meanwhile, Wall Street is split on PLTR's prospects over the next 12 to 18 months.

Of the 19 analysts covering the stock surveyed by S&P Global Market Intelligence, four call it a Strong Buy, two say Buy, six have it at Hold, three say Sell and four rate it at Strong Sell. That works out to a consensus recommendation of Hold, which is sort of like damning the stock with collective faint praise. 

Valuation appears to be a sticking point between PLTR's admirers and detractors. That makes sense. After all, shares have essentially doubled over the past 52 weeks. 

Speaking for the bulls, Argus Research analyst Joseph Bonner writes that "shares are highly volatile and priced at a premium." At the same time, the analyst says Palantir is a "highly differentiated software company reliant upon new AI-powered applications to expand its business. Our long-term rating is a Buy."

Dell, which sells everything from servers and software to information security services, has seen its stock rise almost 50% over the past year. (That's more than double the performance of the S&P 500.) Analysts see more upside ahead thanks to the build-out of all things to do with generative AI. 

"Server and networking growth is impressive (+80%), given the momentum for AI servers that is propelling backlog growth," writes CFRA Research analyst Shreya Gheewala (Buy). "We like DELL's growing pipeline tied to Tier-2 cloud providers/enterprise customers, while Windows 10 end-of-life support and interest in on-device AI should propel commercial PC demand/pricing."

Of the 22 analysts issuing ratings on the stock surveyed by S&P Global Market Intelligence, 12 call it a Strong Buy, seven say it's a Buy and three have it at Hold. That works out to a consensus recommendation of Buy with high conviction.

Erie Indemnity might not be as well known as American Airlines or Etsy, but its market cap of about $27 billion makes it far more material to the benchmark index. Shares in the property and casualty insurance firm generated a total return (price change plus dividends) of 87% over the past year. That beat the S&P 500 by more than 60 percentage points.

Analysts see more outperformance ahead. Unfortunately, only two of them follow ERIE. One rates shares at Strong Buy. The other says they're a Hold. For what it's worth, that works out to a consensus recommendation of Buy.

"The combination of growing management fee income and investment income should allow Erie Indemnity to maintain a positive earnings performance through 2025, with our estimates suggesting growth in the 20% to 30% range," writes William Blair analyst Adam Klauber, who rates the stock at Outperform (the equivalent of Buy).

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Warren Buffett's Berkshire Hathaway (BRK.B) initiated small positions in Ulta Beauty (ULTA) and Heico (HEI) in the second quarter, bought more Chubb (CB), pared stakes in eight names – most notably, Apple (AAPL) and Chevron (CVX) – and exited bets on Paramount (PARA) and Snowflake (SNOW).

There were other moves, as well, but the biggest news to come out of Berkshire's latest regulatory filing was already known. Buffett slashed Berkshire's stake in Apple by almost half. As previously reported, the holding company also reduced its exposure to top holdings such as Chevron and Bank of America (BAC).

Keep in mind that Buffett told Berkshire shareholders that the Apple sales were done for tax purposes, as he expects corporate tax rates to rise sometime in the not-too-distant future. The same thinking could apply to BRK.B's other sales, but then it's not unusual for Buffett to be a net seller of equities when stocks are trading at record levels.

All told, Berkshire sold roughly $77 billion in equities in Q2 – mostly Apple – and purchased less than $2 billion. At any rate, with exactly 400 million Apple shares still in the portfolio, Buffett would appear to be done selling his favorite stock.

Earlier this year, the greatest long-term investor of all time said AAPL is "even better" than American Express (AXP) or Coca-Cola (KO), two "wonderful" businesses that Berkshire has owned since the early 1960s and late 1980s, respectively.

Perhaps it's a coincidence, but Berkshire now holds 400 million AAPL shares – or the exact same number of shares it has held in KO for decades. 

Before we detail Berkshire's quarterly buys and sells, it's important to know that Buffett has always maintained a highly concentrated portfolio. The top five holdings account for almost three-quarters of its U.S. equities portfolio value, while the top 10 account for more than 90%. 

As Buffett likes to say, diversification is for people who don't know what they're doing.

Stocks Warren Buffett is buying

Berkshire picked up two new stocks in Q2: Ulta Beauty and Heico. Berkshire bought 690,000 shares of Ulta Beauty worth $266 million at the end of the Q2. With a weight of 0.1% in the Berkshire Hathaway portfolio, or its 30th largest position, the cosmetics retail chain won't be moving the needle much on Berkshire's returns.

Meanwhile, with a weight of just 0.07%, Heico is even less material. Berkshire accumulated a little more than 1 million shares in the supplier to the aerospace industry. The stake was worth $185 million as of the end of Q2. 

The comparatively small size of the purchases could mean they were initiated by Buffett's co-portfolio managers Ted Weschler or Todd Combs.

On the other hand, one of the largest additions Berkshire made in Q2 was probably the work of Buffett himself. As previously disclosed, BRK.B bought another 7 million shares in Occidental Petroleum (OXY). (Buffett has added to OXY on weakness in the past.) The holding company owned 255 million shares worth $16 billion at the end of the quarter. At 5.8% of its portfolio, OXY is Berkshire's sixth largest holding.

In another interesting move, Buffett also added to Chubb, the insurance company Berkshire first picked up just a quarter ago. The holding company increased its stake by 4.3%, or more than 1 million shares. With roughly 27 million shares worth $6.9 billion at quarter's end, Chubb accounts for a hefty 2.5% of the portfolio, or Berkshire's ninth largest holding.

Elsewhere, Berkshire fiddled with some of its smallest positions, upping its bets on rather immaterial holdings such as Liberty Sirius XM Group, Series C (LSXMK) and Liberty Sirius XM Group, Series A (LSXMA). Note that the company cut its stakes in the tracking stocks last quarter. Berkshire also bought more Sirius XM Holdings (SIRI) – a position it reduced in Q1.

Stocks Warren Buffett is selling

As noted above, Apple accounted for almost all of Berkshire's Q2 sales. Other reductions included Chevron, a Buy-rated Dow Jones stock, which Buffett first purchased four years ago. In Q2, Berkshire cut CVX by 3.6%, or 4.4 million shares. With 119 million shares worth $18.6 billion at the end of the quarter, the integrated oil major is Berkshire's fifth largest holding.

Other sales included a more than 20% reduction in Capital One Financial (COF). Berkshire sold 2.7 million shares in the financial services company in Q2, bringing its position down to 9.8 million shares worth $1.4 billion. With a 0.49% weight in the portfolio, COF is Berkshire's 19th largest bet. 

Berkshire also continued to clean and prune a number of its mid-level equity holdings, paring its stakes in T-Mobile US (TMUS), Louisiana Pacific (LPX), Liberty Media (LLYVK), Liberty Media (LLYVA) and specialty retailer Floor & Decor (FND).

Buffett also closed out its stake in Paramount, dumping all 7.5 million shares. The company first bought PARA in early 2022. It didn't work out.

Lastly, Berkshire exited its position in Snowflake (SNOW), which is believed to have been the work of subaltern Todd Combs. Berkshire made a rare bet on an initial public offering (IPO) with Snowflake in the third quarter of 2020. SNOW has an all-time total return of negative 16%.

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A little over a year ago, I wrote that value stocks were coming back. After trailing growth stocks badly for more than a decade, value beat growth in 2022 and appeared in the ascendancy. 

But I jumped the gun. Over the past 12 months, the S&P 500 Value index performed well, returning 15.3%, but the S&P 500 Growth index did far better, gaining 32.5%. The Russell 1000 Value index, which is calculated in a different way and includes midsize stocks, lagged the Russell 1000 Growth index by even more, returning 13.1% to Growth’s 33.5%. (Returns and other data are as of June 30; securities I like are in bold.)

I am not giving up. Of course, timing the market is impossible, but value and growth move in cycles, and there’s a good case that it is finally value’s turn again. 

Value stocks are those out of favor with investors, as evidenced by lower valuations. Usually, that means profit growth may be consistent but far from spectacular. S&P uses three metrics for identifying value: lower ratios of a stock’s price to its earnings (P/E), book value (P/B) and sales (P/S). Russell pegs value stocks as having lower current P/B ratios, as well as slower book, earnings and sales growth over the past five years and lagging sales projections for the next two years. 

Value led growth in the 1980s, and growth dominated in the 1990s. With the collapse of the tech bubble in 2000, value gained the upper hand for seven years, then passed the torch back to growth. Over the past decade, the S&P Growth index beat the Value index by an average of more than five points per year. That’s a remarkable performance, especially when you consider 2022: The Growth index lost 29.4% and the Value index dropped just 5.2%. 

It's all about technology stocks

Large-capitalization growth stocks have done well lately for two big reasons: first, the spectacular climb of technology stocks, which represent 63% of the assets of the S&P 500 Growth index and just 13% of the Value index; and second, low interest rates, which tend to favor fast-growing companies that take on debt to finance capital investments and research and development. 

BofA Securities issued a report in June that stated, “After two decades of steady underperformance, U.S. value may outperform growth again.” The report referred to a seminar 50 years ago called “Renaissance of Value,” led by Benjamin Graham, the polymath investment guru who was Warren Buffett’s mentor. It is time, wrote BofA analysts, for another renaissance. 

The impending rebirth of value, they wrote, makes sense either in the bull case (with the earnings of value stocks in long-neglected sectors playing catch-up) or in the bear case (with tech revenues hurt by a “hard landing” after the current round of Federal Reserve rate hikes and value stocks doing comparatively better than growth stocks falling from a greater height). 

Finally, wrote the analysts, “the macro shift from a ‘2% world to a 5% world’ [a reference to market interest rates] supports value stocks.” With higher rates, value should outperform growth by 5 percentage points annually, if history is a guide. 

I find this reasoning compelling, and I have two other arguments for value. The first is an instinct that it’s time for a change. Growth has been king for nearly two decades. That’s enough. Trees don’t grow to the moon. My second argument is far more convincing. It is that over the longer term, value has beaten growth handily, and there is no reason this trend won’t continue. 

Growth is good. Bargains are better.

Why does value beat growth? Because cheap beats expensive. Investors often shun value stocks because they get bored with steady performance and need excitement. They want to climb aboard the new, hot thing — not the old, tried-and-true one. 

Value stocks thus get “mispriced” on the low side, just as growth stocks get bid up beyond their true worth. The proof is in the history. Over the past century, value has beaten growth by an annual average of more than four percentage points — a huge margin in the world of investing. What’s more, although investors usually get higher returns for taking on more risk, in the case of value stocks, the risk is actually about 10% lower, based on standard deviation, a measure of volatility. 

Right now, there’s a chasm between value and growth valuations. For example, S&P Dow Jones Indices reports that the average P/E, based on analysts’ earnings projections, for the S&P 500 Value index is 16.3; for the growth index, it’s 27.5. The average P/B ratio for value is 2.7; for growth, it’s 9.6. The S&P 500 Value index has a dividend yield of 2.3%; for growth, it’s 0.7%. (Higher yields are an indicator of value.) 

Because stocks often shift between value and growth categories, the best way to invest in value is through an exchange-traded fund linked to an index. The best choices are iShares S&P Value ETF (IVE, $182) and Vanguard S&P 500 Value (VOOV, $176). For a portfolio that includes smaller stocks and has an even lower proportion of tech shares, consider iShares Russell 1000 Value (IWD, $174) and Vanguard Russell 1000 Value (VONV, $77). All of these ETFs carry expense ratios of less than 0.2%. 

In its recent deep dive on value, BofA recommended three sectors as especially attractive: utilities, energy and banks. I completely agree. Utilities and energy have risen in price but still have low valuations, and they are primed for rising revenues as demand for electricity increases (in part because of the need for powering artificial intelligence computing and electric vehicles) and there are roadblocks — many of them political — to increasing supply. 

You can buy utility stocks through ETFs such as Utilities Select Sector SPDR (XLU, $68) and Fidelity MSCI Utilities Index (FUTY, $44); energy through Energy Select Sector SPDR (XLE, $91) and Van Eck Oil Services (OIH, $316); and banks through Invesco KBW Bank (KBWB, $54) and SPDR S&P Bank (KBE, $46). 

You can also look for individual stocks offering good value. There are few greater pleasures in investing than successfully backing a company that “Mr. Market” ignores or even hates. Here are some candidates: ExxonMobil (XOM, $115), with a forward P/E of 12 and a dividend yield of 3.3%; JPMorgan Chase (JPM, $202), with a P/E of 13 and a yield of 2.3%; Deere (DE, $374), with a P/E of 15 and a yield of 1.6%; and Johnson & Johnson (JNJ, $146), with a P/E of 14 and a yield of 3.4%. All four of the stocks are components of the S&P 500 Value index. 

Just remember that value investing requires conviction and a long time horizon. In his remarks at the value renaissance seminar 50 years ago, Benjamin Graham said it best: “If you believe — as I have always believed — that the value approach is inherently sound, workable and profitable, then devote yourself to that principle. Stick to it, and don’t be led astray by Wall Street’s fashions, its illusions and its constant chase after the fast dollar.”   

James K. Glassman chairs Glassman Advisory, a public-affairs consulting firm. He does not write about his clients. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence. He owns none of the securities mentioned here. You can reach him at JKGlassman@gmail.com.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Warren Buffett's Berkshire Hathaway (BRK.B) slashed its stake in Apple (AAPL) by almost half during the second quarter, further rattling a tech sector already under scrutiny over its massive spending on AI – and naturally unnerving some Apple shareholders, too.

After all, Apple stock has been the single largest position in the Berkshire Hathaway equity portfolio for years, typically carrying a weight in excess of 40%. And yet Buffett has been paring Berkshire's enormous Apple stake at an alarming rate in 2024.

He's also taken something off the top of Berkshire's second largest holding, Bank of America (BAC).

Buffett has said his preferred holding period is forever. It's also important to know that Buffett is not, and has never been, a market timer. Furthermore, he has had nothing but praise for Apple – calling it "Berkshire's third business" – and openly admires Bank of America CEO Brian Moynihan. 

So what's going on?

Stay tuned for churn

We won't get the full details of which stocks Warren Buffett bought and sold in the second quarter until Berkshire Hathaway discloses its changes in holdings after the market closes on August 14. 

What we do know now is that this isn't the first time Buffett has taken a big bite out of Berkshire's Apple stake this year. As we wrote at the time, BRK.B cut its position in AAPL by 13% in the first quarter. Keep in mind that Buffett was explicit that this was done for tax purposes: 

"Buffett took pains to explain to Berkshire shareholders at their annual meeting in Omaha on Saturday that the iPhone maker is still, er, the Apple of his eye. (It would have been embarrassing not to, considering Apple CEO Tim Cook attended the event in person.)"

If Buffett has a problem with AAPL, it's that the value of Berkshire's stake has grown tremendously at a time when he expects corporate tax rates to rise, probably sometime in the not-too-distant future. 

As Buffett told the Berkshire faithful: "If I'm looking at a 21% rate this year and then we're [paying] a lot higher percentage later on, I don't think you'll actually mind the fact later on that we sold a little Apple this year."

Buffett pointed out that Berkshire's corporate tax rate was 35% just a few years ago. Back in the late 1960s, it was more than 50%. This man has been around a long time. He knows tax policy is never written in stone.

Perhaps Buffett's calculus explains the thinking behind the BAC sales too. As with Apple, Berkshire has enjoyed outsized returns from its investment in Bank of America. Indeed, Buffett liked the bank so much that Berkshire received special regulatory approval to acquire more than 10% of its shares outstanding. That's commitment.

The bottom line is that whatever Buffett is up, it's actually sort of irrelevant. He is a professional capital allocator. It's his job to maximize the returns on the capital entrusted to him. You either trust Warren Buffett or you don't. If you don't trust him, fine. You're not going to hurt his feelings. His track record sort of speaks for itself.

More selling to come

If today's news bothered you, you might want to skip next Wednesday. That's because Berkshire Hathaway tends to be a net seller of equities when stocks are at record highs. 

The holding company sold $77 billion worth of stock in Q2, mostly Apple. But do not be surprised if we learn that Buffett & Co. trimmed or exited positions in any number of other holdings when Berkshire files its Form 13F with the Securities and Exchange Commission after markets close on August 14. 

Buffett has this funny habit of trying to buy stocks when they are selling at lower prices rather than higher prices. Stocks are pretty pricey these days. Buffett is selling. What's the mystery?

By the way, some folks might try to use Buffett's buys and sells as signals for what to do with their own portfolios. 

That would be silly. 

As noted above, Buffett is not a market timer. This is the man who wrote in The New York Times in October 2008 that he was buying stocks. The market didn't bottom until months later, in March 2009. 

"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful," Buffett said. 

No, Buffett didn't bottom-tick the S&P 500's 50% collapse. The market fell another 28% from the time he penned that op-ed to equities' nadir. And all Buffett did was buy shares in great companies at cheaper and cheaper prices, probably the entire way down. (Berkshire shareholders then benefited by riding those prices all the way back up.)

As much fun as it might be to see which stocks Warren Buffett is buying and selling, you cannot copy his moves and expect to get the same returns. There are a bunch of reasons for this, but let's keep it simple: Buffett has access to a massive pile of really cheap capital and you don't.

You're no Warren Buffett

Berkshire's timing could have been better. It didn't do market sentiment any favors by releasing its results ahead of a global rout in equities that was mostly sparked by what's happening to the Japanese yen. But that's not on Buffett.

Markets go down as well as up. Pullbacks are normal. "The average drawdown from peak-to-trough in a given year in the U.S. stock market going back to 1928 is -16.3%," notes Ben Carlson, director of institutional asset management at Ritholtz Wealth Management. "Since 1950, the S&P 500 has had an average drawdown of 13.6% over the course of a calendar year."

Volatility is the price of admission to the stock market. The greater the reward, the greater the risk. If you can't handle the equity risk premium, stick to bonds.

In the meantime, leave professional capital allocation to the pros. Word is Warren Buffett is pretty good at it.

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Amazon Prime Day might have offered a flurry of deals and discounts on all manner of goods, but analysts say the biggest bargain of all looks to be Amazon.com (AMZN) stock.  

That might sound counterintuitive at first. Amazon stock gained about 30% on a price basis through the first half of 2024 – vs 19% for the tech-heavy Nasdaq Composite – to trade at record levels.

Ordinarily, the idea is to buy low.

But a sum-of-the-parts analysis of the company's underlying businesses suggests AMZN stock has much further to run, analysts say. Indeed, as a services company with rapidly expanding profit margins, upside from generative artificial intelligence (AI) and a track record of building large businesses from scratch, Amazon is really tough to beat.

"AMZN should be valued as a services company rather than a products company," writes Needham analyst Laura Martin, who rates shares at Buy. "Services revenue and margins (including advertising, subscriptions and cloud) are far larger and growing faster than AMZN's core e-commerce business. Services growth implies valuation multiple expansion owing to its high margins."

Multiple expansion, which is when folks are willing to pay a higher price today for expected earnings in the future, makes stock prices go up. Now you might think AMZN stock is already richly valued, seeing as it currently changes hands at more than 33 times the Street's 2025 earnings per share (EPS) estimate. But Amazon is forecast to generate average annual EPS growth of more than 23% over the next three to five years. 

AMZN stock is cheap

In today's market, these are far from unusual valuations. According to data from LSEG Stock Reports Plus, Amazon is actually cheaper than the broader market when you look at how fast its stock price is rising compared to its growth prospects. Furthermore, Amazon stock trades at steep discounts to its own five-year average on both a forward and trailing price-to-earnings (P/E) basis. As for AMZN stock's price-to-sales (P/S) ratio, it trades essentially in line with its own long-term average.

Moreover, Amazon's valuation looks especially compelling when its already impressive potential for revenue growth and margin expansion is set to be turbocharged by artificial intelligence, experts note.

"We believe investors are underestimating AMZN's positioning to win its fair share of AI workloads and believe its platform approach will be a winning strategy over the long term," writes BMO Capital Markets analyst Brian Pitz, who rates AMZN at Outperform (the equivalent of Buy).

If nothing else, Pitz and Needham's Martin have a lot of company. Of the 61 analysts issuing opinions on Amazon surveyed by S&P Global Market Intelligence, 44 call it a Strong Buy, 15 say it's a Buy and two have it at Hold.

That works out to a rare consensus recommendation of Strong Buy for Amazon stock, and with high conviction to boot. Here's how Argus Research analyst Jim Kelleher (Buy) explains the Street's collective bullish outlook: "AMZN appears inexpensive amid the AI-driven rally."

This is kind of important because plenty of investors have avoided Amazon stock in the past based on concerns its valuation is too rich, and it looks to have been a mistake.

Amazon stock for the long run 

Amazon, which began life as a modest website for book buyers, went public in 1997, and has since generated truly outsized wealth for shareholders. An analysis by Hendrik Bessembinder, finance professor at the W.P. Carey School of Business at Arizona State University, found that Amazon was one of the best stocks in the world over three decades. 

After all, anyone who put $1,000 into Amazon stock 20 years ago has enjoyed truly market-crushing returns. For its entire life as a publicly traded company, AMZN has generated an annualized total return of more than 32%. The S&P 500, by comparison, returned not-quite 11% annualized, according to data from YCharts.

Put another way, since it debuted, Amazon stock has pretty much tripled the performance of the S&P 500. 

Little wonder then that Amazon, which was added to the Dow Jones Industrial Average in February, is now the highest-rated name among all 30 Dow Jones stocks. Or check out analysts' top S&P 500 stocks to buy now, and you'll find Amazon is high on that list. 

The bottom line on Amazon stock

Analysts say the company has a history of execution and is particularly well suited to cash in on AI.

"Given its indisputable franchise leadership, ability to leverage its vendor relationships in the retail space, and market dominance and superior growth in infrastructure-as-a-service, we believe that AMZN warrants long-term accumulation in most equity accounts," Argus Research's Kelleher writes. 

Investors should initiate new positions or dollar-cost-average into existing Amazon positions on share price weakness, the analyst adds. 

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Tech behemoths such as Nvidia and Apple have drawn investor attention lately because of their stock gains and heavy weightings in market indexes and investment funds. 

But there’s another group of stocks that deserve special attention. They are bellwethers, or weathervanes for investors. These companies aren’t necessarily big, profitable or even good investments. Instead, they serve as barometers for their sector or industry, or for the economy as a whole. 

Historically, analysts paid special attention to conglomerates such as the old General Electric because its formerly diversified business reflected activity throughout the economy. Alcoa, which produces aluminum used by manufacturers, not only served as an industrial signal but also garnered attention by being one of the first companies to report its earnings each quarter. But in 2024, as consumer spending and technological innovations have come to dominate the U.S. economy, “there’s a whole new set of bellwether companies,” says Thomas Martin, a senior portfolio manager at Globalt Investments. 

The factors that make a stock a good barometer remain the same, however. For one, timing is still key. Companies that are among the first to report their earnings after the close of a fiscal quarter often get extra attention because their performance can reveal trends affecting competitors that haven’t yet announced results. 

A company’s role in the economy is also important. The revenues and profits reported by transportation companies and suppliers of key manufacturing components, for example, hint at the outlook for not only their own industries but also the industries they serve. Companies with a broad reach still act as windows on the general economic landscape — albeit different companies in a changing landscape. 

Significant moves in the stock prices of bellwethers can be signals for investors. But most analysts, including Que Nguyen, chief investment officer of Research Affiliates, say they generally focus on the sales and earnings announcements companies make every quarter. Especially revealing, she says, are the managers’ comments about sales growth and indicators of demand. 

The internet has made it easy for you to get access to this kind of information. Any investor can freely access a company’s quarterly earnings announcements and analyst calls. The Securities and Exchange Commission’s EDGAR site posts all public companies’ quarterly and annual reports, as well as many other kinds of announcements. Companies post their earnings reports and investor presentations on the investor relations section of their websites. 

