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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When the boss of a company with a $4 trillion market value steps down, investors tend to sit up and take notice. That's why Apple (AAPL) shares dipped temporarily when the firm announced in April that after 15 years, chief executive Tim Cook was moving to a new role in September. His replacement, John Ternus, is a 25-year Apple veteran who now leads the company's hardware engineering division.

Ternus has big shoes to fill. Under Cook, Apple quadrupled its sales, its stock climbed more than a cumulative 2,300%, and its market value increased 10-fold. Cook presided over two product launches — the Apple Watch and AirPods — that now each pull in $10 billion in sales a year. And he successfully negotiated with Trump for tariff exemptions for Apple products.

His signature accomplishment, however, was operational: He streamlined the company's global supply chain, creating a geographically diverse production system across Asia that drastically reduced the time Apple holds its parts in inventory, among other things.

Still, there's much to commend the new guy. For starters, Ternus, a near-lifer at the firm, has played a role in the development of nearly every major Apple product over the past two decades. Analyst Mark Newman, of investment firm Bernstein, says Ternus “has owned the product slate most investors care about — iPhone, iPad and AirPods.”

Apple's board said Ternus's appointment followed a “thoughtful” planning process. It tapped him over better-known senior managers, who arguably were more on display (they made more appearances at the company's events). But they are all in their early sixties, only a bit younger than the 65-year-old Cook.

At 51, Ternus's relative youth stands out. Word is he's a well-respected, well-liked executive with a steady management style akin to his predecessor. He's also all-in on Apple's secretive culture. On a recent call with analysts, he said, “We have an incredible road map ahead. And you're not going to get me to talk about the details of that road map.”

Apple's AI challenge

Ternus earned his bona fides in hardware, but his biggest test will be a software challenge: Artificial intelligence.

Apple has so far opted out of being a hyperscaler like Meta (META), Microsoft (MSFT) and Google (GOOG), all of which are spending hundreds of billions a year to build up their AI capability. Instead, the company has partnered with Google to power its AI solutions. That has enabled Apple to safeguard its hefty cash flow and to continue buying back its stock aggressively.

But critics say Apple has failed to deliver on a number of promised enhancements to Siri, the built-in AI feature in its devices. And that has made Apple's AI plan unpopular with some investors. “Apple Intelligence is a country mile from the ‘wow' experience that was promised,” says Matt Britzman, an analyst with the U.K.-based investment firm Hargreaves Lansdown. Laura Martin, an analyst with investment firm Needham, is no fan either. The company's “lagging AI integrations appear tone-deaf and could have existential risks,” she says.

That said, Ternus could be just what the company needs right now. “We expect him to execute new ideas faster, take on more risk, and drive higher internal accountability,” Martin adds.

A CEO switch can be perilous for a company's stock, particularly if the outgoing chief has been a big success. But Oxford University's Said Business School found that if a new CEO presents their strategy in their first 100 days, company shares tend to move up, albeit by a slim average of 5.3%.

We, along with the estimated millions of Apple shareholders, will be watching.

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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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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Controversy swirls over whether AI is a bubble — and whether the excitement about its potential is overblown and will one day peter out.

But many people don't know that they are already using AI — and they're using it quite a bit. If more people knew what AI does, how it does it and what changes it has brought, they wouldn't believe it's a boom/bust industry.

According to a recent study by Gallup Newsletters and Telescope, 99% of Americans have used a product that uses AI as part of its operation, but only 64% of those people realized that AI was involved.

Stanford University's HAI Institute, in its latest Index Report, states, "AI is poised to be the most transformative technology of the 21st century."

The Index Report points out that AI is growing rapidly, and in the year 2023, the number of AI-enabled medical devices approved by the FDA was 223. This was up from only six approved in 2015.

Another rapidly growing AI technology: Self-driving cars, which offer service to a large and rapidly growing customer base. As of 2024, Waymo reported it was operating more than 150,000 weekly autonomous rides.

Private U.S. AI investment has also grown, hitting $109.1 billion in 2024 — far more than any other country. The next-highest country was China, at $9.3 billion.

What the experts say

Tech executives and experts expect AI to continue flourishing. In a recent Nvidia blog post, it was noted that, during the keynote address at a company event, CEO Jensen Huang highlighted the rise of AI companies such as OpenAI and Anthropic. "This last year, it just skyrocketed," Huang said, pointing to the $150 billion that was invested in venture startups.

He added that demand for Nvidia GPUs (graphics processing units) is "off the charts" and that he believes "computing demand has increased by one million times over the last few years."

Tim Bajarin, a prominent tech consultant and a principal at market research firm Creative Strategies, also doesn't think AI is a bubble. He told me in an interview that he thinks now is a good time for AI. "We only know about an eighth of what it can do," he said.

"Many companies are (already) using intelligence to answer questions from their customers," he pointed out, "like, 'Where's my order?' or 'When will it be shipped?'" A search engine, he said, can answer questions like that quickly and cost effectively.

While acknowledging that many people worry that AI will increase unemployment, Bajarin notes that AI could also create jobs. "Some jobs can be automated. We're already seeing that. Salesforce laid off 4,000 customer service people because talent was not being used."

He recommends that workers learn to use AI tools and strive to be part of AI's development.

AI is a developing tool

All that said, AI's future results might end up being in the middle of present expectations — not as miraculous as some think, nor as bogus as others believe.

We know that AI is helpful for personal use and is used in important industries like healthcare, transportation, entertainment and finance.

Companies are investing real dollars in AI, making its growth more certain. Investors could consider investing in the sector. Many tech companies are tied to AI, and their stocks could trade with the sector's growth.

Some investment choices to consider

Nvidia (NVDA) continues to look interesting, even after climbing over 1,300% in the past five years. Morningstar shows good earnings growth, and with its current PEG ratio of 0.50 on March 15, its market price is quite reasonable.

A package approach could be a good choice for investors wanting to spread the risk, and some small-cap stocks offer value. Using the iShares Russell 2000 ETF (IWM) as an example, small-cap stocks have been outperforming the S&P 500 year to date as of March 15, 2026.

The Invesco S&P SmallCap Information Technology ETF (PSCT) includes stocks of companies that supply information technology products and services. Over the past year, as well as year to date, PSCT has outperformed the S&P 500 index, as of March 15, 2026.

Morningstar shows PSCT with a PEG ratio of 1.20 based on future earnings. This is a reasonable ratio. PSCT showed a loss of $1.29 per share in past earnings.

Another interesting ETF is the Roundhill Generative AI & Technology ETF (CHAT). CHAT holds the stocks of global companies, including emerging markets, that are involved in AI. The ETF is invested in large-caps, and its largest holdings include Alphabet (GOOGL), Nvidia, Samsung Electronics, Microsoft (MSFT) and SK Hynix, an emerging markets technology company. (Note: My clients hold NVDA, and I hold CHAT.)

CHAT has outperformed the S&P 500 index in both the past six months and the past five years, as of March 19, 2026. It also seems reasonably valued. Morningstar's PEG ratio is 1.04. Note that Morningstar estimates that future long-term earnings could be down about 30% from past historical earnings. Based on the lower estimates, however, the PEG ratio would be a reasonable 0.71.

Where we are

So, where does this leave us on the "AI bubble" question? The controversy over whether a bubble exists seems to miss the fact that most of us are already using AI daily, often without realizing it.

We're at only the beginning of learning AI's potential, and we're seeing massive investment and rapid growth across major industries like healthcare, transportation and finance. So while the future may not be as miraculous as some predict, nor as bogus as others fear, the data confirms that companies are investing real dollars, making AI's continued growth more certain.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

To help you understand the trends surrounding business and technology and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe.) You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest…

Power semiconductors are surfing the wave of soaring AI electricity usage. Rather than moving and controlling data, power chips move and control electricity in each step that goes into converting high-voltage power from a power plant to the current that AI chips use.

"Power underpins everything in modern technology," said Leonard Shtargot, a fellow at Analog Devices, in a recent panel that brought together top industry executives. The skyrocketing amount of electricity that AI data centers use “all has to go through power semis one way or another,” said Shtargot.

Global yearly revenue for power chips will jump to $100 billion by 2029, up from about $80 billion in 2026, according to Omdia. The yearly growth rate of 7% or so is faster than previous years, with the AI segment seeing even faster growth.

Power chips are also used in EVs, smartphones, laptops, robotics, motors, wireless gear, military radar and much more. Many of the chips last for decades and have been traditionally treated as commodities, which has meant the sector hasn’t seen as much change or investment as other advanced chips, such as central processing units or graphics processing units.

Advanced power chips use high-performance, but costlier, materials such as silicon carbide and gallium nitride. The industry is also researching newer materials such as gallium oxide and diamond.

The AI industry needs power chip innovation to support the AI buildout. "I think the entire ecosystem has to evolve to meet the demand for AI end users," said Dinesh Ramanath, senior vice president at Onsemi, during the panel. He expects significant innovations in the AI market, especially in power density, or how many watts can be squeezed in a certain amount of space on a chip.

Germany’s Infineon Technologies is the industry leader with about 45% market share. The rest of the market is fragmented, with dozens of companies. Major vendors include Onsemi, STMicroelectronics, Mitsubishi Electric, Texas Instruments and Analog Devices. A big focus for chipmakers is getting power to AI chips more efficiently. For example, 10% to 15% of the high-voltage power that goes to a GPU is lost as heat, which is "not acceptable," said Jeff Halbig, product marketing manager at STMicroelectronics, during the panel.

One pressing concern is China’s push to win more of the market, including by relying more on its domestic suppliers. China already nabs 40% of global sales and Beijing is "focused on building up an ecosystem of emerging power chipmakers," noted MorningStar analyst Brian Colello in a research report last year. Other worries include cost pressure stemming from intense competition, demand volatility and worker shortages.

One way to deal with China’s effort to dominate the market is by boosting U.S.-based production, but that’s easier said than done. Industry players want more federal backing, including higher spending on research. They are also calling for efforts to ensure that chip shortages don’t become a surprise AI bottleneck.

Paul Pickering, research director at Omdia, used his presentation as a reminder about chip chaos during COVID: Cars were stuck in parking lots because they couldn’t get basic $1 chips. He wonders if in, say, 2031, there could be a data center ready to switch on, except for a missing $1 power chip and suggests that this hypothetical scenario is something that policymakers and companies can mitigate by acting early.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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To help you understand the trends surrounding business and technology and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe.) You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest…

There’s a lot happening in space these days: NASA’s ambitious moon mission, data centers in orbit, satellite cell service straight to your smartphone and the list goes on.

There are plenty of reasons to think that future business prospects, new technology and geopolitical shifts will propel the industry to new heights. The renewed optimism of satellite CEOs was clear when I attended SatShow 2026, the industry’s leading conference in Washington, D.C. The mood was in stark contrast to the last few years, when SpaceX’s disruptive force and other business woes were driving the conversations.

SpaceX is still disrupting things as a de facto monopoly, but the entire industry is growing fast and there’s more room for other players to benefit. The global space economy will reach $1 trillion in 2034, up from $626 billion in 2025, according to consulting firm Novaspace. The U.S., led by SpaceX launching 85% of spacecraft into orbit and its Starlink Internet service, reaps most of the business.

One metric that drives home the point is the surge in launch activity last year, which will continue this year and beyond. 2025 saw 325 orbital rocket launches and 4,544 spacecraft (mostly satellites) deployed, according to a global launch report by BryceTech. That marked a 25% year-over-year increase in launches and a 54% increase in spacecraft. The U.S. had 193 launches in 2025, with 165 from SpaceX alone. Second-place China registered 93.

Geopolitics are lifting space revenues

Geopolitical turmoil is spurring growth with higher defense spending and national projects for space. "Now, just given the geopolitical realities, countries are realizing that they need more than what they were buying before," said Mark Dankberg, CEO of Viasat, at SatShow. Others in the industry agreed. "The geopolitical developments that we're seeing out there are creating far and away some of the biggest commercial opportunities for Telesat and, I'll say, the rest of us," said Daniel Goldberg, CEO of Telesat.

The U.S., European countries, China and other nations want to buy more space services and own and operate their own sovereign satellites. The Pentagon has upped space outlays and will continue the spending spree. For example, the Trump administration beefed up Space Force funding for 2026 and is now requesting $71 billion for the agency in its 2027 budget proposal, an 80% jump compared with 2026.

The wars in Ukraine, Israel and Iran show how space tech is crucial for missile warning and tracking, communications, surveillance, drone and vehicle connectivity, and more. In Ukraine, SpaceX’s ability to deliver high-speed satellite internet to a small antenna on the battlefield has been pivotal. "Starlink is functionally embedded into government infrastructure," said Kimberly Burke, director of government affairs at Quilty Space, in a presentation late last year. SpaceX can expect more Pentagon contracts for its launch business, too.

"That said, the Pentagon is still wired for diversity," said Burke. Recent large U.S. military contracts have gone to Rocket Lab, HawkEye 360, York Space Systems, Sierra Space, Lockheed Martin, L3Harris and many others. Though details aren’t clear, a missile defense system known as Golden Dome, costing $185 billion-plus, also catches much industry attention.

SpaceX going public ignites investing interest

Investing in the space sector is already heating up this year, and SpaceX’s splashy upcoming initial public offering (IPO) will supercharge interest. The 24-year-old company is seeking a valuation of more than $2 trillion and aiming to raise about $75 billion.

In 2025, revenue was reportedly about $18 billion. Most revenue comes from Starlink, its speedy, space-based internet service, which has more than 10 million residential subscribers, hundreds of thousands of business subscribers and hefty defense contracts.

Upcoming risky bets include launching artificial intelligence data centers into orbit, building a full-fledged computer chip factory and getting Starship, the largest rocket ever, ready for commercial missions. SpaceX won’t have trouble spending tens of billions of dollars quickly to pursue its mission. In the near term, the top focus will be on growing its Starlink business.

SpaceX’s stock listing will bring a new wave of capital to the entire sector, including from a flood of retail investors. Investors in the space sector are bullish about SpaceX’s unprecedented stock listing. The IPO is an "inflection point" for the space industry, said Michael Mealling, general partner at Starbridge Venture Capital, at SatShow. Mark Boggett, CEO of Seraphim Space, said it will pull up valuations across the entire sector.

The heightened attention means that more Wall Street analysts will start covering the sector as space companies are included in more stock funds and more space companies go public. Investors should know that space stocks can be risky, requiring due diligence, and that the frenzy among investors could outpace the reality of individual businesses.

"I am a little concerned about public market investors looking at the space sector and not understanding the level of risk," said Mealling. “Not every company that goes public is a good company." Mealling also said that having lived through the dot-com bubble of the late 1990s, "I hope we don’t replicate that."

Upcoming battle of the two megaconstellations

As SpaceX prepares to go public, it’s just starting to see a new, fierce competitor in Amazon. Amazon’s growing constellation, Leo, will battle Starlink for customers in consumer, government and business internet markets. Starlink has some major advantages, including a huge head start, with 8,500 operational satellites, and its own rockets to launch them. Amazon is in the early stages of building a commercial business, with more than 200 satellites in orbit so far.

"The signals we get from prospective customers are incredibly strong," said Chris Weber, vice president at Amazon Leo, at the conference. Amazon is touting how it can integrate Leo with its cloud computing platform AWS. For security-minded businesses, a compelling feature is that data can travel from space to Amazon’s cloud without ever touching the internet. Besides standalone web plans, Amazon could bundle satellite service with Prime, use it to track its vast logistics network, support autonomous drone deliveries and more, according to Neil Shah, an analyst at Counterpoint.

Amazon’s space mission has taken eight years and $10 billion, and that was before the company recently acquired satellite company Globalstar for $11.6 billion to expand its network and land Apple as a customer. The competition with SpaceX spells lower prices, faster speeds and more data for consumers and businesses.

Other constellations in operation or coming soon include Eutelsat’s OneWeb, Telesat Lightspeed, Blue Origin’s TeraWave and Logos Space’s. Sovereign constellations include the European Union’s IRIS2 and China’s Guowang. The tens of thousands of planned satellites mean more demand for rockets, especially for SpaceX, which has a packed launch manifest through 2028.

Other launch vendors poised to benefit include Rocket Lab, Arianespace, Blue Origin, United Launch Alliance and Firefly Aerospace. But they don’t even come close to SpaceX’s ability to reliably launch its Falcon 9. Satellite companies, including Amazon, are desperate for other rockets to start flying regularly so SpaceX doesn’t control launch pricing. Some see Blue Origin’s reusable heavy launcher, New Glenn, as a viable option in the coming years, though the rocket company only had two launches last year. Rocket Lab ranked second in commercial launches last year with 18.

Other space trends to watch

Many companies are excited about bringing satellite connectivity directly to smartphones, no extra hardware required. The direct-to-device (D2D) service is now available on newer smartphones for sending text messages, reaching emergency services and using some low-data apps, such as mapping. The feature is useful in spots without cell service, but the industry hopes it will grow into a massive new business. SpaceX and Amazon are both spending billions of dollars to pursue D2D and will be the two leaders. Other companies working on the tech include AST SpaceMobile, Lynk Global, MDA Space and SES.

Artificial intelligence tools are exploding on the scene to analyze Earth imagery, manage airwave interference, automate in-orbit navigation, answer questions and more. Companies such as HawkEye 360 have built their own AI models from years of proprietary data to better track and identify vessels at sea. Earth imaging leader Planet says AI on the ground can parse terabytes of data and AI in space can autonomously spot methane leaks from pipelines or identify airplanes. NVIDIA AI chips are being used on satellites to process info before it hits the ground.

There’s no shortage of companies with exciting tech. Xona Space Systems is developing an alternative to GPS in low-earth orbit with centimeter-level accuracy. ISI is using AI to analyze geospatial imagery. K2 Space is working on high-power satellites for data centers in orbit. Starcloud is building space data centers and has already launched AI satellites. ICEYE uses radar pulses to produce high-resolution imagery, even through clouds and at night. SpinLaunch has a giant centrifuge concept that flings objects into orbit and is already running test launches.

Traditional hardware segments may see higher sales, too. That includes antenna systems, made by companies such as ThinKom, Intellian and Kymeta. And ground equipment, made by companies such as General Dynamics, RTX, Lockheed Martin, Kratos and Airbus.

A final thought: Space is hard

Keep in mind that space is technically challenging and hugely capital-intensive. “This is not for the faint of heart,” said Amazon Leo’s Chris Weber. “You have to have really long-term thinking.” Major concerns include rising costs, global supply chain challenges and the risk of an economic downturn.

Even in a growing industry, it’s likely that there are too many companies and some of the new business ideas won’t work out. Expect more industry consolidation, plenty of delays and occasional outright failures.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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It's been said before, but it bears repeating: American investors are feeling the sting of no longer being spoiled.

For more than a decade, it almost seemed difficult not to make money in the stock market. That all changed in the post-pandemic financial world; 2022 saw one of the most volatile markets in years. Investors have been nostalgic for the "good old days" ever since, today being no exception.

One major player driving market swings in recent years is the Magnificent 7. This ensemble cast doesn't involve Yul Brynner or Steve McQueen. Rather, it's the list of seven megacap tech stocks composed of companies with market capitalization higher than $200 billion:

• Microsoft
• Amazon
• Meta (Facebook)
• Apple
• Alphabet (Google)
• Nvidia
• Tesla

These companies are involved in technologies making headlines around the globe, such as AI, web services and quantum computing. Their success has created a new problem for investors.

A 'safer' practice than direct indexing

Common investment advice is to buy the index: Rather than choosing individual stocks, buy into a fund that owns stocks in a given index, such as the S&P 500 or Dow Jones.

