As of market close on April 22, each "Magnificent Seven" stock has a negative price return in 2025. Among this cohort of megacap technology stocks, Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META) have dropped by the least amounts -- falling by 13% and 14.5%, respectively.

Both companies are set to report earnings for the first calendar quarter of 2025 on April 30. Let's explore why Microsoft and Meta could be good buys right now, despite ongoing turbulence in the stock market.

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Image source: Getty Images.

What road bumps could Microsoft and Meta face in the short term?

I can't think of a bigger potential headwind for technology businesses right now outside of the new tariff policies. Both Microsoft and Meta are investing billions into AI infrastructure -- from Nvidia chips to custom silicon engineering, data center buildouts, and more.

The details surrounding which items and raw materials are subject to tariffs are complex. I think it's reasonable that both Microsoft and Meta could be looking at higher costs related to their AI infrastructure plans. In addition, it's not entirely clear how corporations are planning for how tariffs could impact their business operations.

As a result, companies could be preparing to scale back spending in areas such as cloud computing, cybersecurity, or advertising -- all of which would lead to decelerating sales for Microsoft and Meta. A slowing sales base coupled with rising prices would take a toll on profitability for each business.

One way to mitigate shrinking profits is for Microsoft and Meta to scale back their own AI capital expenditure plans. However, investors may not be encouraged by that choice since AI is the foundation of each company's growth narrative right now. Slowing that down for the sake of near-term profitability may not sit well with investors.

Why I still like Microsoft for the long run

I see the ongoing sell-off across the tech sector as an opportunity to buy the dip in high-quality names. Right now, Microsoft's forward price-to-earnings (P/E) ratio of 28 is slightly below the company's three-year average.

MSFT PE Ratio (Forward) data by YCharts

Even though IT budgets could be operating under tighter controls for the time being, I tend to think that businesses are going to identify cost savings in areas outside of mission-critical infrastructure such as cloud computing and cybersecurity software.

Although I'm not expecting a monster quarter from Microsoft next week, I remain cautiously optimistic that cloud growth from Windows Azure will show some signs of resilience. When you complement this with Microsoft's diversified ecosystem that includes personal computing, social media (LinkedIn), gaming, and more, I see Microsoft as a business that is relatively insulated from a possible economic slowdown caused by the tariff environment.

Why I still like Meta for the long run

On the surface, you might think that Meta is facing outsized pressure compared to its peers given the company really only has two sources of growth: advertising and the metaverse. Candidly, the company's metaverse ambitions are far from reaching widespread scale or profitability, and the digital advertising landscape is packed with competition from the likes of Alphabet, TikTok, and Snap, just to name a few. With that said, I think these are surface-level arguments.

Meta's relative price resilience compared to its Magnificent Seven peers could suggest that investors are less worried about the company's growth prospects. I think this makes sense, too. I don't see tariffs having much of an impact on Meta's business overall. Similar to Microsoft, the company could witness a brief slowdown in revenue growth, but I don't think it will be detrimental.

With leading platforms including Facebook, WhatsApp, and Instagram in its ecosystem, Meta is in a lucrative position to continue monetizing its billions of users -- especially as AI tailwinds unlock new opportunities in the consumer market.

META PE Ratio (Forward) data by YCharts

As of this writing, Meta is trading right in line with its three-year average forward P/E. Considering the company has made huge strides in the world of AI to help diversify the business over the last three years, it would appear that investors aren't applying much value to this potential growth right now.

Remember to think long term

The big thing investors should keep in mind is that these tariff policies could change at any time. Moreover, even if trade negotiations with other countries linger to the point of an economic slowdown, such a cycle won't last forever.

In the meantime, investors are continuing to sell off growth stocks given all of the uncertainty in the market right now. In my eyes, Microsoft and Meta are trading for reasonable valuations and I think investors should take advantage, buy the dip while it lasts, and prepare to hold on for the long term.

Should you invest $1,000 in Meta Platforms right now?

Before you buy stock in Meta Platforms, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Meta Platforms wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

If you listen to the general narrative in the automotive industry, it's a dire one that warns of highly affordable and advanced Chinese electric vehicles (EVs) sweeping the globe in dominating fashion. There's certainly a lot of truth to that narrative, but many promising EV companies in China are busy battling themselves amid a brutal price war.

Nio (NYSE: NIO) is included, and despite the ongoing Chinese price war, the company has a couple of reasons for investors to remain optimistic.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Profitable battery swaps?

For many investors, it feels like a double edged sword when it comes to Nio's battery swap ambitions. On one hand, it gives the company a unique competitive advantage since it has built out a leading battery-as-a-service network. On the other hand, it's quite an expensive endeavor for a company burning cash as profits remain in the distance.

There are positive signs for the battery-swap strategy. Only recently, Nio saw demand for these services spike to a record high 136,720 swaps in a single day on Feb. 3. The period from Jan 28 to Feb. 4 was China's New Year Holiday, with travel peaking before and after the dates. Between Jan. 22 and Feb. 5, Nio provided over 1.7 million battery swaps, a strong 44% increase compared to the prior year.

There are also signs that its customers prefer the option once they've tried it. During the previously mentioned time frame, 83.2% of the power added by Nio users on the highway came from battery swap stations. The even better news: This chunk of Nio's business and capital expenditures could break even by the end of 2026, according to a team at Chinese brokerage Western Securities.

The problem with Nio's battery swap business currently is that there simply isn't enough volume of swaps to generate enough revenue to cover day-to-day operations. According to Chief Financial Officer Stanley Qu, a battery swap station can break even if it serves 60 to 70 motorists a day. That's exactly what should happen, according to the analyst team. As new brands and new models ramp up in production and deliveries, more Nio users will use the battery swap technology.

A path to doubling sales

Nio has come a long way since launching the first ES8 premium SUV in 2018. The company now sells a list of options under its premium brand Nio, and began deliveries of its second brand, Onvo, late in 2024. Its third brand, Firefly, is set to begin deliveries in 2025 while continuing to accelerate production throughout the year.

Its second and third brands are intended to open the door to a much larger addressable audience with lower price tags. Management said on last November's earnings conference call that it was confident it could double sales in 2025 while still targeting 2026 for profitability.

That means Nio expects to deliver roughly 440,000 vehicles in 2025 on the backs of its newest brands and models. Not only would that do wonders for Nio's revenue, but the additional production capacity being used would also help the company's gross margin -- something that would be greatly appreciated by investors amid a brutal price war in China.

Is Nio a buy?

Nio has always been a compelling and unique option, thanks in part to its leading battery-swap network. The company's premium Nio brand has been well received, and its two newest brands, Onvo and Firefly, are poised to help double deliveries this year.

But the stock has shed 80% of its value over the past three years, the company is burning cash, and it faces a price war in China and tariff uncertainty overseas.

There's a lot of risk that comes with investing in companies such as Nio, but a lot of upside as well. Nio should always remain a small position in any portfolio, but despite a slow start to 2025 the company should begin succeeding on all its plans sooner, rather than later.

Should you invest $1,000 in Nio right now?

Before you buy stock in Nio, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nio wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Despite the latest turmoil that's rattling the market due to concerns about how President Donald Trump's trade policies will play out, the S&P 500 index has done a good job compounding investor capital over the long run. In the past 10 years, the widely followed benchmark has produced a total return, including dividends, of 194%.

However, there is one exchange-traded fund (ETF) that has absolutely trounced the broader S&P 500. Had you invested in the Invesco QQQ Trust (NASDAQ: QQQ) in April 2015, you would have registered a spectacular total return of 333%. No one will argue with that kind of outcome.

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Should you buy the QQQ right now and hold it for 10 years? Investors must know important information before making that decision.

Exposure to powerful secular trends

Investors will gain different exposure in their portfolios with the Invesco QQQ Trust, which tracks the performance of the Nasdaq 100 index. This includes the biggest nonfinancial companies that trade on the Nasdaq exchange. That's in stark contrast to the S&P 500's composition.

While every sector is represented, there is an unusually high concentration in the technology and consumer discretionary sectors. That shouldn't be surprising because the "Magnificent Seven" stocks combined make up 40% of the entire portfolio. These companies have generally performed very well in recent times.

It's crucial for investors to realize that the QQQ is essentially a bet on various technology-focused secular trends shaping our economy. For example, this ETF will ensure you benefit from ongoing growth within digital payments, cloud computing, digital advertising, streaming entertainment, and perhaps the most powerful, artificial intelligence.

The beauty of choosing to invest in the Invesco QQQ Trust is that it provides instant diversification. There's no need to pick single stocks that might be the big winners of tomorrow. Instead, it's a basket approach that has worked out quite well in the past. And all it costs investors is a 0.2% expense ratio.

What to expect

As of this writing, the Invesco QQQ Trust trades 18% below its record high, which was established in February. A significant decline like this can definitely be unnerving for some investors, particularly when you see your net worth fall so much in such a short period of time. The natural reaction can be to hold off on buying, or maybe even dump your holdings. This would be a mistake.

The market's turmoil presents a lucrative buying opportunity. It's worth mentioning that the QQQ has experienced multiple major drawdowns historically. It can certainly be very scary when living through it. The market is known to be extremely volatile at times. But it should alleviate investor concerns knowing that this ETF has always bounced back to reach new all-time highs.

Patient investors who can look past the near-term uncertainty and focus on the big picture are inevitably rewarded. And I believe this will happen again, even though the Invesco QQQ Trust's future returns may or may not resemble those in the past.

