By now, my hunch is that you've caught on to some of the major things influencing the stock market this year. As a refresher, mixed economic data, uncertainty surrounding policies from the Federal Reserve, and of course President Donald Trump's tariff agenda have combined to make a series of clouds shading what direction the markets might move next.

But even amid all of this uncertainty, some industries have proven resilient throughout the year. Within the broader technology sector -- which itself has had a tough year so far -- the communication services industry has held up relatively well. If you're unfamiliar with communication services, these are businesses that touch areas such as advertising, entertainment, and internet content consumption.

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When you think about these categories, my guess is your mind rushes straight to Netflix -- and for good reason. As of the closing bell on June 5, shares of Netflix have gained 40% so far this year. That absolutely crushes the breakeven returns of the S&P 500 and Nasdaq Composite.

While Netflix remains a quality business, there is another streaming stock that has been quietly outperforming the competition. With shares up nearly 60% year to date, Spotify Technology (NYSE: SPOT) might be a company to put on your radar.

Below, I'll detail why streaming stocks have outperformed the broader market this year. From there, I'll cover why I think Spotify could be Wall Street's next big stock-split stock and explain how this process works for investors.

Why are streaming stocks crushing the market in 2025?

Perhaps the biggest factor weighing on growth stocks at the moment is how President Trump's tariff policies will shake out. Tariffs are taxes that are placed on goods imported or exported from the country. Usually, tariffs are used as a negotiation tactic in order to change policies with trade partners. While there can be strategic value to implementing tariffs, they can also lead to periods of higher costs (inflation) for businesses.

Unlike many companies in the technology landscape, streaming businesses don't have much to worry about when it comes to tariffs. For the most part, streamers rely on the consumption of digital content such as movies, television, music, or audiobooks. Given these companies don't have much in the way of physical manufacturing or rely on imported or exported goods, streaming is a relatively tariff-resistant business -- making them particularly attractive investments right now.

Image source: Getty Images.

Why I see Spotify as a prime stock-split candidate

The chart below illustrates Spotify's stock price since its initial public offering (IPO). As investors can see, shares of the streaming giant are hovering near all-time highs.

SPOT data by YCharts

Sometimes when a stock price starts to rise in an exponential fashion, investors will shy away from buying. Said another way, a high share price can be perceived as an expensive stock and investors will begin looking for alternatives.

Considering that Spotify has never split its stock, combined with its climbing share price, I see the company as an interesting stock-split candidate.

How do stock splits work?

Stock splits are a simple form of financial engineering. For argument's sake, let's say Spotify announced a 10-for-1 stock-split. How would this work? Essentially, Spotify's share price of $710 would be split tenfold. In other words, Spotify's split-adjusted stock price would be about $71. At the same time, however, the company's outstanding shares would rise by tenfold.

Given the stock price and the outstanding shares change by the same multiple, the market capitalization of Spotify would remain unchanged.

Should you buy Spotify stock right now?

If the valuation of the company doesn't change, what is the point of a stock split? As I alluded to above, when share prices go higher investors often perceive the stock as expensive -- regardless of what valuation multiples might suggest.

Given a stock split results in a seemingly lower (or less expensive) share price, they often result in a new cohort of investors pouring in and buying the stock. Ironically, this activity can actually fuel the market cap of the company higher on a post-split basis. This means that even if you own more shares at what appears to be a lower share price following a split, you might actually be investing in the company at a higher valuation.

With that in mind, let's explore whether Spotify is a good stock to buy right now -- regardless of whether or not the company chooses to split its stock.

SPOT PE Ratio (Forward) data by YCharts

Per the comparable company analysis pictured above, Spotify trades at a notable premium compared to other streaming and entertainment companies on a forward earnings basis.

In my view, Spotify is a pricey stock right now and the current momentum in share price has led to some notable valuation expansion. Normally, I would not chase at these levels -- as I'd view the stock as overvalued. However, given how sensitive the capital markets are right now on the tariff rhetoric and Spotify's proven resiliency in this environment, I'd consider scooping up shares on any dips that might occur.

In the long run, I see Spotify as a best-in-class opportunity in the streaming landscape and a stock deserving of a premium.

Should you invest $1,000 in Spotify Technology right now?

Before you buy stock in Spotify Technology, 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 Spotify Technology 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 $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

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*Stock Advisor returns as of June 9, 2025

Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Spotify Technology. The Motley Fool has a disclosure policy.

When it comes to investing in artificial intelligence (AI) stocks, some of the most common opportunities reside in software platforms and semiconductors. But one pocket of the AI realm that is steadily starting to gain some traction is infrastructure.

Think of it this way: When cloud hyperscalers such as Amazon, Microsoft, or Alphabet each say they are spending tens of billions of dollars on AI capital expenditures (capex), only some of this spend is allocated toward chipsets and network equipment supplied by the likes of Nvidia, Advanced Micro Devices, or Broadcom.

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In the background, there are companies that are actually building the data centers and graphics processing unit (GPU) clusters in which they reside. This is where Nebius Group (NASDAQ: NBIS) comes into play.

Let's explore what Nebius does and how the company is riding the tailwinds of rising AI infrastructure investment. Could Nebius be an under-the-radar opportunity for growth investors right now?

What does Nebius do?

Nebius operates across four segments. The company's core business is an infrastructure-as-a-service (IaaS) business -- essentially offering customers the ability to access high-performance compute architecture via the cloud.

In addition, Nebius has three subsidiaries: Avride, Toloka, and TripleTen. Avride is an emerging force in the autonomous vehicle industry, and recently struck a partnership with global car manufacturer Hyundai. Toloka serves as a data partner for large language models (LLMs) and AI developers including Anthropic, Microsoft, and Shopify. TripleTen is a software platform marketed toward the education industry, which is another budding area where AI could lead to some transformative changes.

Image source: Getty Images.

AI infrastructure is booming

While Nebius is a diversified business and positioned to benefit from AI in many different ways, most investors tend to focus on the company's infrastructure segment. The company works closely with Nvidia, allowing its customers to access a series of different GPU architectures.

At the end of the first quarter, Nebius' IaaS business was operating at a $249 million annual recurring revenue (ARR) run rate. While this might not seem like much at first, consider this: Management is guiding toward an ARR run rate between $750 million and $1 billion by year-end, as well as positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

How is Nebius going to increase its core infrastructure segment by nearly fourfold over the next six months?

For starters, the company's data center footprint is expanding rapidly. In addition to existing projects in France and Finland, the company is also building out new infrastructure in Iceland, Kansas City, and New Jersey.