This practice is often seen as safer than directly investing in specific stocks because it avoids unsystematic risk.

For example, if you buy stock in Company X, which then experiences a major setback such as a scandal or a significant falloff in business, its stock value will likely decline. If the company can't recover, you could lose your investment.

Buying an index means you're investing in multiple stocks simultaneously. Even if Company X is one of them, the other companies that didn't run into trouble are less likely to decline in value, meaning your overall investment is still sound.

That's changed a bit: Because the Magnificent 7 are so large, rather than simply being a part of the index, they're driving it. This is great when things are going well. Those who buy the index are buoyed along by the successes of the Magnificent 7.

In 2024, Nvidia singlehandedly drove more than 20% of the S&P 500's growth.

It's great when they're doing well, but when they're not…

The flip side is that the entire index frequently suffers when one or more of those seven stocks aren't doing well.

When the megacap stocks are having a good run, the properly diversified portfolio often underperforms the indexes because, being driven by the Magnificent 7, they aren't really indexes anymore.

As an investor, that can be tough to watch. It seems as if easy profits are passing you by, but it's important to remember that markets are cyclical.

Over time, the market has, on average, always risen. However, in between growth periods, there will be times when investments will decline in value. Should that decline happen when circumstances require you to sell before your investments have had time to recover, you could lose money.

An option to consider

There is an option for those who see the value in using indexes to maintain a properly balanced portfolio: Equal-weight indexes.

This approach recognizes that there's still value in the non-megacap parts of the index and is designed to allow investors to participate without so much exposure to the Magnificent 7.

As I write this, the S&P 500 is down 3.34% for the year. The equal-weight S&P 500 is up 0.97%. It's easy to see that, while investors who chose the equal-weight index option still lost money, they lost much less than those who bought the full index.

Investors who are worried about a few megastocks having undue influence on their overall returns might find value in such indexes.

If there's one takeaway from this article, it should be that even easy investing, such as buying the index, can get complicated quite quickly.

Investors should consider working with a fiduciary adviser to help them determine the best strategy for their individual circumstances.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

To help you understand the trends surrounding AI and other new technologies and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe.) You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here's the latest…

Artificial intelligence holds huge promise for the U.S. military for both offensive measures and deterrence. That's why the Pentagon is racing to put AI in the battlefield and the office. With a yearly budget nearing $1 trillion, it's a massive tech shift.

The AI arms race

The global AI arms race leverages an unprecedented commercial AI boom. Large language models powering top AI tech are ideal for the military, since they are a general-purpose technology that can process vast amounts of data, reason and generate usable insights. Users interact with the AI in plain English, making adoption far easier. And vast U.S. tech spending has powered AI advances. The most cutting-edge models are being built by Anthropic, Google and OpenAI.

AI is already being used extensively in battle: By Israel in Gaza. Ukraine against Russia. Now the U.S. against Iran. These conflicts are a testing ground for many new AI tools. Ukraine even launched a product-development war program, known as "Test in Ukraine," where foreign military tech companies can get real-time data from combat conditions. In Iran, the U.S. is using AI to screen incoming data and help identify targets.

The big concern is competition with China, the second-largest AI spender. China is rapidly deploying AI to its military, adding electrical capacity at a rapid clip and providing $200 billion in state-backed AI capital. But China's top tech firms spent only 15% to 20% of what U.S. tech giants invested on AI in 2025, according to Goldman Sachs. This year, Alphabet, Amazon, Meta and Microsoft will unleash nearly $700 billion of capital expenditures to build AI.

America's focus on speed

Hence the Department of Defense's AI strategy: Speed wins. "Military AI is going to be a race for the foreseeable future, and therefore speed wins," according to the agency's AI strategy document. "We must accept that the risks of not moving fast enough outweigh the risks of imperfect alignment." Aggressive timelines, slashed red tape and updated procurement rules aim to speed up adoption and use.

The effort includes top-secret projects marked by urgency and little public oversight. Units that don't adopt AI quickly enough could see funding reviewed or pulled. The Pentagon also wants the latest AI models deployed to soldiers and civilian workers within 30 days of public release, a rapid pace of adoption that highlights the strategic imperative of accessing the most cutting-edge commercial tech.

Since December, the agency's 2.8 million personnel have had access to Gen.AI.mil, a chatbot powered by Google Gemini for unclassified work. The chatbot has been used by more than 1 million employees so far, while plans for a similar chatbot for classified work is underway. Google also introduced AI agents that can autonomously do work, such as drafting white papers, preparing briefings and processing data-heavy documents.

The Pentagon wants AI models without constraints. The feud with Anthropic, which erupted into a federal ban and now a legal fight, highlights the ongoing tension. The concern is that an AI system will suddenly refuse an urgent question or command because of the guardrails built into the AI model itself, even if the order is lawful.

Military AI's growing uses

The many combat AI uses include mission planning, target assessments and weapon systems tracking. AI can generate insights by fusing a vast array of data, including satellite imagery, video, radar, radio transmissions, cyber intelligence, social media activity, real-time news, field reports, troop locations and historical info.

"Defense and intelligence workflows that once required weeks of manual analysis can automatically detect threats and generate response plans by processing satellite imagery, sensor data, and historical patterns at unprecedented scale," says Amazon about its government AI cloud computing platform. Meta says its AI model powers a chatbot that enables special operations forces "to generate intelligence reports 18 times faster and process video footage nine times quicker."

AI-enabled drone swarms could pilot themselves, making decisions autonomously. Automated drone software updates could deal with new enemy radar systems, turning intel into weapons in "hours not years." AI could fend off cyber threats. Instead of weeks of manual analysis, AI surveillance could create instant insights.

The growing list of non-warfare uses include training, supply chain management, regulatory compliance, drafting policies, summarizing meetings, parsing contracts. In-depth research reports created in minutes will save hours or days of work. AI could even be used to assess and help modernize aging U.S. military IT systems, a major problem for 30 years that threatens to stall or hinder the AI transformation.

Introducing combat chatbots

Here's how an AI chatbot conversation could happen on the battlefield. On a laptop computer, a soldier sees an alert for an "anomalous activity" on an AI platform built by Palantir, a leading military AI vendor. The chatbot, which is scouring data and real-time info, says satellite imaging has detected that enemy activity could be nearby. The soldier types: "Show me more details." The chatbot says when images were taken, what they could be and shows a map.

The soldier could then ask about options to provide a higher-resolution image. After being provided two choices, such as a surveillance drone or more satellite imaging, the chatbot says, "How would you like to proceed?" The soldier picks the drone and the choice is sent up the chain of command to be approved by a commander. The new imaging shows a tank that is a potential threat.

The soldier then writes, "Generate three courses of action to target this equipment." Three options come with details, such as time required, equipment used, distance to target, personnel needed and more. After probing each option and getting more details, the soldier asks for a summary of the plan. A commander gives final approval.

The military sets permissions for these AI tools, saying what AI can and can’t do, and what data can be accessed. Records are stored for analysis. The guidance and guardrails are evolving fast, and Congress has yet to step in to set the rules for military AI.

The Pentagon's expanding efforts

The Pentagon has groups and initiatives laser-focused on rapid adoption of AI for combat and faster use of emerging commercial AI tech. Two major organizations are the Chief Digital and Artificial Intelligence Office (CDAO), which aims to accelerate adoption of AI for combat, and the Defense Innovation Unit, which aims to make faster use of emerging tech.

The Army's Project ARIA, or Army Rapid Implementation of Artificial Intelligence, focuses on autonomous agents, an AI app store for the battlefield, upgrading supply chain management and more. "Project ARIA represents a fundamental shift in how the Army develops and deploys technology," according to the Army's announcement. "By partnering directly with top AI firms, the Army is delivering solutions in months rather than years."

Project Maven looks to use AI to process battlefield data to speed decision-making. The Replicator initiative aims to use AI to fly thousands of autonomous drones. Thunderforge is an AI wargaming project. Rapid Capabilities Cell is an AI incubator.

Rising defense spending on AI

Military spending on AI will soar in coming years, with AI-related contracts for large tech companies, start-ups and traditional contractors. For example, Palantir has a 10-year, up-to-$10 billion Army contract. Shield AI, maker of AI pilot software, is part of a group receiving a U.S. Air Force contract worth up to $950 million. Anduril, which builds autonomous systems, has a $642 million, 10-year contract with the U.S. Marine Corps for an AI counterdrone system.

Anthropic, OpenAI, Google and xAI each received contracts worth up to $200 million for AI chatbot tech. Scale AI has a five-year, up-to-$100 million contract to label and annotate data for AI. Other start-ups receiving contracts include Rebellion Defense, webAI, EdgeRunner AI and Legion Intelligence. Hundreds of smaller vendors have received small contracts.

Even though AI start-ups are rapidly gaining ground, large firms are gearing up for bigger demand, too. For example, Amazon is investing up to $50 billion to expand AI cloud computing for the government. Meta is supporting national security uses with its open-source AI model Llama, which is easier to modify and can be used on devices without an internet connection. Lockheed Martin, RTX, Northrop Grumman, General Dynamics and Boeing use AI for internal operations and manufacturing, plus include AI in their products.

The world faces new risks

AI brings many risks and rapid adoption is likely to enhance the hazards. The tools need to have guardrails with continued testing and monitoring, since AI can produce mistakes, biases, data leaks, cyber threats and other problems. There's even the growing concern that AI-induced psychosis becomes a national security threat. Meanwhile, the Pentagon’s willingness to experiment and fail while it moves fast is sure to spur more scrutiny over defense spending on new tech.

Expect a much bigger debate over human vs. machine decision-making related to AI’s ability to automate all sorts of processes. And eventually, a discussion of AI arms control, echoing the nuclear age. "The emergence of nuclear weapons prompted the development of nonproliferation regimes that reshaped arms control beyond traditional use-based restrictions," writes Scott Sullivan, a professor of law at the U.S. Military Academy at West Point and the Army Cyber Institute, in a recent article. "Military AI may demand a similar shift."

These trends point to tremendous change as the U.S. military and its defense industrial base "is beginning a once-in-a-century transformation to modernize its military," says a report by researchers at the Wharton School of the University of Pennsylvania.

Still, there are some things that won't change. AI will help militaries fight their wars, but the decision on whether to start or join a war will still be a fully human choice of political leaders.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Using new tech in the workplace and at home is nothing new. But the November 2022 introduction of ChatGPT, a generative artificial intelligence service, made the use of AI the norm, and at breakneck speed.

Since the end of 2022, anyone who purchased the so-called Magnificent Seven (Mag 7) stocks, all of which are embracing AI, should have profited handsomely. The stocks are Nvidia (NVDA), Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT) and Tesla (TSLA). Collectively, these stocks were worth about $20 trillion recently, up threefold from $7 trillion less than three years ago. But stock market professionals are divided on their prospects.

Some are bullish, others see a bubble. Brian Glenn, chief investment officer at private wealth adviser Premier Path Wealth Partners, says the surge in AI-related stocks is not yet in a bubble. "If everyone is talking about a bubble, it probably isn’t," he says. He has a point. "No one rings a bell at the top of the market," says Wall Street veteran Art Cashin.

"Inflation is stable, interest rates are stable and with a downward bias, and earnings are trending higher," says Terry Sandven, chief equity strategist at US Bank. "It supports a higher valuation."

Of course, "this time it’s different," is what Wall Street bulls always say. Famously, legendary investor the late Sir John Templeton said those were "the four most dangerous words in investing."

What’s happening away from Wall Street?

AI needs three things to grow. First, data centers, which are the engine of AI. Second, new electricity sources, such as small modular nuclear reactors. Lastly, enhanced software so that consumers and businesses can efficiently utilize the technology.

All three are needed to increase AI performance. Ethan Mollick, a University of Pennsylvania professor at The Wharton School and co-director of the Generative AI Lab, says, "You need a 10-times increase in computing power to get a linear increase in performance." That’s why large-scale AI deployment needs lots of investment money.

Sandven says the world with AI will speed up permanently. "The rate of change in our society is getting faster, and it will never slow again largely because of tech," he says. "We are in the early innings in the building, and fast is getting faster."

So far, companies betting on AI are happy to spend. "We still see more upside, just as we are employing capital expenditure we have spent," Sandven says. "And we think that will last another few years." Increased investment will keep many businesses and their employees busy while a new infrastructure gets built. That will benefit the United States economy, at least for a few years.

AI Stocks: Who’s buying and who is selling short?

The largest buyers of the MAG 7 stocks are money management companies that dominate passive investment products, such as exchange-traded funds. Money managers Vanguard, BlackRock, State Street, Fidelity, and J.P. Morgan collectively have approximately $36 trillion under management, or about half the value of the S&P 500’s market cap.

Because of this bias toward passive investing, a disproportionate amount of money is being invested in Mag 7 stocks. By Dec. 12 of 2025, the Mag 7 share of the S&P 500 index had grown to 32%, according to an analysis by Yardeni. That’s one-third of the value of the S&P 500.

For some investors, having a third of their investments in huge tech companies is too much. They opt to find ways to reduce their exposure, Glenn says. For instance, money managers may short-sell some Mag 7 stocks by borrowing shares to reduce their overall tech exposure. Likewise, some use financial derivatives, such as stock options or futures contracts, to do a similar job.

Recently, the percentage of the stock float of the Mag 7 that is being short-sold has been relatively modest, between a low of 0.4% and a high of 2.7%, according to MarketBeat. Most of the seven stocks were less than 1%.

Consequently, experts say the growing use of AI promises massive positive changes in the global economy, including a more efficient workforce, reduced production costs, increased profits and improvements in people's lives.

AI business hiccups in the waiting

However, some of the major AI-related corporations are engaged in a circular investment scheme, says Ted Mortonson, Baird's managing director of technology and a veteran of tech growth.

For instance, Oracle is spending tens of billions of dollars on Nvidia chips, while OpenAI inks a $300 billion cloud deal with Oracle. Meanwhile, OpenAI is deploying 6 gigawatts of AMD graphics processing units, while AMD grants OpenAI an option to buy 160 million shares.

A slew of smaller companies are also involved in the mix, including Mistral, CoreWeave, and xAI. "The street is moving to a high capital model with low free cash flow," he says. "Microsoft and Google have monopolies for enterprise software and will benefit no matter what."

Meanwhile, a global chip shortage is increasing the cost of AI deployment. Part of that problem could be related to tariffs and the global trade war. "In this business cycle, which we have never had before, it is the tariffs," Mortonson says.

Massive investment in AI assumes future profits, says Ryan Stever, chief investment officer at Intech Investments, "but that is three to five years away. It’s a long time." Should projected profits fail to materialize, AI-related stocks could drop sharply.

It’s hard to know which companies will be the winners. Right now, AI companies are competing head-to-head, Stever says. "There will be winners and losers, and people will have to pick their stocks," says Nitin Sacheti, portfolio manager at Papyrus Capital. "At the same time, so many other businesses will make our lives better."

Sacheti says the companies involved in constructing data centers and power plants have definitely benefited. "But in 2027 and 2028, those companies will have a hard time," he says. "The high labor use and investment for this physical infrastructure is a once-in-a-lifetime event."

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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I am hooked on a podcast called Acquired, in which two smart guys do a deep analytical dive, typically lasting three or four hours, on a single successful company such as Coca-Cola (KO) or Trader Joe's. Ben Gilbert and David Rosenthal, a pair of venture capitalists, are especially adept at explaining what's behind the success of such tech giants as Alphabet (GOOGL), the former Google, which recently merited 11 hours and 42 minutes of dialogue all by itself.

What have I learned? The big winners have a clear mission, they're adaptable, and they're willing to spend money on talent and take risks. They make astounding profits. Apple (AAPL), essentially a phone manufacturer, earned $112 billion in fiscal 2025 on $416 billion in revenues. Alphabet and Microsoft (MSFT) have even better profit ratios, and Nvidia (NVDA) is in a universe all its own, earning 75 cents for every dollar of sales for the nine months ending in October.

In 2018, Apple became the first U.S. company to achieve a market capitalization (shares outstanding times price) of $1 trillion. Now, 10 companies — eight of them in technology — are trillionaires, and Big Tech dominates the stock market in unprecedented fashion.

The Washington Post in November calculated that the Magnificent Seven — Alphabet, Amazon.com (AMZN), Apple, Meta Platforms (META), Microsoft, Nvidia and Tesla (TSLA) —had gained 1,057% since January 2019 while the remainder of the stocks in the S&P 500 Index rose 132%. (Stocks I like are in bold; prices and other data are as of November 30, unless otherwise noted.)

With the exception of Tesla, whose revenues have been flat for three years, these companies deserve their high valuations. The question now, with all of them investing so much in artificial intelligence, is whether their latest bets will pay off. Other than the chipmakers, no one is earning sizable profits from AI yet, and the companies are making massive capital investments — Alphabet projected it would spend up to $93 billion in 2025 and even more in 2026.

There are other risks, among them intense competition and increasing government intervention. Still, as an investor, you have no choice. You need to own some or all of the Magnificent Seven stocks, either individually or as part of an index fund (the seven represent 35% of the value of the S&P 500), or even through a managed mutual fund such as the Fidelity Contrafund (FCNTX), where the proportion tops 40%.

But, as I wrote a few months ago, don't expect a stock with a market cap of $4 trillion to sextuple. That would amount to half the value of all the homes in the U.S. Trying to find the next Microsoft or Meta is a fool's errand, but there are many other tech stocks out there that actually could sextuple and, even if they don't, are worth your attention.

My Magnificent-Seven-Plus strategy

Let's begin with robotics, the machines that AI can power to do the work of humans or of clunkier machines. Symbotic (SYM) makes AI-driven robotic warehouse automation systems for such retailing giants as Walmart (WMT) and Target (TGT). Revenues rose 26% in the year that ended September 30. Profits are still elusive, but this is a business that could take off.

A major success story is Intuitive Surgical (ISRG), whose shares have tripled since October 2022. Although its market cap is less than one-twelfth the size of Amazon's, the company is not small, and it was founded 30 years ago. Intuitive's widely adopted da Vinci robotic system helps physicians perform minimally invasive surgeries.

At the other end of the risk curve is Serve Robotics (SERV), which makes self-driving food-delivery robots. Both Nvidia and Uber Technologies (UBER) hold stakes in Serve, which went on a wild ride in 2025, falling from $23 to $5, then climbing back to $18 and now trading at about $10.

You can buy a bundle of robotics companies through the Global X Robotics & Artificial Intelligence ETF (BOTZ), an exchange-traded fund that also has a large interest in Nvidia, or through the ARK Autonomous Technology & Robotics ETF (ARKQ), which has returned an annual average of 33.8% over the past three years — more than 13 points better than the S&P 500.

Cathie Wood manages the ARK funds, and it's worthwhile hunting for tech treasures in the portfolio of her flagship ETF, ARK Innovation (ARKK). Among the top holdings is Shopify (SHOP), with a $207 billion market cap but lots of room to grow. The company seems to have cracked the code with a platform that helps businesses track inventory, process sales and fulfill orders.

Archer Aviation (ACHR), which makes vertical takeoff and landing aircraft, still has no revenue, but I am bullish on low-level aerial corridors for fast transportation, and I am encouraged that Wood has taken a serious stake. ARK also owns CRISPR Therapeutics (CRSP), a Swiss company whose gene-editing process for treating disease benefits from AI analysis of huge data sets.

A company with promise is Tempus AI (TEM), whose revenues rose 85% in the most recent quarter compared with a year ago. Tempus uses AI to analyze, diagnose and treat disease. The company's tools sequence a patient's genes and compare the results with others in a proprietary database.