The market downturn can be viewed as an advantage, particularly from a valuation perspective. The Magnificent Seven contain some of the most dominant and innovative businesses the world has ever seen. And today, the group trades at a median forward price-to-earnings ratio of 27.5. Given the general growth potential and impressive profitability of those companies, that valuation doesn't look unreasonable by any means.

The best thing investors can do is to consider starting to put money to work in the Invesco QQQ Trust today while it's well off its peak -- and dollar-cost average every month or quarter. This extra cash inflow can have a serious effect on returns over the next 10 years.

Should you invest $1,000 in Invesco QQQ Trust right now?

Before you buy stock in Invesco QQQ Trust, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Neil Patel has positions in Invesco QQQ Trust. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

In today's video, I discuss Lucid Group (NASDAQ: LCID), a company developing luxurious electric vehicles. I'll examine its growth and challenges with widening losses and a potentially slowing tech sector. Watch to get my prediction on whether this speculative but potentially revolutionary stock is worth buying at its current valuation.

Stock prices used were the market prices of April 22, 2025. The video was published on April 25, 2025.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Should you invest $1,000 in Lucid Group right now?

Before you buy stock in Lucid Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lucid Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Jose Najarro has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Everyone has to start somewhere when saving for retirement. Even if you don't have any money saved up today, it's possible to build up a strong nest egg by the time you retire, potentially even $1 million. Through the power of compounding and investing, you can grow your savings at far higher levels than if you were to just accumulate money in a bank account.

What's important, however, is to have a plan and know how much you may need to invest regularly in order to achieve your goals. Below, I'll show you what amount you may want to aim to invest each month, based on your age and years until retirement, in order to end up with a portfolio of at least $1 million by the time you retire.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Growth stocks are your go-to option for long-term investing

If you're investing for a period of 20-plus years, then you'll likely be far better off going with growth stocks than dividend stocks. The latter are more suitable when you're older, closer to retirement, and want to keep your risk relatively low. The former, however, can produce much better gains over the long run but come with much greater uncertainty and risk in any individual year. As long as you're in it for the long haul and can stomach any bad years along the way, the payoff can be well worth it.

Rather than picking growth stocks yourself, there are many exchange-traded funds (ETFs) you can invest in that will give you exposure to many of them. One popular option for growth investors is the Vanguard Growth Index Fund ETF (NYSEMKT: VUG). This has been a market-beating fund to own over the past decade, with its total returns (which include reinvested dividends) up more than 240%.

^SPX data by YCharts.

The past doesn't predict the future. But odds are, by sticking with growth stocks, you'll be putting yourself in an excellent position to achieve some terrific returns in the years ahead.

The VUG ETF holds more than 160 of the U.S.'s largest growth stocks, including big names like Nvidia and Meta Platforms. Its constituent stocks have averaged an annual earnings growth rate of more than 26% over the past five years. The fund also charges a low expense ratio of 0.04%, which means fees won't take a big chunk out of your gains.

How much do you need to invest each month to retire with $1 million?

In order to forecast how much you'll need to save and invest each month to be on track to retire with at least $1 million, you need to consider the number of years you have until retirement, as well as the average return that you'll achieve over that timeframe.

You might have some control over the retirement number (in this example, I'm assuming you retire at age 65). But predicting an average return can be challenging, and that can make a significant difference in your overall returns and how much you might need to invest.

Historically, the S&P 500 has averaged an annual return of around 10%. For the sake of being conservative, in the table below, I've shown you how much you'll need to invest monthly based on a 10% annual return, and also a 9% return, should the market slow down.

Table and calculations by author.

These numbers can seem high, but they don't need to be discouraging. You can invest tax refunds, inheritance, investment gains, and any other potential lump sum amounts to help accelerate your portfolio's growth. The more money you have invested, the more it will compound over time, and help you end up with a higher balance in the end.

Knowing the amounts you might need can help you create a plan that aligns with your goals, and that doesn't set expectations too high or depend on a best-case scenario. Either way, trying to put aside a regular amount of money into growth-oriented investments can still help you build up a strong portfolio balance by the time you retire, even if you don't end up with $1 million.

Should you invest $1,000 in Vanguard Index Funds - Vanguard Growth ETF right now?

Before you buy stock in Vanguard Index Funds - Vanguard Growth ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Index Funds - Vanguard Growth ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms, Nvidia, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool has a disclosure policy.

President Donald Trump's macroeconomic policies are taking center stage on Wall Street. The 47th U.S. president has decided to implement aggressive tariffs on imported goods from most countries, although he recently paused these plans for 90 days. Regardless, corporations are looking for ways to avoid paying these tariffs.

That includes two pharmaceutical leaders: Johnson & Johnson (NYSE: JNJ) and Novartis (NYSE: NVS). The industry has so far escaped Trump's tariffs, but that might not last for much longer, which makes these drugmakers' plans critical to monitor. Should investors still consider purchasing shares of Johnson & Johnson and Novartis in this environment?

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

1. Johnson & Johnson

One way to avoid tariffs is to manufacture locally. That's what Johnson & Johnson plans on doing more of. The healthcare giant had already been shoring up its manufacturing capacity in the United States, but in March, it announced it would increase these investments. It plans to spend over $55 billion in the U.S. over the next four years, which is 25% more than it spent in the previous four years. J&J will build new facilities and expand some existing ones.

But it will take time for the company to move more of its manufacturing back into the U.S., and in the meantime, it could feel the impact of the tariffs. That's besides other issues the drugmaker faces in the medium term. It's still dealing with thousands of talc-related lawsuits. Furthermore, with the Inflation Reduction Act (IRA), a law passed in the U.S. in 2022 that granted Medicare the power to negotiate the prices of certain drugs, Johnson & Johnson will generate lower revenue from some products.

That said, there are plenty of things to like about J&J's business. Its significant investment in the U.S. to avoid tariffs demonstrates its ability to adapt to changing economic conditions. And that adaptability is precisely what makes this corporation massively successful. No pharmaceutical company generates more in annual revenue. Considering that, it's unsurprising the pharmaceutical company has existed for more than a century. Whether it's dealing with the IRA or some other legal challenge, the smart money is on Johnson & Johnson overcoming it.

It has done so plenty of times throughout its history. The pharmaceutical leader also boasts an AAA rating from Standard & Poor's -- that's a higher credit rating than the U.S. government's. The current legal challenges won't be its undoing.

Meanwhile, it continues to generate strong financial results. Growth in revenue and earnings isn't spectacular, but is steady and reliable. J&J has a deep pipeline of investigational drugs and a diversified medical device business.

Lastly, as more evidence of a robust business, it has now increased its payouts for 63 consecutive years, making it a Dividend King. Rather than avoiding Johnson & Johnson, investors seeking reliable income payers in these volatile times should seriously consider buying its shares.

2. Novartis

Novartis is also shoring up its U.S. manufacturing footprint. The company will invest $23 billion over five years to build seven new facilities and expand three more. In the end, it expects to locally manufacture 100% of the medicines it sells in the U.S. That's all good news for shareholders, as it shows that even if Trump's tariffs outlast his administration, Novartis is well-positioned to mitigate their impact.

The drugmaker expects to grow its revenue at a compound annual growth rate (CAGR) of 5% through 2029, a decent performance for a pharmaceutical giant. Novartis will lose U.S. patent exclusivity for some major products, including heart failure medicine Entresto, this year. Entresto generated $7.8 billion in sales last year, up 30% year over year, so this will be a significant loss.

However, Novartis will eventually fill the gap thanks to newer products. Fabhalta, first approved in the U.S. in 2023 to treat a rare blood disease called paroxysmal nocturnal hemoglobinuria, could generate peak sales of $3.6 billion according to some estimates. There will be others that will allow Novartis to clock that CAGR of 5% through 2029, despite its best-selling drug going off-patent in the U.S. this year. Beyond the next four years, the company's ability to generate consistent earnings, its existing lineup, and its deep pipeline should allow the stock to perform well.

Additionally, Novartis has increased its payouts for 28 consecutive years, a strong streak that makes it attractive to income-oriented investors. Despite the threat of tariffs, I think this dividend stock is a buy.

Should you invest $1,000 in Johnson & Johnson right now?

Before you buy stock in Johnson & Johnson, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Johnson & Johnson wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Prosper Junior Bakiny has positions in Johnson & Johnson. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

For the last few years, Tesla (NASDAQ: TSLA) CEO Elon Musk has spoken repeatedly about his vision to turn his electric vehicle (EV) company into a full-blown artificial intelligence (AI) operation. One of the primary ways AI is expected to revolutionize Tesla's business is through autonomous driving.

Musk doesn't just want to integrate self-driving technology into Tesla cars for consumers to enjoy, though. Rather, he is looking to create a fleet of autonomous Tesla cars that people can hail at virtually any time. This initiative is known as the Robotaxi, and it's become one of the biggest sources of excitement for Tesla bulls ever since Musk gave the public a sneak peek late last year.

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While the idea of Robotaxi has certainly garnered a lot of attention, Tesla is not the only major technology company exploring the prospects of AI in the automobile market. In the piece below, I'm going to explore why I think some of the moves billionaire hedge fund manager Bill Ackman has been making as of late could spell trouble for Tesla and its autonomous vehicle vision.

Did Ackman just beat Tesla at its own game? Read on to find out more.

Step 1: Alphabet is rivaling Tesla in the autonomous vehicle market

Ackman is the CEO of hedge fund Pershing Square Capital Management. Unlike other hedge fund managers, one of Ackman's notable attributes is that he tends to keep Pershing Square's portfolio limited to a small number of stocks, generally owning positions in 10 or so companies at a time.