Moreover, these new data centers will be equipped with the most in-demand GPUs on the market -- of course, I'm talking about Nvidia Blackwell, Grace Blackwell, and Blackwell Ultra architectures.

When you consider that major hyperscalers are on pace to spend more than $300 billion on AI capex just this year, coupled with industry forecasts calling for $6.7 trillion of infrastructure spend by next decade, Nebius appears to have strong secular tailwinds fueling its long-run growth narrative.

Is Nebius stock a good buy right now?

When it comes to investing in Nebius, valuation is a little bit challenging, given the company's corporate history. Toward the end of 2024, Nebius was actually spun out of a Russian internet conglomerate called Yandex. As part of the deal structure, Nebius become an independent entity and listed on the Nasdaq exchange.

Given the limited financial picture available to investors, I don't find traditional valuation metrics such as price-to-sales (P/S) or other ratios entirely helpful when looking at Nebius. Rather, I'd like to look at the company relative to some peers.

NBIS Market Cap data by YCharts

One of the closest comparable public companies to Nebius is AI cloud infrastructure provider CoreWeave, which went public earlier this year. As the graph makes clear, not only does CoreWeave boast a much larger market capitalization than Nebius, but its value is actually expanding.

Granted, there are reasons for this. CoreWeave is a much larger company than Nebius on the sales front, and the company continues to strike lucrative partnerships with AI's biggest developers.

But even so, it's hard to deny CoreWeave's valuation momentum right now compared to the mundane price action in Nebius. To me, Nebius is flying under the radar -- completely overshadowed by CoreWeave's popularity.

I see robust growth ahead for Nebius both in the short and long run, and I think the company's relationships with Nvidia and others in the AI landscape could lead to larger, more strategic deals over time.

For these reasons, I would encourage investors looking for new growth opportunities in the AI space to consider a position in the infrastructure services pocket -- and particularly in Nebius.

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

Before you buy stock in Nebius 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 Nebius 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 $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% 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 June 2, 2025

Suzanne Frey, an executive at Alphabet, 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, Microsoft, Nvidia, and Shopify. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, Nebius Group, Nvidia, and Shopify. The Motley Fool recommends Broadcom 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.

It's been a hard year for investors so far. As of market close on June 5, the S&P 500 and Nasdaq Composite indexes each have breakeven returns on the year. While this makes it incredibly difficult to make money in the stock market, there have been some pockets during which investors made out well if they chose to engage with higher-than-usual volatility.

By now, you may have come across a new acronym floating around financial circles called the "TACO" trade. Below, I'll detail what this means and why it's important.

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From there, I'll dig into one of the new, hot areas fueling the artificial intelligence (AI) narrative: quantum computing.

Could quantum computing stocks be a good way to play the TACO trade? Read on to find out.

What is the TACO trade?

Even though the S&P 500 and Nasdaq are both flat on the year, the image below illustrates that there have been some pronounced dips and sharp rises across both indexes throughout 2025. The catch is that these volatile movements have been incredibly fleeting.

^SPX data by YCharts

The term "TACO trade" is a cheeky acronym that stands for "Trump always chickens out." Basically, whenever the President voiced some tough rhetoric on his new tariff policies, the markets plummeted. However, when he subsequently eases some of the pressure on the tariff talking points, the markets roar again.

In summary, the TACO trade is simply a new version of buying the dip when stock prices become abnormally depressed.

Image source: Getty Images.

Are quantum computing stocks a good buy right now?

Two of the most popular quantum computing stocks in the market right now are IonQ (NYSE: IONQ) and Rigetti Computing (NASDAQ: RGTI). During 2024, shares of IonQ soared by 237% while Rigetti stock climbed by a jaw-dropping 1,450% -- both of which completely dominated the broader market.

This year has been a different story, though. As of closing bell on June 5, shares of IonQ and Rigetti Computing have plummeted by 12% and 28%, respectively.

Given these declines, is now a good opportunity to buy quantum computing stocks?

To answer that question, smart investors understand that valuation needs to be a consideration. Per the chart below, Rigetti Computing and IonQ boast price-to-sales (P/S) ratios that seem incongruent with the company's underlying fundamentals.

RGTI PS Ratio data by YCharts

Looked at another way, IonQ and Rigetti Computing have generated a combined revenue of roughly $50 million over the last 12 months -- all while posting a net loss of $460 million between the two businesses.

Given the nominal sales figures and hemorrhaging losses, it's hard to justify the valuation multiples pictured above.

While Rigetti and IonQ have each been on a monster run from a share price perspective, both of these companies appear to be riding high on a bullish quantum computing narrative. In other words, their trading levels are not rooted in the actual performance of the business but rather in a broader macro viewpoint that quantum computing could be a good opportunity in the long run.

Keep the big picture in focus

The big takeaway here is that even though shares of IonQ and Rigetti are down on the year, their respective valuations make it clear that neither of these companies is a good "buy the dip" candidate. Rather, even with their underperformance throughout the year, each stock remains overvalued.

For these reasons, I would not chase any sell-offs in these quantum computing stocks as the TACO trade continues to evolve. My suspicion is that both IonQ and Rigetti will experience some continued valuation compression, and their share prices could very well keep spiraling downward.

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

Before you buy stock in IonQ, 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 IonQ 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 $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% 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 June 2, 2025

Adam Spatacco 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.

Two stocks that have been at the center of financial news stories throughout the year are data mining specialist Palantir Technologies (NASDAQ: PLTR) and health insurance giant UnitedHealth Group (NYSE: UNH).

The reasons these two companies are fetching so much attention, however, couldn't be more opposite.

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Palantir has emerged as a darling of the artificial intelligence (AI) revolution. As of this writing (June 5), shares of the stock have gained nearly 60% on the year -- making it one of the top performers in the S&P 500 and Nasdaq-100 indexes.

By contrast, UnitedHealth Group stock is the worst-performing name in the Dow Jones Industrial Average -- with shares plummeting by more than 40%.

Is now the time to hop on the Palantir train, or should investors take an inventory check on UnitedHealth and choose to buy the dip?

Palantir is on a run for the ages

It's been just over two years since Palantir released its Artificial Intelligence Platform (AIP), a software suite that's proven to be a transformative game changer in the company's pursuit of competing with the largest players in the tech landscape.

PLTR Revenue (Quarterly) data by YCharts

Since releasing AIP, Palantir has unlocked a new wave of revenue acceleration -- thanks in large part to the company's impressive penetration of the private sector. For most of its history, Palantir relied heavily on government contracts from the Department of Defense (DOD).