The next step is to determine the success of drugs used to treat similar patients and even recommend current clinical trials. Tempus can also compare a patient's tumor with those in its own database and find the best historical treatments. Shares have nearly doubled in the past five years, and the company's market cap is now $14 billion.

Powering gains

At a time when the world needs more power to drive data centers and advanced manufacturing, a sudden interest in geothermal energy has emerged. Geothermal currently provides electricity and heat for a negligible portion of the country.

But innovations similar to fracking, which propelled natural gas, are making geothermal less expensive to develop, faster to deploy, and feasible for more states than California and Nevada, which currently account for 93% of geothermal generation.

Ormat Technologies (ORA), with a market cap of $7 billion, is the only vertically integrated company that's a pure play on the U.S. market. Shares have jumped 39% in the past year, but now is the time to get in on the ground floor — or, in this case, below it.

With my Magnificent-Seven-Plus strategy, you can own the Big Tech stocks individually or in funds, and then perhaps another seven smaller technology companies with the potential to benefit from AI and other innovations. If you do buy the stocks, be committed. They'll go up and down. Try to hold on.

James K. Glassman chairs Glassman Advisory, a public-affairs consulting firm. He does not write about his clients. Of the stocks mentioned here, he owns Amazon.com. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence. 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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The top 25 stocks in the S&P 500 this year might be dominated by tech names taking off on the AI trade, but big-time market beaters can be found in the industrials and materials sectors, too.

First, a quick recap: A volatile spring sell-off (sparked by the "Liberation Day" tariff shock in April) couldn't stop the bull market from stampeding through 2025. Thanks to a strong outlook for corporate earnings and the continued frenzy about AI infrastructure spending, equities are set to end the year at record levels.

With a few days left of 2025, the S&P 500 has delivered a price gain of nearly 18% year to date, with Magnificent 7 stalwarts such as Alphabet (GOOGL) and Nvidia (NVDA) backstopping the cap-weighted benchmark's returns.

It should come as no surprise that the information technology and communication services sectors were the primary outperformers this year, rising 26% and 22%, respectively. The industrials sector, up 19%, also managed to beat the broader market.

A closer look at the individual names in the S&P 500 reveals that 12 of the 25 hottest stocks of 2025 were tech-related.

However, the rally has broadened significantly; five of the best-performing equities hail from the industrial stock sector, while financial stocks, materials stocks, health care stocks, utility stocks, consumer discretionary and consumer staples are all represented, too.

These were the hottest stocks of the year

What the hottest stocks of 2025 tell us

An interesting takeaway from this list is that the biggest beneficiaries of the AI trade weren't the hyperscalers. Instead, it was a collection of tech companies that design and manufacture the computer memory and storage products that live inside servers.

The ongoing build-out of AI data centers isn't just creating massive demand for specialized chips; it's also fueling a run on flash memory and high-capacity hard disk drives. That's why shares in SanDisk (SNDK), Western Digital (WDC) and Micron Technology (MU) posted the market's most explosive gains this year.

For example, SanDisk is the S&P 500 leader for 2025 with nearly a sixfold price gain. The company, which specializes in flash storage, was spun off from Western Digital in February 2025 and subsequently added to the S&P 500 in November.

Investors are bullish because higher-than-expected demand from AI data centers has allowed SNDK to raise prices and expand its profit margins.

Western Digital comes in second in price appreciation, as shares nearly quadrupled this year. By spinning off SanDisk to concentrate on its core competency in hard disk drives, the company became a "pure-play" favorite for investors. The market rewarded the move, viewing hard drives as a relatively stable, high-margin business compared with the more volatile and cyclical flash memory market.

Meanwhile, hyperscalers such as Amazon.com (AMZN), Alphabet (GOOGL) and Microsoft (MSFT) have a seemingly insatiable demand for WDC's high-capacity drives. As a pure-play hard drive manufacturer at the center of the AI boom, it's no wonder WDC had a fantastic year.

Which brings us to Micron Technology. One of the world's biggest memory chipmakers pivoted in 2025 to become a specialized provider for AI infrastructure. The market applauded rapturously, sending MU stock up almost 240%.

A company whose biggest customers include nearly every member of the Mag 7 — plus Advanced Micro Devices (AMD), among many others — is in an enviable position as an AI play. Like its peers, Micron enjoys significant pricing power due to overwhelming demand, allowing the company to post record-breaking revenue in its most recent quarter.

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Who would have believed at the turn of the 21st century that there would be such a thing as a trillion-dollar stock? (Or that the Dow would reach 36,000, for that matter?)

At the end of 2000, the most valuable company was Exxon Mobil (XOM), with a market capitalization — price times shares outstanding — of roughly $302 billion. That's one-fifteenth the value of Nvidia (NVDA) today. Just counting to a trillion incredibly fast, with no bathroom breaks, would take 32,000 years, according to the Q&A platform Quora.com.

In August 2017, however, I wrote, "It may be a matter of months, or more likely a few years, but sometime soon a U.S. company will breach the trillion-dollar mark." I was more right than I expected.

At the time, I offered estimates of when each would hit a trillion in market cap. Apple (AAPL) was first, as I predicted, but it took just 11 months, a year and a half ahead of schedule. The other four quickly followed: Amazon.com (AMZN) in September 2018; Microsoft (MSFT) in 2019; Alphabet (GOOGL), the former Google, in 2020; and Meta Platforms (META), the former Facebook, in 2021.

At that point, I wrote another column, saying, "I'm doubling down and recommending them all." Sure enough, as a group, they have nearly doubled. (Prices, returns and other data are as of September 30; stocks I like are in bold.)

Today, with the additions of Nvidia, Tesla (TSLA), Broadcom (AVGO) and Berkshire Hathaway (BRK.B), membership in the Trillion-Dollar Club (let's call it TDC) has grown to nine. The combined market cap of these stocks accounts for 41% of the capitalization of all the companies of the S&P 500 Index. A mere 10 years ago, the nine largest U.S. stocks had a total market cap of 18% of the S&P 500.

Today, eight of the nine members of the TDC are technology (or tech-related) stocks, and for the ninth, Berkshire, Apple alone represents one-fifth of assets. By contrast, in 2015, the top nine consisted of just five tech stocks, plus companies in banking, pharmaceuticals and energy, along with Berkshire. In 2005, only two tech companies graced a highly diversified top nine.

Concentrated bets

The top-heavy nature of the S&P 500 today should make any investor worried. The market is betting heavily, not simply on tech but on artificial intelligence. But you will notice from the bold-facing that I still like trillion-dollar stocks — at least the initial cohort.

Why? Let's start with Alphabet. Since 2017, revenues have quadrupled and earnings have quintupled, yet the stock's price-to-earnings (P/E) ratio, based on a consensus of analysts' forecasts of profits for the year ahead, has declined from 30 to 25. Analysts at investment research firm Value Line expect earnings will rise an average of 12% annually for the next five years, indicating a perfectly reasonable valuation.

Alphabet owns the global entertainment asset with the greatest potential, YouTube, with nearly 3 billion active users. The company is also sitting on more than $95 billion in cash and has very little debt; it has even started paying a small dividend.

Amazon's P/E has dropped from nearly 200 to 32. It dominates the e-commerce market, accounting for 38% of sales, compared with 6% for number two Walmart (WMT).

Apple's valuation has risen to 33, but it was absurdly low (16) in 2017. The company is a profit machine; it earns about 25 cents on every dollar of sales, and those dollars will exceed 400 billion this year. Microsoft has tripled its earnings since 2017. It has a powerful cloud-computing business and has integrated AI into all its platforms.

Meta gets the least respect. Its forward P/E has fallen from 29 in 2017 to 25, despite net profits rising from $18 billion to close to an estimated $72 billion in 2025. The company, which owns WhatsApp and Instagram, recently won its antitrust case, leaving the ownership of its assets intact.

I am less enamored of the TDC newbies. Nvidia was once a lovely choice. In making it one of my 10 stock picks for 2020, I wrote that it "may be the best artificial intelligence play." Since then, its market cap has risen from $122 billion to $4.5 trillion.

Ponder that number. It’s more than the capitalization of all the listed stocks in the U.K. It is greater than the GDP of Japan. Nvidia, with its graphic processing units, has little competition for top-level AI chips used in data centers, but that is going to change. There is too much money to be made.

Broadcom, a semiconductor company with a niche in AI chips called application-specific integrated circuits, which have specialized functions, is the change agent. It became the newest member of the TDC in December 2024 after its stock price increased by a factor of six in four years. Value Line expects earnings to continue rising at a 24.5% annualized clip through 2030.

Broadcom, like Nvidia, does not own manufacturing plants, or "fabs." That allows the company to retain its capital, but it also leaves it vulnerable to supply interruptions. My other worries about the future of the chip business are government intervention, geopolitical threats and a lack of electricity to power data centers in the U.S.; still, it’s hard not to like Broadcom.

Tesla, which reached $1 trillion in market cap in October 2021, then fell out of the club a few times and came back in, looks more attractive now that its CEO is getting back to work. I am especially excited about its battery storage business.

But Tesla is clearly a meme stock, driven by the enthusiasm of fans. Its revenues have been flat for three years, profits are microscopic by TDC standards, and capital spending requirements are huge.

The outlier, Berkshire, has a P/E in the mid-20s and a brilliant CEO in his nineties. I'm loyal to Warren Buffett and confident in his successors. Berkshire has a hoard of liquid assets, and insurance is the best business in America outside of tech.

When I wrote about trillion-dollar stocks in 2021, I warned about "a sort of law of financial gravity." It's not hard to imagine a stock with a market cap of $100 billion becoming a four-bagger (that is, quadrupling in value) or even a 40-bagger, as Nvidia has proven.

But could Nvidia quadruple from its current value? Could Microsoft or Apple, at $3.8 trillion each? It seems doubtful. Still, doubles or triples are satisfying.

The legacy TDC companies have shown a remarkable ability to innovate and adapt. Operating-system software, for example, used to dominate Microsoft's revenues. Now, it represents only about one-tenth of sales. Server and cloud services account for 40% today, with gaming and LinkedIn making significant contributions.

These are truly exceptional businesses with extensive moats and deep human capital. As crazy as it sounds, they deserve to be trillion-dollar companies — and to keep growing.

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 Amazon.com. 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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Stocks are trading at record levels and valuations are stretched. While that by no means suggests the bull market has to end soon, it does make it harder to find names that industry analysts rate as bang-the-table buys.

True, the S&P 500 is pricey by a slew of metrics — but that's partly due to its market-cap-weighted construction. The Magnificent 7 stocks driving much of the bull run have a collective weighting of more than 30% in the benchmark index.

However, look at the equal-weight version of the index, in which every component accounts for 2%, and you'll see a more attractive picture.

While the S&P 500 gained nearly 40% since its early April bottom — and trades at more than 23 times forward earnings — the equal-weight S&P 500 is up a more modest 25% in the same span. As such, it trades at less than 18 times forward earnings.

That's not bad.

As the cliche goes: It's not a stock market; it's a market of stocks.

Meanwhile, third-quarter earnings season is underway, and the outlook for corporate profits, revenue and guidance is bright.

"Both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are above their 10-year averages," writes John Butters, senior earnings analyst at FactSet. "In addition, S&P 500 companies are reporting impressive numbers for revenues relative to analyst expectations and year-ago results."

Some of the strongest corporate profit margins since 2021 also helps explain why the market fetches its current multiple, notes DataTrek Research co-founder Nicholas Colas. "It also provides a pathway to even higher valuations," he adds.

Given this supportive backdrop for equities, we decided to suss out some of Wall Street's favorite stocks to buy now — and to see what the bull cases on these names looked like.

Targa Resources

Targa Resources (TRGP) is a top way to play a rebound in the midstream sector of the oil and gas industry. Analysts like the way it operates in nearly every segment of its industry and adore its geographic diversity.

When it comes to gathering, processing, transporting and storing natural gas and natural gas liquids (NGLs) in places such as the Anadarko and Permian Basins, analysts say Targa "overshadows" other energy companies.

"Expected completion of projects in the Permian and Delaware position Targa for further growth," writes Argus Research analyst John Staszak, who rates shares at Buy.

With shares down about 12% for the year to date, they look like a bargain. Analysts' average price target of $206.15 gives TRGP implied upside of about 33% in the next 12 months.

No wonder Argus has so much company in its bullish call. Of the 22 analysts covering TRGP surveyed by S&P Global Market Intelligence, 16 call it a Strong Buy, five say Buy, and one has it at Hold. That works out to a consensus recommendation of Strong Buy.

Take-Two Interactive Software

Video-game publisher Take-Two Interactive Software (TTWO) owns some of the strongest franchises in the massive industry. From Rockstar Games' Grand Theft Auto (GTA) series to NBA 2K from 2K Games, the company doesn't lack for lucrative hits.

Shares are up nearly 40% so far this year, but analysts say they have more room to run. All eyes are on the May 2026 release of Grand Theft Auto VI, which should be a major catalyst.

As important as GTA is to the company's fortunes, it's hardly a one-trick pony. TTWO releases a new edition of its NBA 2K game annually, while major franchises such as Red Dead Redemption, Borderlands and Civilization have historically helped it report beat-and-raise quarters.

That said, investors need to have confidence in the enduring popularity of GTA before they take the plunge into TTWO stock.

"Take-Two's prospects will always be more speculative than we'd prefer, as we think that it will always be dependent on developing the next massive hit," Morningstar notes.

Of the 27 analysts covering TTWO, 21 call it a Strong Buy, three have it at Buy, two rate it at Hold, and one has it at Strong Sell. That works out to a consensus recommendation of Strong Buy.

Boston Scientific

If you've ever undergone a minimally invasive medical procedure, chances are you've used something made by Boston Scientific (BSX). From stents and catheters to pacemakers and implantable defibrillators, BSX is critical to modern medicine.

Analysts say the company's strong pipeline, new product launches and additional acquisitions should continue to support revenue growth and margin expansion.

"BSX has a steady cadence of new product flow across its portfolio and is delivering above-industry growth, with particular outperformance over the past year-plus," notes Oppenheimer analyst Suraj Kalia, who rates shares at Outperform (the equivalent of Buy). "BSX is adding to the portfolio through tuck-in M&A and has several product tailwinds."

Shares are lagging the broader market by about 3 percentage points so far this year, but that just has them primed for outperformance, bulls say. Analysts' average price target of $126.14 gives BSX implied upside of about 25% in the next 12 months.

Of the 34 analysts covering BSX, 25 rate it at Strong Buy, seven say Buy, and two call it a Hold. That works out to a consensus recommendation of Strong Buy, and with high conviction to boot.

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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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When I last wrote about China — five years ago, in the midst of COVID — some readers were critical. Why encourage us to invest in an adversary? China has certainly been a bad actor, threatening Taiwan, supporting the Russian invasion of Ukraine, suppressing dissent, oppressing ethnic and religious groups. But the U.S. is not at war with China; we allow Chinese firms to list on our exchanges, and we encourage Chinese investors to buy U.S. Treasuries (current holdings: $757 billion).

The Trump administration’s official position on China, according to the State Department’s website, seems reasonable: “The United States seeks a constructive, results-oriented relationship with China…. The United States uses a range of exchanges, dialogues, and people-to-people ties to pursue its goals.” I would argue that one of those exchanges involves stocks. But if you feel strongly about not investing in Chinese companies, then don’t. As Warren Buffett says, you don’t have to swing at every pitch.

Still, I find it hard to ignore China. It is the world’s second-largest economy in nominal terms (gross domestic product not adjusted for inflation) and first in purchasing-power parity (that is, based on what people in different countries can actually buy) — $10 trillion ahead of the U.S., according to the International Monetary Fund. The Economist projects 4.4% GDP growth this year, compared with less than 1% each for the U.S., Europe and Japan. Also, China has become not just an imitator but an unquestionable innovator.

China now accounts for 29% of the world’s manufacturing output, up from just 9% in 2004 and greater than the next four countries (U.S., Japan, Germany, and India) combined.

According to the World Economic Forum, China’s “culture of techno-optimism, coordinated institutions and economic readiness has allowed artificial intelligence to scale with unprecedented speed.” Cutting its coal dependency by one-fourth and boosting renewables, China increased its electricity-generating capacity — essential for AI and advanced manufacturing — two and a half times from 2010 to 2024, while the U.S. and the EU practically stood still.

China is jumping hurdles

China has problems, among them a glut of unsold real estate and the enmity of the U.S. Both Donald Trump and Joe Biden have hit China with big tariffs and export controls on technology.

So far, China has proved resilient, in part because U.S. industry needs China’s rare earths and more-prosaic components for manufacturing and because consumers demand low-cost Chinese goods. In May, because of tariffs, Chinese exports to the U.S. fell 35% but still rose globally by 5%.

Markets are impressed. After three years of double-digit losses, Chinese stocks recovered in 2024 and are far outstripping U.S. shares in 2025. (Stocks mentioned here trade as American depositary receipts. Prices and returns in this column are as of June 30; securities I like are in bold.)

China’s government is encouraging new industries, and it leads the world in industrial robotics and electric vehicle production. Though effectively banned from the U.S. because of 100% tariffs, Chinese EV maker BYD (BYDDY, $94) is number one in the world, eclipsing Tesla (which was allowed to sell 637,000 EVs in China last year).

BYD is also the world’s largest producer of rechargeable batteries. Its new technology adds 250 miles of range in five minutes; no competitor comes close. BYD benefits from government subsidies, but it has also figured out how to produce EVs cheaply. It sells a model in China for $8,000, in the U.K. for $26,000 and in Mexico for $21,000. The cheapest Tesla in the U.S. is $42,000.

Buffett’s Berkshire Hathaway invested in BYD stock in 2008, and since then, according to Morningstar, the original stake has increased in value by at least 25 times. Shares are pricey, but the business has more than tripled its revenues in three years.

Another Chinese company, Xiaomi (XIACY, $39), created a sensation in June with an electric SUV that drew 289,000 orders in the first hour. Xiaomi is also the world’s third-largest smartphone maker, after Samsung and Apple, and makes home appliances and TVs. Shares have more than tripled in 12 months, partly because of threats that tariffs will drive the iPhone’s price higher.

A smaller, premium EV company, XPeng (XPEV, $18), has 4,000 orders for a flying car — combining a ground vehicle with an aircraft module — which will enter production next year. The stock has more than doubled in the past year, but it remains far below its late-2020 high.

Food-service company Meituan (MPNGY, $32) has interests in health care and travel as well. It is using low-altitude drones to deliver meals in Beijing, Hong Kong, Dubai and dozens of other cities. In the most recent quarter, revenues rose 18% from the same quarter a year ago. Its business is mostly domestic, insulating Meituan from trade wars.

NetEase (NTES, $135) is one of the world’s largest providers of video games. After being flat since COVID, shares took off this year, returning 53.0%. But like many Chinese stocks, NetEase, with a market capitalization (shares outstanding times price) of $85 billion, is moderately priced.

China’s Amazon.com

Shares in Alibaba (BABA, $113) offer more opportunity — and more risk. When the e-commerce and cloud-computing giant, akin to Amazon, went public on the New York Stock Exchange in 2014, it was valued at more than $200 billion, a record. But in the three years after the Chinese government’s 2021 crackdown on high-flying tech firms, and with questions swirling about Alibaba’s finances, the stock lost three-fourths of its market cap. Shares have made a comeback over the past 12 months, and my guess is that Alibaba will live up to its original promise. The price-earnings ratio is only 12.