Since AI burst onto the scene as the market's hottest trend a couple of years ago, one mega-cap tech stock that's been relatively polarizing is Alphabet (NASDAQ: GOOGL). Some skeptics argue that Alphabet's dominance in internet search via Google could be threatened by the rise of ChatGPT and other large language models (LLMs). In addition, Meta Platforms and Amazon are becoming increasingly popular areas for advertisers to invest their budget over the likes of Alphabet-owned properties Google and YouTube.

Nevertheless, Ackman took a liking to Alphabet and began building a position in the company a couple of years ago. The obvious thesis around Alphabet as an AI play is that the company has the ability to integrate new services across its ecosystem -- from advertising, cloud computing, cybersecurity, workplace productivity, internet search, and more.

However, one area that receives virtually no attention pertaining to Alphabet's AI ambitions is autonomous driving.

Over the last several years, Alphabet has quietly built an impressive autonomous vehicle operation of its own called Waymo. Today, Waymo taxis are already serving customers in major metropolitan areas, including Phoenix, San Francisco, Los Angeles, and Austin.

Image source: Getty Images.

Step 2: Robotaxis could revolutionize Uber's business

Earlier this year, Ackman took to social media platform X (formerly Twitter) in which he revealed that Pershing Square took a position in ride-hailing leader Uber Technologies (NYSE: UBER). Similar to Alphabet, Pershing Square's investment thesis around Uber primarily revolved around the company's valuation relative to its growth profile. While the firm thinks Uber's global scale and diversified services operation provide the company with a unique ability to expand profit margins over the coming years, there is a more subtle tailwind that could accelerate its growth as well.

According to Pershing Square's annual investor presentation from February, autonomous vehicle developers may choose to partner with taxi operations, such as Uber, due to the company's existing base of 170 million customers worldwide. In other words, Uber's value proposition is that it already has an enormous, sticky base of consumers that autonomous vehicle businesses wouldn't need to try and acquire themselves. In addition, Pershing Square's stance is that as autonomous vehicle fleets scale and become more mainstream, this dynamic provides an opportunity for the entire rideshare market to expand as well.

You might wonder how autonomous vehicles could benefit Uber's business. Think about other service-oriented businesses that act as distributors. Airbnb doesn't build its own physical infrastructure, unlike hotels. Rather, it serves as a platform on which consumers can book a trip, and Airbnb makes money by brokering that transaction.

In the same way, Uber does not need to spend billions building its own fleet of autonomous vehicles. Rather, it can strike partnerships with other companies developing self-driving technology and simply serve as a distribution channel. This mitigates a lot of risk, as Uber stands to benefit from a number of different companies that may choose to leverage its platform for a robotaxi service. Meanwhile, if Tesla does not pull off its goals in autonomous driving or fails to scale its own fleet, the company will likely be in a tough position in terms of growth opportunities.

Step 3: Hertz could be the missing piece to Ackman's autonomous vehicle vision

Just a few days ago, Ackman took to X again to reveal Pershing Square's latest big move: building a position in car rental stock Hertz (NASDAQ: HTZ). Once again, Ackman provided a long list of detailed financial analyses in his post and made the case for why he thinks Hertz is trading for a great value.

However, there was a sentence in the last paragraph of the post that really caught my eye.

Ackman wrote, "What if Uber partnered with Hertz on an AV [autonomous vehicle] fleet rollout over time?"

Such an idea could make a ton of sense. By merging car rentals, ride-hailing, and autonomous vehicle technology, Hertz could transform into a robotaxi operation of its own. Instead of relying on foot traffic for its services at airports and other venues, Hertz could rent self-driving cars (perhaps from Waymo) on the Uber app. As a result, Hertz removes the variability of the middleman (human drivers) but still benefits from a consistent flow of renters via Uber's installed base. In turn, Hertz could unlock steadier revenue streams and improve its unit economics on its existing vehicle infrastructure.

Ackman could be triangulating an AI trade for the ages

Admittedly, the idea of a three-way partnership between Alphabet (Waymo), Uber, and Hertz might seem like a pipe dream. But remember, Ackman is an activist investor -- often working with a company's executive leadership to identify ways to improve profitability and scale the overall operation.

Given his public statements, I think it's reasonable to say that Pershing Square could see Alphabet, Uber, and Hertz as a cheaper way to invest at the intersection of AI and autonomous driving compared to Tesla and its lofty valuation.

But at a deeper level, I think Ackman could be in the early stages of triangulating an AI trade for the record books. Should Waymo, Uber, and Hertz go on to work together in the world of autonomous vehicle fleets, Ackman would be in a position to benefit from three different opportunities -- as opposed to betting the farm on just one player such as Tesla.

Should you invest $1,000 in Alphabet right now?

Before you buy stock in Alphabet, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Meta Platforms, and Tesla. The Motley Fool has positions in and recommends Airbnb, Alphabet, Amazon, Meta Platforms, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.

The U.S. Federal Reserve reduced the federal funds rate (overnight interest rate) in September, November, and December last year, for a total reduction of 100 basis points. It reversed some of the aggressive rate hikes from 2022 and 2023 when the central bank was trying to tame a four-decade high in the Consumer Price Index (CPI) measure of inflation.

The CPI continues to decline toward the Fed's 2% annualized target, and since the U.S. economy faces significant uncertainty right now in the face of simmering global trade tensions, Wall Street is forecasting several more rate cuts this year.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

According to the CME Group's FedWatch tool, which calculates the probability of the central bank's potential decisions based on the interest rate futures market, there could be four cuts before 2025 is over. This would have significant implications for the S&P 500 (SNPINDEX: ^GSPC) index but not in the way you might expect.

Image source: Getty Images.

Tariffs are creating a headache for the Fed

In March, the CPI increased at an annualized rate of 2.4%, the slowest pace since 2021. Given that reading was a stone's throw from the Fed's 2% inflation target, it would normally clear the way for further interest rate cuts.

However, on April 2, President Donald Trump announced plans to impose tariffs on all imported goods from America's trading partners, which threw a giant wrench into the works.

Trump enacted a sweeping 10% tariff on imports from every country, in addition to a series of much higher "reciprocal tariffs" on imports from specific countries that have large trade imbalances with the U.S. The reciprocal levies are now under a 90-day pause pending negotiations, except those placed on many Chinese imports, which currently stand at 245% for some products.

Tariffs can increase the price of goods for consumers, so Fed policymakers now have to wait for additional CPI data in the coming months before they can be sure interest rate cuts are the right move.

With that said, tariffs could also drive a sharp slowdown in economic activity, which might give the Fed a reason to cut rates even if inflation remains sticky. According to Reuters, seven top Wall Street banks raised their chances of a recession in the U.S., specifically because of the tariffs.

Goldman Sachs believes there is a 45% chance of a recession in the next 12 months (up from 35% before the tariffs), and JPMorgan Chase places the probability at 60% (up from 40% previously).

As a result, some Wall Street banks also reduced their 2025 forecast for the federal funds rate, implying more rate cuts than initially expected by the end of the year. According to the CME Group's FedWatch tool, the central bank could cut rates by 25 basis points four times: once in each of its policy meetings in June, July, September, and December.

Rate cuts often foreshadow stock market volatility

Interest rate cuts are typically good for the corporate sector because they allow companies to borrow more money to fuel their growth, and they reduce the cost of debt, which can boost profits. Plus, lower rates encourage investors to move away from risk-free assets like cash in favor of growth assets like stocks, which can drive the market higher.

However, the start of every rate-cutting cycle since the early 2000s foreshadowed a correction in the stock market, and this time is no different. The S&P 500 is currently down 12% from its recent all-time high, despite the benefit of three rate cuts at the end of 2024:

Data by YCharts.

Simmering global trade tensions (and their potential to weaken the economy) are the main reason for the recent decline in the S&P 500, not last year's interest rate cuts. But the timing is certainly interesting because the Fed tends to cut rates when the economy is showing signs of weakness, and the above chart suggests the first few rate cuts in a given cycle might be a good predictor of temporary stock market declines.

Moreover, the Fed has a documented history of being late to the party. The chart below shows how recessions (represented by the gray-shaded areas) often follow periods of rising interest rates. This indicates the Fed often hikes rates too far, or is too slow to reduce them in the face of economic weakness:

Data by YCharts.

Recessions can be bad news for stocks

Whether or not the recent correction in the S&P 500 turns into a full-blown bear market could hinge on the economic data over the next few months. If the U.S. economy slips into a technical recession -- indicated by two consecutive quarters of shrinking gross domestic product -- investors would likely trim their exposure to stocks even further.

Simply put, the long-term performance of the stock market is driven by corporate earnings, and companies make less money during recessions due to factors like higher unemployment and less consumer spending, thus sending stock prices lower.

Further interest rate cuts should help pull the economy out of any potential slump, and since the stock market is a forward-looking machine, they might even entice longer-term investors to start buying up a bargain or two. After all, despite facing the dot-com bust, the global financial crisis, and the COVID pandemic over the last 25 years alone, the S&P 500 still consistently climbed to new record highs.

This time probably won't be any different, especially since several countries are already negotiating new trade deals with the Trump administration. As a result, any further weakness in the stock market can still prove to be a great long-term buying opportunity.

Should you invest $1,000 in S&P 500 Index right now?

Before you buy stock in S&P 500 Index, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P 500 Index wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and JPMorgan Chase. The Motley Fool recommends CME Group. The Motley Fool has a disclosure policy.

Right now, there are only seven public companies that are trading at a market capitalization north of $1 trillion. The exclusive list of trillion-dollar stocks includes Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta Platforms, and Berkshire Hathaway.

Beyond trillion-dollar stocks, the next three largest companies in the world as measured by market cap are Broadcom, Tesla, and Taiwan Semiconductor Manufacturing. Do you see any themes here?