And many free financial news and investing websites, such as Yahoo Finance, post corporate announcements and transcripts of the calls company officials have with analysts. Kiplinger.com provides a calendar of upcoming earnings announcements. 

We asked investment professionals about which stocks they consider modern-day bellwethers. Six are listed below. 

Fastenal

As the nation’s largest distributor of fasteners — literally the nuts, bolts and rivets of the industrial economy — and a company that posts monthly updates on orders, Fastenal (FAST) offers “a good read on short-cycle manufacturing demand,” says Jason Adams, portfolio manager of the T. Rowe Price Global Industrials Fund. 

Adams’s fund doesn’t hold any Fastenal stock, in part because Fastenal’s first-quarter earnings report revealed a decline in sales of fasteners (though it did see growth in other products, such as safety equipment). That sign of softening demand for many basic supplies indicates “it’s still a tough slog out there in the U.S. industrial economy,” Adams says. “Investors should remain a little patient and selective.”

J.B. Hunt Transport Services

This large trucking firm (JBHT) specializes in moving shipping containers around the country. It tends to report its earnings about two and a half weeks after each quarter ends, which is comparatively early. So the ups and downs of its orders, revenues and profits are important indicators of overall economic activity, says José Torres, a senior economist at Interactive Brokers. 

In the first quarter of 2024, the company reported that demand for its services transporting containers from ships to warehouses was down from the same period last year. Torres says that warns of economic weakness for competing transportation companies such as railroads — at least until the Federal Reserve finally starts to lower interest rates, boosting the economy. 

He also believes that Hunt’s recent results might indicate weakness in manufacturing sectors focused on products considered to be discretionary for cash-strapped consumers (household furnishings and the like).

JPMorgan Chase

The nation’s biggest bank is also among the first firms to report earnings after each quarter ends. Such early information from a company with a broad reach throughout the economy makes JPMorgan Chase (JPM) an excellent bellwether, says Globalt’s Martin. 

In JPMorgan Chase’s most recent report showing growth in business loans, for example, Martin sees indicators that creditworthy businesses are confident about their ability to repay more and bigger loans. That makes him hopeful for an economic “soft landing,” or a cooldown in economic growth that doesn’t lead to a recession.

Lam Research

As a major manufacturer of machinery for making computer chips, Lam Research’s (LRCX) sales are a key predictor of the tech industry’s strength, says Research Affiliates’ Nguyen. “Semiconductors are everywhere. Even toasters now have chips in them,” she notes. 

Lam reported comparatively flat sales in the first quarter of 2024. But in their comments to investors and analysts, executives said they are seeing a slow but steady growth in orders. 

“What that tells me is that business investment in technology continues,” Nguyen says. “Growth continues to be reasonably robust, which bodes well for the entire semiconductor sector,” as well as companies that use technology, such as Amazon.com and Alphabet, she says.

Mastercard

Credit card lending is a good gauge of consumer spending, which accounts for about two-thirds of the economy, says Matt Stucky, chief equities portfolio manager for Northwestern Mutual Wealth Management. Strong spending signals health; consumer pain shows up as delinquencies or late payments. 

Stucky says Mastercard’s (MA) reports of rising spending in 2023 persuaded him that worries about a recession last year were misplaced, which encouraged him to stay invested in stocks (and thus benefit from last fall’s run-up). In 2024, a combination of rising revenues, profits and delinquencies for credit card firms indicates that although companies serving lower-income consumers may face more stress, overall consumer spending remains healthy, he says.

Microsoft

Microsoft (MSFT) has so many large businesses — selling office software, providing cloud-computing services and leading the artificial intelligence revolution — that it’s “the new GE,” says Nguyen. 

The company has its “fingers in a little bit of everything and so can serve as an indicator for the broad economy.” Jim Golan, a comanager of the William Blair Large Cap Growth mutual fund, keeps a sharp eye on Microsoft’s announcements, not only because the stock is his fund’s largest holding but also because it gives him insights about many other companies. 

For example, he says, Microsoft’s continuing investments in more and bigger data centers (buildings that house big banks of computers) make him bullish about a variety of related companies. “Spending on data centers has a ripple effect on everything from the power grid to concrete,” he says. 

That’s one reason Golan’s fund is invested in Martin Marietta, one of the biggest providers of building materials such as cement — in essence, turning ephemeral data into something more concrete.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Small-cap stocks are among the most exciting — and most misunderstood — corners of the market.

Ask your average investors what they think of when they hear "small cap," and you'll get one of two answers: scrappy startups on the verge of breaking out, or risky, thinly traded names they wouldn't even buy with someone else's money.

They wouldn't necessarily be wrong. But that's only part of the story.

Small-cap stocks occupy a distinct space in the market. They're big enough that they're generating significant revenue and getting real analyst coverage. But they're small enough that they're still flying under most radars, so it's possible Wall Street hasn't fully priced in their potential. That goes for the highfliers you'd expect, but also the more grounded, cash-generating businesses that occupy the space.

If you're interested in learning more about identifying investment-worthy small caps, read on. I'll define the group, explain why investors are drawn to smaller companies, then show you how to find the best small-cap stocks on your own.

What are small-cap stocks?

For the newbies out there, the term "cap" refers to a company's market capitalization, which is calculated by multiplying a company's stock price by its number of shares outstanding.

A small-cap stock is any company worth $250 million to $2 billion by market cap.

In a fair and just world, that would be the end of this section. But as I pointed out in my exploration of mid-cap stocks, it's not that simple, life is unfair, and we can't have nice things.

In some cases, the difference is small — a few institutions peg the small-cap range at $300 million to $2 billion. Not much to quibble over there. But then there's the S&P SmallCap 600, whose range includes much bigger companies of between $1.2 billion to $8 billion. And those thresholds have ticked higher over time.

Other definitions are even more fluid, looking at small caps not as some fixed bracket of value, but as a percentage of the overall market. Morningstar, for instance considers small-cap stocks to be any stocks within the bottom 10% of the overall equity market, which over the past few years has put the upper bound in the $10 billion to $15 billion.

And then there's the ubiquitous Russell 2000 Index. This premier small-cap benchmark is made up of 2,000 of the smallest stocks within the Russell 3000 Index, which represents the 3,000 largest securities in the U.S. equity market. Currently, the largest component of the Russell 2000 right now is Bloom Energy (BE), which was around $4.3 billion when it joined the index, but is $90 billion now.*

There's no "correct" small-cap range. But, as we'll get into in a minute, there are certain general tendencies the larger or smaller a stock is.

Lastly, you'll notice most of the above definitions also have a lower bound. Companies smaller than those thresholds are slapped with "microcap" or "nanocap" designations. The Russell Microcap Index is equally maddening, made up of the smallest 1,000 companies in the Russell 2000, and the next smallest eligible 1,000 companies outside the Russell 3000.

Why do investors buy small-cap stocks?

As I mentioned before, small-cap companies aren't a monolith. The size category includes growth and value stocks alike – you could just as easily run across a disruptive technology company as you could a stodgy regulated utility.

But there's a reason small caps are more often associated with growth stocks.

The business rule of large numbers dictates that the larger a company gets, the more difficult it becomes to maintain high-percentage growth rates in revenue and net income — two primary drivers of stock prices.

Put simply: It's easier for a $500 million company to double its revenue than it is for a $500 billion company. And potential stock upside follows similar logic.

Small-cap stocks also don't attract as much media attention, and there's less Wall Street coverage of these firms. With fewer eyes watching, mispricings are more likely, and patient investors who do their homework can capitalize on these opportunities.

The tradeoff, of course, is risk. Smaller companies often have fewer revenue streams, thinner margins, less financial cushion and less access to capital than large-cap stocks. A bad quarter, a lost customer, or a macroeconomic headwind won't necessarily cripple, say, a Dow Jones Industrial Average component, but it could very well sink some of the companies in the Russell 2000.

That tends to lead to more volatile stock movement — there's potential for sharp upside, sure, but also the potential for a stock to get kneecapped.

Other factors to keep in mind:

• Small caps may be thinly traded, resulting in wide bid-ask spreads.
• Institutional investors might struggle to build or exit positions without moving the market.
• Also, small caps tend to be more domestically focused compared to large caps. This is great when the U.S. economy is humming. But small caps feel the pinch of a slowdown more acutely than large multinationals that derive revenues from here and abroad.

One last consideration is that the relationship between large- and small-cap stocks tends to ebb and flow over time. Earlier this year, Fidelity Investments (PDF) studied the performance of both segments between 1929 and 2025. It found there were "six periods of relative outperformance for U.S. small caps since 1929 and seven periods of underperformance. These performance cycles have averaged about seven years." (Emphasis mine.)

How to find the best small-cap stocks to buy

As I usually say, I can't predict exactly what you might want out of small-cap stocks, but I can help you start your search with a basic quality screen.

In this case, I'm going to focus on the small-cap segment's strength: growth. To get the following list of the best small-cap stocks to buy, we've looked for firms that …

Are within the S&P 600. Again, these are 600 stocks that were between $1.2 billion and $8 billion at inclusion. (Only one stock on our current best-of list fell outside this range.)

Are expected to grow revenue by at least 20% annually in the next two years. Top-line growth is often the primary concern of smaller companies, especially newer issues that haven't yet reached profitability. This is just a baseline — feel free to adjust your limit higher if you're looking for screaming growth.

Are expected to grow earnings by at least 15% annually over the long term. Many high-growth small caps aren't yet profitable, so if you screen for a percentage growth rate, companies with currently negative earnings simply won't show up. Thus, if you want to find truly explosive small caps, you might want to ignore this criterion. I'm including this criterion with the understanding that my list will likely skew toward larger, more established small caps.

Have at least five covering analysts. We'd like to look at stocks that are on Wall Street analysts' radar, which makes it likelier that there's both more reporting and more insights on these companies. The more research we have at our disposal, the more educated a decision we can make. When screening for larger companies, I typically set the baseline at 10 analysts. But small-cap coverage is usually thinner, so five analysts is a reasonable starting point.

Have a consensus Buy rating. All of the stocks must have an average broker recommendation of 2.5 or less within S&P Global Market Intelligence's ratings scale. S&P Global Market Intelligence converts analysts' ratings into a numerical scale. Anything with a score of 2.5 or less is considered a Buy. Every stock that made the list has a score of 2.0 or less, which means these are higher-conviction Buys and, in some cases, Strong Buys — the best designation.

* This is a fun fluke. For decades, the Russell 2000 operated on an annual reconstitution schedule, and the last time the index reconstituted was June 30, 2025, based on market caps as of April 30, 2025. Bloom Energy was worth about $4.3 billion then. In the 13 months and change since that April data date, Bloom Energy's market cap has rocketed by nearly 2,000%. For what it's worth, FTSE has since announced that the Russell indices will return to semiannual reconstitutions in 2026 — the regular annual adjustment in June, then the first semiannual reconstitution in December.

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If you needed more evidence that being added to the S&P 500 is what Wall Street likes to call a positive catalyst, witness what happened to shares in CrowdStrike (CRWD), KKR (KKR) and GoDaddy (GDDY) at the start of trading this week.

Shares in all three companies popped on the news that they will be added to the main benchmark for U.S. equity performance. KKR, CrowdStrike and GoDaddy will replace Robert Half (RHI), Comerica (CMA) and Illumina (ILMN) in the S&P 500 on June 24, S&P Dow Jones Indices said in a statement Monday. 

Stocks tend to get a lift from inclusion in the S&P 500 because many trillions of passive dollars are held in products that track the index. The SPDR S&P 500 ETF Trust (SPY), the largest exchange-traded fund (ETF) in the world, has more than half-a-trillion dollars in assets under management all by itself. The bottom line is that loads and loads of passive funds and ETFs now have to pick up shares in CRWD, KKR and GDDY.

As for the reason for the shakeup, S&P said that the changes "ensure each index is more representative of its market capitalization range. The companies being added to the S&P 500 are more representative of the large-cap market space."

Analysts' takes on CRWD, KKR and GDDY

As a reminder, being tapped for the S&P 500 is not an endorsement by the editors of the index to buy the stock. Rather, the stocks in question have merely met the criteria and are deemed better fits than the ones moved down into the mid- and small-cap indexes. 

As for CrowdStrike, shares gained nearly 50% for the year to date through early June, pushing the cybersecurity company's market cap up to $93 billion, or roughly the same size as current S&P 500 stock Starbucks (SBUX). Meanwhile, the Street likes CRWD's prospects going forward. Of the 51 analysts issuing opinions on CrowdStrike stock surveyed by S&P Global Market Intelligence, 34 call it a Strong Buy, 13 say Buy and four have it at Hold. That works out to a consensus recommendation of Strong Buy.

Analysts are bullish on KKR, too, although with slightly less conviction than they have for CRWD. Shares in the private equity firm added more than 30% for the year to date through early June, giving it a market cap of nearly $97 billion. That's a sum roughly equivalent to current S&P 500 constituent Palo Alto Networks (PANW). Analysts give KKR a consensus recommendation of Buy.

Web hosting company GoDaddy is another stock having a terrific 2024. Shares gained more than a third for the year to date through early June, pushing GDDY's market cap up to $20 billion. That's bigger than S&P 500 member Alexandria Real Estate Equities (ARE), which happens to be one of analysts' top S&P 500 stocks to buy now. The Street is bullish on GDDY, too, mind you, assigning it a consensus recommendation of Buy with strong conviction. 

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Nvidia (NVDA) has been posting blowout quarterly earnings reports for a year now, but its most recent print came with some ice cream and a cherry on top. Not only did the market's favorite pure-play bet on all things AI hike its dividend, NVDA split its stock.

Although returning more cash to shareholders and making NVDA stock more "accessible" are what Wall Street would call positive catalysts, they are not sufficient reasons in and of themselves to commit fresh capital to any name at any level.

That is not to say that you should not buy more Nvidia stock when it's trading at record highs. Rather, if you want to initiate or add to a position in Nvidia stock these days, the fact that it's effecting a stock split is immaterial.

First let's make clear that stock splits aren't nearly as important for retail investors as they were back in the days before folks could open a smartphone app and buy fractional shares for free. Nvidia is splitting its stock for pretty much the same reason Walmart split its stock, which was more for its own employees.

Secondly, let's stipulate that stock splits are like making change. In this case, shareholders received 10 shares for every one share held. This is essentially the same thing as breaking a $10 bill into 10 one-dollar bills. The fundamentals and technicals don't change – only the arithmetic does. 

Which brings us to Nvidia's dividend hike. The forward yield on NVDA's dividend comes to about 0.03%. The stock's three-year average dividend yield is 0.06%, while the current yield on the S&P 500 stands at 1.36%. Given those facts, it's probably fair to assume that few folks buy Nvidia for the income. 

Nvidia stock is everywhere 

It's also worth mentioning that you probably already have healthy exposure to Nvidia stock.

Nearly 70% of actively managed mutual funds own Nvidia, according to the team at BofA Securities data analytics. And it's not like it's hard to own Nvidia on the passive side, either. As the world's third-most-valuable publicly traded company, Nvidia is in loads of indexes tracked by passive mutual funds and ETFs. 

Take the main benchmark for U.S. equity performance. Thanks to a market cap of nearly $3 trillion, Nvidia's weight in the S&P 500, as represented by the SPDR S&P 500 ETF Trust (SPY), stands at about 6.6%. 

That's actually quite a lot. Think about it like this: if the S&P 500 were, say, an actively managed large-cap balanced fund, the portfolio managers might have to cut their NVDA position by something like half?

Nvidia is also ably represented in the Nasdaq Composite and Nasdaq-100. As for the latter, Nvidia's weight in the growth index – most popularly tracked by the Invesco QQQ Trust (QQQ) – hovers around 8.1%

The bottom line is there's a universe of products offering exposure to the Magnificent 7 stock. No one is complaining about how hard it is to find a good ETF with Nvidia in it.

The Street loves Nvidia for lots of reasons

As we have noted, Nvidia has generated market-crushing returns for a long time. It's trading at record levels because no one knows how big this whole AI thing is going to get. They just know they don't want to miss out.

Will Nvidia keep beating the market? 

Sure, probably, why not? But stocks never go up in a straight line. Markets are cyclical. Chipmakers are highly cyclical. The good news is that Nvidia is trading on some combination of incredible fundamentals and forecasts, and not just hype.

The bad news? Stocks go down, too. There's a bull case and a bear case for everything. Ever notice how share prices fluctuate all session long? Please remember that high-beta stocks such as Nvidia, which have a history of outperforming the broader market when it's going up, also tend to underperform the broader market when it's selling off. 

On a brighter note, Wall Street makes a brawny bull case for Nvidia stock. Analysts, as a group, give NVDA an elite rating of Strong Buy (with high conviction), according to data from S&P Global Market Intelligence.

Instead of trying to summarize these analysts' investment theses in the space provided here, let's just say that of all the really good reasons to be bullish on Nvidia, the stock split isn't very high on the list.

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Being tapped to join the S&P 500 is kind of a big deal. Witness what happened to shares in Super Micro Computer (SMCI) and Deckers Outdoor (DECK) on Monday.

Super Micro stock added more than 25% at one point during the session on news the AI server, software and infrastructure company will replace Whirlpool (WHR) in the S&P 500 on March 18. 

Not that SMCI needed another catalyst – shares have nearly quadrupled in 2024 alone – but the price action is a good (if exaggerated) example of the importance of being added to the main benchmark for U.S. equity performance.

Many trillions of passive dollars are invested in products that track the S&P 500. The SPDR S&P 500 ETF Trust (SPY), the largest exchange-traded fund (ETF) in the world, has $500 billion in assets under management all by itself. Hundreds of funds and ETFs now have to pick up shares in SMCI and DECK.

Meanwhile, over at DECK, the footwear and apparel company probably best known for the Uggs and Teva brands will replace Zions Bancorporation (ZION) in the S&P 500 on March 18. DECK stock enjoyed a more modest pop of 2.6% on the announcement, but then such is the difference in sentiment between the growth prospects for general AI and shoes.

SMCI and DECK became eligible for inclusion to the S&P 500 in part because of their respective soaring market capitalizations. In addition to a bunch of other criteria, a stock must have a minimum market value of $14.6 billion to join the benchmark index. 

By that metric, SMCI has been eligible for inclusion for some time, but the stock didn't definitively vault past the $15 billion mark until mid-January. Cut to today and Super Micro sports a market value in excess of $64 billion – larger than fellow S&P 500 stock PayPal (PYPL).

Deckers Outdoor stock, which has more than doubled over the past 52 weeks, crossed the $15 billion mark back in October. DECK's current market value is more than $23 billion. 

As for Whirlpool and Zion Bancorporation, they will replace Super Micro Computer and Deckers Outdoor in the S&P MidCap 400, respectively, said S&P Dow Jones Indices.

Analysts' takes on SMCI and DECK

Being included in the S&P 500 is not an endorsement by the editors of the index to buy the stock. Rather, the stocks in question have merely met the criteria and are deemed better fits than the ones kicked down into the midcap index.

So let's see what industry analysts have to say about these soon-to-be S&P 500 names.

Of the 15 analysts issuing opinions on Super Micro stock surveyed by S&P Global Market Intelligence, seven rate it at Strong Buy, three say Buy, four have it at Hold and one calls it a Strong Sell. That works out to a consensus recommendation of Buy, albeit with mixed conviction.

Goldman Sachs initiated coverage of SMCI on Monday with a Neutral rating (the equivalent of Hold) and a price target of $941. Wall Street's average price target stands at $795.04, giving Super Micro stock implied price downside of about 30% in the next 12 months or so. 

"SMCI is very well positioned to serve demand from AI [cloud service providers] over the next few years, but serving enterprise AI infrastructure demand in the years after likely will be more competitive, particularly given more enterprise-focused IT hardware suppliers such as Dell (DELL) and Cisco Systems (CSCO)," analyst Michael Ng wrote in a note to clients. 

Analysts are actually more bullish on the far more boring Deckers Outdoor. Of the 21 analysts covering DECK, 12 rate it at Strong Buy, seven say Buy and two call it a Hold. That works out to a consensus recommendation of Buy, with high conviction. 

That said, the Street's average target price on DECK gives the stock essentially no implied price upside in the next year or so. 

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If you're a long-time shareholder in Walmart (WMT) stock wondering why the world's largest retailer effected a three-for-one stock split near the end of February, well, the move wasn't for you. It was for Walmart's employees. 

After all, investors don't need stock splits anymore – not in a world where they can buy fractional shares for free on their smartphones. But Walmart, like a lot of companies, has a program where its employees can buy shares through payroll deductions. The issue? WMT's price was getting a little too rich for the program to work as intended.

After rising almost 18% on a price basis over the past 52 weeks, Walmart stock is trading at record levels. Indeed, at about $174 a pop, WMT stock stands 20% above its three-year average price of $145. Regrettably, the stock's high-flying ways put it out of reach for some.

"[Founder] Sam Walton believed it was important to keep our share price in a range where purchasing whole shares, rather than fractions, was accessible to all of our associates," said Walmart CEO Doug McMillon in a press release.

The solution? A three-for-one stock split ahead of the open on February 26. Recall that as much as the market likes stock splits, they're essentially immaterial. Nothing about a company's fundamentals or outlook changes. A stock split is like making change. I give you two $10s for a $20.

In Walmart's case, shareholders get three shares for every share held – and that could make a big difference to Walmart employees. That's because the company provides a 15% match on the first $1,800 invested each year by eligible associates. 

Walmart's company match works out to $270 – or not even enough to buy two full shares pre-split. After the split, however, that $270 match will buy more than four full shares of this blue chip stock. 

What it means for WMT investors

Not much. As noted above, stock splits get the market excited for maybe a minute, but they are meaningless. The arithmetic changes, but the fundamentals don't. 

For example, Walmart’s outstanding common stock will grow to approximately 8.1 billion from 2.7 billion shares. At the same time, the dividend per share will drop by two-thirds. Walmart, a member of the S&P 500 Dividend Aristocrats, just hiked its payout for a 51st consecutive year. For fiscal 2025, shareholders will receive an annual cash dividend of 83 cents a share on a post-split basis. That's down from $2.49 on a pre-split basis, but shareholders will own three times as many shares. 

If there's anything interesting about WMT's stock split, it's that it will greatly reduce the name's weight in the Dow. Unlike the S&P 500, which is weighted by market capitalization, the Dow is weighted by price. Pre-split, Walmart is the 17th most important Dow Jones stock with a 3% weight in the index. Post-split, WMT will drop to 26th place with a weight of 1%. 

Interestingly, Amazon.com (AMZN) will join the Dow at the beginning of trading next week. It will slot into the place formerly held by Walmart and its roughly 3% weighting in blue chip index.

AMZN has been one of the best stocks of the past 30 years, and anyone who put $1,000 into Amazon stock a couple of decades ago has done even better. Sadly, Walmart has been a market laggard over the last 20 years. 

If past is prologue, more AMZN and less WMT in the Dow will be good for this bluest of blue-chip market benchmarks. 

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The Dow Jones Industrial Average hasn't had a makeover in almost four years, and this time, it's a doozy. Amazon.com (AMZN) will replace Walgreens Boots Alliance (WBA) in the elite 30-component index before markets open on February 26, S&P Dow Jones Indices said in a press release late Tuesday. 

Not that anyone should be too surprised. The keepers of the Dow have long been under pressure to elevate Amazon to the blue-chip barometer. Not only is it the largest e-commerce company in the U.S., but it's also the market leader in cloud services. And then there's Amazon's presence in the analog world, which includes freight & logistics operations and the Whole Foods grocery chain, among other endeavors.