While deals with the U.S. Military and its allies are still an important cornerstone of Palantir's business, AIP has helped the company break ground in a host of other use cases -- financial fraud, supply chain and logistics, aviation, and much more.

What might be most impressive about Palantir's transformation over the last two years is how rapidly the company transitioned from a cash-burning operation to one that generates consistent profitability. Not only is Palantir acquiring new business, but it's also monetizing these customers in a profitable way. That's a lucrative combination, indeed.

The one idea that's paramount for smart investors to understand is that while Palantir's business is soaring, so is the company's share price. As of this writing, Palantir trades at a price-to-sales (P/S) ratio of 97.

Not only is that magnitudes higher than any of its peers in the software realm, but it is historically high compared to what investors witnessed during the dot-com bubble in the late 1990s.

I don't think I'm the only one who has noticed the pronounced valuation expansion in Palantir, either. Consider that Cathie Wood's Ark Invest portfolio has been trimming Palantir stock as of late, and billionaire money manager Stanley Druckenmiller completely dumped his firm's stake in the AI stock during the first quarter.

UnitedHealth Group can't seem to get out of its own way

UnitedHealth Group's coverage couldn't be any more different than Palantir's. While investors continue to cheer on Palantir's dominance, it seems that only negativity surrounds UnitedHealth at the moment.

At the core of the health insurer's problems are some operational hiccups. Mismanagement in forecasting utilization rates in the company's Medicare Advantage business, as well as some unforeseen challenges in the pharmacy benefits management (PBM) segment, caused management to reduce financial guidance for 2025.

If this weren't enough to get investors worked up, UnitedHealth also replaced its CEO as the company seeks to right the ship and turn things around by next year.

UnitedHealth's downward revision and executive changes were met with a stock sell-off for the ages. Don't believe me? As of this writing, shares of UnitedHealth trade at $296 -- hovering near a five-year low.

Image source: Getty Images.

Which stock is the better buy?

Despite its near-term headwinds, UnitedHealth stock looks awfully tempting at a forward price-to-earnings (P/E) multiple of just 13. When you consider that insiders have been buying the stock in the aftermath of this epic sell-off, I'm cautiously optimistic that all of the bad news surrounding UnitedHealth is priced in.

UNH PE Ratio (Forward) data by YCharts

On the other side of the equation, I think it's becoming increasingly difficult to argue that max upside isn't already priced into Palantir. Sure, I'm bullish on the company's future, but buying the stock near an all-time high doesn't seem like a prudent idea right now.

Overall, I'd choose to buy the dip in UnitedHealth as opposed to chasing the momentum fueling Palantir stock at the moment.

Should you invest $1,000 in Palantir Technologies right now?

Before you buy stock in Palantir Technologies, 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 Palantir Technologies 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 $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% 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 June 2, 2025

Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.

With shares down by more than 40%, UnitedHealth Group (NYSE: UNH) is the poorest-performing stock in the Dow Jones Industrial Average so far this year.

Over the last month or so, there has been no shortage of storylines surrounding America's largest health insurers. And if the share price movements are any indication, most of the news isn't great.

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Let's dig into what has driven UnitedHealth stock off a cliff, and explore whether or not it remains a good buy for long-term investors.

What is going on at UnitedHealth?

A significant influence on a stock price, at least over the short term, is how a company's quarterly earnings are perceived. Generally speaking, if a company beats Wall Street estimates or raises its outlook, shares rise. On the other hand, if investors aren't impressed by the company's performance, they may choose to sell the stock.

During UnitedHealth's fourth-quarter and full-year 2024 earnings call in January, management issued earnings guidance of $28.15 to $28.65 per share.

Things took an unexpected turn when it reported first-quarter earnings on April 17. Management is now guiding in the range of $24.65 to $25.15 for earnings per share (EPS).

Two primary factors contributed to the downward revision. First, utilization rates from the company's Medicare Advantage businesses were higher than management was forecasting. These dynamics increase near-term costs, thereby stifling profitability.

Second, the company's Optum Health division -- which serves as a pharmacy benefits manager -- has been struggling on reimbursement due to a combination of cuts to Medicare as well as changes in insurance plans in certain market demographics.

Unfortunately for investors, UnitedHealth's drama didn't stop at the operational hiccups detailed above. About a month after the first-quarter earnings report, the company announced that CEO Andrew Witty had resigned.

If this weren't enough to get investors hitting the panic button, The Wall Street Journal followed up that news with a report that UnitedHealth was under investigation from the Department of Justice (DOJ) regarding fraudulent activity in Medicare billing.

Management was quick to deny these claims and called the report "deeply irresponsible."

Image Source: Getty Images.

UnitedHealth's valuation is getting clobbered

As of this writing (June 3), shares are trading around $300, near a five-year low.

UNH PE Ratio (Forward) data by YCharts.

The graph above shows that UnitedHealth is valued right in between insurance giants Humana and Cigna on a forward price-to-earnings (P/E) basis.

Is the stock a buy right now?

Just a month ago, the company's forward P/E was roughly twice as high as now and trading for a premium compared to the competition. Given the extreme valuation compression over the last several weeks, I am inclined to think much (if not all) of the bad news is priced into the stock already.

A downward revision in guidance and changes in management are the main talking points surrounding UnitedHealth at the moment. But in the company's first-quarter earnings release and the the announcement of Witty's resignation, management added that the company should return to growth by next year.

The company's new CEO, Stephen Hemsley, purchased $25 million in UnitedHealth stock following the sell-off last month. This was met with another $6.6 million of insider buys from other executives. I think this signals confidence in the company's long-term prospects. In my view, these insider buys suggest management believes that UnitedHealth is poised to return to growth.

While the near-term price action might continue exhibiting some volatility, I think the shares remain a solid opportunity for long-term investors. Given the valuation trends explored in this article, I think now is an opportunity to buy the dip in UnitedHealth Group stock at a bargain valuation.

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

Before you buy stock in UnitedHealth 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 UnitedHealth 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 $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% 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 June 2, 2025

Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.

Brad Gerstner is the founder and CEO of hedge fund Altimeter Capital. Some of his more notable wins include being an early investor in data cloud company Snowflake and Asian ridehailing leader Grab.

As is the case with many investment funds, Altimeter has made artificial intelligence (AI) stocks a core feature of its portfolio in recent years. According to its most recent 13F filing, Altimeter trimmed its stake in Nvidia during the first quarter while completely dumping its stakes in Micron and Taiwan Semiconductor Manufacturing.