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

With the exception of Berkshire, each trillion-dollar or near-trillion-dollar business dominates the technology sector. The next largest company after those referenced above is retail specialist Walmart (NYSE: WMT). With a market value of approximately $760 billion, Walmart is the most valuable non-pure-play technology business on the planet besides Berkshire.

Image source: Getty Images.

What's interesting is that each company valued higher than Walmart could be facing some unwelcome deceleration across their various businesses thanks in large part to new tariff policies. A common fear in the stock market right now is that tariffs could lead to higher prices (inflation) for consumer goods and raw materials, thereby sparking an economic slowdown (recession).

As a contrarian, I think a tariff-induced slowdown could actually benefit Walmart. Let's explore why Walmart's business is ideally positioned to maneuver around any crises caused by tariffs. From there, I'll make the case for why Walmart could soon earn its entry into the trillion-dollar club.

Walmart's business is built for a tough economy

Walmart is primarily known as a brick-and-mortar powerhouse -- offering consumers a variety of goods across apparel, consumer electronics, produce, home remedies, and much more. While that might not sound too different from stores like Target or CVS, Walmart's main value proposition is its attractive prices. Cost-conscious shoppers tend to gravitate toward stores such as Walmart during periods underscored by rising prices or economic uncertainty.

To back this idea up, let's take a look at some key performance indicators for the retail juggernaut over the last few years.

US Inflation Rate data by YCharts

The chart above illustrates trends seen in Walmart's revenue and gross profit, indexed against inflation rates over the last five years. In addition, I've included the brief (but important) COVID-19 recession -- as illustrated by the grey column on the left. Let's unpack what's happening here.

Following the COVID-19 recession in early 2020, inflation levels started accelerating -- peaking at around 9% in mid-2022. During this period, Walmart's revenue and gross profit started to steadily climb. This is an impressive feat, considering many retailers were plagued by lower foot traffic during the pandemic.

Not only are Walmart's prices one way to attract to consumers, but the company has also done a stellar job complementing its physical retail storefronts with an e-commerce marketplace of its own -- providing it with multiple avenues to monetize shoppers.

Taking this a step further, let's analyze some important metrics retailers use to gauge the health of their business. During the fourth quarter of Walmart's fiscal 2025 (ended Jan. 31), the company recognized same-store sales growth of 4.6%, while transactions rose by 2.8% and average ticket size grew by 1.8%. This means that Walmart is seeing more people come to its stores and spending more money while they are there.

Although same-store sales, transaction volumes, and average order size can be variable in the retail space, I think any concerns related to this are mitigated by Walmart's ability to hold onto its shoppers. The big takeaway I gather from the chart above is that Walmart's revenue and gross profit continue to steadily rise, even as inflation levels have cooled over the last two years.

I think ongoing economic uncertainty from tariffs could wind up being a tailwind for Walmart and its ability to lure consumers in and keep them part of its ecosystem in the long run.

What would it take for Walmart to reach a $1 trillion valuation?

For the fiscal year ended Jan. 31, Walmart's earnings per share (EPS) totaled $2.42. Given the company's current share price of $95, Walmart stock trades for a price-to-earnings (P/E) ratio of approximately 39.

A $1 trillion market capitalization implies roughly a 32% increase Walmart's current valuation of $760 billion. This means in order to reach the trillion-dollar club, Walmart stock would need to be trading around $125 per share.

If I assume that the company expands both its EPS and P/E ratio by 15%, that would imply future earnings of $2.81 and a P/E ratio of 45 for Walmart. In turn, this results in a future share price of about $126, which would put Walmart just above a trillion-dollar market capitalization.

I think this level of EPS growth is attainable for Walmart, especially against the backdrop of a cloudy economic picture. The bigger question mark is whether investors will start applying a premium multiple to Walmart -- viewing it as a more essential player in the retail arena, all while giving the company credit for some of its higher-margin pursuits beyond brick-and-mortar sales.

While the exercise above is rooted in simple math, I am cautiously optimistic that Walmart could emerge as a member of the trillion-dollar club sooner rather than later. Investors looking for opportunities that may be slightly more insulated from tariffs or economic slowdowns may want to consider a position in Walmart right now.

Should you invest $1,000 in Walmart right now?

Before you buy stock in Walmart, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Walmart wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, Target, Tesla, and Walmart. The Motley Fool recommends Broadcom and CVS Health and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

What should investors do during a stock-market correction? One great strategy is to go shopping. A bull market will eventually follow the challenging and volatile times we face, and, based on history, this bull run is likely to be longer than the current ordeal. Furthermore, companies often end up trading for steep discounts during corrections, since many investors are unable to resist the urge to panic-sell -- one more reason why fortunes are made during downturns.

With that in mind, let's consider two stocks down 17% and 36%, respectively, this year that are worth investing in right now: Regeneron Pharmaceuticals (NASDAQ: REGN) and Moderna (NASDAQ: MRNA).

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

1. Moderna

Moderna made a name for itself by quickly developing and marketing an effective COVID-19 vaccine when the world needed it most. Although it made a small fortune in this area, the biotech has been struggling since the pandemic started to recede. Moderna's revenue declined substantially while it returned to being unprofitable. The current volatile environment isn't helping the stock, either.

MRNA Revenue (Annual) data by YCharts.

But there is some good news: Moderna has made significant clinical progress in the past couple of years. It earned approval for a vaccine for the respiratory syncytial virus (RSV), mRESVIA, while it aced phase 3 studies for a combination coronavirus/influenza vaccine that could earn the green light sometime this year. This combo vaccine would be the first to inoculate patients against both COVID and flu, showing Moderna's innovative abilities once again.

The company consistently targets areas with high unmet needs, including some where no approved vaccines exist. Its late-stage pipeline features a potential vaccine for cytomegalovirus (CMV) -- there are currently none -- and a personalized cancer vaccine that could help significantly decrease the risk of recurrence or death in eligible patients. Moderna's early-stage pipeline boasts other ambitious candidates. The field of mRNA-based vaccines, in which the biotech specializes, is still relatively new -- but it looks incredibly promising.

Traditional vaccines are made from weakened viruses or bacteria, a process that takes time. While mRNA ones need the genetic code of the target infectious agent, they're faster and cheaper to develop. Moderna is proving to be an innovative player in this growing field, and it has a deep pipeline that should lead to more significant clinical milestones down the line.

So, despite the company's struggles over the past three years, it could have a bright future. That's why it's worth it to purchase Moderna's shares, as they're down by 36% this year.

2. Regeneron Pharmaceuticals

Regeneron Pharmaceuticals, a leading biotech company, faces some uncertainty. While its financial results looked strong last year, Eylea, a medicine for wet age-related macular degeneration co-marketed with Bayer, is facing biosimilar competition. Even though Regeneron earned approval for a new formulation of Eylea in late 2023, the old version continues to generate significant sales for the drugmaker.

That, combined with marketwide volatility, is what's causing Regeneron's shares to perform poorly; the stock is down 17% year to date. However, there are some key factors to consider.

First, Regeneron's most important medicine is Dupixent, an eczema treatment it co-markets with Sanofi. Dupixent was already among the world's best-selling medicines before it earned a label expansion in treating chronic obstructive pulmonary disease (COPD) late last year, which could add several billion dollars in sales of the therapy.

Second, the newer version of Eylea should continue stealing patients away from the older version, thanks to its more convenient dosing schedule. That should help smooth out losses from biosimilar competition.

Third, Regeneron has an exciting pipeline. It's growing its presence in oncology, has made moves in the weight loss market, and is developing a highly promising gene therapy for hearing loss that's posted excellent results in early-stage studies.

Finally, Regeneron recently initiated a dividend in addition to its already attractive share-buyback program; the company clearly intends to reward its shareholders. That's another good reason to invest in the stock.

Should you invest $1,000 in Moderna right now?

Before you buy stock in Moderna, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Moderna wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Regeneron Pharmaceuticals. The Motley Fool recommends Moderna. The Motley Fool has a disclosure policy.

Chipotle Mexican Grill (NYSE: CMG) reported its financial results for the first quarter on Wednesday, posting adjusted earnings per share of $0.29, which exceeded Wall Street estimates. However, its revenue of $2.9 billion came up short of expectations.

This top restaurant stock has been a huge winner over the past five years (as of April 24), rising by 184%. But investors are losing their appetite for it in 2025. Shares have tanked by 18% so far this year, and they're down 28% from the all-time high they set in June 2024.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Has that decline set Chipotle up as a stock you should buy now on the dip and hold for the next 20 years?

Dealing with economic weakness

U.S. consumers aren't in the best shape these days. The University of Michigan Consumer Sentiment Index's reading this month was the second lowest on record (data goes back to 1952). The only other time it was worse was in June 2022, right after the Federal Reserve started aggressively raising benchmark interest rates to combat soaring inflation.

The U.S. might not officially be in a recession right now. But the overall mood of consumers is far from rosy as they attempt to cut back on their discretionary spending in preparation for more difficult times ahead. That's taking a toll on Chipotle, a business that previously had enjoyed fairly durable demand.

The fast-casual Tex-Mex pioneer reported a surprising same-store sales decline of 0.4% in the first quarter. That was its first year-over-year drop since the second quarter of 2020 -- the onset of the COVID-19 pandemic. And it was a drastic reversal from the 7% gain it registered in Q1 2024.

"In February, we began to see that the elevated level of uncertainty felt by consumers are starting to impact their spending habits," CEO Scott Boatwright said on this week's earnings call. The company's outlook calls for same-store sales to increase in the low single-digit range for the full year.