Most important, there's the little fact that Amazon stock has been one for the ages. Anyone who put $1,000 into AMZN stock a couple of decades ago would be delighted with the results today. But that's just what Amazon does over the long term. Between its initial public offering in 1997 and December 2020, Amazon stock created nearly $1.6 trillion in wealth for shareholders, making it one of the 30 best stocks since 1990. 

Why is Amazon replacing Walgreens in the Dow?

Shareholders in Walgreens, on the other hand, probably should have seen this coming. The pharmacy chain slashed its dividend in January by almost half to redirect cash back into the business. WBA stock is also long-time market laggard. Indeed, Wall Street analysts have had a consensus Hold call on shares for years, routinely ranking WBA low on their list of best Dow Jones stocks. 

The final nail in the WBA coffin, however, was its ever-shrinking share price. At around $21, WBA goes for roughly half the next-cheapest Dow stock, Verizon (VZ), at $40. The most expensive Dow Jones stock is UnitedHealth Group (UNH) at $520.

These wide price gaps are a problem because while the S&P 500 is weighted by market capitalization, the Dow is weighted by share price. WBA was begging to be replaced, if only because its low share price made it almost immaterial to the direction of the Dow.

Amazon stock is a much better fit in this regard. At about $169 a share, Amazon's weight in the Dow will land at 17 out of 30, or roughly 2.8%. For comparison's sake, AMZN stock's weighting in the S&P 500 stands at 3.7%.

Although the Dow will start out being underweight Amazon, that's better than having no exposure to one of the most important companies in the U.S. economy. Amazon is also a good fit for the Dow in that although we think of it as a tech name, it's actually part of the consumer discretionary sector. Swapping Amazon in for Walgreens, a consumer staples stock, doesn't technically increase the Dow's weighting in the IT sector.

Neither does the swap much affect the Dow's dividend profile. "Amazon.com joins Boeing (BA) and Salesforce (CRM) as the only non-dividend paying issues in the DJIA (Walgreens paid a dividend)," notes Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. But, at 1.93%, the Dow retains its higher projected dividend yield over the S&P 500 (1.41%), Silverblatt adds. 

The bottom line

Being tapped for the Dow is more about prestige than fund flows. The S&P 500 is the most commonly used benchmark for U.S. stock performance, not the Dow. That's why Amazon stock, with a market value of more than $1.7 trillion, took the news of being tapped for the blue-chip barometer in stride Wednesday. 

But, if nothing else, bringing Amazon into the Dow seems long overdue. As for Walgreens, WBA's tough start to 2024 hasn't been good for anyone following the Dogs of the Dow. Management is trying to turn things around. Analysts say it will be a multi-year process. 

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Shopping for stocks when markets are struggling with a June swoon might not seem like the best idea. Between rising bubble anxiety and mounting uncertainty over the direction of monetary policy, it's understandable if investors are reluctant to put cash to work these days.

On the other hand, markets rarely top out at this time of year. As Ryan Detrick, chief market strategist at Carson Group notes, the most recent all-time high for the S&P 500 was on June 2.

"Stocks soared for the two months off the late March lows, so some weakness in June isn't a big surprise," he writes. "June is the only month in history that hasn't seen the ultimate peak for the year. We don't think this year will be the first one to peak in June."

At the same time, not only has a strong corporate earnings season lifted sentiment, but forward earnings estimates are marching higher. In turn, rising expected operating profits have helped make valuations more attractive.

Besides, every market features select names that are set to outperform.

Although the Magnificent 7 stocks have done much of the bull market's heavy lifting, that hardly means these names are doomed to underperform from here. Indeed, many of them are in pronounced drawdowns. At the same time, a rotation out of these stocks has capital flowing to other, sometimes sleepier, sectors.

As we'll see below, five of Wall Street's top-rated S&P 500 stocks to buy hail from the Magnificent 7. Companies from the financial, healthcare and industrials sectors are ably represented, too.

How we found analysts' top-rated S&P 500 stocks

It's well known that industry analysts are reluctant to slap Sell ratings on the names they cover. There are several reasons for this, some more defensible than others.

What's less commonly understood is that Strong Buy recommendations, while not nearly as rare as Sell calls, are in somewhat short supply, too.

If you run a screen of the S&P 500 using data from S&P Global Market Intelligence, you'll see that analysts assign a consensus Sell recommendation to only one stock.

At the other end of the ratings spectrum stands the Street's highest recommendation of Strong Buy. A total of 52 stocks made the cut there as bullish sentiment soars.

First, a note on our methodology: S&P Global Market Intelligence surveys analysts' stock recommendations and scores them on a five-point scale, in which 1.0 equals Strong Buy and 5.0 means Strong Sell.

Any score below 2.5 means that analysts, on average, rate the stock a Buy. The closer the score gets to 1.0, the stronger the Buy call.

In other words, lower scores are better than higher scores.

Have a look at the chart below to see the 52 stocks in the S&P 500 that score an elite Strong Buy recommendation from industry analysts. Investors who fear it's too late to buy Amazon.com (AMZN), Microsoft (MSFT) or Nvidia (NVDA) will be happy to see they easily made the list.

As much as artificial intelligence (AI) is driving capital spending and market sentiment, analysts see plenty of reasons to be bullish on names across multiple sectors. Here we highlight what Wall Street has to say about three less sexy stocks on the list this month.

GE Aerospace

GE Aerospace (GE), which retained the classic GE ticker following the 2024 spinoff of GE Vernova (GEV), has seen its shares take off as the company establishes itself as a high-margin, pure-play aerospace leader with significant competitive moats.

In a report titled "No sign of stopping the growth engine; reiterate Buy," BofA Securities analyst Ronald Epstein said the company's "robust demand and best-in-class execution support double-digit growth in 2026."

The analyst likes the stock over the longer haul, too, noting that GE Aerospace is well-positioned to benefit from the ongoing ramp-up in commercial aircraft production and sustained aftermarket demand. "Following the spin-off of GE Vernova, we see the company as leaner and focused on execution and safety," Epstein added.

Meanwhile, the company's robust free cash flow – which exceeded $5.7 billion last year – allows GE to aggressively fund R&D and investments in manufacturing infrastructure, all while continuing to return cash to shareholders. GE boosted its dividend by nearly 30% last year. At the same time, it repurchased more than $7 billion in stock.

Shares have delivered only market matching returns so far in 2026 (after adding more than 86% last year), but that just has the stock priced for outperformance, Wall Street says. Of the 22 analysts covering GE, 16 rate it at Strong Buy, three say Buy and two call it a Hold. A lone analyst has a sell recommendation on the name. Nevertheless, that works out to a consensus recommendation of Strong Buy.

Smurfit WestRock

After losing about a quarter of their value in 2025, Smurfit WestRock (SW) shares are beating the broader market by about 4 percentage points this year, and bulls say they are just getting started. After all, the company is still finding its feet.

SW was formed by the 2024 merger of Smurfit Kappa and WestRock Company, creating the world's largest paper packaging company. Smurfit WestRock's operations in 40 countries make it the revenue leader in the world of corrugated cardboard, containerboard, consumer packaging and more.

"We see long-term upside potential and expect earnings growth congruent with growth in e-commerce and growth in demand for sustainable paper and packaging goods," writes Argus Research analyst Alexandra Yates, who rates shares at Buy. "We also expect to see margin growth with operational efficiency improvements in the coming quarters."

Moreover, SW expects $400 million in synergies (also known as cost cuts) as a result of the merger.

With a forward P/E of less than 14, SW trades at 36% discount to the broader market. The dividend yield, at 4.2%, is pretty spicy compared to the S&P 500's yield of less than 1.1%.

Of the 15 analysts covering the materials stock, 10 rate it at Strong Buy and five have it at Buy. That works out to a consensus recommendation of Strong Buy.

Visa

Warren Buffett was a long-time admirer of Visa (V), so it was something of a surprise to see CEO Greg Abel boot it from the Berkshire Hathaway equity portfolio in early 2026.

Happily for continuing shareholders, Wall Street remains bullish on the nation's largest payments processor. Shares are off about 6% over the past year – vs a 26% gain for the broader market – but that just has Visa priced for outperformance amid the relentless war on cash, bulls say.

"Visa remains well positioned to benefit from the ongoing shift to electronic payments and remains one of our top ideas," writes Oppenheimer analyst Rayna Kumar, who rates shares at Outperform (Buy).

The company is enjoying massive growth in value-added services, such as fraud protection, consulting and data analytics. Not only are these high-margin services; they create higher switching costs for banks and merchants. This stickiness helps Visa hold a dominant position in the business-to-business space.

Interestingly, the Street hasn't been this collectively bullish on the name in 16 years. Of the 39 analysts covering Visa, 29 rate it at Strong Buy, seven say Buy and three have it at Hold.

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Apple (AAPL) and Microsoft (MSFT) find themselves in a tight race over bragging rights to the title of world's most valuable publicly traded company after AAPL stock popped following a big analyst upgrade.

A poor start to the year already had some bulls saying it's time to buy the dip in Apple stock. But when one of Wall Street's largest broker-dealers joined the chorus before Thursday's opening bell, it helped Apple recover billions in market value.

BofA Securities lifted its recommendation on AAPL stock to Buy from Neutral (the equivalent of Hold), citing the iPhone maker's investments in generative artificial intelligence (AI) and the launch of its Vision Pro mixed reality headset, among other impending catalysts. 

With a new price target of $225 – up from $208 – BofA Securities gives AAPL stock implied upside of about 20% over the next 12 months or so. The Street's average target price stands at $199.40, according to data from S&P Global Market Intelligence, good for implied upside of only 6% in the next year. 

Importantly, while some analysts have cited weaker iPhone sales in China as reasons to become more cautious on AAPL stock, the BofA Securities team led by analyst Wamsi Mohan argued as part of its upgrade that Apple's "China weakness is largely offset by strength in other countries."

Although Apple routinely makes the list of Wall Street's top-ranked Dow Jones stocks, worries over demand in China have AAPL off to a rough start in 2024. Apple stock is up about 38% over the past 52 weeks, but shares have spent all of January in the red on a year-to-date basis, hurt partly by downgrades.

Piper Sandler analyst Harsh Kumar cut his recommendation on the stock in early January to Neutral (the equivalent of Hold) from Overweight (Buy), citing a weak macroeconomic backdrop in China. Kumar's downgrade followed a more bearish downgrade by Barclays analyst Tim Long – to Underweight from Neutral – two days earlier. Long also cited weaker revenue in China as a concern.

Apple has seen iPhone sales soften in China amid an economic slowdown and other factors. Consumers are holding onto their pricey iPhones longer between refresh cycles, analysts note, while a new 5G phone from rival Huawei is also chipping away at iPhone demand. 

Microsoft and Apple run neck and neck

While Apple stock has traded essentially sideways for six months on worries that growth has peaked, fellow Magnificent 7 stock Microsoft overtook it as the global leader in market capitalization thanks to exuberance over generative AI. 

Microsoft, which enjoys a sort of first-mover advantage in AI via its partnership with OpenAI, had already been an outstanding long-term holding thanks to its dominance in cloud services. 

Not only was MSFT one of the 30 best stocks in the world for three decades, anyone who put $1,000 into Microsoft stock 20 years ago would have clobbered  the broader market. 

Check out the stocks billionaires are buying or hedge funds' top blue chip stocks and you'll see that much of the putative smart money agrees with the Street's view, which gives MSFT a rare consensus recommendation of Strong Buy. 

"Microsoft continues to pursue long-term growth through its AI and cloud investments, and may just hold the premier position in business technology," writes Argus Research analyst Joseph Bonner, who rates shares at Buy. "It also has a large and loyal customer base, a large cash cushion and a rock-solid balance sheet."

Have a look at the above chart and you'll see how bullishness like Bonner's helped Microsoft stock return nearly 65% over the past 52 weeks, allowing it to surpass Apple in market capitalization. 

As of Thursday's close, the two tech giants were separated by less than $10 billion in market cap: $2.927 trillion for MSFT vs $2.917 trillion for AAPL, or essentially tied.

Whether the companies' market values diverge from here is the big question. Happily for investors in both names, the Street very much expects AAPL stock and MSFT stock to continue to beat the broader market in the year ahead.

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In what appears to be a case of "buy the rumor, sell the news," Uber Technologies (UBER) stock languished in its Monday debut as a component of the S&P 500 even as the market enjoyed broad-based gains.

Fair enough. UBER stock is up about 7% since S&P Dow Jones Indices said on December 1 the ridesharing company would replace Alaska Air Group (ALK) in the most commonly used benchmark for U.S. equity performance. That beat the broader market by four percentage points. 

Also note that Uber was already on a roll when it was tapped for the S&P 500. Shares added more than 50% between the market's October nadir and mid-December – a period in which the broader market rose 15%. 

That Uber stock should take a breather on the day it actually became a member of the S&P 500 is no big deal. The pop UBER stock got from being picked for the benchmark index may have run its course, but being a member of the S&P 500 also helps in the long term. 

That's because the S&P 500 is the most widely tracked index in the world. Indeed, more than $11.4 trillion in assets are indexed or benchmarked to the S&P 500, according to S&P Dow Jones Indices. The market's three largest exchange-traded funds – SPDR S&P 500 ETF Trust (SPY), iShares Core S&P 500 ETF (IVV) and Vanguard 500 Index Fund (VOO) – collectively command more than a trillion dollars in assets under management. Anytime a company is included in the S&P 500, every investment vehicle following the index has to buy its stock.

Wall Street is Uber bullish 

The Uber-in-the-S&P 500 trade is over, but Wall Street analysts remain uber bullish on Uber stock as a longer term holding, too.

Of the 48 analysts issuing opinions on Uber stock surveyed by S&P Global Market Intelligence, 32 rate it at Strong Buy, 14 say Buy and two call it a Hold. That works out to a rare consensus recommendation of Strong Buy. The Street is particularly excited about Uber's growth prospects. Analysts forecast Uber to generate average annual earnings per share (EPS) growth of 68% over the next three to five years.

Such an outsized growth rate makes Uber stock, trading at 54 times the Street's 2024 EPS forecast, a screaming bargain at current levels, bulls say.

"Uber is the largest company in the ridesharing industry, and the second-largest player in food delivery," writes Argus Research analyst Bill Selesky, who rates UBER at Buy. "We expect both businesses to perform strongly in Q4 2023 and in 2024, as ridership has now rebounded to pre-pandemic levels."

Selesky adds that Uber reported 21% growth in gross bookings in its most recent quarter, while trip frequency rose by 25%. Uber also posted "solid" free cash flow of $905 million, the analyst notes. 

Uber stock added 150% for the year-to-date through December 18, vs a gain of 24% for the broader market. However, as you can see in the chart below, shares still lag the S&P 500 by a wide margin since Uber went public in 2019.  

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Imagine a company that's enjoyed overwhelming success in its key markets for ages and also claims one of the most valuable and recognizable brands in the world.

This company was so important to both its sector and the broader economy that it was a component of the Dow Jones Industrial Average for nearly a quarter of a century.

One would expect this blue chip stock to have been an outstanding buy-and-hold bet. To be fair, for a good long while, it was.

That was then. This is now.

Unfortunately, the former Dow Jones stock we're talking about is Intel (INTC).

Shares almost doubled in 2023, helped by a multibillion-dollar cost-cutting campaign and the generalized euphoria surrounding all things artificial intelligence (AI). Intel bulls harbored hopes that the year marked an inflection point for the long-time market laggard.

It hasn't worked out that way. Intel fell as much as 60% from its late 2023 peak before climbing back to about breakeven today. Heck, shares remain about 33% below their all-time high.

It's hard to believe now, but once upon a time, INTC was one of the best stocks on the planet. Cut to the present, and it's not clear if the company can reclaim its glory days.

Intel still dominates the markets for central processing units (CPUs) for PCs and servers, but it's been losing share to rivals at an accelerating rate for some time. Nvidia (NVDA) and Advanced Micro Devices (AMD) are just a couple of its formidable competitors.

Where the semiconductor company really went wrong — apart from execution missteps and manufacturing delays — is the way it missed some of the biggest changes in technology. Intel famously whiffed on mobile, and now Nvidia is running away in generative AI.

There's a reason Nvidia replaced Intel in the Dow Jones Industrial Average in 2024.

It's been a curious ride for INTC investors. Thanks to its dot-com era heyday, Intel was one of the 30 best stocks in the world from 1990 to 2020.

In those three decades, INTC stock generated more than $340 billion in wealth for shareholders, or an annualized dollar-weighted return of 16%, says Hendrik Bessembinder, a finance professor at the W.P. Carey School of Business at Arizona State University.

However, the past two decades of that 30-year span have been another story.

The bottom line on Intel stock?

If you go all the way back to Intel's debut in the early 1970s as a publicly traded company, it beats the broader market handily. The chipmaker's annualized all-time total return stands at 14.4%. The S&P 500's annualized total return comes to 10.8% in the same span.

If you look at pretty much any other standardized period, an investment in INTC has been a major dud.

Intel stock trails the broader market by distressingly wide margins in the past five-, 10- and 20-year periods. Indeed, its five-year annualized total return is negative.

What does this sort of performance look like on a brokerage statement? Nothing short of ugly.

Have a look at the above chart, and you'll see that if you invested $1,000 in Intel stock 20 years ago, today your stake would be worth about $4,000, or an annualized total return of 7.4%.

The same amount invested in the S&P 500 would theoretically be worth about $7,000 today. That's good for an annualized total return of 11%.

As illustrious and iconic as the Intel brand might be, Intel stock has been nothing but a sinkhole of opportunity cost for buy-and-hold investors for a very long time.

So where does INTC stock go from here? Wall Street is mostly sitting on the sidelines, giving it a consensus recommendation of Hold. Of the 47 analysts covering Intel surveyed by S&P Global Market Intelligence, eight call it a Strong Buy, one says Buy and 32 have it at Hold. Four analysts rate INTC at Sell, while two say it's a Strong Sell.

Among their worries: the company is in the midst of a major restructuring as it struggles to right its floundering foundry business. True, the federal government took a 10% equity stake in 2025, and that's given INTC stock a boost. However, the foundry business continues to generate operating losses and is having difficulty lining up outside customers, among other issues.

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Few companies are more closely associated with the rise and dominance of the American technology industry over the course of the 20th century than International Business Machines (IBM).

The company that came to be known as Big Blue is sort of the O.G. of big tech stocks. IBM, founded before World War I, became the industry leader in pretty much every market it entered, from early punch-card tabulating systems to electric typewriters to mainframe and personal computers.

IBM stock was a fantastic buy-and-hold bet over those many decades. From 1926 to December 2019, IBM created $525.9 billion in shareholder wealth, according to research by Hendrik Bessembinder, a finance professor at the W.P. Carey School of Business at Arizona State University.

Only seven U.S. stocks generated better returns for shareholders over that span.

Times change. IBM ceded ground to any number of peers, including some of the Magnificent 7 stocks sporting multitrillion-dollar market caps today. The result? Shares in this long-time Dow Jones stock have been a major disappointment for decades.

As a member of the S&P 500 Dividend Aristocrats, IBM is a top-notch name for dependable dividend growth. Not only has the company paid consecutive quarterly dividends since 1916, it has increased its payout annually for 30 years and counting.

However, even after factoring in those reliable and rising dividends, IBM stock has been a market laggard over the long haul.

The bottom line on IBM stock?

IBM stock has been mounting a comeback over the past few years, but as a truly long-term holding, it's been a serious market laggard.

Here's the breakdown: IBM stock's all-time annualized total return (price change plus dividends) comes to 4.6%. The S&P 500 generated an annualized total return of 10.8% over the same span.

It doesn't end there. Shares in the tech giant beat the broader market on an annualized total return basis in the past three- and five-year periods, but lag badly over longer time frames.

It should come as no surprise that if you invested a grand in IBM stock a couple of decades ago, you would be deeply disappointed by the results today.

Have a look at the above chart, and you'll see that if you put $1,000 into IBM stock 20 years ago, it would be worth about $5,700 today. That's good for an annualized total return of 9.1%.

The same sum socked away into an S&P 500 index fund over the past two decades would be worth almost $8,300 today, or 10.9% annualized.

The bottom line? Big Blue has been a buy-and-hold bust in the 21st century.

As for where IBM stock goes from here, Wall Street is cautiously bullish on the name. Of the 22 analysts covering the stock surveyed by S&P Global Market Intelligence, 10 call it a Strong Buy, two say Buy, eight have it at Hold, one says Sell and one rates it at Strong Sell. That works out to a consensus recommendation of Buy with mixed conviction.

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Adobe (ADBE) stock was supposed to get a big boost by adding AI to its offerings, and yet so far the transformational technology has only put shares under pressure.

The result? Although truly long-time shareholders are still sitting on market-beating returns, ADBE isn't the same buy-and-hold beast of yore.

While Magnificent 7 stocks such as Nvidia (NVDA) and Microsoft (MSFT) helped the tech-heavy Nasdaq Composite gain 25% over the past 52 weeks, ADBE is down a painful 30%.

It gets worse. Shares lost more than a quarter of their value last year. And while ADBE popped 77% in 2023, it lost more than 40% in 2022. Yikes.

If it's any consolation to restive shareholders, many steps forward and a few steps back is sort of par for the course for volatile ADBE stock.

Much of the recent underperformance can be attributed to competition in generative AI. For years, the company enjoyed a near monopoly in its niche. Its Creative Suite – which includes the likes of Photoshop, Premiere Pro for video editing and Dreamweaver for website design, among others – really had no peer.

But times change. The emergence of Microsoft's (MSFT) Azure and other cloud-based competitors have taken a bite out of Creative Cloud.

True, Adobe's suite of products still commands a market share of more than 60%, but there's no question the company – and its shareholders – have been feeling the heat.

Indeed, ADBE now lags the broader market on an annualized total return basis by more than 20 percentage points over the past three- and five-year periods.

The bottom line on Adobe stock

It wasn't supposed to be like this. After all, Adobe's hot 2023 run was a lot more like what longtime shareholders have come to expect from the large-cap stock.

Have a look at the chart below and you'll see that a $1,000 investment in Adobe stock 20 years ago would today be worth nearly $12,000. The same money invested in the S&P 500 would theoretically have grown to about $8,300.

Although Adobe is maintaining its market-beating ways, the outperformance gap has narrowed alarmingly since shares peaked back in November 2021.

Happily for bulls, Wall Street believes ADBE can one-day reclaim its record high. Of the 40 analysts issuing opinions on Adobe stock surveyed by S&P Global Market Intelligence, 20 rate it at Strong Buy, five call it a Buy, 12 have it at Hold and three say it's a Strong Sell.

That works out to a consensus recommendation of Buy, with solid conviction.

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There's an old saying about investing that the best way to make money is to buy low and sell high. However, there's also a less popular way to cash in on Wall Street via finding the best momentum stocks.

Simply put: Buy high and sell even higher.

It's not always true that cheap stocks are a bargain. Some companies are trading at low levels for good reason and are likely to see further declines. In a similar respect, some high-flying momentum stocks are pricey for good reason and are likely to be in store for continued and sustained gains.

This latter example is momentum stock investing at its core.

Let's use iconic electric vehicle company Tesla (TSLA) as a working example. Tesla held its initial public offering (IPO) back in 2010 at $17 a share. Adjusting for two stock splits, a $10,000 investment four years ago would be worth roughly $107,500 today.

That's a lot of money, to be sure. But if you invested 10 years ago, you would be sitting on a $280,000 nest egg.

While this example underscores that the best money is to be made over the long term, it also shows how buying a high-flying momentum stock midway through its ascent can still be very profitable, even if you're a bit later to the opportunity than others.

Finding the best momentum stocks to now isn't always about fundamental analysis. There are a lot of high-flying stocks that don't have particularly great numbers right now. Rather, they are speculative bets on what they will become in the future.