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Interestingly, though, I discovered that Altimeter holds a position in red-hot AI IPO stock CoreWeave (NASDAQ: CRWV). This comes from an investment Altimeter made when CoreWeave was still a private company. As of the close of trading on June 4, Altimeter's 2,999,536 shares were worth about $489 million

Let's explore some of the core themes in the ongoing AI revolution to try and discern what may have motivated these moves. From there, I'll break down CoreWeave's business and recent price action to help determine if the stock is a good buy right now.

Why sell Nvidia, Micron, and Taiwan Semi stock right now?

Considering how robust demand has been for high-end graphics processing units (GPU) and memory storage chips, reducing exposure to names such as Nvidia, Micron, and Taiwan Semi looks like a head-scratcher on the surface. However, this is not the first time that Gerstner has shown some contrarian characteristics in his investment style.

While I cannot say for certain what Altimeter's current thesis is regarding chip stocks or the AI movement more broadly, I've come up with some reasons that may help justify the fund's recent moves.

According to industry estimates, Nvidia currently controls roughly 90% (or more) of the data center GPU market. While a lead like that might suggest Nvidia's moat is insurmountable, there are some risks to consider. First, Nvidia's revenue sources are heavily concentrated among cloud hyperscalers such as Amazon, Alphabet, and Microsoft.

Each of these companies has been developing their own custom AI chips, potentially signaling their intentions to migrate away from Nvidia's architecture over time. When you layer on top that the fact that Advanced Micro Devices has steadily been gaining momentum in the data center arena -- as its deals with Oracle, Microsoft, and Meta Platforms demonstrate -- Nvidia's growth could be on course for some deceleration.

Lastly, one of the storm clouds hanging over Nvidia at the moment is its exposure to China. New U.S. export controls and President Donald Trump's tariffs could cut into its sales there.

Micron operates in a unique pocket of the AI realm. It specializes in memory storage chips, which are vital hardware for data centers, personal computers, and smartphones, among other technologies. With that said, memory chips are relatively commoditized. On top of that, a shift toward cloud-based AI infrastructure could potentially serve as a headwind for Micron's hardware-centric chip memory business.

Taiwan Semiconductor specializes in fabrication services -- its foundries are where chips designed by Nvidia, AMD, Broadcom, and a host of others are actually manufactured. While demand for GPUs and other types of AI chips is strong, a deceleration in sales growth from key customers (i.e., Nvidia) could trickle down to TSMC's business, too.

Furthermore, most of TSMC's factories are located in Taiwan. Given the ongoing geopolitical pressures Taiwan faces from China, it's possible that U.S. chip designers like AMD or Nvidia could begin to turn to alternative foundry providers such as Intel.

Image Source: Getty Images.

What does CoreWeave do?

CoreWeave is a cloud computing infrastructure provider that offers its clients access to Nvidia GPUs and a host of other chip integrations. As such, its business is not as exposed to the time it takes to design and manufacture sophisticated hardware -- unlike the names explored above. In a way, this makes the hyperscaler more nimble than other chip and data center stocks, allowing the company to scale at a faster pace.

CoreWeave is able to take advantage of the booming chip landscape but more so on the AI training and inferencing side. Ultimately, it fills the gap between producing chipsets and accessing optimized AI cloud infrastructure.

It's not that Nvidia, Micron, or TSMC are poor investment choices right now. It's simply that those businesses might be reaching levels of maturity, whereas CoreWeave's model could be in the early phases of exponential expansion.

Is CoreWeave stock a good buy right now?

The chart below illustrates how CoreWeave's price-to-sales (P/S) ratio has progressed since its initial public offering (IPO) earlier this year.

CRWV PS Ratio data by YCharts

There are a couple of big takeaways from this chart. First, it's clear that CoreWeave has experienced notable valuation expansion. In my view, outsize momentum is propelling CoreWeave stock right now -- and buying in the wake of its recent climb could leave you as an unsuspecting bag holder.

In addition, CoreWeave's P/S multiple is almost fourfold that of Oracle -- which also provides core data center infrastructure services. Oracle is a mature, profitable business, unlike CoreWeave's high-cash-burn operation.

While I understand the thesis behind CoreWeave's value proposition in the AI landscape, I think the stock is overbought right now. I would pass on investing at its current valuation, but would keep tabs on the company and its growth prospects.

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

Before you buy stock in CoreWeave, 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 CoreWeave 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 $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $869,841!*

Now, it’s worth noting Stock Advisor’s total average return is 789% — a market-crushing outperformance compared to 172% 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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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, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Intel, Meta Platforms, Microsoft, Nvidia, Oracle, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft, short August 2025 $24 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

On April 2, President Donald Trump announced "Liberation Day" -- marking the event with a host of new tariff policies aimed at virtually all major trading partners. Following the announcement, the capital markets experienced a period of intense selling with the S&P 500 and Nasdaq Composite both dropping by double-digit percentages.

Since the initial shock, however, stocks have started to rebound as positive dialogue with important trade partners including China has come to light. While it appears that some progress is being made, smart investors understand that negotiations and tariff policies can change overnight. For these reasons, investors should be looking for businesses that are insulated from tariffs right now.

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Let's explore why data analytics company Palantir Technologies (NASDAQ: PLTR) fits the bill and could be your best bet given the heightened uncertainty driving the direction of the stock market right now.

What type of companies tend to hold up well in a tariff environment?

Tariffs are taxes placed on imported and exported goods. One important detail to understand about tariffs is that businesses that manufacture physical items tend to be most vulnerable. In addition, tariff policies can exclude certain items underneath a broader category.

In other words, a policy could exempt automobile parts or semiconductor chips, for example. The big idea here is that unless you're following these policies down to the last detail, it can be quite daunting trying to identify a company that could hold up well during a period of pronounced tariffs.

One industry that tends to hold up well regardless of tariffs is software. All things considered, software tends to be relatively immune to tariffs because it's a service-oriented business that doesn't rely on importing or exporting physical goods.

Image source: Getty Images.

Why Palantir is in a unique position

Software businesses can be indirectly impacted by tariffs in two major ways. First, it's possible that the equipment they rely on to develop their services (i.e., data centers, hardware) is subject to higher prices due to tariffs. In addition, businesses may choose to reduce their IT budgets during periods of higher prices.