To its credit, though, Chipotle has long implemented a strategy that focuses on its value proposition for customers. Management still believes this is the company's key strength, highlighting the below-$10 average cost of its chicken burritos and burrito bowls, its most popular entrees.

"This is about 20% to 30% below comparable fast-casual meals and can reach as high as 50% below comparable meals in some markets," Boatwright said about those menu items. This could at least provide a buffer that will allow Chipotle to fare better than rivals in a recessionary scenario.

Chipotle's growth story

It's easy to get caught up in the latest news about slowing sales, but don't let that cause you to forget Chipotle's phenomenal longer-term track record of strong financial performance. Between 2019 and 2024, its revenue rose by 102% while net income surged by 338%.

That growth came not just from higher sales per store, but also its rapidly expanding physical footprint -- and its efforts on that second front continue. Chipotle currently has 3,781 locations, with a goal of opening about 273 more before the year is over. It now has five restaurants in the Middle East, and the company just signed an agreement to open its first Chipotle in Mexico next year.

The management team remains confident that it will eventually hit its long-term target of having 7,000 stores open in North America. Based on one of its other objectives -- getting to $4 million in annual unit volume -- Chipotle is aiming for a top line of $28 billion a year at some point in the future. Given the company's track record of success, it's easy to be optimistic that it will hit that goal.

Is the stock expensive?

Shares of Chipotle usually aren't on the discount rack. That's because the market understands that this is a great business.

However, with the stock trading 28% off its peak, I think there's an opportunity here. Its current forward P/E ratio of 39 isn't necessarily a bargain, but it's certainly more reasonable than the multiple of 52 it traded at one year ago.

In my opinion, dollar-cost averaging your way into an investment in Chipotle and holding on for the long term seems like a smart strategy now. The company remains on course to have significantly greater revenues and earnings 20 years from now.

Should you invest $1,000 in Chipotle Mexican Grill right now?

Before you buy stock in Chipotle Mexican Grill, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Chipotle Mexican Grill wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

Two popular stocks among tech investors lately are Rigetti Computing (NASDAQ: RGTI), which makes quantum computing hardware and software, and the semiconductor company Nvidia (NASDAQ: NVDA). While Nvidia is a much more direct bet on the booming artificial intelligence (AI) market, Rigetti's quantum computing systems are integrated into some existing AI.

Both stocks have soared, too, with Rigetti up 34% and Nvidia skyrocketing 342% over the past three years, compared to the S&P 500's 15% rise. But, which is the better AI stock for long-term investors? Let's take a look.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

What's happening with Nvidia?

If you're in the market for an AI stock, it's hard to beat Nvidia. All major global tech companies have ramped up their data center spending over the past few years as they compete for artificial intelligence dominance.

That's led to a bonanza of data center spending and rising demand for the processors in them. The result has been a boon for Nvidia's chip sales. Revenue from its data center segment soared 142% in fiscal 2025 to $115 billion, and the company's non-GAAP earnings soared 130% to $2.99 per share.

It's also given Nvidia a massive lead in the AI data center processing space, with an estimated 70% to 95% market share. And the AI boom isn't over yet. Nvidia CEO Jensen Huang thinks tech companies will invest $2 trillion in AI data center spending over the next few years, which could lead to even more demand for Nvidia's advanced processors.

The company is well-positioned to benefit from its latest AI processor, Blackwell, which has already spurred strong demand from tech giants and resulted in $11 billion in sales, the company's "fastest product ramp."

What's happening with Rigetti?

Quantum computing offers investors a compelling opportunity because the ramifications of the technology could advance everything from materials science to disease prevention and climate science. Unlike traditional computers, which process bits as either 0s or 1s, quantum computers use qubits, which can be either 0 or 1, or both simultaneously.

That allows them to scale hypothetical scenarios much faster than traditional computers, although sometimes at the cost of making more mistakes. Rigetti makes hardware, software, and quantum cloud computing systems that tap into the massive potential of this market, which could be worth $170 billion by 2040.

Rigetti's comprehensive approach to quantum computing is attractive to investors. It also partnered with some heavy hitters in the cloud space, including Amazon and Microsoft, giving Rigetti's tech real-world credibility (as opposed to theoretical applications that are often associated with quantum computing).

But despite all of the interest in Rigetti, the company's recent financial results weren't impressive, considering sales fell 32% in the fourth quarter to just $2.3 million. That's not a good look for a young quantum computing company that's trying to carve out a niche in a speculative, new market.

Rigetti's share price has soared 639% over the past year, giving its stock an expensive price-to-sales ratio of 147. Investors are now paying a premium for a company whose sales are falling and that's betting on an unproven market.

The verdict: Nvidia is the better AI stock

There's no getting around the fact that all stocks are facing some uncertainty right now. President Trump's tariffs have left the market reeling, and many companies are scrambling to adjust to potential changes. Investors should be more cautious than in the recent past about the potential growth for any company, including Nvidia and Rigetti.

But if you're looking for the better AI stock right now, Nvidia is it. Even if an economic slowdown arises from tariffs, Nvidia has a strong lead in the AI processor market, and tech giants are still clamoring for its chips. AI spending could slow a bit during a downturn, but the spigots won't likely turn off. Tech giants have too much at stake in their race for AI dominance to slow spending too much.

As for Rigetti, I think the stock is simply too speculative. Sure, quantum computing holds a lot of promise, but it could still be years before most companies have real-world uses for the tech. Meanwhile, Rigetti's revenue is tumbling when it should be rising quickly, and its stock is expensive. All of which means it's probably best to leave Rigetti's shares alone right now.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $287,877!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $39,678!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $594,046!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.

See the 3 stocks »

*Stock Advisor returns as of April 21, 2025

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

There's no denying that investors love companies that can remarkably grow their wealth. That's precisely what one dominant business has done historically.

In the past 40 years, its shares have generated a spectacular total return of 22,000%. That means a $10,000 investment made in April 1985 would be worth an eye-popping $2.2 billion today. No one will argue with this outcome, which translates to a superb 14.4% annualized gain.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Continue reading to learn more about this monster stock and what makes the business special.

Doing the same thing

If there's a stock with that kind of phenomenal track record, investors need to pay attention. The company in question is Costco (NASDAQ: COST), the giant warehouse club operator with 897 locations around the globe. The operations haven't changed much in the past four decades, as there's always been an emphasis on providing shoppers with quality merchandise at affordable prices.

Costco has experienced meaningful growth, though. Its store base totaled just 221 in 1994. Besides the U.S., it has a presence today in 13 other countries. Executives see potential internationally, with long-term plans for just under half of annual new store openings to come outside the United States.

What's particularly impressive is that Costco experiences durable demand, regardless of economic conditions. We're seeing this play out today, with same-store sales increasing 6.8% in Q2. This key metric has risen in at least the last 13 full fiscal years. Costco is clearly a consumer favorite.

That has propelled net income gains. Diluted earnings per share have climbed at a compound annual rate of 11.6% in the past 20 years. According to Wall Street consensus analyst estimates, this closely watched bottom-line figure is expected to grow at a yearly pace of 11.1% between fiscal 2024 and fiscal 2027.

Dealing with competition

The retail sector is arguably the most competitive industry in the world. From a consumer's perspective, there are virtually an unlimited number of choices for where to spend money. In theory, this should make things difficult for Costco.

But over its storied history, the business has developed durable competitive strengths that support its success. Scale is particularly helpful when it comes to supporting Costco's industry position.

During the 12-week period that ended Feb. 16 (Q2 2025), the business generated $62.5 billion in net sales. That makes it the third-biggest retailer in the world. That volume means Costco has tremendous buying leverage over its suppliers. This advantage is bolstered by the fact that the company's typical warehouse carries just 4,000 stock-keeping units, 87% less than the average supermarket.

Buying massive quantities of a smaller number of goods allows Costco to obtain cost savings. And these are constantly passed to shoppers in the form of everyday low prices on store shelves.

Because of its intense focus on always doing what's right for the customer, Costco has developed a strong brand presence. That supports growth, with membership households increasing 6.8% in the latest fiscal quarter. Loyalty is impressive, as the worldwide renewal rate was 90.5%.

Time to buy Costco?

After learning more about Costco, the immediate reaction from investors might be to buy the stock. After all, shares are currently on the dip, down 9% from their February peak. It's hard to argue with the long-term track record of compounding shareholder capital.

The market is fully aware of just how great of a business Costco is. This is clearly represented by the valuation. If you want to buy the stock, you must be comfortable paying a price-to-earnings ratio of 57. That's not far off from their steepest level ever.

I think shares are extremely expensive. And in this instance, the starting valuation can get in the way of achieving adequate returns going forward. Investors probably shouldn't buy the stock right now.

Should you invest $1,000 in Costco Wholesale right now?

Before you buy stock in Costco Wholesale, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Costco Wholesale wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

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*Stock Advisor returns as of April 21, 2025

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

Bitcoin (CRYPTO: BTC) hit a value of more than $100,000 last year, for the first time ever. Did the fourth Bitcoin halving event prove to be a positive catalyst for the cryptocurrency and its valuation? Or has its rapid rise in value had more to do with other factors?

How Bitcoin has done since the halving event

Bitcoin's big selling point is its scarcity. And every four years, the rewards of Bitcoin mining are halved. It's bad news for miners, but it slows the rate at which new tokens enter circulation, thereby helping maintain Bitcoin's scarcity.

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Bitcoin's value sometimes rises after a halving, prompting investors to buy the digital currency beforehand. But did that happen after the last halving event, which took place on April 19, 2024? Here's a look at Bitcoin's price in the months following the event.