Such low valuations are a big part of China’s appeal to investors right now. MSCI, the index provider, reports that the forward P/E of its China index, which captures 85% of the country’s stock universe, is just 11.

China ETFs

The best way to own China is through diversified exchange-traded funds such as iShares China Large-Cap (FXI, $37), which returned 29.0% in 2024 and is up 21.7% so far this year. Another good choice, SPDR S&P China (GXC, $88), has returned 31.3% over the past 12 months — more than twice as much as the S&P 500.

Also attractive is Franklin FTSE China (FLCH, $22), which has been an excellent performer and has a lower expense ratio (0.19%) than its competitors. The fund’s top asset is Tencent Holdings (TCEHY, $65), the gaming and social media company that, like Alibaba, took a dive during the government’s big-tech crackdown but has been rising briskly over the past year. In the most recent quarter, Tencent’s revenues rose 13% and profits went up 14%. Tencent is also making a big bet on AI.

China is hoping to capitalize on the chaos the U.S. has unleashed on global markets. But the nation still lacks a robust domestic consumer market, a reputation for rule of law and a group of trillion-dollar Silicon Valley–style tech companies whose cutthroat competition generates mutual benefits. In short, these are still early days for the Chinese economy — a condition that holds both danger and opportunity for investors.

James K. Glassman chairs Glassman Advisory, a public-affairs consulting firm. He does not write about his clients. 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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Salesforce (CRM) made headlines in late May when the tech giant announced an $8 billion deal to acquire Informatica (INFA), a leader in cloud-based data management.

The move wasn't just about bulking up Salesforce's enterprise software portfolio – it was also a strategic play on artificial intelligence (AI). Bloomberg reports that International Business Machines (IBM) was also in the running for the deal, highlighting just how competitive the AI space has become.

Large-scale acquisitions like this one have become relatively rare in the public markets lately.

Higher interest rates, economic uncertainty, and market swings have made companies more cautious about making big deals.

In fact, the number of publicly traded companies pursuing large acquisitions has fallen sharply in recent years – from 1,423 in 2021 to just 815 so far in 2025, according to Kaidi Gao, senior venture capital analyst at PitchBook.

Still, M&A activity is starting to bubble up. The tech sector, in particular, seems more willing to open its wallet – especially when it comes to fast-growing fields such as AI, cybersecurity and fintech.

Just look at Meta Platforms (META), which is reportedly eyeing a $14 billion investment for a 49% stake in Scale AI. The deal would include not only a major equity share but also an effort to bring Scale's high-profile CEO, Alexandr Wang, on board.

Tech deals to watch

With this renewed momentum in tech dealmaking, it's worth asking: Who might be next? Here are four companies that could be on the radar.

Innodata

Innodata (INOD) isn't exactly a household name, but for over three decades, the company has been quietly building its credentials in digital content and data services. And since 2019, INOD has been aggressively pivoting its business to AI.

The company organizes its operations around two main customer groups: the "Builders" – think Big Tech firms actively developing their own generative AI models – and the "Adopters," businesses looking to integrate AI into their operations.

For the Builders, Innodata supplies the backbone: annotated datasets in over 85 languages, pipelines for fine-tuning and safety protocols to help ensure models behave responsibly.

Innodata's consulting arm manages the Adopters by helping clients utilize AI operations (AIOps), maintain model governance and implement domain-specific platforms in areas such as media monitoring and regulatory compliance.

One of Innodata's core strengths lies in its platform strategy. Unlike many smaller firms that focus on a single niche, Innodata has built a full-stack ecosystem.

Vertically, it offers tailored solutions for specific industries, including health care, legal and media. Horizontally, it supports broader AI functions including annotation, document intelligence and model evaluation.

At the center of it all is GoldenGate, Innodata's proprietary low-code platform that enables customers to build, deploy and scale AI applications securely. With a global team of over 6,000 specialists and operational hubs in more than 20 locations, the company can serve multinational clients with complex, multilingual needs.

The numbers tell a compelling story. In the first quarter of 2025, Innodata posted a 120% jump in year-over-year revenue, while net income surged to $7.8 million from $1 million the year prior.

Given its accelerating revenue, proprietary platforms and deep integration into the generative AI pipeline, Innodata could be an attractive acquisition target among tech stocks.

Companies such as Microsoft (MSFT), Alphabet's (GOOGL) Google, Amazon (AMZN), and yes, Meta, are pouring billions into AI, and owning a firm like Innodata could help them bolster the infrastructure they need to build smarter, faster and safer systems.

UiPath

UiPath (PATH) was one of the first movers in Robotic Process Automation (RPA) – a field that helps businesses eliminate repetitive tasks by letting software bots mimic human actions, such as logging into systems, copying and pasting data, or navigating through clunky legacy workflows.

But as automation needs have grown more complex, so, too, has UiPath's ambition.

Today, the company is positioning itself as more than just an RPA vendor. It's now offering a broad enterprise automation platform that's increasingly infused with AI.

The latest evolution is what UiPath calls "agentic automation." This is essentially AI-powered agents that can independently operate across different systems, make contextual decisions and adapt on the fly.

This new wave of automation is already seeing meaningful adoption. UiPath customers have run more than 250,000 AI agent tasks and launched over 11,000 automated processes using the company's Maestro orchestration engine.

For Q1 of fiscal 2026, the company reported $357 million in revenue, a 6% increase from the year prior. Annualized recurring revenue (ARR) grew by 12% to $1.7 billion.

PATH's balance sheet remains strong, too, with free cash flow of $117 million and $1.6 billion in cash, cash equivalents and marketable securities.

Strategic alliances have been a key part of UiPath's growth playbook. The company is working with Google Cloud on AI agents for medical summarization, integrating with Microsoft Copilot Studio for bidirectional workflows, and teaming up with Deloitte on enterprise resource planning (ERP) transformations.

High-profile customers such as Delta Air Lines (DAL) and Continental Resources add credibility to the platform's scalability and effectiveness.

As enterprise automation becomes a cornerstone of digital transformation, UiPath's combination of AI, orchestration and a robust partner ecosystem makes it an intriguing acquisition candidate.

Companies such as Microsoft, Oracle (ORCL) or ServiceNow (NOW) – each with their own automation ambitions – could benefit from bringing UiPath's capabilities in-house.

"UiPath's key advantage is solving enterprise AI's biggest challenge: trust and governance at scale," said Nandan Mullakara, founder of Bot Nirvana.

"They have existing customers already using the platform with established guardrails. As Agentic AI is expected to dominate automation, UiPath's enterprise relationships and proven orchestration infrastructure will become exponentially more valuable," Mullakara added.

CyberArk Software

CyberArk Software (CYBR) has long been a dominant player in privileged access management, helping enterprises control who and what gets access to critical systems.

But as cloud adoption, AI automation and machine-to-machine interactions redefine corporate IT environments, CyberArk has expanded far beyond its original niche.

Today, the company's Identity Security Platform offers protection not just for employees and administrators, but also for non-human users such as bots, devices and autonomous AI agents.

In the first quarter of 2025, CYBR revenue jumped 43% year-over-year to $318 million. Free cash flow hit $96 million, while non-GAAP operating margin improved to 18%, up from 15% the year before.

CyberArk's expansion hasn't been purely organic. In 2024, the company acquired Venafi for $1.5 billion, a deal that brought machine identity and certificate lifecycle management into its portfolio. That move alone expanded CyberArk's total addressable market by roughly $10 billion.

Then came the 2025 acquisition of Zilla Security, which enhanced the firm's capabilities in identity governance – a critical area as organizations look to tighten access controls across sprawling hybrid environments.

With recurring revenue, free cash flow, and a strong position in the AI-era security stack, CyberArk is starting to look like a natural acquisition candidate.

Tech giants such as Microsoft, Oracle, or even ServiceNow could see the cybersecurity stock as a strategic bolt-on to bolster their zero-trust and identity offerings.

And Alphabet's recent $33 billion bid for cloud security startup Wiz signals an appetite among large platform players for high-growth, identity-focused firms – and CyberArk fits that mold.

As identity becomes the new perimeter, its blend of technical depth and predictable financials makes it a valuable asset in a crowded field.

Marqeta

Marqeta (MQ) is a fintech company revolutionizing payments with its cloud-native card-issuing and processing platform.

Through flexible, open APIs, it enables clients to design fully customized debit, prepaid and credit card programs. Its modular offerings include money movement, risk management, rewards and seamless integration with issuing banks and network partners.

Customers can embed genuine payment experiences directly into their apps and websites, empowering launches such as Square's Cash Card, Affirm's BNPL cards, and crypto-enabled products including Bitpanda's new card across 26 European countries.

Marqeta has posted strong expansion in recent years. Total payment volume (TPV) climbed from $166 billion in 2022 to $291 billion in 2024.

In Q1 2025, TPV hit $84 billion, representing year-year growth of 27%. Net revenue rose 18% to $139 million and gross profit jumped 17% to $99 million. Marqeta's gross margin arrived at 71%, the same as the year prior.

Meanwhile, Marqeta's stock remains modestly valued at 2.6 times gross profit and its market cap hovers around $2.5 billion.

This makes it an interesting top tech deal target, especially in light of its issuer-processing infrastructure and strong balance sheet with about $1 billion in cash.

Suitors could include private equity groups or financial services incumbents such as Mastercard (MA), Visa (V), Fiserv (FI) and Fidelity National Information Services (FIS).

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In a nutshell, artificial intelligence is what it sounds like: An artificial system or machine that has human-like intelligence.

AI generally refers to computers and software that perform tasks normally done by humans or that exhibit human-like intelligence to do things such as learn, reason or act. AI can be used to process large amounts of data, identify patterns and provide recommendations.

"The goal of AI," according to a useful primer by Stanford University's IT department, "is to develop machines that can operate independently, adapt to new situations, and improve over time, ultimately enhancing efficiency and productivity across various domains, from healthcare to finance to transportation."

Still, there isn't one agreed upon definition of AI, which sometimes leads to confusion. It also makes regulating AI trickier, since a definition needs to be pinned down to avoid unintended consequences. For example, a broad definition of AI could cover simple spreadsheet software, like Microsoft Excel.

And while "AI" as a talking point exploded recently with the launch of generative AI, the technology has been around for years. In fact, AI technology has already long been part of daily life, used for email spam filtering, language translation, music recommendations, credit card fraud detection, wireless communications and much more.

As AI tools start working and become commonplace, they often fade into the background, becoming just another app or piece of software. So, what's changed recently, and what should you know about it? The most revolutionary update is the availability of generative AI.

What is generative AI?

Generative AI is a specific type of AI that creates content, including text, images, video and audio.

The major tech advance exploded onto the scene in November 2022, when start-up OpenAI released its AI chatbot ChatGPT to the public. Many users were amazed at how the online tool could rapidly churn out a limerick or provide detailed answers to complex questions.

Generative AI can be a general-purpose AI with a wide range of knowledge, contrasted to AI that can do narrow or specific tasks. Users don’t need any technical know-how to get started, which many experts say is a key breakthrough, since it opens the floodgates to rapid adoption.

To use generative AI, users simply type commands in plain English. These so-called prompts give the AI chatbot and other tools all they need to start creating. Don’t like the results at first? You can continuously refine the results with additional notes and questions. Anyone who has used internet search or an online messaging tool can quickly grasp an AI chatbot.

The technology behind generative AI

Generative AI stems from AI systems known as large language models (LLMs), which are trained on massive amounts of data, such as the text of websites, with vast amounts of computer power. These models learn patterns in language to predict the next word. The results are often startling, from in-depth research reports to data crunching, often done in seconds.

LLMs can be trained on images and video, too, to create tools that generate photos, Hollywood-like movies or 3D games. Another top use is debugging and generating computer code, a task many companies are unleashing to their computer programmers.

Tech giants Alphabet (GOOG), Amazon (AMZN), Microsoft (MSFT) and Meta (META) are spending astronomical sums to build huge AI data centers, mostly powered by Nvidia (NVDA) chips, to train and run internal AI models and host AI cloud computing for customers. Many in the tech industry consider generative AI the next big tech platform, a major transition similar to, or perhaps even more important than, the shift from PCs to mobile phones.

Generative AI takes huge amounts of computing power, and electricity, to work. And tech giants are spending so much so fast, some analysts worry about overspending.

Is AI good or bad?

AI, on its own, is neither. It's better to think of it as a powerful tool, like other advanced technologies.

Put into action, AI brings huge benefits and, yes, plenty of risks. Good or bad outcomes come from how humans and society decide to use powerful AI and what guardrails are put in place.

The emergence of generative AI has sparked a new excitement around the potential for good, along with new fears over AI safety.

Consider the potential for AI to boost economic growth, aid scientific discovery and improve public health. Generative AI tools are already helping businesses write emails, summarize documents, create presentations and analyze company data. Small businesses can create slick online video ads without needing any technical expertise. There is a growing list of positive uses of AI in medicine, including sequencing protein structures, analyzing medical images and transcribing doctor visits.

AI apps can help organize family calendars and manage household chores. Or even do the shopping for you, with the emergence of AI agents. There are AI voice assistants, tutors and personal trainers.

Traditional AI brings a range of risks, including the potential for bias or threats related to privacy and security. But generative AI brings at least a dozen new risks unique to the underlying tech. For example, AI chatbots can produce false content, known as hallucinations. These falsehoods can seem authoritative and even come with detailed, but fake, citations.

Generative AI can leak private data, offer dangerous or violent recommendations or infringe on intellectual property. AI chatbots can be tricked into spilling a company's or AI model’s internal secrets, even if they are designed not to. Companies building AI tools are well aware of these risks and trying to find ways to mitigate them, especially for high-risk settings, such as in the military.

Criminals and foreign actors can use generative AI as a low-cost tool to mass produce online spam content or email phishing scams – or for creating propaganda and misinformation in huge volumes cheaply.

In many conversations, the bad aspects of AI often swamp the good. But it’s worth keeping in mind the huge potential of AI to improve society, just as great technological shifts of the past have.

Can I use AI for free?

Yes, plenty of chatbots are free, including tools from OpenAI, Meta, Anthropic and Google. Free chatbots come with limitations, though, such as limits on daily usage. Web search from Google now includes expanded AI answers, while AI web search start-up Perplexity offers free AI results.

You may already use generative AI without knowing it, since the tech is quickly being integrated into popular social media and messaging apps, such as Facebook, Instagram, WhatsApp and X. Meta says it already has 1 billion active AI users, since it's building AI into its apps' search tools. Meta is also releasing a standalone, free AI app.

Consumers are finding AI integrated into their smartphones and PCs, too. Users can get real-time translation of foreign languages during phone calls or text messaging, or have long articles or email chains summarized in a few easy-to-read bullet points.

Paid chatbots and other tools have more features, work faster and can provide better responses, along with fewer or no restrictions on use. More and more businesses are adopting paid tools for workforces to organize email, transcribe meetings, analyze data, create marketing copy, do research and much more.

Pricing varies. OpenAI's ChatGPT has a "Plus" version for $20 per month and a "Pro" version for $200 per month. Anthropic's Claude has plans that run $17 per month and $100 per month. Microsoft's Copilot Pro costs $20 per user per month.

How is AI used in finance?

Like other industries such as medicine and retail, there is a growing list of practical uses of AI in finance. Financial services companies are using it to process customer calls, fight financial fraud, create personalized marketing material, forecast sales, interpret regulations, understand tax law and more.

Bank of America, for example, says 90% of its employees use AI to help with IT issues, health benefits and other employee questions. The company also uses it to help with client questions, summarize research and prepare meeting materials. And its AI customer assistant, Erica, has been used more than 2.5 billion times.

Nearly half of consumers have or are considering using generative AI tools for personal finances, according to a survey by Experian last year. Two-thirds of Gen Zers and millennials are using the tech to manage their finances. Thirty-eight percent of those surveyed said they trusted generative AI as much or more than human advisers. The popular investing app Robinhood will launch an AI virtual assistant this year to subscribers on the Gold $5 per month plan.

Don't be shocked if you find out your personal financial adviser is using generative AI. The CFP Board, a trusted organization for financial planners, published a guide on generative AI earlier this year for Certified Financial Planners.

The guide addresses ethical issues and notes that generative AI can be used for a range of tasks, such as summarizing client meeting notes, conducting initial research and refining marketing materials. But it also highlights that generative AI can produce inaccurate information and that financial advisers are responsible for the final work product.

Because AI chatbots are growing in popularity, it’s no surprise that people are using AI to pick stocks. When it comes to personal finances, be wary of giving away sensitive financial information to AI chatbots and look out for inaccuracies. It still pays to have trusted sources and human judgment.

Learn More About AI

• How AI Can Be Used in Investing
• Major AI Companies You Should Know
• What Is AI Investing?
• How to Protect Your Privacy While Using AI
• What Are AI Agents and What Can They Do for You?
• How AI Will Impact Your Workplace Retirement Plan
• Ways to Use AI to Improve Your Financial Life

Depending on what you've been buying, 2025 has been either a great year or one full of heartburn. The broad-based S&P 500 Index is down 0.6% year to date but 4.9% from a February 19 52-week high reached in the aftermath of November's election.

Meanwhile, mega-cap tech stocks such as Apple (AAPL), Amazon.com (AMZN) and Google parent Alphabet (GOOGL) are all in the red since January 1 despite being go-to leaders over the last few years.

As the old saying goes, however, past performance is no indicator of future returns.

We could very well see old Silicon Valley favorites rise again – or, on the other hand, we could see the market stumble across the board as other companies start to underperform, too.

But for trend-following investors who believe current momentum sets the tone for what's next, it's worth watching the following five momentum standouts that have skyrocketed in 2025 and stand apart from the rest of Wall Street.

Each has a unique business model driving its success as well as unique risks to continued growth.

All are momentum stocks that are valued at more than $800 million to prove a measure of stability. And all have more than doubled since where they were trading in December, though some have surrendered some gains amid this year's volatility, including a significant stock market sell-off.

Here are five momentum stocks that have posted impressive gains in a tough year and are well-positioned for more upside from here.

Data is as of May 21.

• Market value: $1.3 billion
• Sector: Health care
• YTD return: 120.3%

Grail (GRAL, $37.45) is a cutting-edge medical firm working on the next generation of cancer diagnostics tools that will allow doctors to identify at-risk patients early on and in minimally invasive ways.

This could be a game-changer on multiple levels: improving outcomes, keeping the total cost of care in check and, ultimately, fighting back against deadly cancers around the world.

Grail's goals are praiseworthy, but its corporate history is not without its challenges, including a little bit of geopolitical controversy.

The company was founded within parent firm Illumina (ILMN) before being spun off in 2016. It was reacquired in 2021 and divested again in 2024 after a battle with European regulators.

Uncertainty put a damper on long-term strategy and caused volatility in the share price. But the stock is up 188% from its June spinoff.

That includes a 120% run since January 1 thanks to news that its Galleri blood test will see sales jump as much as 30% this fiscal year to deliver on its long-term growth prospects.

Innovative development-stage health care stocks are always risky, since a bad result from FDA reviews and patient trials could drive the company to zero almost overnight.

But, from what we've seen, GRAL is a momentum stock with a lot of promise that seems to be delivering in 2025 and beyond.

• Market value: $13.0 billion
• Sector: Consumer defensive
• YTD return: 153.1%

Hims & Hers Health (HIMS, $) is a mid-cap telehealth company that takes some of the embarrassment out of confronting personal issues like hair loss and sexual performance through virtual visits and mail-order treatments.

It offers a range of health and wellness services including mental health visits and consultation on prescription medications as well as recurring fulfillment on those drugs.