Nevertheless, Palantir appears to be in a unique position right now. Shortly after President Trump's "Liberation Day" announcement, Palantir released a new module showcasing how its artificial intelligence (AI) software suite can help retailers analyze the impacts of tariffs on their business.

I found this to be a savvy marketing tactic by Palantir, as it is essentially illustrating how tariffs can actually be a tailwind for the company. In other words, Palantir's ability to help its customers make AI-informed decisions rooted in real-time data indexed against a fluid tariff environment is a major value-add proposition.

I know the scenario above sounds great in theory, but how has Palantir actually held up as of late? Well, during the company's first-quarter earnings call earlier this month, management raised its revenue and profit guidance for the full year -- suggesting strong growth prospects despite a challenging macroeconomic picture featuring higher tariff-induced prices.

To me, this underscores how critical Palantir's products are for its customers, as well as the company's resiliency during a period of uncertainty.

Is Palantir stock a buy right now?

Even though Palantir is in a rare position to be experiencing growth during the current environment, the stock needs a closer look before investors pour in. So far in 2025, shares of Palantir have risen by 67% as of this writing (May 20). To put this into perspective, the S&P 500 and Nasdaq Composite are both at break-even levels for the year.

To better understand Palantir's valuation, just look at the chart below. At a price-to-sales (P/S) ratio of 101, Palantir is the priciest software stock in a cohort featuring both large-cap technology leaders such as Salesforce and SAP, as well as high-growth AI companies including CrowdStrike, Snowflake, and Cloudflare.

PLTR PS Ratio data by YCharts

Each of these companies develops important pieces of software and theoretically stands to thrive in the tariff environment. So why is Palantir stock experiencing such outsized momentum?

To me, I think it all boils down to hype. Palantir has an eccentric, charismatic CEO that is adored by the retail investing community. To boot, it's not uncommon for investors to follow momentum -- especially during a period when finding winners is tougher than usual.

While I think Palantir's current valuation is hard to justify, I do see the stock as a long-term buy. When it comes to AI-powered software businesses, Palantir is my top pick right now. I think the most prudent strategy for investors is to buy shares of Palantir at different price points over the course of many years, with the intention of holding on to the stock for the long run.

Should you invest $1,000 in Palantir Technologies right now?

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Amazon (NASDAQ: AMZN) is best known for its e-commerce marketplace and Prime subscription service. While online shopping and fast shipping are indeed two of Amazon's major pillars, the company has been quietly building new opportunities in the area of artificial intelligence (AI).

Let's explore what investments Amazon has made in AI over the last couple of years, and how they are reaping dividends for the company's growth. From there, I'll break down why AI is such a meaningful tailwind for the company and explain why I think Amazon is headed for a $5 trillion valuation over the next five years.

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What are Amazon's AI-driven catalysts?

Amazon has been investing aggressively in several different areas of AI. Chief among them is that the company has plowed a whopping $8 billion into generative AI start-up Anthropic. Anthropic is now an integral part of Amazon's cloud infrastructure business, Amazon Web Services (AWS) -- spurring a new period of accelerating revenue and operating margins.

On top of that, Amazon has also been designing its own custom silicon chips -- dubbed Trainium and Inferentia. In theory, by using its own custom tech stack and moving away from a reliance on outside GPUs from Nvidia or Advanced Micro Devices, Amazon has the ability to enter new markets and generate significant cost synergies in the long run.

Lastly, Amazon is also leading the charge in AI robotics -- outfitting many of its fulfillment centers with machines that are able to automate human-driven processes. This is yet another way Amazon is positioning itself to yield greater returns on its AI investments by making core parts of the business more efficient.

Image source: Getty Images.

Analyzing Amazon's valuation trends

Amazon and Anthropic initially announced their partnership on Sept. 25, 2023. Since that announcement, Amazon has added nearly $1 trillion in market capitalization (as of May 19). Admittedly, an increase of this magnitude in such a short time frame may suggest shares of Amazon are due for a pullback. While I wouldn't rule that out, I think the longer-term picture for Amazon remains bullish.

AMZN Market Cap data by YCharts

During Amazon's first-quarter earnings call earlier this month, CEO Andy Jassy told investors that the company's "AI business right now is a multibillion-dollar annual run rate business that's growing triple-digit percentages year over year." He followed that up by saying, "as fast as we actually put the capacity in, it's being consumed."

Jassy is essentially saying that demand for Amazon's AI services is so high that the company needs to quickly reinvest back into these operations in order to fulfill customer needs. These supply-demand dynamics aren't going to be solved in one quarter, but they are very good problems to have. The big picture is that customers can't get enough of Amazon's AI ecosystem, suggesting the business is in a strong position to scale over the coming years.

What would it take for Amazon to reach a $5 trillion valuation by 2030?

The chart illustrates Wall Street's consensus revenue estimates for Amazon over the next couple of years. Between now and 2027, analysts expect Amazon to maintain 10% annual revenue growth. If I assume this rate does not change, Amazon would be on pace to generate $1.1 trillion in sales by 2030.

AMZN Revenue Estimates for Current Fiscal Year data by YCharts

As of this writing, Amazon's price-to-sales (P/S) ratio is 3.4 -- much lower than many of its "Magnificent Seven" peers. If Amazon maintains this P/S multiple, the company would be trading for a market cap of roughly $3.8 trillion by 2030. In order to reach a $5 trillion valuation, Amazon's P/S would need to expand to roughly 4.5, assuming a 10% annual growth rate.

AMZN PS Ratio data by YCharts

The way I think about Amazon's valuation dynamics is that the company has already added nearly $1 trillion in value, despite AI being an incredibly nascent part of the business right now. Over the next five years, I think Amazon's AI-inspired investments will start to become more obvious -- seen through accelerating revenue across different areas of the business, widening operating margins, and robust free cash flow growth.

Should this come to fruition, I think Amazon could be in a position to witness either an increase in revenue above 10% annual growth, or an expansion in its multiples -- bringing it in line with other leading cloud and chip businesses such as Microsoft or Nvidia.

To me, Amazon has multiple avenues to achieve a $5 trillion valuation by 2030. I think the stock is trading at attractive levels right now, and long-term investors may want to consider scooping up shares and holding on tight.

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One of the emerging pockets that's piquing interest in the artificial intelligence (AI) realm right now is quantum computing. While the technology is not widely used today, curious investors seem to have bought into the idea that quantum computing represents the next chapter in the AI narrative.

Among notable players fueling the quantum computing landscape is IonQ (NYSE: IONQ), which has witnessed a 275% rise in its share price over the last 12 months. I think that IonQ's rapid ascent echoes the rise of Palantir Technologies throughout the AI frenzy.