Calculations by the author. Source: Yahoo! Finance.

While Bitcoin has risen since the halving event, the rise really began only after Donald Trump, who campaigned as a crypto-friendly president, won a second term.

Relying on patterns and charts is a dangerous strategy

Stocks and cryptocurrencies often move in relation to new developments in the market. And what happened in the past won't necessarily happen again.

As usual, the 2024 Bitcoin halving event was planned and would have been priced into the digital currency's valuation even before it happened. The scarcity was not new or unexpected, so investors shouldn't have expected it to have an immediate impact on Bitcoin's valuation, regardless of what may have happened in previous years.

The real catalyst behind the digital currency's surge in value was due to something that wasn't priced in -- the election win of a president who was looking at loosening restrictions in the crypto world, and even setting up a bitcoin reserve.

Investors should remain careful with crypto

Bitcoin has hit record highs in recent months, but that doesn't mean it's destined to continue going up in value. This is a speculative investment, and favorable policies from President Trump may lead to greater use and acceptance of the digital currency, but there's no way of knowing.

Some investors call Bitcoin "digital gold," but it has not lived up to that name this year, as the cryptocurrency has declined right along with the S&P 500. At the same time, the price of gold has been hitting record levels this year as many investors are craving safe assets. Although it has been picking up steam in recent days, Bitcoin's proving to be as volatile as ever; it's a safe investment only when compared to other cryptocurrencies.

For the vast majority of investors, that's not safe enough. Unless you have a high risk tolerance, you're likely better off pursuing growth stocks than taking a chance on Bitcoin or any other cryptocurrency. With the markets still on shaky ground, speculative investments could be particularly vulnerable to sharp and sudden sell-offs this year.

It might be tempting to buy Bitcoin especially as it gets hot and rises in value, but investors should tread carefully with the cryptocurrency as its movements can be unpredictable. And with a lot of question marks remaining around the economy, there's still plenty of risk in the markets right now.

Relying on safe businesses with strong growth prospects is going to be a more tenable option for investors, especially those who are risk-averse.

Should you invest $1,000 in Bitcoin right now?

Before you buy stock in Bitcoin, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of April 21, 2025

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

Media-streaming technology innovator Roku (NASDAQ: ROKU) is always riding a roller coaster down Wall Street. As of April 23, the stock is trading 36% below its annual peak and 87% down from the all-time highs in the summer of 2021.

But Roku's high-octane growth story is still playing out. The company sacrificed some profits to boost its market reach and sales growth in recent years, and many investors focused on the swooning bottom line instead of the accelerating revenue trend. As a result, Roku's stock now trades at a ridiculously low valuation and I highly recommend buying a few shares in April 2025.

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Roku's value-stock valuation neighbors

So here's the deal. Roku's stock is changing hands at 2.2 times trailing sales. That's an appropriate valuation for mature, slow-growing businesses. For example, The Home Depot (NYSE: HD) carries the same 2.2 price-to-sales (P/S) ratio and Starbucks (NASDAQ: SBUX) hovers just above this unlikely duo with a P/S ratio of 2.6.

Starbucks and Home Depot are perfectly respectable companies. They're great investments in their own right, in large part thanks to their generous dividend policies. Investors expect these retail giants to generate massive cash profits, most of which are distributed to shareholders in the form of buybacks and dividends. Sales growth isn't terribly important in this scenario. It's all about bottom-line profits.

Not your barista's growth trajectory

But Roku isn't running that type of business yet. It could get there in a decade or two, but this company is maximizing its revenue growth and global market reach right now. There was a slowdown in the inflation crisis of 2022, but that's ancient history already. Roku is growing its business much faster than Starbucks and Home Depot:

ROKU Revenue (TTM) data by YCharts

Roku's profit-sapping business growth methods

Roku's impressive sales growth was built on some temporarily painful policies. The company boosted its research and development (R&D) budgets throughout the difficult post-lockdown and high-inflation periods. Did it slow down on sales and marketing efforts? Nope, those budgets rose just as quickly as the R&D spending. At the same time, gross margins headed lower because Roku sold its media players at very low prices in order to win some price-sensitive customers.

Things have changed since then. Roku is pursuing international markets while building its presence in the video-based digital advertising sector. This isn't the most inspiring economy ever for advertising experts, with unpredictable government policies and low consumer confidence, so it could take some time before Roku's ad business starts pulling its weight.

Smart ways to buy a roller-coaster stock like Roku

That's alright, though. I showed you that Roku's revenue growth is accelerating right now. The company's robust American business forms a rock-solid platform from which it can explore opportunities abroad, much like former parent company Netflix (NASDAQ: NFLX) did in the 2010 to 2015 era. I can't promise that Roku will earn a trillion-dollar market cap any time soon, as Netflix hopes to do, but the stock looks incredibly undervalued at today's tiny valuation ratios.

So Roku checks all the boxes for a promising long-term growth investment. It's an exciting growth stock (check!) in a booming global market (check!), trading at bargain-bin prices (check!).

Volatility comes with the territory, and you might want to blunt the price risk by spreading out your Roku investment over time. Buying in thirds is one reasonable approach, or you could make a deeper commitment by setting up a dollar-cost averaging plan. The more you can automate these moves, the better.

And keep an eye on that P/S ratio. Roku's stock doesn't belong in the same value-investing conversation as Home Depot and Starbucks in the long run. Netflix is a more reasonable peer, currently trading at 11 times sales.

Should you invest $1,000 in Roku right now?

Before you buy stock in Roku, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Roku wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $680,390!*

Now, it’s worth noting Stock Advisor’s total average return is 869% — a market-crushing outperformance compared to 159% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of April 21, 2025

Anders Bylund has positions in Netflix and Roku. The Motley Fool has positions in and recommends Home Depot, Netflix, Roku, and Starbucks. The Motley Fool has a disclosure policy.

The latest quarterly update from Moody's (NYSE: MCO) delivered mixed signals for investors to interpret. For the period ended March 31, the financial services intelligence giant posted an 8% year-over-year increase in quarterly revenue, while adjusted earnings per share (EPS) were up 14% to $3.83, with both metrics surpassing Wall Street estimates.

On the other hand, a revision lower in the company's full-year profit guidance overshadowed the report, adding to a volatile start for the stock in 2025. Shares of Moody's are currently down about 19% from its 52-week high at the time of writing amid renewed economic uncertainties.

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Does the recent weakness offer investors a buy-the-dip opportunity, or could it signal the potential for more downside ahead? Let's discuss what to do with Moody's stock now.

Rock-solid fundamentals

Moody's is recognized for its financial analytics technology platform that includes credit ratings, investment research, and technical market data. The company has capitalized on a global trend as corporations, financial institutions, and government agencies increasingly outsource critical parts of their investing workflow as a more cost-effective approach.

The company has captured strong demand for its cloud-based subscriptions and data licensing agreements amid the bull market in financial assets in recent years. These high-level themes were evident as Moody's started fiscal 2025 with strong performance. The company kicked off the year on a high note.

Image source: Getty Images.

With record revenue and earnings in the first quarter, the Moody's Investor Service (MIS) segment, which issues credit ratings, has been a growth driver. Momentum in global bond issuances, alongside favorable market conditions between tight credit spreads and lower interest rates as the key indicator for ratings demand, propelled Q1 MIS revenue up by 8% year over year.

Additionally, results from the Moody's Analytics (MA) group have been solid with a 9% increase in annualized recurring revenue (ARR) at the end of Q1, coupled with a 93% retention rate, suggesting durable growth. Profitability is another highlight. Moody's adjusted operating margin reached 51.7%, up 100 basis points over the past year.

Strong free cash flow has allowed Moody's to hike its dividend by 11% to the new quarterly rate of $0.94 per share, yielding 0.9%. The company has also been active with stock buybacks, including $1.2 billion remaining under an existing authorization to repurchase shares. Overall, beyond the stock market turbulence, Moody's fundamentals remain solid.

A more cautious outlook

While it was largely business as usual for Moody's at the start of the year, the company now faces the challenge of navigating a rapidly evolving operating environment. Recent changes to U.S. trade policy have rocked markets, with experts predicting disruptions to the economy, forcing some businesses to rethink their investment plans.

For Moody's, the concern is that a slowdown, particularly in global debt issuances, could directly impact its credit ratings business while limiting new growth opportunities. The company is taking these risks seriously and has tempered its full-year growth and earnings expectations.

Compared to a prior 2025 revenue growth estimate in the high single digits, Moody's now expects just a mid-single-digit percentage increase. Similarly, the full-year target for adjusted EPS guidance was lowered to a range of $13.25 to $14, from the prior $14 to $14.25 estimate issued earlier in the year.

Data source: Moody's Corp.

Despite Moody's overall solid fundamentals, including an outlook for continued profitable growth, the clear slowdown compared to stronger trends in 2024 has made it more difficult for investors to justify the stock's valuation premium. Even following the sharp sell-off from recent highs, shares of Moody's are trading at a price-to-earnings (P/E) ratio of 38, above the five-year average multiple of around 35. As such, the stock seems relatively expensive with room for the price to fall a bit further before standing out as a clear bargain.

MCO PE Ratio data by YCharts

A wait-and-see approach

I believe shares of Moody's are simply too pricey to buy today, considering its subdued outlook. There are likely enough strong points for current shareholders to continue holding, but investors watching from the sidelines may find more compelling opportunities elsewhere in the stock market that offer better value and greater upside potential.

Should you invest $1,000 in Moody's right now?