That means taking a longer view, and prioritizing the following factors:

Sentiment: Generally speaking, momentum stocks rise because investors are excited about them. Therefore the "feelings" around a successful momentum stock are incredibly important. Though hard to quantify, sentiment can be tracked in part via consensus Wall Street recommendations on a stock. If nearly all analysts rank a stock as a Buy or have recently changed their recommendations from neutral to positive, that's a great sign.

Longer-term charts: Technical analysis of Wall Street charts and price patterns can be complex. But you don't need a black belt in charting to understand concepts like the "moving average" for a stock price that reflects longer-term changes beyond day-to-day readings. 

Momentum has a natural time element to it, so you have to think beyond today's closing price and identify long-term momentum trends by investigating price and volume patterns in charts.

Comparative returns: It's easy to identify a momentum stock that has tripled in short order, but less obvious momentum investments might not be as noticeable. Make sure you're comparing returns in short-term as well as long-term windows, and vs peer companies as well as the broader market. 

You may be surprised to learn that what looked like a big winner is actually just part of a broader bull market trend and isn't all that special. Or worse, you may notice it's lagging its competitors – and at risk of falling behind even if it's still seeing shares move generally higher. 

The potential payday from momentum stocks is clear, particularly if you're looking at historic success stories like Tesla. But pointing to an old winner is much harder than getting in on the ground floor of tomorrow's next momentum stock standouts. 

As mentioned previously, a big factor in these investments is the intangible feeling around them. That's hard to quantify, and very hard to predict. 

This makes momentum stock investing very risky, and very much a leap of faith.

Beyond that challenge of identifying stocks with a difficult-to-define "it" factor, it is also important to understand that momentum cuts both ways. Just as some stocks seem to go up illogically just because investors like them, other stocks can crash and burn when Wall Street gives up on them. That's true regardless of the facts of the news cycle or hard numbers around earnings or sales.

Stocks that are prone to upside momentum are often equally prone to big moves to the downside when sentiment changes. That means if you buy at the wrong time or in the wrong stock, you could see a dramatic loss rather than the big profit you had hoped for.

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• If You'd Put $1,000 Into Nvidia Stock 20 Years Ago, Here's What You'd Have Today

Nvidia (NVDA) in 2023 established itself as the market's runaway favorite way to bet on the explosive growth of generative artificial intelligence (AI). And NVDA stock has the outsized returns and trillion-dollar market capitalization to prove it. 

Latecomers might figure that the easy money in NVDA stock has already been made. But thanks to Nvidia's market dominance and first-mover advantage, Wall Street believes shares in the chipmaker powering the AI revolution have plenty of upside left.

That's remarkable considering that Nvidia stock has more than tripled in value for the year-to-date through early November. 

Indeed, the maker of graphic processing units (GPUs) added roughly $800 billion in market capitalization in 2023 alone. To put that in perspective, competitor Intel (INTC), a component of the Dow Jones Industrial Average, has a market value of $160 billion. Rival Advanced Micro Devices (AMD) has a market cap of $180 billion. 

In other words, NVDA's market value this year has expanded by the equivalent of five INTCs or four AMDs. 

NVDA stock was up 211% for the year-to-date through November 6, pushing its market cap up to $1.12 trillion. If the idea is to buy low, then it's perhaps reasonable to assume that it's far too late to add Nvidia stock to your portfolio. 

Most industry analysts, however, would beg to differ.

Nvidia's iPhone moment?

The world is suddenly awash in all sorts of AI wizardry, with more sites and tools and apps coming every day. And Nvidia's place in this ecosystem couldn't be more enviable. It's churning out a new generation of advanced chips to power the data centers tasked with making the calculations that conjure all this AI magic.

Demand is so great for Nvidia's hardware that the company's second-quarter revenue more than doubled year-over-year to $13.5 billion. Analysts were looking for revenue of "only" $11.1 billion. For the full fiscal year, Wall Street expects the company to post revenue of more than $54 billion – a 100% increase over last year's revenue of $27 billion. 

The key to the investment thesis on NVDA stock is that AI data centers will continue to have an almost insatiable need for Nvidia's products. Naturally, traders and investors could not be more elated. That's certainly understandable given what they see as historical precedent. As Nvidia CEO Jensen Huang said in an interview last spring, the company has been preparing for years to take advantage of the AI craze.

"I call it the iPhone moment,” Huang told The Wall Street Journal, comparing NVDA's position in generative AI to the way Apple's (AAPL) iteration of the smartphone essentially ushered in a new era of tech. "All the technology came together and helped everybody realize what an amazing product that can be and what capabilities it can have."

Analysts: Nvidia stock is still a buy

Long-time followers of Nvidia stock probably already know that it happens to be one of the best stocks of the past 30 years. Between 1990 and 2020, NVDA created $309.4 billion in wealth for shareholders, according to calculations by Hendrik Bessembinder, a finance professor at the W.P. Carey School of Business at Arizona State University. Indeed, NVDA stock was good for an annualized dollar-weighted return of almost 28% over that span.

Nvidia stock has also generated stupendous wealth for anyone who picked it up a couple decades ago. If you put a mere $1,000 into Nvidia stock 20 years ago, you would have enjoyed an annualized return of almost 34%. 

And now, even with shares having more than tripled in 2023, the Street is still pounding the table for Nvidia stock. Of the 53 analysts issuing opinions on NVDA surveyed by S&P Global Market Intelligence, 38 rate it at Strong Buy, 12 say Buy and three have it at Hold. That works out to a rare consensus recommendation of Strong Buy, with high conviction to boot. 

As for where the Street thinks NVDA is headed, analysts' average price target stands at $641.37. That gives Nvidia stock implied upside of about 40% in the next 12 months or so. 

The bottom line? Nvidia stock might be trading near record highs, but the Street says this rally is far from finished. Have a look at the list of hedge funds' top stocks picks or stock picks that billionaires love and you'll see that much of the so-called smart money wholeheartedly agrees.

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Historically, communication services is a robust sector with resilient fundamentals. This diverse segment of the market includes companies involved in advertising, broadcasting, internet media services, publishing, entertainment and mobile telecom services. The best communication services stocks range from mature operators that have been around for decades and pay attractive dividends to early stage growth startups, which are years away from showing profits.

This sector, like so many others, sold off last year alongside the broader market. And while many communication services stocks have shown strength so far in 2023, there are still a few concerns clouding the near-term outlook. 

For instance, recession worries have many companies cutting back on advertising spending, which could affect some of the big-name players in this space. Also, some of the largest companies in the sector are falling under the watchful eye of bipartisan regulators. Antitrust investigations could soon become a thing for the world's largest social and communications companies.

But there are "pockets of opportunity," writes Matthew Drukker, portfolio manager at Fidelity, including among streaming platforms and broadband/wireless providers. "Companies that can cut costs and maintain solid balance sheets may have the best long-term prospects to come out of a downturn in a stronger position," Drukker adds.

With that in mind, here are nine of the best communication services stocks to buy now. With a handful of household names and even some smaller opportunities making this list, communications is definitely one sector that shouldn't be overlooked by any investors with a long-term outlook.

Data is as of March 14. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Analysts' average price targets courtesy of S&P Global Market Intelligence.

• Market value: $154.9 billion
• Dividend yield: 7.1%
• Analysts' average price target: $45.62 (23.7% implied upside)

Last year, Verizon Communications (VZ, $36.88) hit a rough patch as subscriber numbers flatlined and the company had to fend off tough rivals like AT&T (T) and T-Mobile (TMUS). The result was that – during 2022 – Verizon's stock price dropped from a February high in the mid-$50s to an October low in the mid-$30s. 

But it looks like things are getting back on track. In the latest quarter, Verizon reported a 217,000 increase in postpaid connections. These types of subscribers are critical because they tend to be more stable and have higher margins.

There are some other catalysts for the Dow stock. With 5G mostly built out, capital expenditures are expected to decline to $18.25 billion to $19.25 billion this year, compared to $23.1 billion for the prior year. For 2024, the capex forecast is for $17 billion. 

Another boost should come from the synergies from the massive Verizon platform. The company is poised to benefit from the trend of bundling streaming services. Verizon's +play platform, which helps customers better manage streaming subscriptions, has offerings like Netflix (NFLX), Disney Plus, and HBO Max. There is also a revenue split for this. 

Given Verizon's longer-term technical struggles, the valuation is still at an attractive 7.8 times forward earnings. VZ is also one of the best communication services stocks for income investors (and one of the best dividend stocks period), yielding 7.1% at present.

• Market value: $9.4 billion
• Dividend yield: N/A
• Analysts' average price target: $47.33 (17.0% implied upside)

Even though interest rates may be close to a peak, they are likely to remain fairly high for the foreseeable future. The Federal Reserve wants to make sure it gets inflation under control.

But a high interest rate environment has been painful for the real estate market. Just look at Zillow Group (Z, $40.42). After the stock price reached a peak above $200 in early 2021, the direction has been mostly downward. Currently, Zillow trades around $40.

Yet this is an opportunity to buy one of the best communication services stocks in the digital real estate space. The company's platform averaged 198 million monthly active users (MAUs) in the fourth quarter and there are about 2.2 billion visits. 

There is even an interesting AI play with Zillow. In January, the company announced a ChatGPT-like app that allows for natural language queries. According to Zillow's press release on the new service, users "can enter phrases like '$700K homes in Charlotte with a backyard' or 'open house near me with four bedrooms' directly into the Zillow search bar, rather than starting with a location and having to filter their way to the homes they want." 

Z wants to become the housing super app and AI will certainly be key for this. The company also has the advantage of an extensive proprietary database, which includes data on 135 million homes. 

To deal with the macro headwinds, Zillow has engaged in belt tightening. However, the company has continued to increase investments in product and technology. This is an encouraging sign, as it shows the confidence in the business and the secular trends.  

As Rich Barton, co-founder and CEO of Zillow, noted in his latest shareholder letter: "We expect 60 million homes will trade hands over the next 10 years, which reflects a much more natural and healthy mover rate. And, given all the product and service innovation opportunities we see, we believe we can capture an increasing and meaningful share of those customer transactions and drive value for our customers, partners, employees, and shareholders."

• Market value: $170.6 billion
• Dividend yield: N/A
• Analysts' average price target: $129.00 (38.2% implied upside)

In November, Walt Disney (DIS, $93.36) was looking shaky. The company posted a disappointing earnings report and said its streaming division lost $1.47 billion. There was also muted guidance. The share price sank 9% on the news.

Not long after, Disney's board and senior executives replaced CEO Bob Chapek with Bob Iger. It was bold and disruptive, but it looks like it was the right move.

Consider that Iger has wasted little time in making changes. He has set in motion layoffs for 7,000 jobs and will cut $5.5 billion in costs. Part of this is aimed at getting to profitability for the streaming business, but Iger is also realigning the power structure at the company, providing more control with content executives.

This could perhaps be the most impactful change. A key to Iger's success as CEO of Disney from 2005 to 2020 was his focus on producing blockbusters. He bolstered this with savvy acquisitions for Pixar Animation Studios, Lucasfilm, Marvel Entertainment and 21st Century Fox.

On Iger's first earnings call in February, he talked about sequels for popular franchises like "Frozen," "Toy Story," and "Zootopia." These should boost growth for the blue chip stock. 

As a testament to Iger's plan, activist investor Nelson Peltz called off his proxy fight, saying the company has a solid plan. "Now they've got to execute," Peltz added.

True, now is the time to follow through. But Iger has demonstrated he can successfully lead Disney – and this should be good news for investors seeking out the best communication services stocks.

• Market value: $981.1 million
• Dividend yield: N/A
• Analysts' average price target: $46.22 (35.0% implied upside)

Founded at the peak of the dot-com boom in the late 1990s, TechTarget (TTGT, $34.22) is a leading platform for content and marketing tools for the technology industry. It has over 150 websites that cover topics like networking, storage, cybersecurity, cloud, DevOps and virtualization. 

Unfortunately, the business has suffered because of the problems in the IT world. With sluggish growth and layoffs, there have been cutbacks to marketing budgets. For 2023, TechTarget forecasts a decline in revenues of 11% to 14%. 

But the company has strong competitive advantages. It has a user base of 30 million and 95% of the traffic is unpaid. And consider that there are more than 1.2 million page one rankings on Google.

The company is also building useful tools that should help boost growth. One is the Priority Engine, which leverages TechTarget's rich database to improve conversations for leads.  Then there is the content enablement segment. This is a comprehensive program that helps validate market opportunities, test messaging, create buyer personas and develop competitive analysis.

Even with the expected fall-off on the top-line for this year, TechTarget is still expected to have an attractive EBITDA (earnings before interest, taxes, depreciation and amortization) margin of about 35% and net income of $16.2 million to $23.2 million. This is partly due to an asset-light business model. In fact, for the past 19 years, the company has generated positive free cash flows.

• Market value: $27.7 billion
• Dividend yield: N/A
• Analysts' average price target: $67.41 (19.2% implied upside)

The Trade Desk (TTD, $56.53) operates a cloud-based ad buying platform that allows for campaigns across display, video, audio, mobile, social and CTV (connected TV).

Unfortunately, the industry has been under pressure, but The Trade Desk has been able to continue to show robust growth. In the latest quarter, revenues jumped by 24% year-over-year to $491 million and adjusted EBITDA came to $245 million, up 27.6%. By comparison, the company's large competitors were posting drops on the top line.

What's the difference? A major factor for the growth is TTD's AI platform, Koa.This sophisticated technology allows granular profiling of audiences, and is based on processing more than 600 billion queries per day. From all this, a marketer can get the right insights to build effective campaigns. 

In the meantime, The Trade Desk is benefiting from the secular trend of CTV. This allows for personalized ad campaigns. But this requires state-of-the-art technologies like Koa. 

On The Trade Desk's latest earnings call, founder and CEO Jeff Green said, "The shift from linear TV to CTV continues to accelerate, and I predict that, at some point in the near future, we will reach a precipitous tipping point. It won't be a long, gradual shift to CTV. It will be an acceleration and then a full-on shift."

• Market value: $30.6 billion
• Dividend yield: 0.7%
• Analysts' average price target: $133.67 (19.9% implied upside)

The gaming industry can definitely be choppy. A game can easily flop or fade. Then there are the inevitable delays.

This is why it's a good idea to focus on game publishers that have a set of durable franchises. They can ride out the temporary problems – and ultimately provide investors a way to benefit from the continued growth of the industry.

Of course, Electronic Arts (EA, $111.48) fits the bill. Its franchises include FIFA, Madden, UFC, Star Wars and Sims. There is also a massive player network, which is at 650 million.

It's true that there were problems in the recent quarter. EA pulled the Apex Legends Mobile game. Even though it was the game of the year for 2022 for Apple and Google app stores, it was not enough. This does show how difficult the mobile gaming segment can be. 

Another problem was that EA delayed the launch of its Star Wars Jedi: Survivor console game. Instead of being released in mid-March, it will be for late April. Still, the game has a good chance of being a hit and a boost for growth.  

In other words, EA's recent issues appear to be temporary, while its long-term prospects look bright, especially as other games are launched this year. For investors, this allows them the chance to get one of Wall Street's best communication services stocks at a discount.

• Market value: $11.8 billion
• Dividend yield: N/A
• Analysts' average price target: $83.33 (32.2% implied upside)

Founded in 2008, Twilio (TWLO, $62.99) has been a strong innovator. The company started as a platform that allowed developers to include communication services – like voice, messaging and email – into their apps. It then leveraged this expertise into creating solutions for the contact center. This was then followed up with technologies for sales reps. And then there was a move into the customer data market, which came through the acquisition of Segment.

While all this has created a large company, Twilio has had its problems. The disparate businesses have become more difficult to manage. The headcount also got bloated.

But co-founder and CEO Jeff Lawson has taken swift actions, most recently dividing his organization into two groups: Twilio Communications and Twilio Data & Applications. This has resulted in a shakeup of leadership ranks.

There have also been significant layoffs, with 26% of the workforce let go in recent months. The company also eliminated many employee perks – including its sabbatical program – and reduced its real estate footprint.

Now, the good news is that Twilio continues to grow. In the fourth quarter, revenues were up 22% year-over-year.  

But given the state of the company – in which revenues are at over $1 billion per quarter – there is a need to focus on profitability. All in all, it seems Lawson's plan is spot-on for this.  

• Market value: $11.3 billion
• Dividend yield: N/A
• Analysts' average price target: $34.52 (61.6% implied upside)

ZoomInfo Technologies (ZI, $21.36) is a provider of market intelligence for sales, marketing, operations and recruiting. For example, the platform can help provide an account executive a 360-degree view of a prospect, which should help close sales.

The databases are massive. They have over 220 million professional profiles and more than 100 million companies. There are roughly 1.5 billion updates daily. 

All this has been crucial for ZoomInfo's AI efforts. Some of the features include predictive modeling for customer personalization, targeted messaging, web form optimization and conversation intelligence.

In early 2023, ZoomInfo announced it will launch a ChatGPT-type language system for its products. The company noted in a press release: "this cutting-edge technology will transform the way sales and marketing teams find and connect with their ideal customers, cutting prospecting time and driving more efficient results for go-to-market (GTM) teams."

While the economic slowdown has weighed on ZI's business, the company has continued to grow, with revenues up 36% in the latest quarter. It also has a lean operating structure, with impressive free cash flows of $122.4 million.

To gin up growth, ZoomInfo has been investing heavily in its enterprise segment. And there is lots of runway for one of Wall Street's best communication services stocks. The company estimates that its addressable market opportunity is at about $100 billion.

• Market value: $10.3 billion
• Dividend yield: N/A
• Analysts' average price target: $63.14 (71.9% implied upside)

Like many other digital companies, Match Group (MTCH, $36.74) stock got off to a strong start in 2023. But the enthusiasm soon fizzled. The reason? A weak earnings report. The company reported a 2% year-over-year drop in revenues to $786 million and a 54% fall in operating income to $107 million. There was also weak guidance for the first half of this year. 

But investors should not throw in the towel on Match stock. If anything, this is an opportunity to get a better valuation on one of the best communication services stocks.

One catalyst for future growth is the changes CEO Bernard Kim has been making to the Tinder app. A key to this has been a slew of innovative features, as well as a new marketing campaign, which should help accelerate the growth.

In the meantime, there have been important changes to the Hinge app, such as boosting monetization by adding subscription tiers. There is also the push into foreign markets, including Asia.

Again, the near term is expected to be challenging, and restructuring efforts will take some time to get results that move the needle. But this should set Match up for renewed growth in the second half of the year. 

The Federal Reserve is in a tricky spot these days as the central bank's rate-setting committee gathers for its next meeting.

On the one hand, economic growth remains solid and inflation remains above the Fed's long-term target. Price pressures could resurface as a result of President Donald Trump's tariff policies.

On the other, the jobs outlook is weakening, and too many folks are priced out of the housing market. Meanwhile, economists, strategists and investors are increasingly concerned about the central bank's independence going forward.

December's CPI report showed that consumer inflation held steady at 2.7%, relieving pressure on the Federal Open Market Committee (FOMC), the Fed's rate-setting panel, to raise rates. We should see further cooling ahead thanks to easier comparisons.

"The 12-month inflation rate for all prices will drop in January through March, but mostly because of strong price increases a year ago raised the base for the year-over-year calculation," writes Kiplinger economist David Payne.

Sluggish hiring, meanwhile, leaves the possibility of future rate cuts on the table.

These twin pulls make the Fed likely to leave the short-term federal funds rate unchanged at its next meeting, experts says.

"Firmer economic growth may be translating into some welcome improvement in labor markets, which should be sufficient to sideline the FOMC at month's end," writes Sal Guatieri, senior economist at BMO Capital Markets. "At the same time, the peak-tariff effect on inflation could be in the rearview mirror, opening the door for more rate cuts this year."

When you consider the Fed's dual mandate against the backdrop of sticky inflation and a softening labor market, it makes sense that folks are obsessed with tracking when the next Fed meeting is coming up.

Lower interest rates today equal higher returns for equities tomorrow.

The next Fed meeting: What to expect

As you can see from the FOMC meeting calendar below, the committee meets eight times a year, or about once every six weeks. The FOMC is required to meet at least four times a year and might convene additional meetings if necessary. The convention of meeting eight times per year dates to the market stresses of 1981.

FOMC meetings last two days and conclude with the committee releasing its policy decision at 2 pm Eastern Standard Time. The Fed chief then holds a press conference at 2:30 pm. (Pro tip: As closely scrutinized as the Fed statement might be, market participants are usually even more keen on what the Fed chair has to say in the press conference.)

As for the next Fed meeting, it will begin on Tuesday, January 27, and conclude with a policy statement on Wednesday, January 28, at 2 pm EST.

As of January 20, interest rate traders assigned a 97% probability to the FOMC leaving the fed funds rate unchanged at a target range of 3.50% to 3.75%, according to CME FedWatch.

That's up from 78% a month ago. The odds of a quarter-point cut stood at 3%, down from 22% last month.

The schedule of upcoming Fed meetings is listed below, courtesy of the FOMC.

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Apple (AAPL) stock has been in a slump since notching a record high at the end of 2025, but that means little to truly long-term investors.

Recall that at one point last year, AAPL stock lost as much as 30% of its value. Shares soon went on a remarkable run, adding about $1.6 trillion to the company's market cap in only eight months.

Given that context, a 9% drawdown from AAPL's December record is just the cost of doing business. If you want to own equities, volatility is merely the price of admission.

Truly long-term buy-and-hold Apple investors already know this. After all, they've been through these sorts of things many times before – and have been rewarded with incomparable returns over the past few decades.

As famed speculator Jesse Livermore once said, the big money is made by "sitting tight." If any stock proves the wisdom of his words, it's Apple.

From January 1990 through December 2020, AAPL stock created $2.67 trillion in shareholder wealth, or an annualized dollar-weighted return of 23.5%, according to an analysis by Hendrik Bessembinder, a finance professor at the W.P. Carey School of Business at Arizona State University.

Indeed, per Bessembinder's findings, which account for a stock's increase in market cap adjusted for cash flows in and out of the business and other adjustments, Apple was the best stock in the world over those 30 years.

True, AAPL stock traded sideways for the first few years of the 21st century, but an explosion of innovation soon put an end to that.

Under the visionary leadership of the late Steve Jobs, Apple essentially reinvented itself for the mobile age, launching revolutionary gadgets such as the iPod, MacBook and iPad.

But what really set Apple on its course to becoming the world's third-largest publicly traded company – and one of hedge funds' favorite blue chip stocks – was the 2007 debut of the iPhone.

Today, Apple isn't just a purveyor of gadgets; it sells an entire ecosystem of personal consumer electronics and related services. And it's a sticky ecosystem at that.

No less an eminence than Warren Buffett has called the iPhone maker Berkshire Hathaway's (BRK.B) "third business," noting Apple fans' fantastic brand loyalty as one reason for being all-in on the stock. (Apple accounts for more than fifth of the value of the Berkshire Hathaway equity portfolio.)

True, Berkshire Hathaway cut its Apple stake sharply over the past year, but that was because the holding company believes that corporate taxes are likely to rise at some point in the future. Bulls needn't worry about Berkshire losing its taste for the stock. Warren Buffett adores Apple as much as ever.

Little wonder the iconic tech firm was tapped to become one of the elite 30 Dow Jones stocks. In 2015, Apple replaced AT&T (T) in the Dow Jones Industrial Average.

The bottom line on Apple stock?

Over the past 20 years Apple stock generated an annualized total return (price change plus dividends) of 27.4%. By comparison, the S&P 500 delivered an annualized total return of 10.8% over the same span.

What does that look like on a brokerage statement? Check out the chart below and you'll see that if you invested $1,000 in Apple stock 20 years ago, it would today be worth about $130,000.