Beyond its prescription operations and licensed healthcare staff, HIMS also offers a host of over-the-counter products and cosmetics including vitamin supplements and skincare treatments to ensure its customers are doing their "self care" the right way.

This one-two punch of serving two fast-growing marketplaces with minimal overhead has fueled an amazing revenue surge of almost 70% in fiscal 2024, with projections for more than 40% growth in fiscal 2025.

It's no surprise this momentum stock is also up dramatically.

And, lest you think this is just a low-cost leader chasing market share at a loss, HIMS is comfortably profitable and projecting better earnings this year – four times better, in fact.

Full-year earnings are set to leap from 22 cents per share to more than 80 cents, according to the latest forecasts.

• Market value: $24.9 billion
• Sector: Technology
• YTD return: 40.3%

Super Micro Computer (SMCI, $41.63) was founded way back in 1993. The company helped build the early backbone of the internet through server sales and support. It remains one of the largest producers of high-performance servers and data-storage infrastructure in the world.

And, in the age of data-intensive artificial intelligence as well as data-hungry cloud computing services, SMCI hardware is in demand more than ever.

Super Micro Computer hit a bit of a roadblock last year, delaying its annual report due to accounting issues and being de-listed from the flagship Nasdaq-100 index as a result.

But SMCI stock surged in January and into February on news it would meet its deadline to file a revised report – as well as on hope the results would meet Wall Street estimates.

That includes a fiscal 2025 forecast of 60% revenue growth and expectations the stock will rejoin major tech indexes and re-attract institutional buyers.

As a result of these developments, this momentum stock surged as much as 97.7% as of February 19. SMCI has been volatile since then but continues to stand apart from the broader market this year.

• Market value: $10.1 billion
• Sector: Health care
• YTD return: 84.9%

If you've been chasing AI stocks over the last year, you know all too well it's easy to arrive late for the biggest moves after other investors crowd in first.

But Tempus AI (TEM, $58.23) is one of the late-bloomers in the space, getting a huge boost only recently thanks to a new software service and insider buying activity.

Specifically, the health care AI company unveiled new functionality in its generative AI assistant, Tempus One, which helps physicians and researchers assess clinical data and bring new drugs to market faster.

Precision oncology treatments are now the norm, as no form of cancer responds the same way even if patients present similar charts.

With many oncologists and primary care physicians too busy or overwhelmed with data to tailor treatments, Tempus One offers breakthrough capabilities to make sense of unstructured data.

Tempus AI is still unprofitable. But, thanks in part to Tempus One, management forecast nearly 80% revenue growth in its next fiscal year.

And TEM has attracted the attention of former Speaker of the House Nancy Pelosi, who disclosed a major purchase of call options in the stock.

The "smart money" seems to like what it sees in this AI play, and the momentum stock has put up tremendous returns as a result.

• Market value: $832.5 billion
• Sector: Consumer discretionary
• YTD return: 416.5%

The fashion industry doesn't know how to take a break during a recession. Sales of expensive clothes and luxury goods historically remain quite durable even if other discretionary categories see rollbacks.

ThredUp (TDUP, $7.04) is capitalizing on this long-term trend through an innovative "virtual thrift shop."

This isn't like searching through the racks at your local Goodwill or surfing unwearable bargain items on eBay (EBAY). ThredUp is the go-to destination for more than 50,000 brands, from The Gap to Gucci. And the bargain-conscious can sometimes find high-end deals at 90% off the former retail price.

There is a counter-cyclical element to the ThredUp business model, as hard times leave people less willing to pay full price (even if they maintain their distinct tastes).

So TDUP stock can stand up in a spending downturn. And when times are good, as they have been in recent years, the sky is the limit on how much it can grow.

The retailer is expected to record roughly double-digit revenue growth for the fourth quarter. More importantly, management expects to see significant improvement in margins as it moves towards profitability.

There is risk here, as selling apparel isn't exactly a business with a wide moat. But ThredUp continues to connect with both buyers and sellers.

And this momentum stock may have a value proposition that lasts as it expands its digital footprint.

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Generative AI got all the headlines last year. Now, something bigger may be brewing — and it’s not just about writing essays or generating fancy art. At Nvidia’s GTC conference, CEO Jensen Huang declared that the emergence of AI agents represented “a multi-trillion-dollar opportunity.”

His point? We’re moving past artificial intelligence (AI) that creates content and into a world where AI agents are actually handling tasks, automating systems and behaving more like coworkers.

“The IT department of every company,” he joked, “is going to be the HR department of AI agents in the future.”

So, how are AI agents different from what we’ve seen before? Which companies are pushing it forward, and how might this reshape the way businesses — and individuals — operate? Let’s break it down: Who’s leading, where it’s showing up in real-world use cases, and what you need to know before letting a digital agent take the reins.

What is an AI agent?

An AI agent is sophisticated software that carries out tasks. It can respond to its surroundings, learn, and use other software tools.

“Unlike a chatbot where you type in prompts and you get responses, an AI agent is autonomous and can think and act on its own accord,” said Aaron Chaisson, VP of product and solutions at VAST, a data platform company involved with AI. “It will plan and carry out multiple steps to achieve goals.”

He provided an example: “Suppose you have a Visa card and go to the company’s website. You say that you want to take a trip to London next week. One AI agent will book the flights and another will book the hotels. Then another agent will provide recommendations for restaurants and sites to visit.”

Note, this is not to imply that AI agents are completely autonomous. There will still be some queries and requests for approvals. Even so, AI agents promise to greatly streamline tedious processes.

Just recently, both Mastercard and Visa announced new ways for agentic AI to be involved in their processes. This follow's Amazon's Buy for Me, which is currently in beta (i.e. testing) and uses agentic AI to make purchases outside of Amazon for customers.

Mastercard's Agent Pay allows for AI to be involved in payments — the company gave the example of a small business using an AI agent to handle sourcing and logistics and optimize payment terms, including completing a purchase with a Mastercard. Visa's Intelligent Commerce similarly allows for an AI agent to make purchases for you.

The best AI agents

Determining the best AI agents is challenging, as the field is still in its early stages.

“AI agents aren’t ready for production in most use cases,” Andy Triedman, a partner at Theory Ventures, which invests in software companies, told Kiplinger. “Many tasks are just too complex for current models, and even for ones that are possible, models won’t be successful 100% of the time.”

So, there continues to be ongoing progress and innovation. Part of this work is being done by AI model developers like OpenAI, Anthropic, Microsoft, Amazon and Meta, as their systems are becoming increasingly agentic.

Consider OpenAI’s Operator platform. It can visit websites, fill out forms, place orders and schedule appointments. Currently, Operator is in research preview and only available for the Pro subscription, which costs $200 per month per user. But OpenAI has plans to make it a feature of its other plans.

Meanwhile, large enterprise software firms – like Salesforce, ServiceNow, Oracle and Microsoft – are developing AI agents to automate business operations. A key advantage is that these companies have access to enormous amounts of data and workflows, which allows for training AI agents to better handle automations.

Take Salesforce’s Agentforce platform, which makes it easy to build and deploy AI agents (in some cases, the process can only take a few minutes). The company started producing television commercials for it featuring actor Matthew McConaughey, often alongside Woody Harrelson, signaling the product's strategic importance.

“Agentforce goes beyond chatbots and copilots, using advanced reasoning abilities to make decisions and take action, like resolving customer cases,” Kishan Chetan, EVP & GM of Service Cloud at Salesforce, told Kiplinger.

“For example," Chetan continued, "the Sales Coach Agent can help coach salespeople, letting them practice their pitching, how they respond to objections, and how to negotiate deals with realistic role-playing that is tailored to each deal for every seller. Agentforce can even provide feedback on seller strengths, reveal areas for improvement, and arm them with actionable steps to help them advance deals, all grounded in the business’s CRM data.”

There are also plenty of startups creating interesting AI agents:

• MindCorp: Michelle Crames, the co-founder and president of this startup, was previously a business analyst at McKinsey & Company. She saw how time-intensive the management consulting process was, so she launched MindCorp to use AI agents to significantly improve the process. A project that may take a couple weeks could instead be done in a few hours.
• Sierra: The co-CEO and founder is Bret Taylor, who was the chief technology officer of Facebook and co-CEO of Salesforce. As for Sierra, it uses AI agents for customer service and support, with customers like SiriusXM, SONOS and ADT. Late last year, the company raised $175 million at a $4.5 billion valuation.
• Hippocratic AI: This startup uses its own AI models to create agents for health care tasks like pre-operative check-ins, post-discharge follow-ups, chronic care management and appointment scheduling. In January, the company announced a $141 funding round at a $1.64 billion valuation.

The risks of AI agents

The autonomous decision-making of AI agents poses major potential risks. For example, a system could misinterpret data and approve a large invoice. Or, a health care AI agent might misdiagnose conditions due to biases in training data, which could lead to inappropriate treatments.

“AI agents need to be constantly updated with the latest data for both accurate outputs and to prevent false feedback loops that may put the organization at risk of interruptions to managing day-to-day tasks,” said Chris Moss, general manager of small business solutions at Dun & Bradstreet. “It’s crucial to still have a human in the loop to ensure there is proper oversight.”

If you're experimenting yourself, you should always be sure to protect your privacy while using AI by keeping up with the latest security information and checking where exactly you're sharing information and how it's used.

Another major issue is that today’s information technology (IT) infrastructures were not built for the complexities of AI agents.

“AI agents need to be able to integrate and authenticate with different applications,” said Triedman. “They need a secure environment to run code. And they need observability and analytics to help developers understand where they’re going wrong. Companies are rapidly working on these problems, but we don’t have all the solutions yet.”

Learn more about AI

• How AI Will Impact Our Lives in 2025 and Beyond
• Major AI Companies You Should Know
• How to Protect Your Privacy While Using AI
• How AI Can Be Used in Investing
• What Is AI Investing?
• How AI Will Impact Your Workplace Retirement Plan

"The thing that’s really important to recognize," Nvidia (NVDA) CEO Jensen Huang recently said, "is that this is the largest infrastructure buildout in human history." His remark about artificial intelligence (AI) is not hyperbole.

The rapid adoption of generative AI and large language models (LLMs) has ignited a surge in spending on data centers, networking equipment and specialized semiconductors, chips and processors needed to train and run AI systems.

Generative AI will boost global GDP by 7%, add close to $7 trillion in value and drive increased productivity in the next decade. Venture funding, a key catalyst for growth so far, surged 85% year over year to $211 billion in 2025.

Hyperscale technology companies Alphabet (GOOGL), Amazon.com (AMZN), Meta Platforms (META) and Microsoft (MSFT) are expected to spend about $650 billion on AI-related infrastructure in 2026.

Yet the investment frenzy isn't just about building data centers. Whether you see an AI boom or an AI bubble, the broader promise lies in AI's potential to transform the global economy.

Companies across sectors and industries are deploying AI tools to automate tasks, analyze information faster and improve decision-making processes.

These capabilities can translate into higher productivity, lower operating costs and more efficient workflows.

One of the most promising developments is the rise of AI agents, which autonomously perform complex tasks such as customer service, research, software development and business operations.

Unlike earlier forms of automation that handled narrow tasks, AI agents can coordinate multiple steps in a workflow, interact with other systems and adapt to changing conditions.

As these technologies mature, businesses expect them to unlock new levels of efficiency and innovation.

Who are the big names in this AI revolution? Here's an overview of 10 major players you should know.

Amazon.com

AI applications are often built on cloud platforms. Some of the reasons include scalability, low costs, centralization of data, monitoring, analytics and customization. All that is good news for Amazon, as Amazon Web Services (AWS) is the world leader in cloud technologies.

AWS has been retooled as a comprehensive platform for AI development. Amazon management said AWS generated $35.6 billion in fourth-quarter sales, a 24% year-over-year increase.

AWS offers several systems, such as SageMaker and Bedrock, which make it easier to use, manage and deploy AI models and agents. Bedrock allows companies to access leading generative AI models from multiple providers through a managed service.

Amazon has strengthened its AI ecosystem through major strategic investments and partnerships. The company has invested about $8 billion in Anthropic, whose Claude models are tightly integrated with the Bedrock platform and run primarily on AWS infrastructure.

In early 2026, Amazon struck a major partnership with OpenAI and invested $50 billion as part of a $110 billion funding round. The transaction has expanded a long-term cloud computing contract.

Amazon has also built several AI applications on its AWS infrastructure, such as the Amazon Q assistant, which the company used to save $250 million in a Java migration project. Without this tool, the project would have taken 4,500 developer years. Amazon Q is designed to help developers and enterprise workers generate code, analyze data and automate tasks across AWS systems.

But AWS is more than software. Amazon has invested heavily in creating its own silicon chips for processing AI workloads. The latest offering is Trainium2, which has shown strong performance at relatively low costs.

Amazon has also developed Inferentia chips for AI inference workloads, part of a broader strategy to lower the cost of running large AI models and reduce reliance on third-party processors.

OpenAI

In late 2015, investors including Elon Musk, Reid Hoffman, Peter Thiel and Sam Altman co-founded OpenAI to "ensure that artificial general intelligence — AI systems that are generally smarter than humans — benefits all of humanity."

The first few years were far from encouraging, but in 2019, the company realized that the best strategy was to pursue generative AI, which led to the building of a series of generative pre-training transformer (GPT) models.

This became the foundation for the launch of ChatGPT in late 2022, when generative AI quickly became mainstream. Within two months, it would attract more than 100 million users, making it history's fastest-growing app.

While the AI market has become intensely competitive, OpenAI's models remain highly popular. The company sells access to its models to developers and also generates revenues from different versions of ChatGPT.

Revenue has surged in recent years, hitting about $13 billion in 2025 and reportedly surpassing $25 billion in annualized revenue by early 2026.

OpenAI's models are also widely used by enterprises through cloud platforms and developer APIs. This makes it a foundational layer for many generative AI applications.

A major driver of this growth has been OpenAI's close partnership with Microsoft, which has invested billions of dollars in the company and integrated OpenAI's models into products such as Azure, Microsoft 365 Copilot and GitHub Copilot.

Databricks

In 2009, a group of computer science students at University of California, Berkeley created an open-source project called Apache Spark. They wanted to make it easier to manage data processing for AI models.

The timing was spot-on, as deep learning was becoming more practical and powerful. As Apache Spark grew more popular, the students would go on to found Databricks, a platform for data management, providing analytics, security and governance.

Databricks has since expanded into a broader "data and AI platform," helping organizations store, analyze and prepare massive datasets used to train and run AI models.

More than 20,000 organizations worldwide — including Comcast (CMCSA), Shell (SHEL) and Rivian Automotive (RIVN) — rely on Databricks to take control of their data and put it to work with AI.

Databricks CEO Ali Ghodsi has been aggressive with acquisitions. In 2023 the company acquired MosaicML for about $1.3 billion. This gave Databricks the technology to help customers build and train their own LLMs. Then in 2024, the company acquired Tabular for a reported $2 billion. The deal strengthened Databricks’ capabilities around data lakehouse architecture and open table formats, which are increasingly important for managing the large datasets used in AI applications.

In late December of 2025, Databricks announced its latest funding round of $4 billion at a $134 billion valuation. Investors included Insight Partners, Fidelity, J.P. Morgan Asset Management, Andreessen Horowitz, BlackRock and Blackstone.

Meta Platforms

Unlike many other megacap tech firms, Meta's AI strategy has focused on building open models that developers can freely use and adapt. The company launched Llama in early 2023, and the models quickly became popular with researchers and startups.

Meta has continued to expand the lineup. In 2025 the company released new multimodal versions of Llama capable of processing text, images and other types of data.

A key advantage for Meta in the AI race is its enormous scale. More than 3.5 billion people (PDF) use at least one of the company's apps every day. This gives Meta a powerful distribution channel for AI services.

Meta is also using AI extensively in its core advertising business. The company has been deploying systems to automate ad targeting, creative generation and campaign optimization for advertisers. These efforts have already shown results, with improved revenue and lower costs.

Ultimately, the mission for AI is to build a platform for "personal intelligence." CEO Mark Zuckerberg (PDF) explains it: "We're starting to see the promise of AI that understands our personal context — including our history, our interests, our content and our relationships."

According to Zuckerberg, "A lot of what makes agents valuable is the unique context that they can see, and we believe that Meta will be able to provide a uniquely personal experience."

Alphabet

In 2017, researchers at Alphabet's Google published a paper on machine learning, "Attention Is All You Need." The paper introduced the transformer model (PDF), which is what powers generative AI.

While Google continued the research, it wasn't focused on commercialization until the launch of ChatGPT. Worried that its core search business was in jeopardy, it scrambled to create its own products, such as Bard. But they were disappointing.

Since then, Google has made significant strides. The company's Gemini 3 model has demonstrated strong results against rival LLMs, including those from OpenAI and Anthropic. The chat app has about 750 million monthly users.

"As an ex-Googler, I’m very impressed by the amount of progress and efficiency to become a force in not only building models but also training data," says Shanea Leven, CEO at Empromptu AI.

Google has "such a large corpus of data," Leven adds. "They should be the leaders without much of the backlash OpenAI and Anthropic have been getting."

Google has also aggressively integrated AI across various segments. For example, search has an "AI mode."

Its AI investments are starting to make a major impact on the company’s growth: Alphabet reported an 18% increase in revenue to $114 billion (PDF) for the fourth quarter, driven by increased monetization of the ad business and the cloud division.

Nvidia

Founded in 1993, Nvidia was one of the pioneers of graphics processing units (GPUs) and was initially focused on the fast-growing gaming market.

But in 2012, Alex Krizhevsky, Ilya Sutskever and Geoffrey Hinton showed that Nvidia GPUs could be effective in training sophisticated AI models for tasks such as image recognition. The chips were able to handle huge amounts of data in parallel. Another key advantage was Nvidia’s Cuda software system, which allowed for customization.

At the time, the company had a market cap in the $7 billion-to-$8 billion neighborhood. Elevated by the AI revolution, NVDA is now a $4 trillion stock and is the world's most valuable publicly traded company.

Nvidia earnings continue to grow at a blistering rate. Management reported fiscal 2025 fourth-quarter revenue growth of 73% to $68.1 billion. More than 91% of the top-line came from data center hardware, with a focus on training AI models.

The market is expected to transition toward inference, which is how AI systems respond to queries and actions. Management has been preparing by bolstering its CPU segment, its efforts paying off in February with Nvidia's announcement that Meta will buy "tens of billions of dollars' worth" of Nvidia's Grace and Vera CPUs.

"The part that matters most for the AI trade is not simply that NVIDIA is selling more GPUs," Futurum Chief Market Strategist Shay Boloor observes, "but that the revenue mix is proving the stack is moving from training-only narratives into full AI factories where compute and networking are one integrated purchase decision."

As Boloor sees it, "Jensen Huang has basically framed the company as an AI infrastructure provider rather than a chip vendor."

Microsoft

In 2019, Microsoft CEO Satya Nadella agreed to invest $1 billion in OpenAI. At the time, it was a risky proposition. OpenAI was still a fledgling startup, and the launch of ChatGPT wouldn't happen for another three years.

But Nadella knew AI was strategic to the success of Microsoft, and OpenAI had a standout team of data scientists. He would eventually invest another $13 billion in OpenAI.

The investment has turned into a home run. Microsoft got exclusive access to OpenAI models while becoming its sole cloud provider. This was critical in giving Microsoft a head-start in the AI race.

The OpenAI relationship has been critical for the growth in Microsoft's cloud business, where revenue was up 39% during its fiscal second quarter.