Before you buy stock in Moody's, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Moody's wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

Now, it’s worth noting Stock Advisor’s total average return is 859% — a market-crushing outperformance compared to 158% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Moody's. The Motley Fool has a disclosure policy.

Tech stocks have taken investors on a wild ride in 2025, with tariffs, interest-rate jitters, and a new presidential administration fueling market volatility. But while many are running for the exits, savvy investors know that short-term chaos can create long-term opportunity.

Here are a few of those stocks -- trading at significant discounts -- that are worth a closer look while Wall Street catches its breath.

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1. AppLovin

AppLovin (NASDAQ: APP) provides technology and tools to help mobile app developers effectively market, monetize, and grow their apps. The stock trades recently traded around $270 per share and has increased by more than 300% since its initial public offering in 2021.

Yet the stock is down roughly 23% in 2025, in part due to the investigative investment firm Muddy Waters Research releasing a short report on the company claiming that AppLovin appears to be violating the platforms' terms of service. As a result, Muddy Waters believes AppLovin could lose business to competitors, claiming a 23% client churn rate in the first quarter 2025.

AppLovin CEO Adam Foroughi pushed back against the short report, describing it as "littered with inaccuracies and false assertions." Foroughi emphasized that the company operates in full compliance with App Store policies and stressed that its business is "based on transparency and integrity."

AppLovin delivered strong financial results in 2024, generating $4.7 billion in revenue and $2.1 billion in free cash flow -- marking year-over-year increases of 43.4% and 100%, respectively. The company has been putting its free cash flow to work by buying back stock, reducing its shares outstanding by 10% over the past three years. As of the end of 2024, it still has $2.3 billion remaining under its share repurchase program.

APP Price to Free Cash Flow data by YCharts

AppLovin's valuation may look steep at first glance -- trading at 43.6 times free cash flow -- but high multiples are par for the course in the world of tech and growth stocks, where investors pay for future potential. What makes AppLovin stand out is its rapid growth: With free cash flow doubling in 2024, the premium looks far more palatable. Plus, the stock is currently trading about 50% below its peak price-to-free cash flow multiple, making this high-growth company look like a bargain.

2. Nvidia

Arguably, at this stage of the artificial intelligence (AI) boom, Nvidia (NASDAQ: NVDA), a chip supplier, has been the largest beneficiary. It provides the ecosystem of software and materials to support AI development. After its stock skyrocketed over the past few years, Nvidia briefly became the world's most valuable publicly traded company.

Since then, the stock has cooled to $104 per share, falling more than 30% from its peak of $153 per share. Despite the price fluctuations, the business is humming along.

In fiscal 2025, Nvidia generated $130.5 billion in revenue and $72.9 billion in net income, representing an incredible increase of 114% and 145%, respectively, compared to fiscal 2024.

One reason for the recent dip in Nvidia's stock is growing uncertainty around tariffs, which could pressure the company's high gross margin. Nvidia's gross margin, a key indicator of cost efficiency and pricing power, stood at 78.4% in fiscal Q1 2025, but management expects it to decrease to between 70.6% and 71% in fiscal Q1 2026. If that projection holds, it would mark the fourth consecutive quarter of margin contraction.

Addressing the issue during the company's February earnings call, CFO Colette Kress acknowledged the uncertainty around tariffs, saying, "It's a little bit of an unknown, it's an unknown until we understand further what the U.S. government's plan is, both its timing, it's where, and how much."

For a mature company like Nvidia, the price-to-earnings (P/E) ratio remains a widely used valuation tool, measuring a company's stock price relative to its earnings over the past 12 months. Currently, Nvidia trades at 35.6 times trailing earnings -- a figure that might seem steep to traditional value investors. However, when considering the forward P/E ratio, which reflects expectations for the next 12 months of earnings, the valuation appears far more attractive at 23.6 times earnings.

NVDA PE Ratio (Forward) data by YCharts

Looking further ahead, Nvidia CEO Jensen Huang's long-term optimism surrounding the AI revolution helps support the company's valuation. On the company's most recent earnings call, Huang outlined a sweeping vision for the role of AI, stating:

Every fintech company will [use AI]. Climate tech companies use AI. Mineral discovery now uses AI ... every higher education, every university uses AI, and so I think it is fairly safe to say that AI has gone mainstream and that it's being integrated into every application.

Are these discounted tech stocks worth buying?

Whenever the market turns turbulent, growth stocks are often the first to take a hit -- and that's exactly what investors are seeing now. Both AppLovin and Nvidia have delivered explosive growth in recent years, resulting in premium valuations. But with the latest pullback, investors finally have a rare chance to scoop up shares at far more reasonable prices. Given the long-term tailwinds behind mobile advertising for AppLovin and the surge of AI for Nvidia, this moment of market uncertainty could end up being a prime opportunity for investors who can look beyond the next few quarters and focus on the long term.

Don’t miss this second chance at a potentially lucrative opportunity

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• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $276,000!*
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Collin Brantmeyer has positions in Nvidia. The Motley Fool has positions in and recommends AppLovin and Nvidia. The Motley Fool has a disclosure policy.

It's not difficult to find stocks likely to go up if the tariff dispute is resolved with a series of trade deals, but what if you want to be a bit defensive and buy some stocks with relatively less exposure to potential tariffs or even some upside exposure? Where better to look for them than among Warren Buffett's Berkshire Hathaway holdings?

Here's why beverage king Coca-Cola (NYSE: KO), building materials maker Louisiana-Pacific (NYSE: LPX), and swimming pool specialist Pool Corp. (NASDAQ: POOL) are worth buying right now to diversify a portfolio.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Why $8,100 in stocks?

Appreciating that $8,100 is an odd figure, it was selected because the average 40-year-old investor has roughly $162,000 in stocks, and a position in one of these stocks of $8,100 would be equivalent to about 5% of the total portfolio. That's a decent amount to buy a little "insurance."

Coca-Cola remains a longtime Buffett holding

The main drawing points of Coca-Cola, the perennial Warren Buffett holding, are its 2.8% dividend yield and relative safety in the current market. As management outlined on an earnings call in February, Coca-Cola tends to produce and sell locally. As such, it's relatively insulated from the impact of cross-border tariffs.

In addition, its exposure to increased packaging costs -- from, say, tariffs on aluminum -- isn't significant, as the metal is only a small part of its cost component. Its core sparkling soft drink business is also relatively immune to an economic slowdown. It all adds up to make Coca-Cola a safe place to park money in the current environment.

Louisiana-Pacific could be a net winner from tariffs

Louisiana-Pacific, which specializes in engineered wood siding and oriented strand board (OSB), has a bit more complicated relationship with tariffs. CEO William Southern argues that OSB is a "traded commodity." In plain English, that means there's no brand loyalty with OSB, and its pricing is heavily influenced by the costs of wood fiber and resin. As such, increases in tariff costs will feed through into higher prices across the industry.

Its engineered wood siding business sources wood fiber from the U.S. and Canada, and it will be affected by any tariffs placed on Canadian wood fiber. Still, Louisiana-Pacific has two engineered wood siding mills in Canada from which it could potentially increase production for the Canadian market.

Meanwhile, it can produce more in the U.S. from its mills there. In addition, if significant tariffs are placed on Canadian wood fiber, it's likely that the price of its engineered wood siding would rise significantly, and the company's ability to source and produce in the U.S. could be a major plus. While President Trump hasn't imposed a new tariff on Canadian softwood yet, plans are in progress , and Louisiana-Pacific could be a net winner.

In the longer-term view, engineered wood siding can grab more market share from alternatives such as vinyl and fiber cement, and at some point, new housing starts -- its key end market -- will surely start to grow again.

Pool is more resilient than you might think

Pool Corp., the wholesale distributor of pool equipment, is a surprisingly resilient business. While new pool construction is down 50% from the pandemic-induced boom in spending on the home, and management expects new pool construction in 2025 to be flat with 2024, almost 65% of its sales go to the more stable market for maintenance and minor repairs.

That helps to support sales in a slowing discretionary spending environment. In addition, note that the 60,000 new pool units expected this year in the U.S. still represent growth in the installed base of pools, which Pool Corp. could potentially sell into.

Turning to the issue of tariffs, back in February, CFO Melanie Hart said that "we do not have a significant amount of direct imports" and "do not anticipate that the currently enacted additional tariffs from China will have a material impact on sales for 2025."

While tariffs on Chinese products are significantly higher than in February, the "vast majority" of Pool's products are still "purchased domestically," she said. What's less clear is the knock-on impact on costs from its suppliers as they suffer increased costs from tariffs. Naturally, Pool will try to pass them on with price increases, but it's not clear how consumers might react.

Still, the company has good long-term growth prospects, largely because of ongoing pool maintenance spending and an eventual recovery in new pool construction growth.

Image source: Getty Images.

Three Buffett stocks to buy

While all three stocks face some headwinds in 2025, Berkshire Hathaway and Buffett's focus is on the long term, and demand for things like soft drinks, engineered wood siding, and pool products is likely to be a feature of the economy for many years to come.

Should you invest $1,000 in Coca-Cola right now?

Before you buy stock in Coca-Cola, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

Now, it’s worth noting Stock Advisor’s total average return is 859% — a market-crushing outperformance compared to 158% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.

Walmart (NYSE: WMT), one of the largest retailers in the world, has been a reliable stock for long-term investors. Over the past 10 years, it has gained nearly 270% as the broad market S&P 500 index advanced by about 160%. Factoring in reinvested dividends, Walmart's total return was 340% against the S&P 500's total return of 205%. Here are seven reasons it's still worth buying with both hands today.