The same $1,000 invested in an S&P 500 index fund would theoretically have turned into less than $8,000 over the same period.

For those wondering if Apple stock is a buy at current levels, Wall Street certainly thinks so.

Of the 48 analysts covering AAPL surveyed by S&P Global Market Intelligence, 25 rate it at Strong Buy, six say Buy, 15 have it at Hold, one says it's a Sell and one has it at Strong Sell.

That works out to a consensus recommendation of Buy, with high conviction.

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Nvidia (NVDA) cemented its place as the market's favorite bet on artificial intelligence (AI) three years ago and it shows no signs of letting up.

Indeed, the company has become so important to investors that Nvidia's earnings report helps set the tone for trading for the broader market.

To recap: OpenAI's ChaptGPT kicked off the AI frenzy at the end of 2022. Seemingly insatiable demand on the part of AI hyperscalers for Nvidia's graphics processing units (GPUs) propelled NVDA stock past $1 trillion in market capitalization midway through 2023.

It took only about eight months for yet another blowout quarterly earnings report to push Nvidia stock past the $2 trillion mark.

Cut to early 2024 when Nvidia's over-the-top first-quarter earnings – plus a NVDA stock split and a dividend hike – pushed its market cap past $3 trillion.

As of this writing, Nvidia, which replaced Intel (INTC) in the Dow Jones Industrial Average in late 2024, is the world's largest publicly traded company. Indeed, it became the first company to top $4 trillion in market cap in July 2025. Four months later, Nvidia briefly exceeded $5 trillion in market cap before shares eased back.

But then, long-time shareholders should be used to such outsized rewards and risks by now.

That's because volatility has always been the price of admission to this long-time market beater. True, Nvidia, a highly cyclical semiconductor stock, has vastly outperformed the broader market since going public at the end of the last century.

Quite naturally, it has done so with several vertiginous ups and downs along the way.

After losing half its value in 2022, NVDA stock more than tripled on a price basis in 2023, vs a gain of 24% for the S&P 500.

And as for 2024? Nvidia stock gained more than 170% vs a 25% rise in the broader market. The stock once again led the broader market in 2025, albeit by "only" 21 percentage points.

Nvidia's market-beating ways go much farther back than most folks might know, however. In fact, few stocks have done more for investors over the past few decades than Nvidia.

From its initial public offering at $12 a share in January 1999 through December 2020, NVDA stock created $309.4 billion in shareholder wealth, according to an analysis by Hendrik Bessembinder, a finance professor at the W.P. Carey School of Business at Arizona State University.

Indeed, per Bessembinder's findings, which account for a stock's increase in market value adjusted for cash flows in and out of the business and other factors, Nvidia was one of the 30 best stocks over that 30-year time frame.

Looked at another way, over its life as a publicly traded company, Nvidia stock generated an annualized total return of 37.1%. The S&P 500, with dividends reinvested, returned an annualized 10.8% over the same period.

Importantly, most of the shareholder wealth generated by Nvidia came over just the past few years. That's because back in the day, the primary market for Nvidia's chips consisted of PC and console video game enthusiasts.

Happily for Nvidia, it just so happens that the company's powerful GPUs and related intellectual property are indispensable to the fields of artificial intelligence, professional visualization, cryptocurrency mining and more.

As noted above, NVDA processors are in demand for use in data centers – and especially data centers that power generative AI. Indeed, the company is struggling to keep up with orders from hyperscalers such as Microsoft (MSFT), Meta Platforms (META), Amazon.com (AMZN) and Alphabet (GOOGL).

Few blue chip stocks offer so much exposure to so many emerging endeavors, which helps explain NVDA stock's amazing returns over the longer haul. AI has been NVDA's afterburner.

But as remarkable as the company's business may be, it doesn't quite get to the heart of what NVDA stock has meant to long-term shareholders and their brokerage statements. For that, consider the following facts about Nvidia stock.

The bottom line on Nvidia stock?

Over the past two decades, Nvidia stock generated an annualized total return (price change plus dividends) of 37.2%. The S&P 500, by comparison, generated an annualized total return of 10.9% over the same span.

What does that mean in dollar terms? Have a look at the above chart and you'll see that if you invested $1,000 in Nvidia stock 20 years ago, it would today be worth more than $560,000. The same amount invested in an S&P 500 index fund would theoretically be worth not quite $8,000 today.

As for adding to NVDA at current levels, the Street remains bullish even after the stock's incredible run. Indeed, NVDA rates as a top Dow Jones stock to buy.

Of the 63 analysts issuing opinions on Nvidia stock surveyed by S&P Global Market Intelligence, 49 rate it at Strong Buy, 11 say Buy, two call it a Hold and one has it at Strong Sell.

That works out to a rare consensus recommendation of Strong Buy. Indeed, Nvidia ranks among analysts' top S&P 500 stocks to buy now.

Speaking for the bulls, Oppenheimer analyst Rick Schafer says the AI build-out is still in its early days.

"Nvidia has transformed from a graphics company to a premier leading full stack AI solutions platform company," notes the analyst, who rates NVDA at Outperform (the equivalent of Buy.) "Compute continues to chase demand. NVDA ubiquitous AI platform best positioned to win."

Just remember that NVDA is ultimately a chip company, and the semiconductor industry is cyclical. As exciting as the AI build-out may be, Nvidia's growth prospects could still one day change.

More Stocks of the Past 20 Years

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• If You'd Put $1,000 Into Walmart Stock 20 Years Ago, Here's What You'd Have Today

Summary: The best growth ETFs to buy are those that hold companies expected to grow faster than peers based on one or more fundamental measures, including earnings per share and return on equity. Growth ETFs tend to have outsize exposure to stocks in the technology, communication services and consumer discretionary sectors. Seek out large-cap growth ETFs with low costs and high liquidity.

Besides segmenting by size, such as small-cap stocks or large-cap stocks, and the sector type, including those defined under the Global Industry Classification Standard (GICS), investors can distinguish between two investing styles: value vs growth.

Value investing is associated with legendary investors such as Benjamin Graham and Warren Buffett. The approach has deep academic roots thanks to Eugene Fama and Kenneth French, who studied the value factor.

But growth has dominated performance since the Great Recession. Even broad, core benchmarks like the S&P 500, designed to blend value and growth, lean heavily toward growth today.

Nowhere is this clearer than in the outsized role of tech stocks, representing more than 30% of the index. And then you have top-heavy composition driven by the so-called Magnificent 7 stocks: Alphabet (GOOGL), Amazon.com (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA).

For investors looking to double down on the growth style, options exist outside of broad market indices. Growth exchange-traded funds (ETFs) are one of the simplest ways to capture this factor tilt.

How do growth ETFs work?

Growth ETFs can be rules-based, tracking an index with objective criteria for screening and weighting stocks or actively managed by analysts using research and models. In either case, the goal is to select companies expected to grow faster than peers based on one or more fundamental measures.

A common screen, for instance, is historical or forecasted earnings-per-share (EPS) growth. It's popular because earnings growth often drives long-term stock performance.

But it's not foolproof. Backward-looking EPS may reflect cyclical booms rather than durable growth, while forward-looking EPS depends on analyst forecasts and company guidance that can prove optimistic.

Another frequently used metric is return on equity (ROE), which measures how effectively a company generates profit from shareholders' equity. ROE is calculated by dividing net income by shareholder equity, with growth-oriented companies often sustaining double-digit ROE, signaling strong profitability and efficient capital use.

Valuation also comes into play. Growth investors often look at the price-to-earnings growth (PEG) ratio, which adjusts the traditional P/E ratio by factoring in expected earnings growth.

A PEG around 1.0 is often considered reasonable — suggesting a stock is fairly priced for its growth rate — while much higher ratios may indicate overvaluation.

Growth vs value

The line between growth and momentum investing can blur. Some growth ETFs incorporate technical analysis, targeting stocks trading above moving averages or relative strength indicators. The idea is that the "trend is your friend" and that investors should "let winners run."

Growth ETFs over the past decade have tended to share several characteristics:

• Heavy concentration of large-cap and mega-cap stocks in the top holdings.
• Overweight to cyclical yet innovative sectors such as technology, consumer discretionary stocks and communication services stocks.
• Lower or nonexistent exposure to dividend-paying stocks and dividend yields, because many growth companies prefer to reinvest cash into expansion rather than pay shareholders.

They hold regardless of which investing style — growth or value — is used.

How we picked the best growth ETFs

The first step in narrowing the universe of growth ETFs was deciding what to exclude. Actively managed growth funds were taken off the list. While some can beat their benchmarks in hindsight, the odds are stacked against doing so consistently.

S&P's SPIVA study shows that nearly 90% of large-cap growth funds underperformed the S&P 500 Growth Index over a 15-year period. Much of this gap is explained by higher fees, which compound year after year and create a structural drag on performance.

We also limited our picks to large-cap growth ETFs. Academic research and investing experts, including Larry Swedroe, have described small-cap growth strategies as "a black hole." This is an anomaly, since the size factor typically implies stronger returns.

But small-cap growth stocks often combine the worst traits of both categories: limited profitability, stretched valuations and higher volatility without the historical return premium of small value.

From there, we applied three practical filters:

Fees. We set a maximum expense ratio of 0.20%. Growth funds are a highly competitive category in 2026, so there is little justification for paying higher fees.

Liquidity. We focused on ETFs with 30-day median bid-ask spreads of 0.1% or less. This ensures investors can trade efficiently without losing performance to transaction costs.

Assets under management. Finally, we required at least $1 billion in assets for economies of scale and investor trust.

Here are five of the best growth ETFs to consider for your portfolio.

Data is as of June 6.

• Assets under management: $93.6 billion
• Expense ratio: 0.15%
• 30-day median bid-ask spread: 0.01%
• 3-year annualized total return: 26.5%

The Invesco NASDAQ 100 ETF (QQQM) is the smaller, buy-and-hold counterpart to the Invesco QQQ Trust (QQQ). It trades at a lower price per share and carries a 0.05% lower expense ratio, making it better suited for long-term investors rather than active traders, since it doesn’t offer the same robust options market as QQQ.

Both ETFs track the Nasdaq-100 Index, which consists of the 100 largest non-financial companies listed on the exchange and weights them by modified market capitalization using listed shares rather than float-adjusted shares, with caps to limit concentration.

In practice, that results in a heavy tilt toward technology stocks, though the Nasdaq's history of attracting innovative listings means a notable presence of healthcare names, particularly in biotechnology.

Learn more about QQQM at the Invesco provider site.

• Assets under management: $393.8 billion
• Expense ratio: 0.03%
• 30-day median bid-ask spread: 0.01%
• 3-year annualized total return: 27.26%

The Vanguard Growth ETF (VUG) holds 153 stocks that make up the CRSP US Large Cap Growth Index. Unlike QQQM, it does not exclude financials, so investors gain exposure to names such as Visa (V) and Mastercard (MA).

The growth tilt is clear in its fundamentals, with an average return on equity of 36.1% and average earnings growth of 33.4%.

Still, valuations run high. On average, portfolio companies trade at 35.2 times earnings and 11.7 times book value.

The fund also has a pronounced technology bias, with 67.8% of assets in the sector. Apple, Nvidia and Microsoft account for more than 33% of the ETF's total weight.

Learn more about VUG at the Vanguard provider site.

• Assets under management: $126.9 billion
• Expense ratio: 0.18%
• 30-day median bid-ask spread: 0.01%
• 3-year annualized total return: 26.24%

Many older growth mutual funds use the Russell 1000 Growth Index as their benchmark to beat, making iShares Russell 1000 Growth ETF (IWF) a popular "buy the haystack" option for ETF investors. The portfolio includes 386 companies, offering similar exposures and metrics as VUG but in a slightly more diversified format.

The familiar growth tilts remain. Technology stocks make up 53.38% of assets, and Nvidia, Apple and Microsoft together account for 34.19% of the ETF's weight. Still, performance has been strong.

IWF carries a four-star Morningstar rating, reflecting how it has historically outperformed most of its large-cap growth peers on a risk-adjusted basis.

Learn more about IWF at the iShares provider site.

• Assets under management: $53.57 billion
• Expense ratio: 0.04%
• 30-day median bid-ask spread: 0.01%
• 3-year annualized total return: 29.24%

The same S&P 500 Growth Index that many active managers struggle to beat can be accessed at minimal cost through the SPDR Portfolio S&P 500 Growth ETF (SPYG).

SPYG elects the growth half of the S&P 500, resulting in 147 holdings best aligned with growth criteria. The fund projects an estimated 3- to 5-year EPS growth rate of 21.2%.

The familiar style tilts are present but less pronounced than in other growth ETFs. Nvidia, Apple and Microsoft together account for almost 31% of assets, while technology makes up 52.8% of the portfolio.

A modest 0.42% SEC yield also helps make SPYG a relatively tax-efficient option for taxable accounts.

Learn more about SPYG at the SPDR provider site.

• Assets under management: $58.78 billion
• Expense ratio: 0.04%
• 30-day median bid-ask spread: 0.03%
• 3-year annualized total return: 26.55%

The Schwab U.S. Large-Cap Growth ETF (SCHG) delivers broad growth exposure similar to IWF but at a much lower cost.

SCHG tracks the Dow Jones U.S. Large-Cap Growth Total Stock Market Index, which includes 198 holdings. On average, portfolio companies show a return on equity of 33.86%, reflecting strong profitability.

As with other growth ETFs, familiar tilts remain, though less extreme than in VUG or IWF. Nvidia, Apple and Microsoft together account for almost 29% of the fund, while technology stocks make up just under 45% of assets.

Tax efficiency is also decent. Schwab estimates a three-year after-tax, pre-liquidation return of 33.36% compared with a 26.53% three-year NAV return.

Learn more about SCHG at the Schwab provider site.

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High-growth stocks were hit especially hard in 2022, but they are making quite the comeback in 2023. 

Consider this: The iShares Russell 1000 Growth ETF (IWF), which tracks the performance of the Russell 1000 Growth Index, is up 25% year-to-date, compared to a 13.8% advance for the S&P 500 and a 3.5% return for its counterpart, the iShares Russell 1000 Value ETF (IWD).

While it's true that high-growth stocks can spark short-term volatility in portfolios, they remain great long-term investment stocks. 

The iShares ETF of growth stocks mentioned earlier has delivered positive returns in eight out of the past 10 years; the only exceptions were in 2018 and 2022, when it lost 1.7% and 29.3%, respectively. Yes, past performance doesn't guarantee future returns, but high-growth stocks remain an excellent strategy for improving a portfolio's overall performance over time.

Today, we're going to look at nine of the best high-growth stocks to buy. To find the best stocks to buy, we looked at names on the S&P Composite 1500 Index – made up of the S&P 500, S&P MidCap 400 and S&P SmallCap 600 – that meet a number of criteria. For example, they must have produced at least 15% average compound annual growth in revenues and net income over the past three years, analysts must expect an average of 10% growth in both revenues and earnings over the next two years.

Additionally, each of them must enjoy at least a consensus Buy (if not Strong Buy) rating from Wall Street's analyst community. It's a small and exclusive club. Let's take a look.

Data is as of Aug. 17. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Analyst ratings courtesy of S&P Global Market Intelligence. Stocks listed in reverse order of analysts' consensus ratings, where the lower the score, the better the consensus ranking.

• Market value: $18.0 billion
• Dividend yield: N/A
• Analysts' ratings: 14 Strong Buy, 8 Buy, 11 Hold, 1 Sell, 0 Strong Sell
• Analysts' consensus recommendation: 1.97 (Buy)

Enphase Energy (ENPH, $131.44) delivered mixed results for Q2 2023 in late July and the markets hammered its stock. As a result, the manufacturer of solar microinverters, battery energy storage and electric vehicle charging stations, is now down more than 50% for the year-to-date.

While ENPH reported higher-than-expected Q2 earnings of $1.47 per share, revenue of $711.1 million fell short of what analysts were anticipating. On the top line, the company reported revenue of $711.1 million, below the $726.0 million in Q2 2022. This is due in part to declining U.S. sales, which fell 12% year-over-year amid a combination of lower utility rates and higher interest rates.

Enphase also said its board of directors approved a $1 billion stock buyback program.

The company guided for third-quarter revenue of $550 million to $600 million, down 19% quarter-over-quarter and 9% year-over-year at the midpoint. While it didn't reveal its guidance for earnings, it did say that the non-GAAP (generally accepted accounting principles) gross margin should be 43.5% at the midpoint, with non-GAAP operating expenses around $103 million. 

Raymond James analyst Pavel Molchanov maintained an Outperform (Buy) rating on ENPH after earnings, saying the company's "geographic diversification provides growing exposure to Europe's energy transition, bolstered by climate policy and the urgency of security." Additionally, despite recent headwinds to ENPH's top line, Molchanov forecasts 18% annual revenue growth in both fiscal 2023 and 2024.

Analysts are also anticipating a big rebound in the share price of one of Wall Street's best high-growth stocks. The average price target of $194.05 represents implied upside of 48% over the next 12 months or so.

• Market value: $9.2 billion
• Dividend yield: N/A
• Analysts' ratings: 15 Strong Buy, 7 Buy, 9 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus recommendation: 1.81 (Buy)

SolarEdge Technologies (SEDG, $162.77) manufactures and sells direct current (DC) optimized inverter systems to residential and commercial solar installations. Since SolarEdge commercialized the system in 2010, it has shipped nearly 48.0 gigawatts (GW) of these systems to customers in more than 125 countries.

In early August, SolarEdge reported record second-quarter revenue of $991.3 million, up 5% from Q1 and 36% higher than the year-ago period. Non-GAAP net income was $157.4 million, down 10% from the previous quarter, but up substantially from the $15.1 million it recorded in Q2 2022. 

Similar to Enphase, SEDG is seeing headwinds in the U.S. from higher interest rates. However, demand in Europe remains relatively strong and the company "is on track for U.S. manufacturing to commence in the third quarter" says Susquehanna Financial Group analyst Biju Perincheril. The analyst currently has a Positive (Buy) rating on SEDG, with a $305 target price. Additionally, Perincheril expects annual top-line growth of 24% and 26% in fiscal 2023 and 2024, respectively. 

Perincheril isn't alone in this bullish revenue outlook for SolarEdge. Analysts surveyed by S&P Global Market Intelligence estimate SEDG will grow sales by about 22% annually over the next two years. And earnings per share are expected to climb to $9.25 this year from 2022's $5.95, and hit $11.40 in fiscal 2024.

And considering SEDG is down more than 42% for the year-to-date amid macroeconomic headwinds, investors seeking out the best high-growth stocks can pick this one up at a relative bargain. 

• Market value: $10.7 billion
• Dividend yield: N/A
• Analysts' ratings: 9 Strong Buy, 5 Buy, 5 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus recommendation: 1.79 (Buy)

Paylocity Holding (PCTY, $191.76) provides payroll and human capital management (HCM) software solutions. Its competition includes Paycom (PAYC), Paychex (PAYX) and Automatic Data Processing (ADP).

Like many of its competitors, most of Paylocity's revenue is recurring, making the sales process a little easier. In fiscal 2023 (June year-end), total revenue increased 38% year-over-year to $1.17 billion – 93.5% of which came from recurring revenue. Meanwhile, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $375.2 million – 55% higher than in fiscal 2022.

Paylocity expects fiscal 2024 revenue to range between $1.405 billion and $1.410 billion, which would mark a 20% increase at the midpoint. In addition, its outlook for adjusted EBITDA is $466.0 million at the midpoint, 25% higher than fiscal 2023.

And the company has even more growth potential in its pocket. Paylocity estimates that the total addressable market (TAM) of businesses with between 10 and 5,000 employees is $18.6 billion. It currently has 3% of the 1.3 million businesses in this market.  

Raymond James analyst Brian Peterson maintained an Outperform (Buy) rating and $265 price target on PCTY after earnings. "Given the company's consistent execution, expanding product portfolio and healthy balance of growth and profitability, we continue to believe shares will represent an attractive long-term compounder," Peterson wrote in a note to clients.

Meanwhile, analysts tracked by S&P Global Market Intelligence are expecting solid upside for one of Wall Street's best high-growth stocks. The average price target of $253 sits nearly 31% above PCTY's current price.

• Market value: $1.07 trillion
• Dividend yield: 0.04%
• Analysts' ratings: 32 Strong Buy, 13 Buy, 6 Hold, 1 Sell, 0 Strong Sell
• Analysts' consensus recommendation: 1.54 (Buy)

It seems safe to assume that any list of the best high-growth stocks will include Nvidia (NVDA, $433.43). The semiconductor stock has nearly tripled for the year-to-date as it continues to benefit from the push by corporate America into artificial intelligence (AI). As a result, the chip designer's GPU (graphics processing unit) business is booming as the tech industry buys up its new A100 and H100 GPUs.

The only downside: It's having a tough time keeping up with demand. However, there could be worse problems to sort through.

Nvidia reported first-quarter earnings in late May. Not only was the quarter a rousing success – revenue of $7.2 billion was 10% higher than analysts were expecting, while earnings of $1.09 per share came in well above estimates. And its forecast was otherworldly.

Specifically, Wall Street was expecting a second-quarter revenue forecast of around $7.2 billion; Nvidia guided for $11 billion on huge demand for chips that power AI applications.

"The computer industry is going through two simultaneous transitions – accelerated computing and generative AI," said Jensen Huang, founder and CEO of Nvidia, in the Q1 press release. "A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process."

Analysts were already quite enthusiastic about Nvidia's business. The latest earnings report only ratcheted up this enthusiasm – and instilled NVDA as the newest member of the trillion-dollar market-cap club.

"Nvidia has transformed from a graphics company to a premier leading AI computing platform company," says Oppenheimer analyst Rick Schafer, who has an Outperform (Buy) rating and $500 price target on the stock. "We see several structural tailwinds driving sustained outsized topline growth in high performance gaming, data center/AI and autonomous driving vehicles."  

Translation: Nvidia remains one of the best high-growth stocks to own for the long haul.

• Market value: $14.3 billion
• Dividend yield: N/A
• Analysts' ratings: 11 Strong Buy, 3 Buy, 3 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus recommendation: 1.53 (Buy)

Deckers Outdoor (DECK, $548.08) is best known for its Ugg boots. However, it is the Hoka running shoes that have really lit a fire under this high-growth stock. Shares of the consumer discretionary stock are up more than 39% for the year-to-date and nearly 63% over the past year as the company's Hoka brand continues to capture investor interest.

In late July, DECK disclosed fiscal first-quarter earnings, with total revenue up 10% year-over-year to $676 million. Hoka sales surged 27.4% to $420.5 million – or 62% of total revenue – while Ugg sales slipped 6% to $195.5 million.

"Critically, HOKA revenue was +27% despite tough Wholesale channel dynamics and a pause in new distribution," says Raymond James analyst Rick Patel, who has an Outperform (Buy) rating on DECK. "Indicators of brand affinity are strong, and we view HOKA as in the early innings of long-term global growth."

Over at UBS Global Research, analyst Jay Sole notes that "Hoka is one of the world's fastest growing footwear brands and its direct-to-consumer sales increased 63% year-over-year in the first quarter. We believe Hoka's exceptional momentum with consumers continues and think this will lead to strong fiscal 2024 sales growth and stock-driving earnings beats."

Sole believes DECK is one of the best high-growth stocks around and shares are expected to outperform. "Thus, our rating is Buy," he says.

• Market value: $110.8 billion
• Dividend yield: N/A
• Analysts' ratings: 24 Strong Buy, 9 Buy, 4 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus recommendation: 1.46 (Strong Buy)

Of the 37 analysts covering ServiceNow (NOW, $543.64) stock, 33 say it's a Buy or Strong Buy, making it one of the top-rated high-growth stocks featured here. 