At the same time, Microsoft has struggled with building its own applications, such as Copilot. This system has lagged, such as against rivals like Gemini, Anthropic’s Claude, and ChatGPT.

To bolster its efforts, Microsoft introduced Copilot Cowork, an agentic AI automation system that according to Nadella "turns your request into a plan and executes it across your apps and files, grounded in your work data."

Anduril

Palmer Luckey started building virtual reality (VR) headsets when he was 16 years old. Relentless with his innovation, such as adding stereoscopic 3D, wireless capabilities and wider fields of views, his efforts were the foundation of a startup called Oculus VR, which he launched when he was 19.

To fund the development, Luckey pulled off a successful Kickstarter campaign, raising $2.4 million. In just a couple years, he'd sell the company to Meta for $2 billion.

While working at Meta, Luckey became intrigued with another startup opportunity. The pace of innovation in the defense industry was too slow, he concluded, and he saw an opportunity to build a company that would leverage software, AI and inexpensive hardware.

In 2017, he left Meta to pursue this startup, called Anduril. "The company shows what happens when AI is applied to a specific high-stakes domain," Empromptu.ai co-founder and CEO Shanea Leven said.

At the core of Anduril is its Lattice AI platform, an autonomous command-and-control layer that processes huge amounts of data from sensors. Lattice AI also powers the company's drones, as well as U.S. Air Force jets and undersea vehicles.

Like many companies developing cutting-edge military technology, Anduril has faced setbacks. Some of its autonomous systems and drones have experienced failures during military tests and exercises, including drone crashes and mechanical issues in prototype systems.

Regardless, there remains strong interest from investors. According to The Wall Street Journal, Thrive Capital and Andreessen Horowitz are leading a massive investment in Anduril at an estimated valuation of $60 billion.

Anthropic

Former OpenAI executives Dario Amodei and Daniela Amodei founded "safety-first" AI company Anthropic in 2021 following disagreements with their previous employer about general strategic direction and AI safety in particular.

Anthropic's latest model is Claude Opus 4.6, widely regarded as one of the top frontier AI models for reasoning, coding and complex multistep tasks.

As for the growth of the business, it's been rapid. The annual run-rate is near $20 billion, up from $9 billion in 2025, according to Bloomberg. To fund its future ambitions, Anthropic announced a $30 billion venture round in February at a $380 billion valuation.

A dispute with the Department of War (formerly, the Department of Defense) about the developer's refusal to disable safety features in its models led the Pentagon to label Anthropic a "supply-chain risk," essentially banning its tech or federal use.

Anthropic has filed a lawsuit against the Pentagon, claiming that it had been targeted. The dispute represents a threat to billions of dollars of revenue from government contracts.

xAI

In 2023, Elon Musk founded xAI to build powerful generative AI models and applications. Musk assembled a veteran team of researchers and AI experts from companies such as OpenAI and Google.

The AI application of xAI is Grok, a conversational AI assistant (launched in late 2023). To accelerate distribution, Musk integrated the system into X.

Grok has been controversial, though. Then again, Musk wanted a system that had fewer filters for content moderation. The result is that the responses from Grok have sometimes been offensive or misleading.

For example, critics have alleged that the company's image-generation system creates sexualized deepfakes of unconsenting women and minors. This has led to various investigations and lawsuits.

In the meantime, Musk has made deals to accelerate the growth. Last year, xAI acquired X in an all-stock swap for $33 billion.

In January, xAI announced a $20 billion funding round led by Valor Equity Partners, Stepstone Group, Fidelity, Qatar Investment Authority, Abu Dhabi's MGX and Baron Capital Group. Then SpaceX agreed to purchase xAI, establishing a valuation for the combined entity of $1.25 trillion. The company plans to launch its IPO in July.

According to Musk, SpaceX is "the most ambitious, vertically integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet."

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Genetic analysis company 23andMe (ME) announced this week it's declaring bankruptcy and pursuing a sale, leading many customers to pursue deleting their data from the company.

23andMe was founded in 2006 and became something of a frenzy as customers willingly spit into tubes to find out origins of their ancestry. 23andMe wanted to be more than merely a family history lesson, though: The company also sought health insights for customers, using genetic analysis to test for certain predipositions, inherited traits and possible genetic disorders and indicators. It went public via a SPAC in 2021.

Through the years, there have been concerns for user privacy over a variety of issues, ranging from how the company would use your genetic information to if law enforcement would have access to it to the implications of run-of-the-mill data breaches. Now that the company is looking for a buyer, those concerns are coming to a head again as users consider what the next owner might do with their data.

How to delete your information from 23andMe

California Attorney General Rob Bonta put out a statement last week calling on 23andMe customers to delete their data "due to the trove of sensitive consumer data 23andMe has amassed."

The components stored by 23andMe include the ancestry and health reports as well as the saliva samples themselves. Your information can also be used by 23andMe for research — so that's another risk factor you have to mitigate.

These are the steps to delete your genetic information from 23andMe:

1. Log into 23andMe
2. Go to "Settings" (on a computer, you find "Settings" by clicking your initials in the top right)
3. Scroll all the way down to "23andMe Data" on the "Settings" page and hit "View"
4. Enter your date of birth
5. You have the option on this page to download your data in various fields. If you want to maintain it personally, go ahead and download the data, following the buttons on the page
6. After you've downloaded data to your wishes, scroll all the way down to the "Permanently Delete Data" button and select that

Note that if you requested any downloads of data reports that aren't immediately available (some take time to process), requesting to delete your data will stop those requests. So only delete your data after you have downloaded everything you want to keep.

After you request to delete your data, you will get an email to confirm the request. Click that link to confirm you want to delete your data.

Then, remember, you also have to request to destroy your saliva sample. Here are the steps to destroy your 23andMe saliva sample:

1. Go to the "Settings" page on 23andMe's website
2. Scroll down to "Preferences" and find "Sample storage"
3. If it says "You have selected to store your samples," click "Edit" in the top right of the "Preferences" box
4. Select "Permanently discard samples"
5. You'll see a green checkmark indicating your preferences have been updated

Lastly, look at if your data is being used for research. If you do not want your data used for research, here's how you address it:

1. Go to the "Settings" page on 23andMe's website
2. Scroll down to "Research and Product Consents"
3. If it indicates you've allowed your data to be used for research, click "Edit" in the top right of this box
4. Select "Change consent" as appropriate
5. For each option, you'll have to scroll down and check the box indicating "I am this person, I have read this document, and I DON'T GIVE CONSENT."

How else can you keep your 23andMe data safe?

Like any other service you log into and provide information to, 23andMe presents privacy risks that can be helped with basic safety measures.

For example, use a password manager like 1Password or NordPass to select smart passwords, use different passwords for each account, and change your passwords frequently.

With all the changes in the air for 23andMe, you should also be on the lookout for scams. Do not click on any links in texts or emails purporting to be from the company and asking you to provide information or payment. Go directly to the website, app or customer service yourself if you need to manage anything.

23andMe is "unique" in "the scale of how much highly sensitive data" it has, Suzanne Bernstein, counsel at the nonprofit Electronic Privacy Information Center, told NPR, making the protection of user data a bit murky, legally speaking.

Because of that, Bernstein said, she recommends taking the steps to delete your data "and advocating to your state and federal representatives to pass strong consumer privacy laws."

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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

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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

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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

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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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To help you understand the trends in science and technology and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

A lot of technology news generates buzz. But a type of tech start-up often goes under the radar. Enter the world of deep tech.

Deep tech, the term used by many investors, is about fixing hard societal problems with tech solutions, often by advancing underlying scientific knowledge. The applications of deep tech run the gamut, from advanced nuclear reactors and tiny sensors to quantum computing and nanomaterials. It also often involves creating a physical product, rather than something digital. The definition isn’t always clear-cut, and it does overlap with well-known tech, but it makes sense as a distinct category.

To support a “prosperous and abundant future world, we’ll need many new technologies,” says deep tech venture capital firm DCVC in its new Deep Tech Opportunities Report, a worthy read for people interested in learning about the topic. That investment mindset has gone mainstream for many corporate investors, venture capitalists, sovereign wealth funds and private equity firms.

20% of venture capital funding goes to deep tech, up from about 10% a decade ago, says Boston Consulting Group in a 2023 report, “An Investor’s Guide to Deep Tech.” Investors see it as a smart way to diversify away from software and traditional tech investments.

Areas topping the list for most deep tech funding are artificial intelligence, autonomous systems, advanced physics and chemistry, the Internet of Things and other sensors, and synthetic biology, according to BCG. Applications include electric-powered aircraft, next-gen batteries, microscopes and gene sequencing.

Some of the companies are household names, such as driverless car leader Waymo, rocket and internet satellite giant SpaceX and generative AI firm OpenAI. Deep tech also includes popular fields such as virtual reality, robots and drones.

Scouring the portfolio of a deep tech VC firm often seems like catching a glimpse into the future. DCVC’s report highlights many of its intriguing investments, such as Fervo Energy, which is using horizontal drilling and fracking tech to tap new sources of geothermal energy. Radiant Nuclear is developing a very small nuclear microreactor. Brimstone is creating a carbon-emission-free cement-making process. Freenome is using AI to develop tests for the early detection of cancer.

Plenty of other VC firms either focus on or dabble in deep tech. There are hundreds of VC firms that invest in deep tech, according to BCG. They include Alumni Ventures Deep Tech Fund, Apex Ventures, Boost VC and SOSV.

The caveats should come as no surprise. These are high-risk bets that could fizzle. The R&D costs are high and the timelines are long. VC investment in deep tech has fallen in recent years, echoing declines in overall VC funding. However, deep tech’s share of VC dollars has held stable, says BCG. That’s because of the promise of disruptive commercial products that not only solve big problems but lead to big profits.

High interest and healthy funding will continue, even if the inherent risk makes it not for the faint of heart. “In the earlier stages of deep tech development, the principal risks are scientific, and the big challenge is often moving the technology out of the lab and into the real world,” notes BCG.

A couple of major tailwinds have emerged in recent years. Generative AI is spreading and advancing fast, helping support breakthroughs in all sorts of areas, such as drug discovery and nanomaterials. Meanwhile, there’s been a resurgence of support for industrial policy in the U.S. and other countries, leading to funding and policy changes beneficial to the field.

As tech giants and their soaring stock prices grab all the attention, deep tech can serve as an antidote to overhyped AI features, social media apps or digital advertising that dominate media coverage. It’s an opportunity to discover cutting-edge tech before it breaks into the mainstream.

This forecast is from the team at The Kiplinger Letter, which has been running since 1923. It is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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To help you understand the trends in AR and other new technologies and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

Consider an augmented reality demo that is so impressive it sparks thoughts of Star Wars. You see stunning holograms and real-time digital information overlayed on a nearby table. You’re left with the impression that the tech has big challenges but is moving fast and could make headway in just two to three years.

No, it’s not Meta’s recent launch of the Orion headset prototype. It’s me testing out the Microsoft HoloLens in 2017. Back then, I wrote for The Kiplinger Letter about being “struck by how these first-generation wireless AR goggles worked so smoothly.” Cut to seven years later and Microsoft is discontinuing support for HoloLens with no public plans for future AR hardware.

Times have changed, but AR challenges remain the same. The technical hurdles stem from the difference between AR and virtual reality. AR glasses are meant to be worn all day, with constant, unobstructed views of the real world. That means a lightweight, fashionable headset packed with sensors, computing power and long battery life. No easy feat, even for a tech giant flush with cash for research and development.

The splashy launch of Orion shows that Meta is all in on building a viable commercial product. The company has already found success with its low-cost VR headsets, which are popular with gamers. CEO Mark Zuckerberg sees AR headsets as an emerging computing platform, like the advent of smartphones, that gives users easy access to AI voice assistants and all sorts of useful digital alerts and information.

The Orion headset impressed those who tested it, but it’s still a work in progress. Demos include overlaying digital graphics about groceries on a table; a game resembling virtual ping pong; and a video call on a holographic computer screen. The company highlights the advanced optics, custom computer chips, miniaturized sensors and snappy wireless connectivity. But there’s no escaping the bulky look, low resolution and limited battery life. Other notable trade-offs include needing a wireless pack for extra computing power and having a wristband that helps interpret finger gestures. Plus, the current production cost is about $10,000.

Zuckerberg has put his money where his mouth is when it comes to his vision of the so-called metaverse, with Meta spending north of $50 billion to date on VR and AR research. Meta says that Orion is “a look at the very real possibilities within reach today” and to expect new AR devices in “the next few years.” It hopes to launch a device that costs around $1,000 at first and declines in price from there.

Meanwhile, Meta has found success with another form of smart glasses that includes cameras and microphones, but no in-display holograms. The Ray-Ban Meta glasses let users take photos or videos, answer calls and messages, listen to music and talk to an AI voice assistant. The glasses can give an audio walking tour as you stroll through a city or provide real-time translation of foreign-language text in front of you. Though much more limited than AR, they look like normal, stylish glasses and are a hit with many users. The competition isn’t sleeping on Meta. Apple surely has a prototype in its labs that is similar to Meta's Orion. Alphabet is likely to get back in the game after its early Google Glass project was nixed a decade ago. Even Microsoft will be eyeing ways it can build new AR software and hardware. There are smaller players, too, such as Vuzix, which sells headsets and underlying tech for business uses.

Expect Meta’s launch to intensify AR efforts at other companies. As Orion gets into the hands of developers, its flaws should help pave the way for more promising hardware. With that in mind, here are five pressing issues for consumer AR in the years ahead.

Five issues for consumer AR

• Finding social acceptance. There’s an obvious need for AR glasses that people are willing to wear in their daily lives for a long period of time. They should look as close to normal glasses as possible. A related challenge: Making the AR headsets socially acceptable for the masses. Besides design, that includes privacy and security, and plenty of marketing to convince buyers.
• Improving low-power chips. To go mainstream, the glasses should work without any extra hardware, even a nearby smartphone. That means low-energy, capable mobile chips that can last for hours on a charge. Qualcomm and big tech companies are working on such chips, but it won’t be easy. Especially early on, makers will have to decide how many features to sacrifice to beef up battery life.
• Finding killer applications. It could be messaging, fitness, music, social media or gaming, but AR glasses need compelling uses to win over skeptical buyers. One of Meta’s priorities is convincing software developers to create apps and content for its headset. It’s an ongoing chicken-and-egg conundrum of creating demand for both apps and users.
• Lowering prices. Meta’s goal of around $1,000 for a consumer device is still too high for mass adoption. Apple, too, is working feverishly to develop a commercial product at a cheap enough price. Don’t be surprised if businesses foot the bill for early editions of Meta’s and Apple’s AR headsets, paving the way for consumers.
• Tapping emerging AI. One of the reasons Meta is so bullish on AR headsets is the emergence of generative AI, which is vastly improving AI voice assistants. An always-on personal AI assistant is a potentially potent app for headsets. Users could ask it questions by voice command or even interact via subtle finger movements.

This forecast is from the team at The Kiplinger Letter, which has been running since 1923. It is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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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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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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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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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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Apple (AAPL) stock declined in an up market Monday after Berkshire Hathaway (BRK.B) disclosed it cut its stake by 13% in the most recent quarter. 

Is Warren Buffett, Berkshire's chairman and CEO, losing faith in what is by far the company's largest holding?

Not at all.

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.) 

For the record, the greatest long-term investor of all time said that 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.

Indeed, during the question and answer portion of the meeting, Buffett was asked: "[Has your] view of the economics of Apple business or its attractiveness as an investment changed since Berkshire first invested in 2016?"

Buffett: "No. But we have sold some shares."

Why? Because corporate taxes are "likely" to go up "later." He figures the federal government – at some unknown future date – will have to raise taxes to reduce the deficit. 

"With current fiscal policies, I think something has to give," said Buffett. "I think that higher taxes are quite likely."

That's not exactly a heretical idea, regardless of your policy preferences or political inclinations. It's also kind of irrelevant. Buffett is a steward of other people's capital. It's his job to maximize their returns. 

"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 said.

He noted that Berkshire's corporate tax rate was 35% just a few years ago. Back in the late 1960s, it was more than 50%.

Buffett on paying taxes

Mind you, Buffett is no tax dodger. Here are some of the things he said about taxes when explaining the Apple stock sales:

• "Almost everybody I know pays a lot more attention to not paying taxes than I think they should."
• "We don't mind paying taxes at Berkshire."
• "We at Berkshire always hope to pay substantial federal income taxes. We think it's appropriate [to pay taxes] to a country that's been as generous to our owners. It doesn't bother me in the least to write that check. I would really hope that with all that America has done for all of [Berkshire shareholders], it shouldn't bother you that we do it."

The bottom line is that Berkshire doesn't mind paying taxes. But if they're going to go up, better to pay them at a lower rate today than a higher rate tomorrow. 

Apple by the numbers

Apple is still Berkshire Hathaway's largest holding.

At one point last year AAPL accounted for about half of the holding company's U.S. stock portfolio. However, with 790 million shares (down from 905 million at the end of 2023), Apple is now somewhere in the lower-to-mid-40% range.

That's a hefty allocation, but then Berkshire has always maintained a highly concentrated portfolio. Including its positions in Japanese brokerages, Berkshire's top five holdings – AAPL, Bank of America (BAC), AXP, KO and Chevron (CVX) – comprise about 75% of its equity portfolio.

We won't know the exact breakdown of Berkshire's holdings until it files its Form 13F with the Securities and Exchange Commission after the market closes on May 15.

Whatever the filing reveals, Apple bulls needn't fret about Berkshire Hathaway losing its taste for Apple.

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Have you ever noticed that equity investors can't have nice things? As miserable as we are when stocks are going down, we're even more unhappy when they're going up.

There's an empirical explanation for this psychological phenomenon. It's called "loss aversion." Humans are at the mercy of all sorts of cognitive biases, and one of the more perverse ones is that we experience far more pain from losing money than we experience pleasure from winning the same sum.

That's why when markets are rising, stocks are said to be climbing a wall of worry. The higher stocks climb, the more investor anxiety mounts. That's loss aversion at work.

Cut to today, with markets at record highs and valuations stretched by just about any metric you care to use, and it's only natural for investors to question if stocks are in a bubble.

Stocks never go up in a straight line, but that's pretty much what the S&P 500 did after bottoming out early last spring. From its April 7, 2025, intraday low to its close on December 31, the benchmark index was up 41.6% on a price basis. Such a torrid run has U.S. equities trading at some of their very priciest levels in history, according to BofA Securities.

As of December 31, on 18 of 20 metrics the S&P 500 was trading at statistically expensive levels, according to a note to clients from Savita Subramanian, head of U.S. equity strategy and U.S. quantitative strategy at BofA Global Research. Four of the metrics — Market Cap to GDP, Price to Book, Price to Operating Cash Flow and Enterprise Value to Sales were at record highs.

Is the stock market in a bubble? Here's how to tell

Happily, valuation is not a timing tool, as strategists take pains to point out. As Subramanian suggests, opportunities remain for investors willing to look for selective sector opportunities

Meanwhile, though questions remain about when and whether the Federal Reserve will cut interest rates amid a backdrop of broadening and accelerating profits, it's not hard to argue for a boom in earnings-per-share and GDP growth.

It's also possible that stocks have structurally re-rated to carrying richer valuations, as Subramanian noted earlier in 2025.

"The S&P 500 has changed significantly from the 80s, 90s and 2000s," explains Subramanian. "Perhaps we should anchor to today's multiples as the new normal rather than expecting mean reversion to a bygone era."

Perhaps most important, bubbles are as much of a psychological phenomenon as a financial one.