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Could investing in IonQ today be like catching Palantir at the onset of the AI revolution? Read on to find out.

Taking a closer look at IonQ's business

The chart below illustrates IonQ's revenue growth trends over the last several years. I'll admit that the steeping slope of the revenue line is quite impressive. And considering the company has won over the likes of Nvidia, Microsoft, Amazon, and Alphabet as key customers and partners, IonQ's future looks pretty bright.

IONQ Revenue (TTM) data by YCharts

Analyzing IonQ's stock price and valuation

Over the last 12 months, IonQ has only generated $43 million in sales. So even though the company's growth rate looks enormous, this percentage growth is going off a relatively small figure in the grand scheme of things.

Nevertheless, IonQ's market cap currently hovers around $8 billion -- putting the company's price-to-sales (P/S) ratio right around 165. Considering IonQ is still burning cash and not generating meaningful revenue, it's hard to justify such a lofty valuation.

Image source: Getty Images.

Could buying IonQ stock today be like investing in Palantir at the dawn of the AI revolution?

One of the chief concerns surrounding an investment in Palantir is also that the company's valuation has become overextended. Given Palantir's P/S multiple is among the highest across leading enterprise software businesses, I understand these concerns.

PLTR PS Ratio data by YCharts

The caveat I would make is twofold. First, Palantir is already proving that its software platforms are an integral component to AI roadmaps across the public and private sectors. This is underscored by the company's consistent ability to command healthy revenue acceleration and positive earnings. Second, I would not apply too much weight to IonQ's relationships with big tech.

Nvidia already has its own quantum computing platform, called CUDA-Q. Meanwhile, Microsoft, Alphabet, and Amazon have each built their own quantum chips. Given each of these "Magnificent Seven" members are already dominating the AI space and innovating at a rapid pace to enter new markets such as quantum computing, I'm hard-pressed to see how IonQ will compete in the long run -- especially as long as the company remains unprofitable.

At the end of the day, Palantir's future prospects are somewhat predictable given the current trajectory and robust outlook from management suggest that AI-powered software will remain in demand for years to come. For these reasons, some investors can justify Palantir's premium valuation. Given the nascency of quantum computing and the competition IonQ faces, I do not think the same can be said for the company.

While following a hot stock can be entertaining and tempting, oftentimes it's also pretty dangerous. Ultimately, I think IonQ has already experienced its "Palantir moment" and I see pressure on the stock as the more likely outcome going forward. I'd pass on investing in IonQ and opt for more established opportunities in the AI sector across megacap tech.

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

Before you buy stock in IonQ, consider this:

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Suzanne Frey, an executive at Alphabet, 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, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Amazon, Cloudflare, CrowdStrike, Datadog, Microsoft, MongoDB, Nvidia, Palantir Technologies, Salesforce, ServiceNow, and Snowflake. 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.

Over the last two years, artificial intelligence (AI) has come into focus as the next megatrend. In the capital markets, megacap technology stocks have attracted the lion's share of the attention and hype as it relates to the prospects of AI.

But some smaller players are proving they also can compete with big tech. I can't think of a better example of this than enterprise software developer Palantir Technologies (NASDAQ: PLTR), which has seen its stock soar by 361% over the past year (as of May 6).

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While Palantir has become one of the most popular AI stocks, smart investors are wondering if the company's parabolic gains in share price can persist. Let's explore its valuation trends and compare these dynamics to share behavior around other important historical events in the technology sector. From there, it should become more clear which direction the stock could be headed.

Analyzing Palantir's valuation

In just one year, Palantir's market capitalization has risen from about $46 billion to more than $250 billion.

PLTR Market Cap data by YCharts.

As of this writing, the company's price-to-sales ratio (P/S) is about 91. Looking at that figure in isolation doesn't tell us too much, so let's consider it in the context of some notable examples from the tech sector's history.

Image Source: Getty Images.

How does Palantir's valuation trajectory compare to other notable tech giants throughout history?

A couple of months ago, my fellow Fool.com contributor Sean Williams wrote an astounding article referencing valuation trends during the dot-com bubble and the current AI revolution, and he subsequently indexed those results against Palantir.

Prior to the dot-com crash, the price-to-sales ratios of hot names such as Cisco and Amazon peaked around 40. That's similar to what Nvidia has experienced throughout the AI boom -- its P/S ratio reached a record of 46 a couple of years ago.

Yes, Palantir's P/S is now more than double what some leading tech players have traded at during periods of pronounced stock market euphoria.

In that light, it's clear that Palantir's valuation is overstretched. But investors still need to consider what happened in the fallout from the dot-com boom and more recent trends in the AI arena to get a better understanding of where the stock may be headed.

What does history suggest will happen to Palantir stock?

As of this writing, Cisco, Amazon, and Nvidia trade at P/S multiples of 4.4, 3.1, and 21.6, respectively. At a high level, I think the historical context here strongly suggests that Palantir's valuation multiples could begin to compress significantly.

While such a notion might inspire some panic selling, I wouldn't encourage acting on that emotion. The reason I say that is because it is completely reasonable for valuation multiples to normalize over long time horizons. As companies mature, so do their valuation ratios. In other words, as sales and profits grow over time, so does the market value of the company -- hence, valuation multiples begin to smooth out.

CSCO Market Cap data by YCharts.

Moreover, just because valuation multiples begin to compress does not necessarily mean a company's market value will decline. Amazon is a much more valuable enterprise today than it was 26 years ago during the dot-com boom, when its multiples were peaking.

While Cisco's valuation never fully recovered, the company's current market cap of $236 billion is still far greater than it was during the mid-2000s. This underscores the idea that holding stocks for the long run (several years or even decades) can lead to outsize gains.

Furthermore, Nvidia's market cap is more than twice what it was just two years ago, when its P/S peaked at around 46.

NVDA Market Cap data by YCharts.

Is Palantir a buy right now?

One of the key differences between Palantir and the examples above is that I do not think the AI sector is in a bubble. I think Palantir's growth prospects now are much clearer than those of Cisco or Amazon during the dot-com era, thanks in large part to surging demand for AI software. While this suggests its long-run prospects are robust, I would still encourage investors to understand the opportunity cost of investing in the company at a historically high valuation.

Although history suggests that Palantir could well eclipse its current market value of $250 billion eventually, there is also quite a bit of evidence suggesting that it will be trading at more reasonable prices for new buyers at some point. For investors who want to build a position in it now, I think the best strategy to use would be dollar-cost averaging. And I'd say that to get the most out of that investment, they should be prepared to hold the stock for many years.