Image source: Getty Images.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

1. Its consistent comps growth

Walmart's comparable-store sales metric, which gauges the year-over-year growth of stores that have been open for at least 12 months (plus its e-commerce sales), has consistently risen over the past decade. It achieved that sales growth by renovating its stores, rolling out more private label brands, matching Amazon's prices, expanding its e-commerce and digital capabilities, and leveraging its massive network of brick-and-mortar stores to fulfill online orders.

Its Sam's Club chain also grew at a healthy rate, keeping pace with rival Costco (NASDAQ: COST) in the membership-driven warehouse club market. Walmart's international growth slowed down in fiscal 2022 and fiscal 2023 (which ended in January 2023) as it divested some of its weaker overseas businesses, but that streamlined segment flourished over the following two years.

Data source: Walmart. Comps growth excludes fuel sales.

Walmart's growth over the past five years shows how resistant it was to inflation, geopolitical conflicts, and other disruptive macro headwinds. For its fiscal 2026 (now underway), it expects its net sales to grow by 3% to 4% on a constant-currency basis.

2. Its stable brick-and-mortar expansion

The total number of Walmart stores worldwide declined from 11,501 at the end of fiscal 2020 to 10,593 at the end of fiscal 2022. However, a large portion of that decline was caused by its overseas divestments.

It has been expanding its footprint steadily since then, and it ended fiscal 2025 with 10,711 physical locations. That stable pace of expansion should help it widen its moat and maintain its lead against its smaller retail competitors.

3. Its gross and operating margins are resilient

Walmart's scale enables it to maintain higher gross and operating margins than many other retailers. While surging inflation squeezed its gross and operating margins in 2022 and the first half of 2023, both figures bounced back in the second half of 2023 and 2024 as those headwinds diminished.

Source: YCharts.

4. It's resistant to tariffs

Those resilient margins suggest that it will be able to resist the impact of President Donald Trump's unpredictable tariffs, even though most of the products it sells are manufactured in China and other Asian countries. Walmart should be better positioned to convince its overseas suppliers to pre-deliver more products to the U.S. warehouses before the larger portion of Trump's tariffs kick back in, leverage its scale to negotiate better prices for its future shipments, have its suppliers absorb some of those higher costs, or pass the costs of tariffs onto consumers by raising its prices. The last solution would certainly be the least preferable for its customers -- but the chain could still sell its products at lower prices than its competitors.

5. It's a Dividend King

Walmart's forward dividend yield of 1% might seem paltry, but it has raised its dividend annually for 52 consecutive years, earning it the title of Dividend King. It also spent just 52% of its free cash flow on its dividend payments over the past 12 months, so it has plenty of capacity to make future hikes.

6. It's still buying back its own shares

Walmart bought back 6% of its outstanding shares over the past five years, 17% of its shares over the past decade, and 36% of its shares over the past 20 years. Its consistent stock buyback policy, combined with its regular dividend hikes, indicates that it's committed to returning a lot of its free cash flow to its investors.

7. It deserves its premium valuations

From fiscal 2025 through fiscal 2028, analysts on average expect its revenue to grow at a compound annual rate of 4% as its EPS increases at a compound annual rate of 11%. Investors should take those estimates with a grain of salt, but they do suggest that Walmart can continue to grow regardless of Trump's tariffs and his escalating trade war, sticky inflation, and other macroeconomic challenges.

That's why Walmart's forward price-to-earnings ratio of 36 doesn't seem too expensive. Costco, which also has plenty of evergreen advantages, trades at 54 times forward earnings. Walmart's stock isn't cheap, but the company's resilience in this rough market justifies its valuation multiple. That's probably why it's still up 6% year to date even as the S&P 500 is down by 7%. Investors who buy the stock today should be well rewarded over the next few years.

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

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This has been a difficult year for semiconductor stocks, which is evident from the 23% decline in the PHLX Semiconductor Sector index so far. Investors have decided to book profits and preserve capital owing to the uncertainty caused by the tariff-fueled trade war. This, in turn, has led to an increase in the possibility of a global recession.

However, recent developments suggest there could be a reason for investors to remain optimistic. These include the 90-day pause in reciprocal tariffs to allow time for negotiations between the U.S. and its trade partners, the exemption of duties on imports of semiconductors, computers, processors, and some other electronic items, and news that the U.S. and China are engaged in trade negotiations.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Favorable trade deals between the U.S. and its trading partners could bring the stock market out of the rut it is in. Moreover, disruptive trends such as artificial intelligence (AI) are here to stay thanks to the massive productivity gains they can deliver in the long run.

That's why now would be a good time for savvy investors to take a closer look at a couple of top semiconductor stocks that have pulled back of late but have the potential to fly higher in the next year -- and in the long run thanks to the massive AI-driven opportunity they are sitting on.

1. Broadcom

Shares of Broadcom (NASDAQ: AVGO) have retreated 28% in 2025, and that drop doesn't seem justified in light of the company's remarkably solid growth in recent quarters. Not surprisingly, analysts are upbeat about Broadcom's performance on the stock market in the coming year. The shares carry a 12-month median price target of $250 as per 44 analysts covering the stock, which points toward potential gains of 50% from current levels.

Also worth noting here is that 89% of analysts covering Broadcom recommend buying it. That isn't surprising considering the impact of AI on the company's business. The company's AI revenue increased an impressive 77% year over year in the first quarter of fiscal 2025 (which ended on Feb. 2) to $4.1 billion.

That was faster than the 25% growth in the company's overall quarterly revenue, which landed at $14.9 billion. AI, therefore, is now producing 27% of Broadcom's top line. Importantly, AI chips are likely to move the needle in a bigger way for Broadcom going forward as the company's custom processors are in tremendous demand from cloud hyperscale customers.

Broadcom is expecting a 44% year-over-year increase in its fiscal Q2 AI revenue to $4.4 billion. However, don't be surprised to see the company doing better than that as more customers are expressing interest in its custom AI chips. Each of Broadcom's existing three hyperscale cloud customers is expected to deploy AI server clusters powered by more than 1 million of its custom AI chips, known as XPUs, over the next three years.

Management says that "these three hyperscale customers will generate a Serviceable Addressable Market or SAM in the range of $60 billion to $90 billion in fiscal 2027." Considering that Broadcom is in the final stages of the development of custom AI accelerators for two more hyperscale customers, its AI-driven addressable market should ideally become bigger.

Even better, Broadcom's AI-focused customer lineup is about to get bigger as "two additional hyperscalers have selected Broadcom to develop custom accelerators to train their next-generation frontier models." So, the company could eventually sell its AI chips to a total of seven cloud hyperscale companies in the future.

That could open up the possibility for exponential growth in the company's AI revenue from fiscal 2024 levels of $12.2 billion. Its addressable market from the current three customers is quite huge already. All this explains why analysts are expecting Broadcom's earnings to jump by an impressive 36% in the current fiscal year to $6.64 per share.

However, Broadcom delivered stronger earnings growth of 45% in fiscal Q1, suggesting that it has the potential to beat Wall Street's expectations, especially considering the new AI customers that it is bringing on board. So, investors looking to add a top AI stock to their portfolios right now would do well to buy this chip designer before it starts flying higher.

2. Marvell Technology

Marvell Technology (NASDAQ: MRVL) is Broadcom's competitor in the custom AI chip market, and shares of the company have slipped a massive 55% this year. As a result, Marvell is now trading at just 22 times trailing earnings. Buying this chip stock at this valuation is a no-brainer given its phenomenal growth.

After reporting 27% year-over-year growth in fiscal 2025's Q4 (which ended on Feb. 1), Marvell is expecting its fiscal 2026 Q1 revenue to jump at a greater pace of 61%. Meanwhile, it is expecting earnings to jump by more than 2.5 times from the year-ago period. This tremendous growth makes it clear why Marvell's 12-month price target of $105 as per 39 analysts covering the stock points toward a potential jump of 112% from current levels.

What's more, 92% of the analysts suggest buying Marvell stock, which is not surprising considering its red-hot growth. Importantly, its growth seems sustainable going forward. Marvell is the second-largest player in the custom AI chip market after Broadcom, with the latter controlling an estimated 70% of this space. However, analysts are expecting both companies to be on equal footing in the future, driven by Marvell's recent wins in the custom AI processor market.

Marvell currently has two high-volume customers for its custom AI chips, and the good part is that it is expecting both customers to expand the adoption of its processors. Also, management pointed out on the company's March earnings conference call that it is on track to start production of custom AI chips for a third customer in 2026. The company points out that this third customer can drive "a very significant amount of incremental revenue for Marvell over the next several years."

What's more, Marvell is pushing the envelope on the product-development front. The company is working with its foundry partner TSMC to roll out custom AI processors and connectivity chips made using a 2-nanometer (nm) manufacturing process. The two companies have already developed a working sample of the 2nm silicon, according to an update issued last month.

This could give Marvell an advantage over Broadcom considering that the 2nm chip samples of the latter are expected in June this year. So, the possibility of Marvell gaining ground in the AI chip market is definitely solid. All this explains why analysts are expecting remarkable growth of 79% in the company's earnings in the current fiscal year, which could indeed help this semiconductor stock deliver the remarkable returns that it is expected to deliver over the next year.

Throw in Marvell's cheap valuation, and it is easy to see why it would be a good idea to buy this stock hand over fist following its big drop this year, as it may not be long before it regains its momentum thanks to its outstanding AI-fueled growth.

Should you invest $1,000 in Broadcom right now?

Before you buy stock in Broadcom, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Broadcom wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

Now, it’s worth noting Stock Advisor’s total average return is 859% — a market-crushing outperformance compared to 158% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and Marvell Technology. The Motley Fool has a disclosure policy.