There's no substitute for experience on Wall Street, which is why it's always wise to listen to old hands when it comes to divining the market's machinations. Nicholas Colas, co-founder with Jessica Rabe of DataTrek Research, started working full-time on Wall Street in 1986. He lived through the October 1987 stock market crash and has witnessed every boom and bust up close ever since.

Colas has developed a three-point checklist for "spotting unhealthy, runaway markets." Here's a thumbnail version:

The market for initial public offerings gets frothy. Although the number of IPO announcements hit a multiyear high in the third quarter, the market for new issues has been subdued since it peaked in 2021. Higher interest rates and the availability of private-market funding remain headwinds.

"The good news is that history shows a rampant IPO market is a clear sign of a top," Colas notes. "We're nowhere close to that now."

Hallmark mergers and acquisitions (M&A) deals. "Exceptionally bad deals happen at the top, even if at the time they seem quite sensible," Colas writes. "M&A activity is ultimately a function of CEO/board confidence. Just like retail investors chasing hot IPOs at a market peak, senior managers fall prey to the same overconfidence that the good times will last forever."

Happily, M&A activity, while picking up, also remains under control. Through November 30, M&A volume was up 2% year over year in 2025, according to PwC.

A double is a bubble. Colas has a general rule to identify unsustainably high prices in a range of markets. Whenever the S&P 500 doubles in three years or less, stock prices decline shortly thereafter. The same is true about the Nasdaq Composite over any rolling one-year window going back to the early 1970s, notes Colas.

"A double is a sign of speculative excess because macro conditions are never so different that asset prices should rise 100% over a short period of time," Colas says. "Markets are reasonably good discounting mechanisms. When prices double, you know speculation — not fundamentals — are driving those gains."

Even the Nasdaq Composite, which is the frothiest equity market right now, is up "only" 20% over the past year.

Another tech bubble?

The remarkable bull market in equities was given fresh fuel by the Federal Reserve's jumbo interest rate cut in September 2024, but it's uncertain how much more fuel monetary policy can provide from here. Meanwhile, bubble anxiety centers around the AI companies, such as the Magnificent 7, that dominate the S&P 500 and Nasdaq-100.

Naturally, echoes of the bursting of the dot-com bubble are tat the op of anxious investors' minds.

"The introduction of transformative technologies typically attracts growing investor interest as well as significant capital and new competition," writes Peter Oppenheimer, chief global equity strategist and head of macro research Europe at Goldman Sachs. "As enthusiasm builds and stock prices increase, the sum of individual company valuations can overstate the total potential aggregate returns; often a bubble develops and bursts."

Oppenheimer notes the technology sector has generated 32% of the global equity return and 40% of the U.S. equity market return since 2010. This reflects stronger fundamentals rather than irrational exuberance.

"In our view, the technology sector is not in a bubble and is likely to continue to dominate returns," the strategist adds. That said, "concentration risks are high, and investors should look to diversify exposure to improve risk-adjusted returns while also gaining access to potential winners in smaller technology companies and other parts of the market."

Are stocks in a bubble?

None of Colas' time-proven indicators point to a stock market bubble, but a bubble very much remains a possibility in 2026, Colas says. Keep an eye on IPOs, M&A and how fast market levels rise from here.

Also remember that while the explosive growth in all things AI has valuations looking stretched, Goldman Sachs' Oppenheimer notes, "valuations often also understate the opportunities that can accrue in the nontechnology industries that can leverage the technology to generate higher returns."

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To help you understand what is going on in the tech sector our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

There’s a newfound excitement over the potential of humanoid robots. Hefty investment has poured into the tech sector to speed up commercialization. Hundreds of millions of dollars in venture capital have been invested in the robots in the last few years, including a recent $675 million bet on the start-up firm Figure— which describes itself as "The team bringing impossible ideas to life... with over 100 years of combined AI and humanoid experience." 

Firms working on cutting-edge robots include Boston Dynamics and Agility Robotics. Tesla made a splash with its effort — Optimus, aka the Tesla Bot. Other notable firms in this space are Apptronik, 1X Technologies, Sanctuary AI and Unitree Robotics. 

Agility Robotic’s Digit, which is being tested in warehouses now to move boxes short distances, is 5’8”, weighs 140 pounds and lifts up to 35 pounds. However, humanoid robots have specific challenges not easy to overcome including lackluster balance, lack of strength and speed, very high costs and short battery life. It’s especially tricky to develop a robot that can work anywhere on a range of tasks. 

Expect exciting developments in the coming years, but not much adoption over the next decade. The first uses in work settings are likely to be for repeatable and specific tasks — taking a box from a shelf to a conveyor belt, for instance.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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In the film The Magnificent Seven, seven gunslingers help a band of simple townsfolk overcome an army of baddies (worth watching if you haven't already – either version). But that's not the group that concerns us here. Instead, it's the stocks of mega-size companies – Alphabet (GOOGL), Amazon.com (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA) – that have soared in price over the past year, propelling the broad market to double-digit returns. These seven aren't battling villains, but they have armed investor portfolios with lots of extra dollars. 

Since the start of 2023, the Magnificent Seven stocks, or the Magnificent 7 stocks as it's sometimes written, which top the S&P 500 index, have gained a cumulative average of 107%. The benchmark, by comparison, is up 26% over the same period. "Triple-digit returns are not unusual in the land of risky small-cap companies," says Scott Opsal, director of research and equities at Leuthold Group, "but for the very top of the S&P 500 market-cap ranking to gain 100% is another thing altogether." 

Will the momentum continue in 2024? That's the trillion-dollar question. The shares of Apple and Amazon have recently trailed the broad market; Tesla stock has dropped 30% in price over the past six months (it's now the eighth-largest company in the S&P 500, behind Berkshire Hathaway). Regulatory scrutiny and risk abound with many of the Seven, and there's no getting around the fact that they are richly priced. 

Nevertheless, the Magnificent Seven are magnificent for a reason. They dominate their industries, make products that are in high demand, boast strong balance sheets, and generate piles of cash. And each firm is a key player in its own way in generative artificial intelligence, a new technology paradigm that experts say will power future revenues and earnings growth across multiple industries for years to come. 

In this story, we'll take a closer look at the growth prospects and potential risks for the Magnificent Seven, collectively and individually, to help you decide how they might fit in your portfolio – or not. 

The power of AI 

There are many modes of generative AI, but generally speaking, it's the ability of sophisticated computers to process mounds of data, images, and even written and spoken language and then use that information to create original text, images, computer code or other content. The market potential, say many analysts, is huge. AI will improve economic productivity as it speeds up innovation and as it helps workers become more efficient, a May 2023 Brookings Institution report said. 

What's more, the implementation and economic impact of AI may occur faster than innovations in the past because AI is software-based and can be rolled out quickly on the internet. "The world is changing at an increasing pace thanks to AI," says Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "It has never been faster." 

ChatGPT, developed by Microsoft partner OpenAI, hit 100 million users within two months of its launch, the fastest-growing user base of any app on record, according to multiple reports. Instagram took two years to hit that mark.

All of the Magnificent Seven companies boast traits that give them a powerful edge in generative AI. Data fuels AI, and these companies have that in abundance, says Dom Rizzo, manager of T. Rowe Price Global Technology fund, thanks to the loyal mass of consumers each company counts as customers. 

Microsoft dominates computing; Amazon, e-commerce; Alphabet, web searches – you get the idea. What's more, each company has a strong vision for the future and the cash and talent to make it happen, or at least give it a good try.

Does price matter if they're mag­nificent? After doubling in price, on average, the Mag Seven trade at an average 34 times expected earnings for the year ahead. That exceeds the price-to-earnings (P/E) ratio of the S&P 500, which trades at 20 times expected earnings. The lofty P/E has some strategists saying the group has run out of steam. Other strategists are comparing the rise in these elite shares to the sky-high dot-com stocks of the 1990s and the Nifty Fifty of the 1960s.

But earnings growth may justify some of the pricier valuations of these leaders. Analysts expect the group to average a 29% growth rate in profits over the year ahead, according to Zacks Investment Research – more than double the 14% earnings-growth forecast for the S&P 500. 

"Mag Seven valuations are rich, but not stretched," says Martin Romo, Capital Group's chairman and chief investment officer. "I'm not saying they're all buys, but you can't ignore them." 

There's likely room for more gains in each of the stocks, especially over the long term. "We're still in the early innings of AI, and these companies are well positioned going forward," says U.S. Bank's Sandven. 

Just don't expect the average share price for the Magnificent Seven to double again this year. "Nothing is impossible, but the chance that the same group has runaway performance in 2023 is pretty slim," says Liz Young, SoFi's head of investment strategy. 

A reality check on the Mag 7 

Chances are you already own some or all of the Mag Seven, either as individual stocks or in a fund. Even if you don't, they're worth watching. Together they make up 28% of the S&P 500's market capitalization, and that packs a punch. 

The group is "single-handedly driving earnings growth for the broad market right now," says Jeff Buchbinder, chief equity strategist of LPL Financial. 

Whatever your strategy is with these high-flying stocks, be prepared for a lot of choppiness along the way. Sandven advises investors to consider balancing investments in this singular group with exposure to sectors that underperformed in 2023, such as utilities, real estate investment trusts (REITs), healthcare and financials. View any dips in a Magnificent Seven's share price – around 10%, say – as a good potential entry point.

And be patient. Even a fast-moving, transformative theme like AI can take two to five years to play out, says SoFi's Young. Today's key players could be minor ones tomorrow, for instance. It's not unusual for "the company that no one expected to be the darling of a theme to land on top," she adds. 

Read on for more on each of the Magnificent Seven stocks. (All returns are through January 31, unless otherwise noted.)

Alphabet

There's no Alphabet without Google. The search engine, which accounts for 55% to 60% of the company's total revenue, handles 90% of all internet queries worldwide. But growth in ad revenue is slowing, at least according to the firm's recent quarterly results. For now, that has overshadowed strong growth in Alphabet's other businesses, including Google Cloud and YouTube – each of which account for about 10% to 12% of revenue.

Meanwhile, the company has been investing heavily in AI – almost $150 billion in just five years – to improve the experience for users and customers when they interact with its products. Google Translate, for instance, now works for 133 languages. Google's multisearch allows people to search with images and text at the same time – in 70 languages. Google Lens allows you to take a photo of a tomato plant in front of you and add "care instructions" to learn how best to nurture it. Even Google Maps uses AI in various ways, including to map remote and rural areas.  

Any upside to the company's Cloud computing business and its AI initiatives would be a positive for Alphabet shareholders. But growth in Google Cloud slowed in the most recent quarter compared with a year earlier, catching some analysts by surprise. And turning AI-driven products, like a chatbot (a computer program that simulates human conversation, answers queries and performs some routine tasks, like ChatGPT), into money-making machines could be a challenge. The other problem: A more AI-enabled world could squelch some of Alphabet's search business, as people start to find other ways to gather information. 

Finally, regulatory risks loom, too, and with them, rising legal costs. The U.S. Department of Justice, various states and other plaintiffs have filed several antitrust lawsuits against Alphabet that target various aspects of its business, including its search engine. Alphabet recognized $600 million in legal fees in the recent quarter, notes Mizuho Securities USA analyst James Lee.

All of the uncertainty, however, means Alphabet stock is downright cheap compared with some of its magnificent peers. At $140 – about $5 below its 2022 peak – it trades at 21 times expected earnings. Jefferies analyst Brent Thill rates the stock a Buy, with a 12-month price target of $175. Shares can "grind higher" despite a 58% gain in 2023, he says, thanks in part to accelerating growth in Cloud sales and strength in search. The upcoming naming of a new chief financial officer could be a catalyst, too. 

Amazon.com

The Magnificent Seven stocks haven't always been on top. They took such a beating in 2022 that some of them are still recovering to their pre-2022 peak levels, despite monster gains in 2023. Amazon.com is one of them (Alphabet and Tesla are the others). Though Amazon shares have climbed 76% cumulatively since the start of 2023, they still trade 9% below their previous peak in 2022. 

Does that make stock in this e-commerce/cloud services giant a good deal today? Yes, relative to its historical trading range. Shares trade at a P/E of 43 – well below average and close to their low over the past 10 years. Meanwhile, earnings growth is robust. Analysts project the company will post a 35% jump in 2024 earnings compared with 2023, and nearly 30% in 2025. 

But there are reasons to feel cautious, too. Although the company has, at long last, turned into a highly profitable, cash-generating machine, near-term drivers of growth are, well, meh. 

The company is digging into some new business areas – healthcare, for instance – but its short-term fortunes hinge on how much consumers are spending online, accelerated growth of its Amazon Web Services cloud computing business, or on cost-saving initiatives. And Amazon faces regulatory issues of its own, including a number of Federal Trade Commission lawsuits. One filed in September alleges that Amazon employed unfair, anticompetitive strategies to stifle competition.

Apple

For years, Apple set the pace, launching new technology and devices that quickly became must-have tools. But that innovation appears to have hit a holding pattern for now, and customers are waiting longer to upgrade their devices to the latest iteration. 

A few Wall Street analysts, including Tim Long, of Barclays, are cool on the stock. Long reduced his price target to $158 in early January, which is below the stock's recent price of $184, citing lackluster sales for the iPhone 15 and soft expected demand for the iPhone 16, which will launch later this year. Expectations for slowing growth in Apple's services business segment – including subscription fees for Apple TV+, Apple Music and iCloud – was another negative. 

But Apple's ecosystem, which encompasses 2.2 billion actively used devices the world over, is nothing to sniff at. And some analysts say the company's AI potential is consistently underestimated. Siri, for instance, has big potential. "She can book your Uber, order your dinner and make a hotel reservation after you buy an airline ticket," says T. Rowe Price's Rizzo. "That's a powerful world for Apple, and it potentially leads to a hardware upgrade cycle," in which customers will clamor for the latest iPhone in order to make full use of AI-enabled services. 

For the quarter that ended in December, Apple reported record earnings per share, despite disappointing sales in China. The report dimmed analysts' expectations for the upcoming quarter, but average annual earnings growth over the next three years is expected to be a healthy 13%. And Apple throws off more cash than any other Mag Seven peer – $99 billion at last report. 

The stock trades at a more reasonable P/E – 28 – than do some of the other six stocks. And Apple has been one of the less volatile, too. Morgan Stanley's Erik Woodring, who rates the stock Overweight, or the equivalent of Buy, says he would be a buyer on any weakness in share prices.  

Meta Platforms

Meta is known for its social-networking apps – Facebook, Instagram, WhatsApp and Messenger. But the firm's true assets are its 3.14 billion daily users. Their clicks in Meta's apps are gold for generative AI. 

Generative AI is already working behind the scenes. AI algorithms make predictions on what kinds of posts and ads you might want to see on Instagram Reels, based on what you're watching, clicking on and liking. Users can turn selfies into watercolor portraits with an AI-powered image-editing tool or consult Meta AI, the chatbot personal assistant, to plan their next meal out. But the firm is working to find other ways generative AI can improve app experiences in search, ads, messaging and more. 

Shares soared more than 160% over the past 12 months ending January 31. Days later, shares leaped anew after Meta announced solid quarterly results and its first-ever quarterly dividend of 50 cents per share. Despite the strong share gains, on a P/E basis, the shares are still among the cheapest of the Magnificent Seven. Analysts on average see earnings growth approaching 30% year-over-year in 2024. 

Meta went on a spending "diet" last year, laying off 13% of its workforce and cutting $3 billion in operating costs, says market strategist Ed Yardeni, of Yardeni Research. That, and a rebound in digital ad spending, helped boost earnings. Advertising accounts for 95% of the company's revenue.

That said, the firm's key risk is a decline in digital ad spending. Many analysts, including Robert W. Baird's Colin Sebastian, expect a pickup in ad spending this year, with the largest portion of advertisers planning to increase budgets on social media, followed by video and search. But some, including Wells Fargo Securities' Ken Gawrelski, predict a spending slowdown in 2024. And regulatory scrutiny is a worry; Meta faces a litany of legal issues in the U.S. and Europe. 

Microsoft

It may be the oldest of the Magnificent Seven, at nearly 50, but Microsoft is more consequential than ever. At $2.9 trillion in market value, it's the biggest company in the world – yet it still raked in a record $22 billion in sales in its last fiscal year, which ended in June. More than a billion people around the world use Office, its collection of desktop apps. 

More important, Microsoft has nimbly adapted to multiple tech paradigm shifts over the years, from the PC to the internet, the cloud, and now AI. Indeed, 32 out of 43 stock analysts who cover the Dow Jones stock rate the shares a Strong Buy in part because the company has its fingers in so many AI pots. Copilot, the company's chatbot, is embedded in all of the company's popular products – for an extra monthly fee, of course.

Microsoft's AI prowess is helping companies and organizations in practical ways. Taiwan's Ministry of Education has built an online platform to help elementary and high school students learn English using Microsoft's cloud-based AI platform, Azure AI. Developers at the Argentinian financial technology company Mercado Libre (MELI) have shaved 50% off the time they spend writing code by using Microsoft's GitHub Copilot. And Mercedes-Benz (MBGAF) is making its in-car voice assistant more intuitive for drivers by using ChatGPT. 

Truist Securities analyst Joel Fishbein sees 2024 as a "pivotal year in the market for generative AI spending" and says Microsoft is the leading generative-AI-enabling provider. Fishbein expects roughly 14% growth in Microsoft's revenues and 15% to 16% growth in earnings over the next three years. At a recent price of $398, shares trade at 36 times expected earnings. That's rich, but not extreme compared with its historical median P/E of 31 over the past five years, according to Zacks Investment Research. Even so, the stock's valuation leaves little room for missteps. 

Nvidia

Nvidia's semiconductor chips are in high demand these days because they can crunch massive amounts of data, the fuel for artificial intelligence programs. Sales are set to double in 2024, year-over-year. And analysts expect earnings per share to jump fourfold from the previous year – to $12 in 2024 – and to $20 in 2025. "I don't think we've ever seen earnings growth of this size, scale and scope before," says T. Rowe Price's Rizzo. "It's crazy."

It's the reason the stock has climbed 277% cumulatively since the start of 2023. Shares currently trade at a P/E of 30 based on a consensus of analysts' earnings forecasts for its next fiscal year, which ends in January 2025. 

Smart investors will look for dips in price to buy, then buckle up for the ride. Nvidia shares have been twice as volatile as the broad market and the Nasdaq Composite index over the past three years. Of course, that volatility measure – standard deviation – is as much about the stock's big moves up as it is about the stock's downward shifts.

Nvidia faces some near-term risks, however. The company's original bread-and-butter business, gaming chips, is slowing. There's a chance that AI-chip demand could slow, too. And competition from other AI chipmakers, such as Advanced Micro Devices (AMD) and Broadcom (AVGO), is ramping up. Plus, the U.S. is limiting the types of chips that companies can sell to China, which may pose problems for Nvidia, as China sales account for 20% to 25% of overall revenues. 

Tesla

Shares in this automaker – the biggest electric-vehicle manufacturer in the U.S. (but not the world) – have declined 30% over the past six months, which has us wondering whether its days as a member of the magnificent club are dwindling. 

The automaker missed analysts' expectations for revenues and earnings in each of the past two quarters – a big no-no for fast-growing stocks. Tesla cut prices on some of its electric vehicles last year in an effort to drive up sales, and that pinched operating profit margins. And there have been a spate of recalls.  