Should you invest $1,000 in Palantir Technologies right now?

Before you buy stock in Palantir Technologies, 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 Palantir Technologies 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 $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $714,958!*

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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 Amazon, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Amazon, Cisco Systems, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.

When artificial intelligence (AI) emerged as the next big thing a couple of years ago, much of the talking points around the technology revolved around how it would be deployed in corporate environments to enhance productivity, data analytics, and efficiency. While AI certainly lends a hand to these applications, it is capable of far more.

Some of the more subtle use cases for AI include process improvements in drug discovery, financial fraud, and cybersecurity. But to achieve major breakthroughs in these areas, today's AI protocols are going to need some enhancements.

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This is where quantum computing comes into play. While quantum computing is not a widely adopted component of AI right now, the opportunity it presents is enormous.

Let's explore the quantum computing market and assess which companies are making waves in the space. More importantly, after a thorough analysis of the industry's hottest players, I'll reveal my top disruptor in the quantum computing arena and make the case for why investors should consider buying this stock hand over fist right now.

Image source: Getty Images.

1. Quantum computing is a massive opportunity

Management consulting firm McKinsey & Company estimates that the total addressable market (TAM) for quantum computing could be as much as $131 billion by 2040. Under the broader quantum computing umbrella, McKinsey sees mobility, life sciences, chemicals, and financial services as four of the biggest opportunities -- set to potentially gain $1.3 trillion in value by the middle of the next decade thanks to quantum computing adoption.

2. This AI stock is an underrated opportunity in quantum computing

Interest in quantum computing started to emerge in the later months of 2024. During that period, relatively unknown names, such as IonQ, D-Wave Quantum, Quantum Computing, and Rigetti Computing, began witnessing abnormal buying activity. These dynamics are not uncommon. Oftentimes, when a new trend begins to gain steam, smaller players start to see some momentum -- usually driven by speculation or hype narratives.

IONQ data by YCharts.

As the chart above shows, each quantum computing stock I mentioned above is trading well off its prior highs. While this might suggest these once-red-hot stocks are good buys right now, let's check out their valuations.

IONQ PS Ratio data by YCharts. PS Ratio = price-to-sales ratio.

Despite their precipitous sell-offs, each of the stocks in this peer set still trades for extended valuations. The magnitude of these price-to-sales (P/S) multiples underscores that IonQ, Rigetti Computing, Quantum Computing, and D-Wave Quantum aren't generating much in terms of revenue -- yet each company is trading at a valuation near or more than $1 billion.

On top of that, none of these companies is on a proven path to generate consistent profitability. Given these valuation dynamics, none of the quantum computing stocks in this cohort are trading at levels that would suggest buying the dip.

Beyond the smaller players, several "Magnificent Seven" stocks, including Amazon, Alphabet, and Microsoft, are quietly competing in the quantum computing arena as well. While each of these companies has made impressive inroads into quantum computing, my top pick in the space right now is Nvidia (NASDAQ: NVDA).

At the moment, Nvidia is best known for its AI chips, called graphics processing units (GPUs). However, few investors understand that Nvidia also has a software product called CUDA that works in parallel with the GPUs. By tightly integrating both its hardware products with an in-house software service, Nvidia is quickly building an end-to-end platform for enterprise AI infrastructure.

Nvidia is parlaying this strategy by adding another stitch to the broader CUDA fabric. Known as CUDA-Q, Nvidia now has a software suite that can work alongside the hardware stack needed to perform sophisticated tasks in quantum computing. Just as Nvidia has become the market leader in the AI chip space, I think the company is going to emerge as a force in the quantum computing industry despite receiving little coverage in the space so far.

3. Nvidia stock is trading for a bargain

Similar to the other stocks mentioned in this piece, shares of Nvidia are also trading well off their highs. As of this writing (May 7), Nvidia stock has plummeted 24% off its 12-month high -- losing nearly $1 trillion in market cap in the process.

But unlike IonQ, Rigetti, D-Wave Quantum, and Quantum Computing, Nvidia stock trades at a reasonable valuation. As seen below, the compression in the company's forward price to earnings (P/E) multiple could suggest that expectations around Nvidia have either normalized or that growth investors could be souring on the stock.

NVDA PE Ratio (Forward) data by YCharts. PE Ratio = price-to-earnings ratio.

Despite some near-term uncertainty as it pertains to the ongoing tariff situation and Nvidia's prospects in China, I would not write off the company. For now, Nvidia remains in control of the AI chip market, and as explored above, quantum computing represents a longer-term opportunity worth tens of billions of dollars for the company.

I think investors with a long-term horizon should consider taking advantage of Nvidia's current depressed price action and buy the stock hand over fist.

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Throughout her tenure as CEO and chief investment officer of Ark Invest, Cathie Wood earned her reputation as an investor by making big bets on emerging technology themes. Some of Ark's largest positions are in high-growth, and arguably speculative names such as Tesla, Coinbase, Palantir Technologies, and Archer Aviation.

While the companies above are each disruptive in their own right and stand to benefit from the prospects of artificial intelligence (AI), none trade for a particularly bargain valuation. Instead, recent buying activity at Ark suggests Wood has her eyes on the AI chip market. Yet, interestingly, the savvy investor seems to be interested in an alternative opportunity to chip all-star Nvidia.

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Between April 22 and May 1, Wood scooped up more than 212,000 shares of Advanced Micro Devices (NASDAQ: AMD). Let's explore what may have influenced this decision and assess why now looks like a lucrative time for investors to follow Wood's lead.

AMD is making serious moves in the data center space

When it comes to semiconductors and data centers, Nvidia is widely seen by investors and Wall Street analysts as the undeniable market leader. Considering that industry estimates suggest that Nvidia has amassed more than 90% of the market share, it's hard to deny just how dominant the company is.

Nevertheless, AMD has quietly built a respectable data center business of its own, and I think that is playing a big role in Wood's decision to buy the stock. In the table below, I've summarized AMD's financial results for its data center segment over the last year.

Data source: Investor Relations.

On a quarter-to-quarter basis, this financial picture may look a tad lumpy. Keep in mind that the semiconductor industry is highly cyclical, so it's to be expected that companies such as AMD will experience more pronounced levels of demand from time to time. The more important theme here is that AMD's data center business is accelerating sales while widening its operating margins.

Image source: Getty Images.