The cloud-based enterprise software company reported second-quarter earnings in late July that exceeded analysts' expectations. ServiceNow disclosed revenue of $2.15 billion, 25% higher than the year-ago period. On the bottom line, it earned $2.37 per share, up 46.3% year-over-year.

"ServiceNow results were supercharged by unprecedented demand for our organic innovation," said Bill McDermott, chairman and CEO of ServiceNow in the company's press release. "We're in a powerful new 'AI world,' where imagination is the only limit. ServiceNow is already seeing our own significant productivity increases with the generative AI solutions we're releasing to the market, which will rapidly accelerate breakthrough innovation for our customers."

Indeed, NOW remains busier than ever. The second quarter finished with a current remaining performance obligation (CRPO) of $7.2 billion, 25% higher than a year ago, excluding currency. Plus, the number of customers with more than $1 million in annual contract revenue jumped 18% from Q2 2022.

"The increase in the number of high-value deals demonstrated ServiceNow's traction in a shaky enterprise market, as well as its ability to sign multiproduct deals," says Argus Research analyst Joseph Bonner, who has a Buy rating on NOW stock.

Additionally, ServiceNow "sees generative AI as an accelerator for its business, increasing its total available market and boosting average selling prices," Bonner says. The company is already implementing generative AI across its platform, and is currently partnering with Microsoft (MSFT) to connect its platform to Azure OpenAI. "Management expects to see a 25% increase in average selling prices as new generative AI-based tools drive higher-priced solutions," Bonner notes.

Still, NOW is not cheap relative to the broader market. Shares currently trade at 59.2 times forward earnings vs 19 times for the S&P 500. However, this is well below ServiceNow's five-year average forward price-to-earnings (P/E) ratio of 76.5.

• Market value: $29.8 billion
• Dividend yield: 5.2%
• Analysts' ratings: 13 Strong Buy, 5 Buy, 2 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus recommendation: 1.45 (Strong Buy)

If you're a risk-averse investor, a better way to play the growth in sports betting in America is to buy shares in VICI Properties (VICI, $29.67), one of the largest owners of casino properties in America.

The REIT (real estate investment trust) owns the real estate at iconic Las Vegas casinos such as Caesars Palace, MGM Grand and The Venetian Resort. Overall, VICI's portfolio consists of 50 gaming facilities with more than 60,000 hotel rooms and 450 restaurants, bars and sportsbooks.

VICI announced in mid-May that it acquired four properties in Alberta from Century Casinos (CNTY), and paid $165 million for the real estate assets. Century will lease the properties from VICI, and the REIT's annual rent will increase by $12.8 million due to the sale-leaseback transaction. Properties acquired from the transaction have rent escalations beginning in early 2025, and rents escalate at 1.25% annually or the Canadian CPI (Consumer Price Index) to a maximum of 2.50%, whichever is greater.

This is VICI's second Canadian sale-leaseback transaction. The first was in January 2023, when it paid $201 million for four Canadian gaming properties acquired from Pure Canadian Gaming.

Jefferies analyst David Katz thinks the company's focus on acquisitions and partnerships – like its investment in wellness resort Canyon Ranch – "could add meaningfully to shareholders over the long term." Katz has a Buy rating and $43 price target on VICI, representing implied upside of nearly 45% for one of Wall Street's best high-growth stocks.

• Market value: $18.9 billion
• Dividend yield: 2.4%
• Analysts' ratings: 13 Strong Buy, 5 Buy, 1 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus recommendation: 1.37 (Strong Buy)

Targa Resources (TRGP, $83.79) is one of the leading midstream infrastructure companies in North America. Based in Houston, the company is on RBC Capital Markets Global Energy Best Ideas list.

In the second quarter, TRGP said revenue was down 44% year-over-year amid lower commodities prices. However, the company reported adjusted EBITDA of $789.1 million, up 18.4% year-over-year.

Targa expects its full-year adjusted EBITDA to be $3.6 billion at the midpoint of its guidance, 24% higher than the record $2.9 billion it posted in 2022.

As you can see from the analysts' ratings and analysts' consensus recommendation, Wall Street really likes this energy stock.

Following TRGP's recent earnings announcement, CFRA Research analyst Stewart Glickman reiterated a Strong Buy rating on the stock and lifted his price target by $7 to $102. The analyst believes next year's completion of its Daytona natural gas liquids (NGLs) pipeline will lower the company's capital expenditures and potentially boost the dividend. 

Wall Street is certainly upbeat about TRGP's growth prospects down the road. Analysts, on average, expect the company to generate average annual earnings growth of 15% over the next three to five years.

Plus, the average price target of $100.68 represents implied upside of 20% over the next 12 months or so for this Strong Buy stock. 

• Market value: $9.1 billion
• Dividend yield: 0.3%
• Analysts' ratings: 5 Strong Buy, 1 Buy, 0 Hold, 0 Sell, 0 Strong Sell
• Analysts' consensus recommendation: 1.17 (Strong Buy)

On the first Saturday in May every year, the Kentucky Derby is held at Churchill Downs (CHDN, $120.99) in Louisville. More than 150,000 attended the race this year, with Mage winning the Run for the Roses going off at 15-1 odds. Unfortunately for Mage's owners, the horse came third in the Preakness Stakes, the second leg of the Triple Crown, putting the underdog story to rest for another year.

A considerable portion of Churchill Downs' revenue is generated by horse racing. In addition to owning America's most iconic horse racetrack, it also owns three other race tracks in Kentucky and the Fair Grounds Race Course in New Orleans. In February, it sold the Arlington Heights property in Illinois to the Chicago Bears for $197.2 million.

In Q1 2023, the company's Live and Historical racing segment generated $408.0 million in revenue, up 48% year-over-year. The segment accounted for more than half of CHDN's $768.5 million in total revenue

Churchill Downs' Gaming segment, meanwhile, posted $247.9 million in revenue for Q2, accounting for roughly a third of total revenue. Acquisitions in New York and Iowa drove most of the growth. The company's Q2 2023 revenue and adjusted EBITDA were both record results. 

With these impressive fundamentals, it's no wonder Churchill Downs is on this list of the best high-growth stocks. The strength is being seen on the price charts, too, where CHDN has averaged an annual total return (price change + dividends) of 25.4% over the past 10 years.

Jefferies analyst David Katz sees even more upside for CHDN stock, as evidenced by his Buy rating and $157 price target, nearly 30% higher than current levels. While the company's Q2 results came in below Katz's estimates, he believes "the longer term growth remains intact, which is unique to CHDN." 

The analyst adds that "there should be ongoing growth catalysts near term and longer term, which should drive upside in the shares."

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Growth investing came to a crashing halt in the early going of 2022, but investors shouldn't give up on beaten down stocks with high upside just yet, says the team at UBS Research Management.

Working in coordination with the firm's strategists and analysts, the UBS team came up with a list of 15 growth stocks they say look more attractive than ever amid the market's weak start to the year.

The researchers screened the market for Buy-rated stocks forecast to increase operating earnings at compound annual growth rates of at least 10% through 2024. At the same time, they looked for cheap stocks, or shares trading at discounts to their own five-year averages. Lastly, they stuck to names with high upside, based on analysts' price targets.

Adherents of growth investing looking for bargain names promising lots of upside should take note of the stocks UBS found. Among the highlights:

• Envestnet (ENV, $73.83) kicked off the new year with a thud. Nevertheless, UBS – and much of the rest of the Street – says ENV remains an outstanding idea for a growth investing portfolio. Envestnet's flagship product is an advisory platform that integrates services and software used by financial advisors in the wealth management segment. Bullish analysts like Envestnet's ability to both scale and squeeze more sales out of its user base.
• Power- and hand-toolmaker Stanley Black & Decker (SWK, $176.14) has something adherents of growth investing don't often find in a stock: A deeply compelling valuation. SWK stock trades at just 14.6 times analysts' 2022 earnings per share (EPS) estimate, per S&P Global Market Intelligence. UBS analyst Markus Mittermaier notes that puts SWK's valuation at a near-record low vs. the S&P 500 – and that, in turn, spells outperformance ahead.
• In addition to being one of UBS's top growth investing ideas for high upside, Terex (TEX, $43.09) also makes the list of best industrial stocks to buy for 2022. Best known for its aerial work platforms (AWP) segment and materials processing (MP) segment, Terex also makes equipment such as concrete mixer trucks. As such, the bull case stands on the $1.2 billion Infrastructure Investment and Jobs Act, as well as already robust backlogs in the company's AWP and MP businesses.

Share prices as of Feb. 1. UBS's implied upside is based on stock prices and price targets as of Jan. 21.

Have a look at the table below to see all 15 of UBS Research Management's growth investing stock picks to buy now:

In 2008, two investment managers crunched more than 20 years of market data and produced findings that can only be called shocking.

Eric Crittenden and Cole Wilcox found that most stocks did significantly worse than the overall market averages over time, and an unexpectedly large number fell dramatically. These losses were offset by a few stocks that rose spectacularly.

As Wilcox wrote, "Capitalism produces a surprising number of extreme winners and losers each and every year."

Examining returns from 1983 to 2006, the two money managers found that 64% of stocks had a lower return than the Russell 3000 index (a measure approximating the entire U.S. market) over the full period. Some 18.5% of all stocks lost 75% of their value or more. On the other hand, 6% of stocks beat the Russell 3000 by 500% or more, and 25% of stocks accounted for all of the market's gains.

Despite this lumpy distribution, the winners and losers combined to produce average annual returns, including dividends, of about 10% and deliver a fairly smooth ride for long-term investors – a concept that was the foundation of a book I coauthored in 1999, Dow 36,000. During no 15-year period in a century, for instance, have stocks lost money after inflation.

As a result, a simple, profitable way to invest is to buy the market through exchange-traded funds that are linked to an index, such as the Russell 3000 or the S&P 500, or managed mutual funds with strong track records and low turnover and expense ratios, such as Dodge & Cox Stock (DODGX) or T. Rowe Price Dividend Growth (PRDGX), both members of the Kiplinger 25, the list of Kiplinger's favorite no-load, actively managed funds.

But the findings of Crittenden and Wilcox beckon investors in another direction – toward trying to find the "Golden 6%" of stocks that will produce returns that quintuple those of the broad market.

Find the High-Scoring Stocks

On the theory that what goes up continues to go up, the two authors of the study are believers in "trend following" – investing in assets with values that have been hitting new records.

Wilcox wrote 10 years ago in a foreword to The Little Book of Trading that if your portfolio were an NBA team, such a strategy would lead you to "own the LeBron Jameses, Kobe Bryants, and Dwight Howards of the world. There are many able players in the NBA, but only a handful of difference makers."

Crittenden and Wilcox make a valid point, but good players are expensive, and even the Los Angeles Lakers have won the NBA title only four times in the past 20 years.

My view is that investors should search for the Golden 6% among companies that have the chance to achieve spectacular business success. Your targets are innovators with big ideas, adaptability and mammoth potential markets.

Think of yourself as a venture capitalist, less concerned with companies such as Procter & Gamble (PG) or Johnson & Johnson (JNJ) that will keep making secure profits and raising dividends in favor of firms with gigantic prospects.

But like Crittenden and Wilcox and unlike real venture capitalists, I want to see concrete signs of success before buying potential outsize performers, and I want to hold their shares for decades. Here are five candidates for the best stocks to own for decades (all returns and data are as of Jan. 7):

Tesla

• Symbol: TSLA
• Share price: $1,027
• Market value: $1.0 trillion
• Price-to-earnings ratio: 124
• One-year return: 25.9%

I am well aware that Elon Musk's electric-vehicle and energy-storage (that is, battery) company has a market capitalization (stock price times shares) of more than $1 trillion, that it trades at a price-earnings ratio of more than 100 based on a consensus of analysts' projected earnings for 2022, and that, after a big head start, it now faces competition from nearly every automaker in the world.

Still, Tesla has built the strongest EV brand in the world and is led by a dynamic CEO. The company sold 936,000 autos in 2021, a year when 66 million new cars of all kinds were bought worldwide. Almost certainly, by the end of the decade, EVs will account for half of all car sales. This is only the beginning.

Uber Technologies

• Symbol: UBER
• Share price: $42
• Market value: $80.3 billion
• Price-to-earnings ratio: N/A
• One-year return: -26.1%

It hasn't been a great year for Uber. After hitting new highs in the first few months of 2021, the stock slid by more than 40% from its peak.

Trend followers will be deterred, but I'm still convinced that ride-sharing is the future and that smaller, ancillary businesses including food and freight delivery could grow into huge money-makers.

Uber now operates in 71 countries, including Australia, Brazil, Germany, Qatar and Tanzania. The company, which made its first operating profit only in the third quarter of 2021, has encountered problems, such as a driver shortage and the insistence by some tax authorities that drivers are employees and not contractors. But those obstacles also discourage competition and keep Uber's price attractive – for now.

Nextdoor Holdings

• Symbol: KIND
• Share price: $7
• Market value: $2.6 billion
• Price-to-earnings ratio: N/A
• One-year return: N/A

Other companies have tried and failed to break into the hyper-local media market, but Nextdoor may succeed, becoming a fabulous online advertising vehicle. With reader-generated content – lost cats, car break-ins, restaurant tips, questions about where to get a COVID test – Nextdoor seems to have figured out how to engage audiences where they live.

With a strong management team led by Sarah Friar, formerly chief financial officer of Square, Nextdoor is quickly boosting revenues. The company went public through a special purpose acquisition company (SPAC) in November. Shortly before that, Nextdoor reported that it had 33 million active users in the third quarter, with revenues of $52.7 million, up 66% compared with the same quarter last year.

Nextdoor, down 48% since its debut, is the outlier in this quintet: still tiny, with a market cap of $2.6 billion, and highly speculative.

LVMH

• Symbol: LVMUY
• Share price: $163
• Market value: $407.1 billion
• Price-to-earnings ratio: 30
• One-year return: 33.7%

Following Wilcox's LeBron James rule, I'm recommending the premier luxury-goods stock in the world.

No other company comes close to matching the portfolio that CEO Bernard Arnaud has put together. In addition to the eponymous leather goods and champagne firms, LVMH owns 75 prestigious global brands with 5,000 retail outlets, including Christian Dior, Givenchy, Tiffany, Dom Perignon, the Belmond hotel chain and many more.

If you believe the world will keep getting wealthier, this is the stock to own.

Walt Disney

• Symbol: DIS
• Share price: $158
• Market value: $286.9 billion
• Price-to-earnings ratio: 34
• One-year return: -11.6%

Can an entertainment company with a $287 billion market cap have a shot at massive growth over the next decade or two? If it's Disney, then yes. The stock had a rotten 2021, but with new leadership, a world learning to live with COVID, a dozen theme parks and brands that include Pixar, ESPN, Star Wars, the Muppets, ABC and Disney+, the company’s two-year-old video service, Disney is ready to accelerate. On top of that, Disney is modestly priced.

And, like Uber, Disney is one of Kiplinger's best stocks to buy for 2022.

Understand that your retirement assets should still be dominated by funds like the ones I mentioned earlier, along with solid individual stocks such as P&G and J&J. Golden 6% candidates should represent no more than 20% of your holdings.

Finally, if they take off, resist the urge to sell. In July 2019, Tesla was trading at $45 a share. Within six months, it had quintupled, but if you sold then, you would have missed another quintupling. They don't all work out like that, but, as in Disney's movie business, it's the massive winners that count.

James K. Glassman chairs Glassman Advisory, a public-affairs consulting firm. He does not write about his clients. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence. Of the stocks mentioned here, he owns TSLA and UBER. Reach him at james_glassman@kiplinger.com.

Apple (AAPL, $151.12) fanboys and AAPL stock bulls alike are amped for the coming launch of the iPhone 13. And Wedbush Securities says their enthusiasm is very much warranted.

Analyst Daniel Ives writes that recent supply-chain checks suggest a "normal" launch for the latest iteration of Apple's wildly popular smartphone, which he expects to drop in the third week of September.

That doesn't sound like good news for AAPL. But between the global shortage of semiconductors and spread of COVID-19 Delta variant overseas, "normal," in this case, is extremely good news.

Ives' Read on the iPhone

"Asia supply chain builds for iPhone 13 are currently still in the approximately 90 million unit range compared to our initial iPhone 12 reads at 80 million units (pre-COVID), and represent an approximately 10%-plus increase year-over-year out of the gates," Ives writes in a Tuesday note to clients.

Although the iPhone 13 build number "will clearly move around" over the coming months because of the global chip shortage, the analyst believes the data "speaks to an increased confidence with Apple CEO Tim Cook & Co. that this 5G-driven product cycle will extend well into 2022, and should also benefit from a post-vaccine consumer 'reopening environment.'"

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Fanboys will be happy to hear that Ives has increased confidence that the iPhone 13 will offer an "eye-popping" one-terabyte storage option. That's double the maximum storage capacity available in any previous iPhone model.

What It Means for Apple Stock

Apple bulls, meanwhile, should be pleased to know that the iPhone 13 remains the potential catalyst AAPL stock could probably use at this point.

Shares in Apple were up 13.9% for the year-to-date through Aug. 16, lagging the Nasdaq (14.8%), Dow Jones Industrial Average (16.4%) and S&P 500 (19.3%) over that span.

Although investors would surely like to see the world's largest publicly listed company beat the major benchmarks by year-end, let's remember: AAPL stock is nothing if not a long-term holding.

Just ask Warren Buffett, chairman and CEO of Berkshire Hathaway (BRK.B), and arguably the greatest long-term investor of all time. AAPL is by far Buffett's favorite stock, accounting for a whopping 41.5% of Berkshire Hathaway's total portfolio value as of June 30.

Wall Street is firmly in the buy-and-hold camp as well. Of the 42 analysts issuing opinions on AAPL stock tracked by S&P Global Market Intelligence, 25 rate it at Strong Buy, seven say Buy, seven call it a Hold, one has it at Sell and two say Strong Sell. Their consensus recommendation comes to Buy, with high conviction, per S&P GMI.

The Street's average target price of $163.29, however, gives Apple stock implied upside of just 8% over the next year or so.

The bulls, naturally, expect much more from shares. As for Wedbush's Ives, he maintained his Outperform (Buy) rating, calling Apple "a top tech name to own." Meanwhile, the analyst's $185 price target gives AAPL implied upside of about 22% over the next 12 months.

"Our favorite large-cap tech name to play the 5G transformational cycle is Apple," writes Ives, "with the one-two punch of its massive services business and iPhone product cycle translating into a $3 trillion market cap for Cupertino in the next six to 12 months."

Apple's market cap was roughly $2.5 trillion as of Aug. 16.

The S&P 500 Index has been on a tear since its pandemic-induced bottom in March 2020. The broad-market barometer is up more than 90% in that time, led by a host of high-return stocks that have delivered even more explosive performance.

However, much of the market's run over the past 15 months or so has been driven by monetary and fiscal stimulus, which could stall growth once the Federal Reserve decides to tap the brakes.

Translation: High returns won't be so easily reaped from here on out.

From here, investors are best off taking a longer-term view of growth, targeting companies that have proven capable of delivering electric returns during pre-pandemic times, and that have enough potential left to keep churning out gains as times normalize in the years ahead.

You can start your search with this list of 10 high-return stocks. These picks, which come from a wide variety of sectors, have delivered outsized returns for shareholders during at least the past five years if not longer, and have compelling bull cases signaling that they could continue being high-return investments much farther down the road.

Data is as of July 29. Stocks are listed in reverse order of one-year total return.

• Market value: $102.0 billion
• Sector: Financial Services
• One-year total return: 18.5%
• Three-year total return (annualized): 28.4%
• Five-year total return (annualized): 28.9%

While many investors think of S&P Global (SPGI, $423.57) as the indices company, it generates its most revenue and profits from its ratings business, which provides credit ratings of companies, organizations and individual debt issues.

In the second quarter ended June 30, 2021, SPGI's ratings business had revenue of $1.1 billion, 7% higher than a year earlier. Its operating profit was $729 million, 5% higher than a year earlier. Ratings contributed 51% of its $2.1 billion in sales and 63% of its $1.1 billion in operating income.

The big news at S&P Global is its tentative acquisition of IHS Markit (INFO). The deal is valued at $44 billion in an all-stock transaction that sees shareholders receiving 0.2838 shares of SPGI for every share held in IHS Markit. Following the close of the transaction, SPGI shareholders will own 67.75% of the combined company, with IHS Markit shareholders owning 32.25%.

On May 13, the two companies provided investors with an update on their pending merger. After receiving feedback from regulators, they've decided to put IHS Markit's oil price information services (OPIS) business up for sale. They will also sell IHS Markit's coal, metals and mining business. The companies continue to expect the merger to close by the end of 2021.

During its Q2 2021 conference call at the end of July, CEO Doug Peterson highlighted some of SPGI's newer products and services. One of the products that stands out is Sustainable1, the company's efforts to unite its environmental, social and governance (ESG) efforts under one core brand.

In 2020, S&P Global's ESG business had revenue of $65 million. In the second quarter, ESG revenue was $22 million, 50% ahead of last year. These efforts could create even more tailwinds for this high-return stock.

• Market value: $47.7 billion
• Sector: Healthcare
• One-year total return: 55.4%
• Three-year total return (annualized): 27.3%
• Five-year total return (annualized): 26.2%

Checking out the annualized returns of IQVIA Holdings (IQV, $248.71), it's easy to see why it has a place on this list of high-return investments. The Connecticut-based company is a provider of analytics, technology solutions and clinical research services to the life sciences industry.

IQVIA's Connected Intelligence platform helps these companies accelerate the development and commercialization of medical treatments by providing the analytical insights necessary to produce faster results.

The company reported Q2 2021 results near the end of July. Revenues grew 36.5% year-over-year to $3.4 billion, while its adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $722 million during the quarter, 49.5% higher than a year earlier.

IQV also upped its full-year guidance. It is now projecting revenue growth of at least 19.3% – up from its April forecast of 16.2%. As for adjusted EBITDA, it is expecting growth of 23.7% at the low end in 2021, compared to its previous estimate of 21.6%.

A big buyer of IQV stock is hedge fund HealthCor Management, whose stake in the firm accounted for 5.5% of its 13F holdings at the end of March 2021. Its most recent filing showed the fund held 401,690 shares – down from the 840,740 shares it had at the end of September 2020. Still, at current prices, those 400,000-plus shares are worth $99.9 million.

And with IQV up 38.9% for the year to date, it would not be surprising if HealthCor's 13F for the second quarter showed some increased share sales.

Analysts like IQVIA, too. Of the 21 covering the stock that are tracked by S&P Global Market Intelligence, 15 have a Strong Buy rating, four say Buy, two call it a hold and not a single one deems IQV a Sell or Strong Sell. Plus, the average price target of $275.21 represents expected upside of 10.7% over the next 12 months or so.

• Market value: $8.3 billion
• Sector: Real Estate
• One-year total return: 60.8%
• Three-year total return (annualized): 31.5%
• Five-year total return (annualized): 31.3%

FirstService (FSV, $189.01) is one of those high-return stocks that fly under the radar. And it also used to be much bigger.

Founded in 1989 by Jay Hennick, CEO at Colliers International Group (CIGI), FirstService acquired a controlling interest in Vancouver-based commercial real estate broker Colliers Macaulay Nicolls in 2004. Six years later, it acquired Colliers International Group, the world's third-largest real estate services firm.

Finally, in June 2015, FirstService and Colliers International split into two separate companies, with Hennick running Colliers and his chief operating officer (COO), Scott Patterson, taking the helm at FirstService. Both men still run their respective companies.

Of the two companies, FirstService has a better long-term record. However, shareholders who held on to both stocks have done very well for themselves.

What makes FirstService so special?

It operates two business segments: FirstService Residential, North America's largest manager of residential communities, and FirstService Brands, a provider of outsourced property services to both the residential and commercial markets. FirstService Brands includes California Closets, CertaPro Painters, Floor Coverings International and Paul Davis.