But the pace of auto sales, accounting for 95% of Tesla's business, is the biggest problem—not just at the company, but worldwide. In 2023, the firm's auto revenues rose 15%, far short of the 50% pace logged in 2021 and 2022. EV demand is "stalling" globally, says Wedbush Securities analyst Daniel Ives, and a glut of EV parts is hitting the market. Though Ives believes most of Tesla's price cuts are done, the company may feel pressure this year to cut prices further. If so, Tesla shares may find it hard to "shed this black cloud in the near term," he says. Even so, the stock still trades at a P/E of 57, a nosebleed level relative to analysts' expectations for earnings growth. 

Tesla has other long-term bets that could propel growth in the future, including energy generation and storage. And it has the AI edge in self-driving cars, thanks to the data compiled by its own EVs. But even analysts who are bullish on Tesla admit that 2024 will be challenging. We wouldn't unload shares, but you might wait for more dips if you're thinking about buying. 

Note: This item first appeared in Kiplinger's 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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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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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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A couple of analyst downgrades might have Apple (AAPL) stock reeling to start the new year, but much of Wall Street sees the AAPL selloff as a chance to pick up shares in the iPhone maker on the cheap.

Apple is routinely one of Wall Street's top-ranked Dow Jones stocks, but concerns over demand in China have some analysts becoming increasingly cautious on the name. Piper Sandler analyst Harsh Kumar cut his recommendation on the stock last week to Neutral (the equivalent of Hold) from Overweight (Buy), citing a weak macroeconomic backdrop in China. 

"We are concerned about handset inventories," Kumar wrote in a note to clients. "Growth rates have peaked for unit sales." 

Piper Sandler'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. 

The bottom line is that although AAPL stock is still up more than 40% on a price basis over the past 52 weeks, it's down more than 4% to start the year. The world's most valuable publicly traded company has lost more than $135 billion in market capitalization in 2024 alone – or roughly the entire market value of General Electric (GE). Pull the chart back to AAPL stock's peak in mid-December, and the company has lost an astonishing $225 billion in market cap since then. 

The Street says buy Apple stock

Morgan Stanley analyst Erik Woodring speaks for the bulls when he notes that Wall Street sentiment towards Apple – as approximated through its mix of Buy, Hold and Sell ratings – is at its lowest point since September 2020. That's a contrarian buy signal, in the analysts' view, and he advises clients to buy Apple stock on weakness. 

Woodring contends Apple's fundamentals are on the path to recovery, albeit with some near-term unevenness. More importantly, 2024 will be the year when Apple's artificial intelligence (AI) efforts likely come to fruition, the analyst adds. 

If you look at the Street's recommendations, it has indeed become the most uncertain about Apple stock since 2020. That said, it does remain collectively bullish on the name. Of the 45 analysts covering AAPL surveyed by S&P Global Market Intelligence, 20 rate it at Strong Buy, seven say Buy, 14 have it at Hold, three say it's a Sell and one calls it a Strong Sell. That works out to a consensus recommendation of Buy, with mixed conviction.

Meanwhile, analysts' average target price of $198.81 gives Apple stock implied price upside of more than 8% in the next 12 months. Wall Street strategists give the S&P 500 average implied upside of about 5% in the year ahead. 

As for buy-and-hold Apple investors, well, they can pretty much ignore its latest gyrations in share price. After all, Apple has been a dream of a long-term holding. It was the best stock in the world for the 30 years ended 2020. And anyone who put $1,000 into Apple stock two decades ago would be very happy with the results today too. 

That's partly why billionaire investors are big fans of Apple stock. Apple is hard to top when it comes to hedge funds' top blue chip stocks, as well. And, of course, there is no bigger fan of Apple – or of buying on weakness – than Warren Buffett.

The iPhone maker accounts for about half of Berkshire Hathaway's (BRK.B) equity portfolio, but AAPL's red-hot run – along with the rest of the Magnificent 7 stocks – means Buffett hasn't added to it in some time.

Don't be surprised to learn from regulatory filings a few months from now that the smart money was buying Apple stock in bunches during this January swoon. 

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Bank of America strategist Michael Hartnett coined the term "Magnificent 7" stocks for the most dominant tech companies. The group is made up of mega-cap stocks Apple (AAPL), Alphabet (GOOGL), Microsoft (MSFT), Amazon.com (AMZN), Meta Platforms (META), Tesla (TSLA) and Nvidia (NVDA). 

In 2023, the Magnificent 7 stocks logged an impressive average return of 111%, compared to a 24% return for the broader S&P 500.

Here's a look at the individual performances of the Magnificent 7 stocks over the past decade:

These stocks drove the domestic stock market in 2023 for a reason, says Daniel Dusina, a Chartered Financial Analyst (CFA) and chief investment officer at Blue Chip Partners. "These companies display earnings growth that is among the highest within the large-cap domestic subset, and most have businesses that are exposed to secular trends."

These returns are certainly impressive, but these Magnificent 7 stocks are not bulletproof. Even seemingly invincible stocks can have problems (think 2022, when all seven of these names finished the year with double-digit percentage losses). As such, prudent investors must stay aware of market environments and diversify their portfolios. 

With that in mind, let's take a closer look at each of the Magnificent 7 stocks:

Microsoft

The recent drama at OpenAI – when the board abruptly fired CEO Sam Altman – threatened Microsoft's $13 billion dollar investment in the company.  But this event turned out to be a big plus. Microsoft CEO Satya Nadella skillfully managed the crisis and ultimately strengthened the partnership with the artificial intelligence (AI) firm, with Altman back at the helm.

OpenAI is the clear leader in sophisticated generative AI technologies, and MSFT has leveraged this into an array of applications. Analysts at Jefferies estimate that Microsoft's Office 365 Copilot will generate about $19 billion in revenue by fiscal 2025.  

The company is also aggressively moving into other categories. There will be copilots that target massive opportunities like CRM and cybersecurity.  So even though Microsoft fetches a high multiple – priced at 35 times earnings – a premium is reasonable in light of the long-term growth potential.

Amazon.com

In terms of operating income, Amazon.com's cloud business has been the main driver. The problem is that during the past year or so, the business has come under pressure. This is unlikely to last long, though. 

Why? Generative AI.  

While Amazon was slow to invest in this technology, the company has been able to make up a lot of ground. This was evident at the recent AWS re:Invent conference where Amazon announced enhancements to its Bedrock platform and also disclosed details about its Q chatbot. These technologies can certainly help boost AWS, as customers rapidly adopt generative AI.  

Nvidia

Over the years, Nvidia CEO Jensen Huang has made huge bets on AI. His vision was that GPUs – or graphics processing units – would be at the heart of this technology.

No doubt, this was spot on and NVDA has become a growth machine. In the latest quarter, revenue more than tripled year-over-year to $18.1 billion.  

But Nvidia is more than a chip company. It has a full-stack technology platform for running sophisticated AI applications. These include networking capabilities, as well as a software system called Cuda that is essentially an operating system.  These assets have turned Nvidia's advantages into a powerful moat. 

As AI continues to grow, so will Nvidia.

Meta Platforms

Meta Platforms is starting to rev up growth again. In the third quarter of 2023, the Facebook parent saw revenue jump by 23% year-over-year to $34.1 billion. In addition to seeing traction with Instagram reels, AI is becoming a factor, helping to improve the results with advertising. Given Meta's large user base, even a small enhancement can have a big impact on the top line.

In the meantime, the company has been investing in its own large-language model, called Llama 2. This has become the number one choice for those companies looking for open source platforms.  

In the near term, the main catalyst for Meta is likely to be the upcoming U.S. presidential election. This will create a surge in advertising – and a considerable chunk will go to Meta. 

Apple

Apple has suffered from declining sales as its smartphone business has matured, but the company should not be counted out. Apple has the benefit of a large customer base that can be leveraged, such as with its lucrative services business.  

"They offer Apple TV, Music and other services," said Glenn Tompkins, senior global market strategist at VectorVest. "People are deeply engaged in the ecosystem and many will never leave."

The company may also get a boost from AI. Recently, Apple announced the release of MLX, which is an open source framework for Apple Silicon. It is a platform to help build AI projects and it has already shown promise against rival systems. 

Alphabet

Alphabet's Google has seen a rebound in its core search and advertising business, but there worries remain about its AI initiatives. Even though the company's researchers pioneered generative AI, it was slow to commercialize it.  

But Google is making up for lost ground. Its new model, Gemini, appears to be state-of-the-art. The company is also aggressively implementing the system across its apps. Additionally, Google is developing new AI products, such as for code development, cybersecurity and healthcare. These could open up new growth opportunities for the company.  

Tesla

Despite competitors like Ford Motors (F) and General Motors (GM) spending huge amounts of money on electric vehicles (EVs), Tesla remains the category leader. It has the advantages of a modern infrastructure for production and charging networks.  

"We expect the focus of the story to shift towards share gains and deeper penetration within the auto space," says Tejas Dessai, AVP and research analyst at Global X. "Tesla's attempt to ignite a price war on the back of massive operational efficiencies from scale is a net positive for consumers and will likely continue to keep the pressure on competition. Meanwhile, real margin capture for Tesla will likely come through value-add services such as self-driving software."

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Wall Street's top strategists collectively forecast another year of gains for the S&P 500, albeit a much more muted one. That's to be expected after the benchmark index gained more than fifth on a price basis in 2023.

Wall Street's average target on the index gives the S&P 500 implied upside of about 5% from current levels. At the high end, Capital Economics forecasts the benchmark index to hit 5,500 by the end of 2024, giving the S&P 500 implied price upside of about 15% next year. At the low end, JPMorgan Chase expects the index to retreat 12% to 4,200 in 2024. 

Passive investors will go along for the ride no matter where it takes them. Stock pickers, on the other hand, seek to beat their benchmarks, and that's where Wall Street's S&P 500 stocks with the most upside come in. 

Analysts base their Buy, Hold or Sell recommendations on how they expect a stock to perform relative to the S&P 500 over the next 12 months or so. To do so, they plug numbers into discounted cash flow models. These models spit out price targets, which tell them where the stock should be trading in a year. The difference between the stock's current price and its target is called its implied, or potential, upside. Analysts' average price targets tell you how the Street collectively expects a stock to perform.

While you can hardly base a stock-picking strategy on the sole criterion of price targets, it can be helpful to know which S&P 500 stocks are expected to deliver the biggest returns in the year ahead. To that end, we used S&P Global Market Intelligence to screen the S&P 500 for the index members with the highest implied upside for 2024 and beyond. 

Have a look at the table below to see the 10 S&P 500 stocks analysts expect to put up the biggest price gains in 2024. (Price targets and other data are as of December 22.)

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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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You may soon be able to get your workout in with a side of cancer screening, diabetes testing and routine blood work. 

Healthcare technology company Forward recently launched CarePods — self-serve, walk-in healthcare units entirely driven by artificial intelligence (AI) that, according to the company, “are designed to treat the issues of today and prevent the issues of tomorrow."

For a monthly membership fee of $99, the pods will work with a library of existing Forward Health Apps to address a range of both physical and mental health issues. Patients will have access to full-body scans and bloodwork, along with skin cancer screenings, mental health assessments and even COVID-19 testing.

CarePods will soon begin popping up in malls, gyms and offices starting in San Francisco, the Bay Area, New York, Chicago and Philadelphia. The company said it plans to double its footprint next year.

The company says on its website that patient data from CarePod visits will be securely transmitted to its platform, which will enable health progress monitoring, disease risk identification and in-depth evaluations using sensors, lab tests and vital sign measurements.

Virtual healthcare on the rise

Virtual, more accessible healthcare is on the rise. Amazon recently rolled out an offer for a $9/month virtual healthcare service through its One Medical unit. This followed the launch of its drone delivery service for medications and a messaging service that can diagnose ailments and prescribe medicine.

But patients might not be so quick to jump on board with an entirely AI-driven healthcare model like this one. According to a Pew Research poll last February, 60% of Americans would be “uncomfortable” with a healthcare provider relying on AI. Although, when it comes to the ways it might aid in correcting human error, the outlook is more positive. 

“A larger share of Americans think the use of AI in health and medicine would reduce rather than increase the number of mistakes made by health care providers (40% versus 27%),” Pew found.

NYS's plan to protect patient data

In New York, elected officials are racing to keep up with the evolving scope of healthcare systems and address some of those concerns. Gov. Kathy Hochul recently introduced a state-wide proposal that would dedicate $500 million to improving cybersecurity in New York hospitals to help protect patient data from cyber attacks.

As part of the plan, hospitals would take steps both to protect current data by testing the tools currently in place and developing new ones to prevent future incidents.

As Kiplinger has previously reported, security systems are not foolproof and data breaches can occur in both AI and in-person healthcare. There has been a slew of cyber attacks targeting the healthcare industry this year, exposing the personal data of millions of patients. 

Agencies including the Centers for Medicare & Medicaid Services advise people to take action. This includes enrolling in a credit monitoring service and obtaining a free credit report by calling 1-877-322-8228 or requesting it online .

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"What are FAANG stocks" is a question newer investors may ask when they hear the once-popular phrase "FAANG stocks" tossed around.

In 2013, CNBC commentator Jim Cramer coined "FANG" as an acronym for Facebook – now Meta Platforms (META) – Amazon.com (AMZN), Netflix (NFLX) and Google, which is now Alphabet (GOOGL). He wanted to find a quick way to describe these dominant tech and communication services stocks. But by 2017, FANG switched to FAANG when Cramer added Apple (AAPL) to the lineup.  

What are FAANG stocks and is it good to invest in them? 

While not in as heavy a rotation as it once was, FAANG is a good shorthand to describe mega tech, and investing in these stocks would have juiced your portfolio.  Here are the 10-year returns for the five FAANG stocks.

The average return during this period for FAANG stocks is a sizzling 755%. By comparison, the S&P 500's 10-year return is 166%.

"The latest great leap forward has been generative AI [artificial intelligence], and the FAANG stocks are all, to one degree or another, involved in bringing generative AI into existence and attempting to monetize it," says John Cunnison, chief investment officer at Baker Boyer. "The most interesting FAANG stocks are likely going be those with the best strategies for deploying, integrating and, ultimately, monetizing AI."

Meta Platforms

What started as a software project in a Harvard dorm turned into a social media empire. Today Mark Zuckerberg's Meta counts over 3 billion daily active users across its properties that include Facebook, Messenger, Instagram and WhatsApp. In the latest quarter, the company reported nearly $32 billion in revenue, up 11% on a year-over-year basis, while net income rose 16% to $7.8 billion. 

Following its 2021 name change – a result of Zuckerberg shifting the company's strategic focus to the Metaverse – the stock shed roughly 70% of its value. Realizing he needed to make a major change, Zuckerberg refocused the company on cutting costs and bolstering its social media properties as well as its AI capabilities. Meta even launched a rival to Twitter – or X – which is called Threads.  

The result has been an epic rally in Meta's stock price. But it also means that the valuation is rich, at about 36 times earnings. Then again, all the FAANG stocks are trading at hefty levels.

Alphabet

Since its founding in the late 1990s, Alphabet has mostly made the right bets, whether that was on Android or YouTube. But during the past year, the company has been caught flat-footed.  The explosive growth of OpenAI's ChatGPT – which is backed by rival Microsoft (MSFT) – has shown that Alphabet blundered with generative AI. The irony is that its researchers helped to pioneer this technology, such as with the creation of the transformer model.

Yet Alphabet is showing progress. The company continues to add features to its Bard chatbot and integrate its generative AI technologies across its other  apps. The fact is that Alphabet has some big-time advantages like its thousands of talented engineers and massive troves of data.

In the meantime, Alphabet's core advertising business is on the mend. In the most recent quarter, revenue was up 7% to $74.6 billion.  

Among the FAANG stocks, Alphabet has the most attractive relative valuation, trading at a  price-to-earnings ratio at about 29.  

Apple

Apple's business has been in a slump lately.  For the past three quarters, the company has reported declining sales – the longest stretch since 2016.

The slowdown should not be a surprise. Given Apple's massive revenue base, it is difficult to find ways to boost growth. The smartphone market is also mature and the company has already benefited from much of the low-hanging fruit of its services business.

But there is a potential catalyst: the Apple Vision Pro headset. This is a cutting-edge virtual reality system that is expected to retail for $3,500. This could be the way to make the Metaverse a reality and a viable business.  

Netflix

Netflix's crackdown on password sharing is paying off.  In the latest quarter, the streaming giant reported 5.9 million new subscribers, bringing the global customer base to 238.4 million.

The costs should drop for content too. The main reason is that Hollywood writers and actors strike, which could add about $1.5 billion in additional annual free cash flow. 

Despite all this, investors should be cautious because the key to driving long-term subscriber growth and retention is solid content. If the strike continues for a prolonged period of time, this could weigh on the business. And so far, there appears to be little progress with negotiations.

Amazon.com

Amazon.com's legendary CEO Jeff Bezos left big shoes to fill when he left the head role in mid-2021, but successor Andy Jassy is finding his groove.  

This was definitely the case in the most recent quarter, with sales growing at 11% to $134.2 billion.  The company expects similar growth in the next quarter. A key driver was the ecommerce business.

It's true that the cloud platform, Amazon Web Services (AWS), reported continued deceleration on the top line as businesses have tightened their IT budgets.  

But there could be support from AI spending. Amazon has been getting more aggressive with developing its own models and adding new capabilities.  

Alternatives to FAANG stocks

While FAANG stocks have proven to be a good bet for investors, there are other mega-cap stocks that deserve to be a part of the coveted list.

"Microsoft has to be an inclusion given they're the second most valuable company in the world and making a big bet on AI, and Nvidia (NVDA) has emerged as the leading hardware foundation on which big tech products and services run," says Jason Mountford, trend analyst at investment app Q.ai. "With Facebook now Meta and Google now Alphabet, that means our new acronym is MAANAM. Yet, not quite as sexy, but the returns sure could be."

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The hottest initial public offering (IPO) in years has thus far lived up to its hype. Arm Holdings (ARM) priced its IPO at the top end of its range of $47 to $51 a share. The listing gives the British chip designer a market value of $54.5 billion, while raising $5 billion in fresh capital in the process. 

Arm's American depositary shares began trading September 14 under the ticker ARM on the Nasdaq Global Select Market. ARM opened today at $56.10. Shares reached $66.28 in intraday trading before settling at $63.59. 

As the biggest upcoming IPO of 2023, Arm was bound to get more than its fair share of attention. That the ARM IPO also happens to be taking place in the red-hot tech sector only adds to its allure.

Parent SoftBank Group acquired Arm in 2016 for about $32 billion, so it appears to have put its initial capital to good use. Retail investors typically don't get access to hot IPOs, which is really just as well. It's too easy to buy high under the best of circumstances. Frenzied opening day trading only compounds the problem. 

But there's a pretty bearish fundamental case to be made against the Arm IPO too.

Steer clear of Arm IPO

David Trainer, CEO of New Constructs, a research firm powered by artificial intelligence, is best known for being skeptical of some of the hottest IPOs of the past few years. So when Trainer puts out a bearish call on the Arm IPO, it's bound to generate controversy. 

"After a nearly two-year drought in the IPO market, SoftBank is wasting no time by offering Arm Holdings to the public markets, and at a valuation that is completely disconnected from the company’s fundamentals," Trainer writes in note to clients Tuesday. 

The analyst adds that Arm's valuation "implies that the company needs to grow its revenue by over 20% compounded annually every year for the next decade, which is a highly unlikely scenario."

Arm faces a growing brigade of formidable competitors in each of its end markets, Trainer notes. "Many of the competitors have more than enough capital and expertise to build their own custom solutions and box Arm out of many of the markets in which it needs to grow to justify its lofty IPO valuation," he says.

The bottom line? "Investors should avoid this IPO, as we see very limited upside ahead," Trainer says.

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