While FSV is based in Toronto, it generates 88% of its revenue in the U.S. Its trailing 12-month revenue through March 31 was split evenly between FirstService Residential and FirstService Brands.

In the end, it is the FirstService business model that makes this a high-return investment shareholders have enjoyed for the past two decades – its compound annual growth rate for sales between 2000 and 2020 is 19% – and it is the focus on customer service that will deliver over the next 20 years.

It's not the cheapest stock going – price-to-sales (P/S) is 2.7x versus a five-year average of 1.7 – but it will get you where you want to go over the long haul.

• Market value: $1.8 trillion
• Sector: Communication Services
• 1-year total return: 78.2%
• 3-year total return (annualized): 29.4%
• 5-year total return (annualized): 28.0%

Alphabet (GOOGL, $2,715.55) co-founder Sergey Brin sold both Class A and Class C shares between May 7 and May 11. While the sale netted Brin millions in after-tax proceeds, the important note is that it's the first time he sold Alphabet shares on the open market since November 2017. Since then, its shares have more than doubled.

However, investors needn't worry that Brin has lost confidence in Google and the rest of its businesses. Even billionaires sometimes require a little spending money.

The reality is Alphabet is rock solid as it makes its way through 2021.

In the second quarter, it reported insane results. It had $61.9 billion in revenue, $5.7 billion higher than analysts were expecting. Its core advertising business saw revenues increase by 69% over last year to $50.4 billion. Its YouTube ad revenues in the quarter were $7.0 billion, up 83% year-over-year. Plus, earnings per share were $27.26, 41% higher than the consensus estimate.

Business is so good that Alphabet's board amended its share repurchase program to include both Class A and Class C shares (previously, it just stipulated for the buyback of Class C shares). In the second quarter, it repurchased $12.8 billion in shares, up from $6.8 billion a year earlier. Alphabet paid an average price of $2,370 per share to buy back its stock.

Despite its status as one of the best high-return stocks out there, Alphabet remains solidly in the growth-at-a-reasonable-price (GARP) camp.

• Market value: $12.0 billion
• Sector: Industrials
• One-year total return: 85.4%
• Three-year total return (annualized): 34.5%
• Five-year total return (annualized): 29.5%

The Toro Company's (TTC, $112.11) history dates back to 1914. It was founded to make engines for the Bull Tractor Company, the number one maker of farm tractors in the U.S. at the time. Investors who play golf are likely familiar with the company's red tractors used to cut and maintain golf courses. TTC created its first fairway mower in 1919.

A hundred years later, it's still going strong, and shareholders are thankful for this high-return stock.

Toro generates 75% of its $3.4 billion in annual revenue from golf courses, landscape contractors, sports fields and other professional markets. The remaining 25% come from residential sales of both its Toro and Lawn-Boy lawn mowers. Approximately 80% of its revenue is in the U.S., while the remainder is generated in international markets such as Canada.

The company focuses on disciplined capital allocation. It balances investing in its growth with debt repayment and returning capital through dividends and share repurchases. In the trailing 12 months, Toro had $700 million in free cash flow. Based on a market cap of $12 billion, it has a free cash flow yield of 5.8%; TTC appears to be a GARP stock despite its price-to-sales ratio of 3.3, considerably higher than its five-year average of 2.7.

In its fiscal second quarter, TTC had revenues of $1.2 billion, 23.6% higher than a year earlier. Its bottom line rose 40.2% year-over-year to $1.29 per share. Given its strong cash position of $497.6 million on the balance sheet, the company repurchased $107.2 millions shares during the three-month period.

Toro expects the remainder of the year to be healthy, leading to 12%-15% sales growth – up from its previous estimate of 6%-8% – and adjusted earnings per share between $3.45 and $3.55, a dime higher than what it forecast in March.

• Market value: $11.8 billion
• Sector: Consumer Cyclical
• One-year total return: 86.2%
• Three-year total return (annualized): 41.0%
• Five-year total return (annualized): 25.2%

Williams-Sonoma (WSM, $157.16) has four primary brands: Williams-Sonoma, West Elm, Pottery Barn and Pottery Barn Kids & Teen. In 2020, those four brands generated 95% of its $6.8 billion in sales. Of those sales, 70% were online, with only 30% from brick-and-mortar retail.

Leadership starts at the top. There aren't many better CEOs in retail than Williams-Sonoma boss Laura Alber, who's run the company since 2010. That likely makes her one of the longest-tenured CEOs in the industry.

The company leans on women for its success. Approximately 52% of its upper management (vice presidents or higher) are women. Sixty-nine percent of its 21,000 associates are female. And the average tenure of its leadership team is 14 or more years at the company.

This gives the company a decided advantage in operating its omnichannel retail business. The team at Williams-Sonoma understands why e-commerce is vital to its business, and the results show. Since 2000, it has grown its e-commerce sales by 9.5% compounded annually. That's quite a record over 20 years.

However, Alber also understands that people like to get out and sit on a couch or chair before buying. By selecting and retaining only the best real estate locations for its brick-and-mortar operations, its business will likely only get stronger as e-commerce sales grow nationwide.

Currently, Williams-Sonoma has less than a 3% market share of the $250 billion U.S. Home category. The Global Home category is $450 billion and the U.S. Business-to-Business market is another $80 billion. Capturing a 3% market share in these two areas would add almost $16 billion in annual revenue.

The opportunity that lies ahead for Williams-Sonoma is tremendous. Shareholders looking for high-return investments will certainly want to keep WSM on their radar, given the strong performance it's delivered over the past five years.

• Market value: $32.1 billion
• Sector: Real Estate
• One-year total return: 122.2%
• Three-year total return (annualized): 24.1%
• Five-year total return (annualized): 27.4%

Having previously mentioned one of CBRE Group's (CBRE, $95.56) biggest competitors, it's only appropriate to include the world's largest real estate services firm in our list of 10 high-return investments.

In addition to providing real estate services, it's also the largest commercial real estate developer in the U.S., with more than $129 billion in assets under management.

In CBRE's Q2 2021 results, net revenue was up 30% year-over-year to $3.9 billion. Plus, adjusted earnings grew by 289% to $1.36 per share. In its Advisory Services segment, operating profits jumped 130% from the year prior to $464 million, while its Global Workplace Solutions and Real Estate Investments segments saw operating profits grow by 34% to $170 million and 150% to $385 million, respectively.

The company anticipates that its 2021 adjusted earnings per share will outdo its 2019 pre-COVID results by a large margin. With a strong balance sheet and generating strong free cash flow, shareholders can expect it to turn on the stock buybacks over the remainder of 2021.

In 2020, it repurchased $50 million of its stock. In Q2 2021, it repurchased $88.3 million.

• Market value: $32.0 billion
• Sector: Financial Services
• One-year total return: 147.7%
• Three-year total return (annualized): 21.3%
• Five-year total return (annualized): 41.4%

SVB Financial (SIVB, $566.71) is on a hot streak at the moment. In July, it announced second-quarter results that were off-the-charts good. The bank's $9.09 earnings per share were more than double what it brought in the year earlier. On top of that, it had a return on equity of 22%, 68% higher than in Q2 2020, and well above its banking peers.

If you're unfamiliar with the California-based financial firm, it is the holding company that operates Silicon Valley Bank. The bank was created more than 35 years ago to help innovators grow their businesses. With $163 billion in assets and $51 billion in loans outstanding, SIVB has working relationships with approximately half the U.S. venture-backed technology and life sciences companies.

In recent years, acquisitions have helped diversify the SVB business model. It now has four operating segments: Silicon Valley Bank, SVB Private Bank (private banking and wealth management), SVB Capital (venture investment management) and SVB Leerink (investment banking in healthcare and life sciences) to help grow the overall business.

Since the end of 2017, it has grown its total assets by 220% through a combination of increased loans and venture capital investments. It continues to expand internationally, after opening its first branch in the U.K. in 2004. In the 17 years since, it's added a strong presence in China, Israel, Hong Kong, Canada and several countries in Europe.

As a result of all this hard work, SVB Financial has been one of the best high-return stocks to own in recent years. And it's possible this strong performance will continue. SVIB is a bank that thinks outside the box and shareholders consistently win as a result.

• Market value: $13.1 billion
• Sector: Basic Materials
• One-year total return: 287.6%
• Three-year total return (annualized): 558.3%
• Five-year total return (annualized): 23.4%

The history of Companhia Siderúrgica Nacional (SID, $9.49) dates back to 1941, when then-president of Brazil, Getúlio Vargas, created the multinational that today is a vertically integrated steel producer with operations also in mining, cement, logistics and energy.

In 1993, the Brazilian company, which goes by CSN for short, floated its shares on the Rio de Janeiro Stock Exchange. As part of the public offering, the Brazilian government sold its 91% stake in the business. SID used the proceeds to improve the quality of its products and business efficiency.

In the first quarter of 2021, CSN reported a record quarterly adjusted EBITDA of 5.8 billion Brazilian real ($1.1 billion) and a 47.7% EBITDA margin. Over the past five quarters, its adjusted EBITDA margin has doubled from 24% in Q4 2019.

In the first quarter, its free cash flow was 3.5 billion Brazilian real ($690 million) from 6.7 billion Brazilian Real ($1.3 billion) in sales. The latter metric is 32% higher than in the fourth quarter and 91% higher than Q1 2020.

In terms of its balance sheet, it has net debt of 20.5 billion Brazilian real ($4.0 billion) or just 31% of its $13.1 billion market capitalization.

CSN is controlled by the Brazil conglomerate Vicunha Acos, which owns 49.2% of the company. The Steinbruch family, one of the wealthiest in Brazil, owns Vicunha. It initially gained its wealth through the textile business before diversifying into steel and banking in the 1990s.

It's hard to argue with SID's place on this list of high-return stocks, given its performance over the past five years.

• Market value: $6.1 billion
• Sector: Technology
• One-year total return: 409.2%
• Three-year total return (annualized): 69.1%
• Five-year total return (annualized): 29.0%

MicroStrategy (MSTR, $625.01) operates a business intelligence firm that provides companies with enterprise analytics and mobility software. It makes money by selling cloud-based subscriptions to these businesses for access to its analytics platform.

Founder and CEO Michael Saylor is said to have invented the concept of relational analytics, or the science of human social networks. A bright man, Saylor also started Alarm.com (ALRM) before selling it in 2013 for $110 million. However, in recent times, he is more likely known for his support of Bitcoin.

Saylor doesn't just believe in Bitcoin. He's bought almost 92,000 Bitcoins for MicroStrategy's balance sheet. In the first quarter alone, MicroStrategy bought 20,857 Bitcoins for $1.09 billion in cash. That's about $52,260 per coin. The carrying value of its 91,326 Bitcoins at the end of March was $1.95 billion. It did not sell any of its Bitcoins in the first quarter.

Saylor is so convinced about Bitcoin's future, he's included it in the company's overview. In addition to its strategy of growing its enterprise analytics software business, MSTR's other initiative is to buy and hold Bitcoin. Simple and elegant.

Saylor has been vocal about his thoughts on Bitcoin. "... #Bitcoin is the most powerful & disruptive technology of our lifetime, why it is irrational & tragic to dismiss it as speculative fervor, how it is good for the health & prosperity of both the US & the rest of the world," he tweeted in April.

When Tesla (TSLA) said it acquired $1.5 billion in Bitcoin earlier this year, Saylor told Elon Musk he should have bought $10 billion. And even after Musk suspended his company's policy of accepting Bitcoin in May because of environmental concerns, MicroStrategy bought $15 million more.

You can't teach this kind of commitment.

While 2021 began as the year of value, growth stocks and growth exchange-traded funds (ETFs) have been making their way back into favor in recent weeks.

Growth investing is one that continues to capture many investors' attention. While there are no hard and fast rules for the style, incorporating growth stocks into your portfolio involves finding names that are expanding faster than their sector peers or broader market averages.

Typically, these stocks are smaller in terms of market cap, but they don't have to be. Measures of revenue growth or predicted gains to earnings per share (EPS) are often the chief metrics that growth investors focus on.

Capital gains are another factor investors in growth stocks and growth ETFs keep an eye on, as dividends are often nonexistent for many names within the category. Many growth firms tend to retain whatever earnings they have and plow them back into building the business.

There are certainly drawbacks to growth investing. For one, you never really know when the bus is going to run out of gas. It is not uncommon for growth stocks to eventually start to slow down and mature, but some do this more quickly than others and this loss of momentum can rapidly hamper your returns.

One way to protect investments against these sharp drops is to adopt a broad approach. Growth ETFs provide immediate diversification by spreading out risk across dozens or even hundreds of stocks, mitigating some of the headaches that accompany this investing style.

Here are 7 growth ETFs that act as one-stop shops for those looking to capitalize on growth investing. A few of these selections deal primarily with the broader growth style of investing, while a few home in on specific explosive trends.

Data is as of July 20. Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds.

• Assets under management: $79 billion
• Dividend yield: 0.57%
• Expenses: 0.04%, or $4 annually for every $10,000 invested

Vanguard funds are synonymous with low-cost indexing. Founder John Bogle did invent the entire concept of index funds after all. So, the investment manager is often a great place to visit first, no matter what style or sector you're looking to add to your portfolio. It's no different when it comes to growth investing.

Here, we get the $79 billion Vanguard Growth ETF (VUG, $290.99).

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VUG tracks the CRSP U.S. Large Cap Growth Index, which focuses its attention on the large-cap segment of the U.S. market. CRSP – which is affiliated with the University of Chicago Booth School of Business – applies various screens looking at future long-term earnings growth, sales metrics, current investment-to-assets ratio and return on assets to determine which stocks can be considered for the index.

This works out to be about 290 stocks. Top holdings include names such as Amazon.com (AMZN) and Microsoft (MSFT). Tech stocks make up about half of the fund, with consumer discretionary making up another fourth or so. That sort of sector mix is to be expected given that these industries are often full of growth stocks.

That sector makeup hasn't really affected VUG's returns throughout its history. Over the last 10 years, the ETF has managed to produce a 17.5% annual total return. Given the fund's paltry dividend yield, much of that return has come from capital gains. This makes VUG a wonderful addition to a taxable portfolio to take advantage of lower long-term capital gains taxes.

And for those looking for a low-cost fund, VUG is one of the best growth ETFs you'll find. Its expense ratio is just 0.04%, meaning you'll have a cheap, easy way to add a swath of growth stocks to your portfolio.

To learn more about VUG, visit the Vanguard provider site.

• Assets under management: $11.7 billion
• Dividend yield: 0.32%
• Expenses: 0.24%

It takes a lot to move the needle for a mega-cap stock. We're talking tens of billions of dollars' worth of additional revenue or earnings to make a difference to the bottom line. But for smaller stocks, achieving double-digit revenue or earnings expansion is much easier, and many people equate small-cap stocks with growth.

And the power of thinking small can do wonders for your portfolio.

The iShares Russell 2000 Growth ETF (IWO, $296.62), for instance, put out a massive 34% return in 2020. The Russell 2000 is arguably the benchmark for small-cap U.S. stocks. IWO takes this the power of small caps a step further and applies various screens to the parent index to focus only on those meeting growth criteria. This drops the number of holdings down to 1,173 different small-cap stocks.

This screening process has resulted in some impressive relative strength. IWO outperformed the regular iShares Russell 2000 ETF (IWM) by 15 percentage points in 2020. The growth ETF also managed to surpass the value version of the Russell 2000 – the iShares Russell 2000 Value ETF (IWN) – by nearly 30 percentage points over the 12-month period.

While growth took a break at the start of 2021, it's finally starting to reassert itself. And IWO, which costs a mere 0.24% in annual expenses, could be the best way to get the most bang for your buck while participating in that revival.

To learn more about IWO, visit the iShares provider site.

• Assets under management: $2.8 billion
• Dividend yield: 0.16%
• Expenses: 0.35%

A few years ago, the smart-beta revolution took hold in the world of ETFs. The basic principle is to improve upon the standard bread-and-butter market-cap weighted indexes. By screening for various factors and other metrics, index sponsors can craft a framework for stronger returns.

Truth be told, a lot of smart-beta does fall flat. But when it comes to growth ETFs, smart-beta occasionally comes up with a winner ... and that includes the Invesco S&P 500 Pure Growth ETF (RPG, $185.74).

Some value and growth indexes that actually contain the same stocks. RPG looks to counter that issue. The ETF uses various screens and assigns two scores to all the stocks in the S&P 500 Index – one for value and one for growth. The ratio between the value score and the growth score is then used to rank all the stocks in the index as either deep value, blend or deep growth. Only the deep growth-scoring stocks are included in RPG's portfolio.

The screens do make a huge difference in terms of the number of holdings. Thanks to its smart-beta twist, RPG only holds around 73 names. Top holdings include PayPal (PYPL), Nvidia (NVDA) and Generac (GNRC). Technology stocks make up the bulk of the ETF, coming in at roughly 40% of assets.

The tighter portfolio worked for RPG last year, as it managed to outperform both the S&P 500 Index and the S&P 500 Growth Index. That outperformance carries over since the ETF's inception in 2006. It's just a few basis points annually, but over time, small amounts do compound to greater long-term returns.

To learn more about RPG, visit the Invesco provider site.

• Assets under management: $20.8 billion
• Dividend yield: 0.94%
• Expenses: 0.23%

For more cautious investors, there may be a way to "have your cake and eat it too” when it comes to growth stocks – and that's by not focusing on strictly growth stocks in the first place.

Mid-caps offer much of the same potential as growth stocks, but with a little bit more safety. That's because mid-cap stocks are big enough to have real cash flows, sales, profits and maybe even a steady dividend. But they are also small enough to still be able to grow revenues and earnings at a relatively quick rate. As such, most mid-caps still fall within the realm of growth stocks.

For older investors wanting to grow their capital, but unable to take on the pure risk of growth stocks, mid-caps make for an attractive solution.

Now there is some trade-off here. You won't experience the same sort of huge increase watching a cloud stock go to the moon. But, you also won't feel the same sort of heartbreak when it hits a snag and crashes back down to earth.

When it comes funds featuring mid-cap stocks, the SPDR S&P Midcap 400 ETF Trust (MDY, $481.54) is still the big boy on the block.

The fund tracks the benchmark S&P 400 Midcap Index and has performed well since its inception in May 1995. That performance has been very "growthy" indeed, with the ETF's 12-month return at the end of June clocking in at 52.9%. Since its inception, the MDY has managed to produce average returns of about 12% per year.

With its swift trading volume, low expenses and ability to perform well over time, the MDY could be one of the best growth ETFs for more conservative investors.

To learn more about MDY, visit the State Street Global Advisors provider site.

• Assets under management: $10.5 billion
• Dividend yield: 1.2%
• Expenses: 0.39%

One of the biggest sins in investing has to be having a hometown bias. We tend to load up our portfolios with stocks from the nation we live in, with the idea being that they may be safer than international rivals.

But the truth be told, nearly half of the world's market cap lies outside the U.S. and that number is growing. And thanks to the expanding world economy, you're just as likely to drive a German car, watch shows on a TV made in Korea or eat food from a British corporation. To that end, it's not a terrible idea to have some international exposure to your portfolio and growth stocks are a great way to do that.

At nearly $11 billion in assets, the iShares MSCI EAFE Growth ETF (EFG, $106.47) is the largest and most liquid fund focusing on international growth stocks. The fund tracks the MSCI EAFE Growth Index, which captures the growthier-side of mid- and large-cap stocks in Europe, Australia, Asia and the Far East . Sadly, our neighbors to the north are not included. All in all, the ETF holds more than 460 different foreign equities.

Shockingly, technology isn't the biggest sector for the fund. That would be industrial stocks, which account for roughly 20% of assets. Rounding out the top three are healthcare stocks (16.3%) and consumer discretionary names (16.1%). Tech only makes about 15% of assets.

Returns for EFG have been mixed. But so has the return profile for all international stocks. However, there have been pockets of some very decent returns from the fund. For example, last year, the exchange-traded fund managed to produce an 18% gain. Over the last decade, the ETF has averaged a more modest return of 7.5% per year.

With investors painfully under-exposed to international equities, EFG makes any easy low-cost way to add exposure to global growth stocks.

To learn more about EFG, visit the iShares provider site.

• Assets under management: $179.7 billion
• Dividend yield: 0.48%
• Expenses: 0.20%

Certain sectors are naturally more prone to having growth stocks in their mitts. Technology, healthcare and consumer discretionary tend to focus on fads, innovation and cutting-edge products moreso than say industrial manufacturers making ball-bearings. Investors looking to add a dose of growth stocks to their portfolios may want to focus their attention on these sectors.

And the Invesco QQQ (QQQ, $358.79) could be one of the easiest ways to do just that.

The "Cubes" track the Nasdaq-100 Index. As one of the first exchanges to embrace computer trading back in the 1980s, the Nasdaq has long been home to companies focused on innovation. As such, the vast bulk of the index is made up of tech, consumer discretionary and healthcare firms.

The Nasdaq-100 tracks the largest domestic and international non-financial companies listed on the Nasdaq Stock Market. Tech makes up nearly 50% of the index, while consumer discretionary makes up around 22% of assets and healthcare comes in at roughly 7%. Because of its mix, QQQ represents a who's who of growth stocks.

Top holdings include Apple (AAPL), Amazon.com and Adobe (ADBE). That puts it among the best large-cap growth ETFs around.

Performance-wise, the fund is hard to beat. Over the last 10 years, QQQ has managed to post a 21% annual total return. It's focus on the growthier aspects of the Nasdaq has it beating the regular Nasdaq Composite Index – which includes all the stocks on the exchange – by about 4 percentage points annually over that time frame.

Adding in the very swift trading volume, low bid-ask spreads and rock-bottom expenses, the QQQ could be one of the easiest ways to add a touch of growth to any portfolio.

To learn more about QQQ, visit the Invesco provider site.

• Assets under management: $22.6 billion
• Dividend yield: 0.00%
• Expenses: 0.75%

Guru Cathie Wood takes a lot of heat for some of her, perhaps, overzealous price targets for stocks she loves – Tesla (TSLA) to $3,000, for instance. But the growth investor has been really spot-on with finding top-names in the world of science and technology. The nearly $23 billion Ark Innovation ETF (ARKK, $120.76) is her flagship fund.

Unlike the rest of the growth ETFs on this list, ARKK is an actively managed fund. That is, a human being rather than an index determines the holdings. In this case, Wood and her team focus their attention on "disruptive innovation." Basically, finding companies that use technology to completely change the traditional way we do things.

This can include healthcare, automation, fintech and renewable energy to name a few. Wood runs a concentrated fund, with just 35 to 55 holdings. This helps ARKK stay locked-in on their best ideas only.

Top holdings read like a list of growth stocks, including electric vehicle (EV) maker Tesla, streaming giant Roku (ROKU) and telehealth pioneer Teledoc Health (TDOC).

Wood's prowess in finding growth stocks has worked well over the years. ARKK has managed to produce a 48% annual return over the last five years and is up a whopping 87% in the last year.

However, nothing in life is free.

Given the fund's concentrated nature, ARKK is a volatile beast and prone to some big price swings. Year-to-date, the ETF is down about 6%. Secondly, while not a trader per se, Wood isn't afraid to drop stocks from the holdings or to add distressed names. Finally, the exchange-traded fund isn't cheap at 0.75% in annual expenses.

But for investors looking for a more active role with their growth stocks, ARKK could be one of the best choices around. Woods has proven herself to be a tactful manager and her long-term returns speak for themselves.

To learn more about ARKK, visit the ARK Innovation provider site.

A cyberthreat environment that was only getting more complex has been made even more dangerous with the proliferation of artificial intelligence (AI). According to feedback from more than 3,500 cybersecurity and business leaders for IBM's Cost of a Data Breach Report 2025, the average cost of a data breach has reached $4.4 million.

It's a pretty safe bet that a world made even more dangerous by a hot war in the Middle East that threatens to escalate beyond the region and onto other fronts, cybersecurity costs will continue to increase.

"Threat actors are using AI to increase the success of their campaigns," says Nathaniel Jones, vice president of security and AI strategy at Darktrace. "Large language models (LLMs) make it easier to conduct research on targets, tailor phishing emails even more granularly and craft emails with more accurate spelling and grammar in a variety of languages."

And demand for cybersecurity solutions will likely remain robust. Grand View Research estimates the global cybersecurity market will reach $663.2 billion by 2033, growing at a compound annual rate of 11.9%.

How can investors play this secular trend? Here are six of the best cybersecurity stocks to buy as growth in the industry ramps up.

Data is as of March 24. Analysts' annual long-term earnings-per-share (EPS) growth estimate represents the estimated average rate of earnings growth for the next three to five years and is courtesy of S&P Global Market Intelligence.

• Market value: $7.0 billion
• Analysts' consensus annual EPS growth estimate: 349.0%

SailPoint (SAIL) develops identity security solutions for enterprises. The SailPoint cybersecurity solution provides customers with extensive visibility across an organization.

It manages employees and non-employees, like contractors and partners, as well as machine entities, such as application-level accounts, Internet of Things (IoT) devices and even AI agents. There are also tools to create, control and automate policies.

Identity has become a growing target of cybersecurity threads. According to a survey from the Identity Defined Security Alliance, about 90% of the respondents said they suffered a breach.

SailPoint has shown that its solutions can make a difference, and it continues to gain traction with large customers. The company reported annual recurring revenue (ARR) of $1.12 billion for fiscal Q4 2026, up 28% on a year-over-year basis.

SailPoint completed its initial public offering last February, raising $1.38 billion. Its post-IPO performance has been lackluster, with the stock down more than 45%. Yet price action does provide an attractive entry point for investors seeking the best cybersecurity stocks.

• Market value: $3.3 billion
• Analysts' consensus annual EPS growth estimate: 7.7%

Founded in 1999, Qualys (QLYS) is one of the pioneering developers of software-as-a-service (SaaS) for cybersecurity. Its initial focus was on vulnerability management and providing automated scans of local area networks (LANs).

At the time, it was a controversial strategy. The standard approach to cybersecurity was to use hardware systems — such as firewalls — for on-premise environments.

But leadership at Qualys was convinced the SaaS approach was superior, creating advantages on cost efficiency, scale, real-time monitoring and collaboration.

Over the years, the strategy proved to be spot-on. Qualys also would go on to build a comprehensive suite of capabilities, including identity management, remediation, compliance assessments and analysis of large IT security data. Despite all these efforts, Qualys has seen a deceleration in growth. But there is a potential catalyst to get things back on track.

In late 2024, Qualys launched TotalAI, which is focused on addressing the cybersecurity threats of generative AI. TotalAI handles the Open Web Application Security Project (OWASP) Top 10 most critical risks for LLMs, such as prompt injections, model theft and the disclosure of sensitive information. TotalAI could help accelerate growth for Qualys.

According to a survey, about 70% of enterprises plan to use LLMs in production within the next year, and 40% say that AI model risk is a notable concern. So Qualys is well-positioned among the best cybersecurity stocks.

• Market value: $4.4 billion
• Analysts' consensus annual EPS growth estimate: 0.3%

Tomer Weingarten cofounded SentinelOne (S) in 2013 because he believed cybersecurity solutions were becoming obsolete. They were mostly based on the brute force of pattern matching. Weingarten imagined a much better approach using AI. It would be more adaptable, and it could learn in real time.

The first few years proved to be challenging. His AI-first vision mostly fell on deaf ears. But, as AI started to gain momentum — accelerated by breakthroughs in deep learning — Weingarten's startup started to get more attention.

Customers wanted better approaches and saw SentinelOne as something to take a bet on. Its longtime focus on endpoint protection, detection and response helps it fend off a variety of threats like malware and ransomware. These solutions would ultimately become part of SentinelOne's comprehensive Singularity platform.

In April 2024, SentinelOne launched Purple AI, which leverages LLMs so users can write natural language queries. In practice, it means a security analyst can use the system without having to understand query languages.

So far, the customer response has been quite positive. The company reported full-year revenue growth of 20% for fiscal 2026. And it forecast revenue growth of 20% for fiscal 2027.

SentinelOne has announced several partnerships to distribute Purple AI, including one with Lenovo, the world's largest PC manufacturer. The company plans to bundle Singularity and Purple AI on new enterprise PC shipments.

"Purple," Weingarten has said, "is one of the fastest-growing solutions in SentinelOne's history and will continue to drive meaningful growth into the future."

• Market value: $2.2 billion
• Analysts' consensus annual EPS growth estimate: 13.5%

In 1998, when Renaud Deraison was only 17 years old, he created an open software project called Nessus. It was a full-blown vulnerability scanner.

From the start, Nessus saw a large number of downloads. Four years later, Deraison would cofound Tenable (TENB) with Nessus at the heart of the business.

He's continued to build on that solid foundation. Tenable has entered other categories like cloud-native application protection platform (CNAPP) solutions and cloud infrastructure entitlement management (CIEM).

Ultimately, the company's product focus would converge on exposure management and developing systems that take a proactive approach to cybersecurity by providing comprehensive visibility into potential vulnerabilities.

Tenable's acquisition of Vulcan Cyber is a key strategic investment in exposure management. The combination will allow for consolidating data into a single hub, which will be a part of the Tenable One platform. Ultimately, it will boost visibility on potential threats and enable the more effective use of AI.

Tenable's top line has looked a little lackluster lately. But bolstering exposure management applications should provide a revenue boost.

And the company enjoys strong customer loyalty and market penetration. More than half of its customers are Fortune 500 companies, and the remainder includes Global 200 enterprises and major government agencies.

Solid long-term fundamentals and continuing investments in scalable operations should support long-term growth and make Tenable one of the best cybersecurity stocks to buy.

• Market value: $128.3 billion
• Analysts' consensus annual EPS growth estimate: -0.3%

In early 2024, Palo Alto Networks (PANW) CEO Nikesh Arora, introduced his "platformization" strategy.

"Platformization" was based on Arora's belief that customers had to manage too many point solutions. His breakthrough idea was that companies wanted to consolidate on fewer vendors.

Fewer vendors would allow for improved integration, more cohesive user interfaces and lower costs.

Wall Street was skeptical of Arora's plan, mostly due to his willingness to give away some of his solutions in the bundle. Would there be enough to make up for the shortfall?

It appears these worries were overblown. Platformization has driven larger deals with customers. Palo Alto Networks recently said that contracts worth more than $5 million and more than $10 million both grew by about 50% year over year.

This has made a difference for total revenue, which increased by 15% during its fiscal 2026 second quarter to $2.6 billion.

Palo Alto has completed roughly 1,550 platformizations among its top customers. And there's much more runway left for growth, as the sweet spot for this tech stock's strategy is about 5,000 customers. And that makes PANW one of the best cybersecurity stocks to buy.

• Market value: $15.5 billion
• Analysts' consensus annual EPS growth estimate: 8.7%

In 1993, Gil Shwed, Marius Nacht and Shlomo Kramer cofounded Check Point Software Technologies (CHKP). It was the perfect time to start a cybersecurity company: the dawn of the internet revolution.

The company capitalized by building pioneering firewall systems for network security. Check Point has continued to focus on innovation and now has several cybersecurity platforms.

They include Quantum Network Security (firewalls and security gateways), CloudGuard Cloud Security (protection across cloud systems), Harmony Endpoint Security (security for devices) and Infinity Unified Management (a centralized security system).

Despite its evolving solutions, Check Point has seen somewhat sluggish growth over the past couple of years. Sales grew by 6.3% to $2.73 billion in 2025.

But management has been making major changes. A key part of the update is, of course, AI. And Check Point has seen traction with its Infinity AI Copilot.

Based on generative AI, Innfinity AI helps automate complex security tasks and allows for proactive threat detection. And tests indicate it can reduce by up to 90% the time needed to perform common tasks.

Check Point has also been using generative AI to streamline its own operations, including product design and customer experience. Just as the internet was a catalyst for growth in the company's early days, generative AI may provide a boost for CHKP in the current era.

And that's why it's one of the best cybersecurity stocks to buy.

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Dow Jones stocks won't always keep up in a rising market, but you can't beat them when it comes to stability and defense in a down market.

Case in point: the benchmark S&P 500 is up 22% on a price basis since over past 52 weeks, while the "growthier" but riskier tech-heavy Nasdaq Composite has added more than 30%.

Meanwhile, the Dow Jones Industrial Average, that elite list of 30 more mature industry leaders, rose less than 18% over the same span.

You can blame the Magnificent 7 stocks for much of the Dow's lagging ways in the bull market. Of the mega-cap tech names driving so much of the bull market's returns, only Microsoft (MSFT), Apple (AAPL), Amazon.com (AMZN) and Nvidia (NVDA) can be found in the blue-chip average.

The fact that the Dow is weighted by price rather than market cap limits the Mag 7's contributions on the way up, but then it also helps limit any damage on their way down.

That sort of underperformance hurts, but remember that stocks don't always go up. Take 2026, for example. When the market swooned in March, the Nasdaq was off nearly 11% for the year to date at one point, while the S&P 500 shed more than 7%. The more resilient Dow lost 6% at its year-to-date nadir.

That's generally what the Dow is supposed to do. Half of the average's components are low-beta stocks. That means they tend to lag in up markets, but hold up better when everything is selling off.

This low-beta influence can have advantages for long-term investors. After all, as bright a time as it's been for equity investors over the past several years, downside risks very much remain.

A new international trade regime had already injected uncertainty into markets – and that was before the war with Iran threatened to upend the global economy.

Although fears of an economic slowdown are receding, worries about an AI-fueled bubble are rising. BofA Securities recently cut its year-end price target on the S&P 500 to 7,100. That gives the index implied downside from current levels.

Savita Subramanian, head of U.S. equity and quantitative strategy, noted that seven out of 10 of BofA's bear market indicators have now been triggered – a signal that historically matches levels seen right before market peaks.

Should such a change in market fortunes come to pass ... well, that's where Dow Jones stocks come in.

Dow Jones stocks ranked

This collection of industry-leading companies and dividend growth stalwarts with their fortress-like balance sheets can offer relative stability in tempestuous market times.

From the best Dow dividend stocks to the most widely held blue chip stocks, components of the industrial average occupy top spots in the portfolios of hedge funds and billionaire investors.

Warren Buffett's Berkshire Hathaway (BRK.B), in particular, is a huge fan of select Dow stocks.

To get a sense of which Dow Jones stocks Wall Street recommends at an increasingly uncertain time for equities, we screened the DJIA by analysts' consensus recommendations, from worst to first, using data from S&P Global Market Intelligence.

Here's how the ratings system works: S&P surveys analysts' stock calls and scores them on a five-point scale, where 1.0 equals a Strong Buy and 5.0 is a Strong Sell. Scores between 3.5 and 2.5 translate into Hold recommendations.

Scores higher than 3.5 equate to Sell ratings, while scores equal to or below 2.5 mean that analysts, on average, rate shares at Buy. The closer a score gets to 1.0, the higher conviction the Buy recommendation.

In other words, lower scores are better than higher scores.

See the table below for analysts' consensus recommendations on all 30 Dow Jones stocks, per S&P Global Market Intelligence, as of June 9, 2026.

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Forget the Dow. Forget the S&P 500. If you're looking for the major index with the most pep in its performance step, look to the Nasdaq-100 – and the growing number of Nasdaq-100 ETFs and mutual funds that allow you to enjoy its fortunes.

The Dow Jones Industrial Average was for decades America's premier stock index, the favored proxy of domestic industry.

Over time, the Dow was eclipsed by the S&P 500 Index. By virtue of tracking 500 companies versus the 30 Dow Jones stocks, the S&P could cover a wider array of firms and better represent the spectrum of U.S. business.

But, from a pure return perspective, both suffer in comparison to the tech-heavy Nasdaq-100 Index. The Nasdaq-100, introduced in 1985, is a select slice of the larger Nasdaq Composite's largest nonfinancial companies.

The index has long been dominated by the best tech stocks, with technology currently accounting for roughly 60% of its total weight.

But it also includes sizeable slugs of high-growth consumer discretionary plays, communication services stocks, and significant health care and industrials exposure too.

The Nasdaq-100 has been a monster outperformer over the long run, delivering a 464% total return (price change plus dividends) during the past decade, easily outdoing the Dow (+213%), S&P 500 (+265%) and the Nasdaq Composite (357%).

The folks over at investment management company Invesco are surely loving it. They sponsor the Invesco QQQ Trust (QQQ), which has allowed investors to take advantage of those rapid gains for decades.

The popularity of QQQ has spawned several related equal-weight, inverse and leveraged products over the years.

More recently, Invesco has leveraged QQQ's success into a number of related investment products tied to the fund (more on those in a moment).

Read on as we examine 14 of the best Nasdaq-100 ETFs and mutual funds. A few of these funds are direct plays on the index itself, while the rest offer various ways to slice, dice and even amplify the Nasdaq-100.

Data is as of July 29.

• Assets under management: $362.4 billion
• Expenses: 0.20%, or $20 annually for every $10,000 invested

Ultimately, the Nasdaq-100 Index is just a set of data. The Invesco QQQ Trust (QQQ) turned that dataset into shareholder returns.

QQQ came to life in March 1999 – unfortunate timing for its first few years, given the dot-com bubble burst shortly thereafter. But, given its total return, long-term investors aren't exactly complaining.

Between 2010 and 2013, QQQ assets had grown from $22 billion to $38 billion. Today, it's more than $360 billion under management, and QQQ has become ubiquitous. You can find it in limited-selection beginner investment apps and robo advisers, and even its options contracts are popular.

As for its innards, the QQQ ETF is a simple index fund that tracks the Nasdaq-100. Top holdings include artificial intelligence juggernaut Nvidia (NVDA) as well as familiar tech names such as Apple (AAPL) and Microsoft (MSFT).

The portfolio also includes consumer giant Amazon.com (AMZN), upstart semiconductor company Broadcom (AVGO), electric vehicle (EV) maker Tesla (TSLA) and social media conglomerate Meta Platforms (META).

It's not quite accurate to call the Nasdaq-100 a broad index because there are so many areas of the market that are quiet or downright missing in QQQ. But it's not a wholesale tech ETF, either.

It is what it is, mostly for better than for worse.

Learn more about QQQ at the Invesco provider site.

• Assets under management: $1.3 billion
• Expenses: 0.35%

Invesco might be the most well-known fund to leverage the Nasdaq-100, but Direxion offers an interesting take on the index, too.

The Direxion Nasdaq-100 Equal Weighted Index Shares (QQQE) invests in an equal-weighted version of the Nasdaq-100. Every March, June, September and December, the index is rebalanced, resetting each of its 100 stocks at 1% of assets.

Their weight will fluctuate depending on how they perform over the next three months, but once the next rebalancing occurs, they're all set back onto equal footing.

That means "bottom" Nasdaq-100 holdings like Micron Technology (MU) and Automatic Data Processing (ADP) have just as much sway as the Apples and Microsofts – and, now, the Nvidias – of the world.

The good news? There's far less single-stock risk. Consider that, with QQQ, three stocks each account for more than 7% of its performance, and there are a few more with healthy single-digit weights.

A bad stretch for any one of those stocks could cancel out the progress of several smaller-weighted constituents, thus dragging on the ETF's returns. Equal-weighting blunts this downside risk.

The bad news? Over the long term, it doesn't allow its winners to ride.

The reason the likes of Apple, Microsoft and Nvidia are overwhelming factors in the major indexes (which tend to be weighted by market capitalization) is simply because they've grown so much. This allows these indexes to increasingly benefit in their upside.

Ultimately, the choice between QQQE and QQQ comes down to what you're comfortable with from a risk perspective.

Learn more about QQQE at the Direxion provider site.

• Assets under management: $56.1 billion
• Expenses: 0.15%

While QQQ is wildly popular, it does have one small shortcoming: Compared to many other broad-market and sector index funds, its annual fees are a touch on the high side.

However, Invesco took care of that in October 2020 by launching the Invesco Nasdaq 100 ETF (QQQM). It's simply a cheaper version of QQQ. At 0.15% annually, it costs five basis points fewer than its sister fund. (A basis point = 0.01%.)

So . . . why not just make QQQ cheaper? The QQQ ETF is an extremely liquid fund that changes hands at a rate of more than 40 million shares daily. As a result, it's able to create tight bid-ask spreads.

That's ideal for traders, who aren't as concerned about low expense ratios as longer-term investors. Rather than drop the fee on QQQ, Invesco created QQQM for buy-and-hold investors who are focused on cost savings.

Invesco can't complain. In fewer than three years, QQQM soaked up more than $56 billion in assets – without kneecapping the QQQ, which continues to expand apace.

As for investors, if you want to buy the Nasdaq-100 Index and hold it, your most significant cost savings will be from the five-basis-point discount in QQQM.

Traders, however, will benefit more from entering and exiting trades with pinpoint precision, which the QQQ's trading volume offers.

Learn more about QQQM at the Invesco provider site.

• Assets under management: $7.7 billion
• Expenses: 0.42%

Before we discuss a few other Nasdaq-100 ETFs, we should point out that the index can support more than just exchange-traded funds.

It might sound funny to call a $7.7 billion mutual fund a "hidden gem." But it's not far from the truth with Victory Nasdaq-100 Index Fund (USNQX).

USNQX, which launched in October 2000, is almost as old as QQQ. But it boasts a small fraction of the ETF's assets.

And it's not for lack of performance: USNQX ranks in the top 10% of funds in its category (large growth) for every meaningful long-term time frame.

The 0.42% expense ratio is more than you'd pay for the Invesco QQQ Trust (and it's much higher than ETFs on average, for that matter).

But it's roughly half the Morningstar category average expense of 0.785%, so USNQX is at least relatively cheap. And it should be, given that this is an index fund.

As you might expect, Victory Nasdaq-100 Index Fund's holdings and breakdown are virtually identical to QQQ. They both just track the index.

Learn more about USNQX at the Victory Capital provider site.

• Assets under management: $74.3 million
• Expenses: 0.20%

The Invesco ESG Nasdaq 100 ETF (QQMG, $38.98) is another of the funds Invesco created to capitalize on QQQ's popularity. Its October 2021 launch also dovetailed with the rising popularity of environmental, social and governance (ESG) investing.

As the name suggests, this ETF invests in Nasdaq-100 stocks that also meet certain ESG criteria. Among the requirements for inclusion:

• meet an ESG Risk Rating Score threshold;
• be deemed compliant with U.N. Global Compact principles;
• meet business controversy-level requirements; and
• not be involved in certain business activities, including alcohol, cannabis, controversial weapons, gambling, military weapons, nuclear power, oil & gas and tobacco.

The ESG filters keep out fewer than 10% of QQQ's holdings – mostly energy stocks but also industrial heavyweight Honeywell (HON).

From a sector perspective, you lose a little exposure to several sectors. The portfolio is concentrated in tech, which represents 62.5% of assets vs 53.3% in QQQ.

It's not a massive difference. But if you're looking for a slightly greener version of QQQ without any oil and gas exposure, QQMG does the trick.

Learn more about QQMG at the Direxion provider site.

• Assets under management: $173.8 million
• Expenses: 0.29%

The Invesco Nasdaq 100 Index Fund (IVNQX), which was launched alongside QQQM, allows investors to track the Nasdaq-100 Index with a mutual fund.

This fund, which will provide similar coverage as QQQ and QQQM, was created to allow Invesco to reach a broader audience. Specifically, it's aimed at retirement accounts, which often can't access ETFs.

Indeed, IVNQX represents Class R6 shares, which are primarily intended for retirement plans, shareholders of omnibus intermediaries that meet certain standards, and institutional investors. In short, it's unlikely you'll be able to access IVNQX with a traditional brokerage account.

Fortunately, your traditional brokerage account will have access to QQQ and QQQM, so it's not an issue.

Learn more about IVNQX at the Invesco provider site.

Call 'em sequels, call 'em spinoffs: The next three funds aren't traditional Nasdaq-100 ETFs. But they're closely related, and they've picked up significant followings of their own. The expense ratios for the following funds range from 0.15% to 0.20%.

First to market, in October 2020, was the Invesco Nasdaq Next Gen 100 ETF (QQQJ). Think of this as the Nasdaq-100's junior varsity squad. While QQQ ETF tracks the 100 largest Nasdaq non-financials, QQQJ tracks the next 100 largest stocks, hence the name.

QQQJ is similar to QQQ in some ways but different in others. For instance, like its older sister fund, QQQJ is heavy in tech, which is the top sector allocation at 39%.

What has set it apart from inception is a much larger position in health care (20.6% to QQQ's 4.8%) and industrials (10.2% to QQQ's 3.5%).

Since inception, the Next Gen's index has traded similarly to the Nasdaq-100 but with periods of clear outperformance and underperformance.

In October 2021, Invesco launched the Invesco ESG NASDAQ Next Gen 100 ETF (QQJG), an ESG-screened version of QQQJ.

The ESG screening doesn't have much of an impact at present, eliminating just a few holdings.

Then, in October 2022, Invesco introduced the Invesco NASDAQ Future Gen 200 ETF (QQQS) – and no, it's not the next 100 stocks up after the Next Gen ETF.

QQQS tracks the Nasdaq Innovators Completion Cap Index, which is made up of 200 small-cap stocks "with the most valuable patent portfolios relative to their total market value as deemed by Nasdaq," according to the fund site.

The index selects its holdings from the Nasdaq Composite, but those holdings can't be Nasdaq-100 or Nasdaq Next Generation 100 stocks.

Learn more about these ETFs at Invesco: QQQJ | QQJG | QQQS

• Expenses: 0.95%

This last group of ETFs is not for the faint of heart. More specifically, these funds are not designed for buy-and-hold investors. Except for ProShares UltraPro QQQ (TQQQ, which has an expense ratio of 0.84%, the expense ratio for these funds is 0.95%.

ProShares offers several ETFs that provide leveraged, as well as inverse, exposure to the Nasdaq-100 Index.

"Leveraged" exposure typically means the fund produces multiple times the performance of an index on a daily basis.

With the ProShares Ultra QQQ (QLD), you're getting two times – or two-times – the daily performance of the Nasdaq-100. That gives you the opportunity to double your gains . . . but also to double your losses. The ProShares UltraPro QQQ provides three-times positive exposure.

"Inverse" exposure means you're getting the inverse of an index's performance. Let's say the Nasdaq-100 Index goes down 1% tomorrow; the ProShares Short QQQ (PSQ) should gain 1% (minus expenses, of course).

You can combine the two ideas – leveraged and inverse exposure – via the ProShares UltraShort QQQ (QID), a negative two-times fund, and the ProShares UltraPro Short QQQ (SQQQ), a negative three-times fund.

We've previously noted that the ProShares Short S&P500 ETF (SH) provides inverse, or negative 1x, exposure to the S&P 500 and is a fairly safe and straightforward hedge against the market. That makes it one of the best bear market ETFs to buy.

The same goes with PSQ, which also offers negative 1x exposure to the Nasdaq-100. If the market heads higher, these products naturally will lose value – but not at an accelerated rate like their leveraged brethren.

However, two-times and three-times products are best left to day traders and the pros. A wrong bet on these products can compound in a hurry.

They're generally too heavy on risk for most individual investors.

Learn more about these inverse ETFs at ProShares: QLD | TQQQ | PSQ | QID | SQQQ

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