The company's growth acceleration is just beginning

Last year, Nvidia generated upwards of $115 billion in revenue just from the data center business. Given its size relative to AMD, you might think that Nvidia's lead is insurmountable. However, the next few years are going to be quite interesting in the chip space.

Cloud hyperscalers Microsoft, Alphabet, and Amazon are all developing their own lines of in-house chips. Furthermore, social media and metaverse behemoth Meta Platforms is joining its "Magnificent Seven" peers by building its own chips, too. Each of these companies is believed to be major customers of Nvidia, and so the introduction of new chips to the semiconductor market could pose as a serious headwind to the company's growth.

On the flip side, AMD is already working with Meta Platforms, Microsoft, and Oracle in the data center space -- each of which is deploying AMD's MI300X accelerators. To make things even more interesting, AMD already has a line of successor architectures, with the new MI350 GPU scheduled to make a splash later this year.

Is AMD stock a buy right now?

Year to date, shares of AMD have plummeted by some 37%. I think a big reason for the sell-off is that most growth investors are viewing the AI chip opportunity through a binary lens. In other words, you're either all-in on Nvidia or you think AMD may surpass its rival.

I don't personally see things this way. Despite the introduction of both direct and tangential competition, Nvidia will likely continue to be a critical player in the AI infrastructure space for the long run. However, this does not mean that investors should look the other way when it comes to AMD.

AMD may never become as large as Nvidia, and that is OK. Right now, AMD stock trades at a modest forward price-to-earnings (P/E) multiple of just 22.4. If the downward trend in AMD's forward P/E suggests anything, it's that investors aren't overly optimistic about the company's future.

AMD PE Ratio (Forward) data by YCharts

In my eyes, it's not about AMD building a data center business of the same size or footprint as Nvidia. Rather, the bigger idea is whether or not AMD can scale its current GPU business and do so in a profitable way. If the financial profile above, combined with AMD's notable customer wins, serves as any indication, I'm optimistic that the company's new chipsets should experience strong demand and help fuel robust growth for AMD.

To me, Wood is making a smart decision to pounce on AMD stock at its current price point. I think investors with a long-term time horizon should consider adding AMD to their AI portfolio.

Should you invest $1,000 in Advanced Micro Devices right now?

Before you buy stock in Advanced Micro Devices, consider this:

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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 $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $714,958!*

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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, Coinbase Global, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Coinbase Global, Meta Platforms, Microsoft, Nvidia, Oracle, Palantir Technologies, and Tesla. 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.

It's been a rough year for semiconductor stocks so far. As of market close on April 30, the VanEck Semiconductor ETF has fallen by 13%. To put that into perspective, this is more than double the losses witnessed in the S&P 500 so far this year.

Among one of the more notable laggards in the semiconductor space this year is Nvidia, which has seen its market value drop by nearly $1 trillion. Indeed, the rare dip in Nvidia stock presents a tempting opportunity for growth investors right now. However, there's another name in the chip realm that I think is going overlooked.

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Let's dig into the entire operation at Advanced Micro Devices (NASDAQ: AMD). At just $100 a share, could AMD stock be your next winning ticket in the artificial intelligence (AI) revolution?

There's more than meets the eye with AMD's business

In financial analysis, looking at the aggregate totals for revenue and profit often doesn't tell the entire story around a business. Take AMD as a prime example. In 2024, AMD's revenue and net income increased by 14% and 92%, respectively.

Although these figures are impressive, they also don't really tell you a whole lot. Furthermore, most investors might simply compare these figures to Nvidia and determine that AMD is an inferior competitor given its smaller size and less robust growth.

Savvy investors understand that there's more to the picture. By taking a look at some of the more nuanced details around AMD, investors may come to see that the company is actually beginning to give Nvidia a run for its money.

AMD breaks its revenue and operating income into four buckets: data center, client, gaming, and embedded. In 2024, the data center and client segments stole the show. The data center business is particularly important, as this represents AMD's graphics processing unit (GPU) operation that competes directly against Nvidia. Moreover, the client segment includes sales from personal computers (PCs) and electronic devices -- which can serve as a proxy to help gauge AMD's chipset business outside of data centers.

Last year, revenue from the data center business grew by 94% year over year to $12.6 billion while operating income surged by 175% to $3.5 billion. The client segment rose by more than 5% year over year to $7 billion in revenue, and transitioned from an operating loss in 2023 to a profit of $897 million.

Clearly, these figures are much higher than the 14% revenue growth I referenced above. Unfortunately, AMD's gaming and embedded segments decelerated by 58% and 33%, respectively, last year. The declining sales and shrinking operating profits from gaming and embedded are essentially skewing the overall picture at AMD.

Image source: Getty Images.

Keep your eyes on AMD's data center business

While Nvidia still remains king of the AI chip realm, I would not sleep on the pace at which AMD is moving and its potential over the next several years. Over the last year or so, several behemoths in the AI space -- many of which are Nvidia customers -- have expressed interest in complementing their Nvidia infrastructure with alternative providers.

Some examples include Oracle, Meta Platforms, and Microsoft -- each of which is training various AI applications on AMD's MI300 accelerators in addition to using Nvidia chipsets. As AMD continues releasing next-generation GPU architectures combined with custom silicon solutions from cloud hyperscalers, I think AMD is in a position to force Nvidia's hand when it comes to price as GPUs are likely going to experience some commoditization in the coming years.

Why I think investors should buy AMD stock like there's no tomorrow

Right now, AMD stock trades at a forward price-to-earnings (P/E) ratio of 22.4 -- nominally below that of Nvidia. To add another layer to this analysis, take for instance the valuation disparity between AMD and Nvidia.

AMD PE Ratio (Forward) data by YCharts

As of this writing, Nvidia boasts a market capitalization of $2.8 trillion. By comparison, AMD's market cap is $160 billion. While Nvidia is a much larger company than AMD in terms of revenue and profitability, I question whether its valuation should be 17 times that of AMD.

AMD is already proving that it can work with some of Nvidia's largest existing customers, and do so in a highly profitable manner. Furthermore, the financial and customer profiles explored above underscore that AMD is still in the middle of scaling its data center GPU operation, suggesting the company is positioning itself for more growth ahead.

In my eyes, investors are too hung up on AMD's overall growth and not attributing enough of a premium to the trends in the data center business. For just $100, investors can buy into AMD at a valuation of $160 billion -- a steep discount to the next closest competitor (Nvidia) all while enjoying long-run tailwinds fueling the AI infrastructure movement. I think AMD is positioned to thrive over the next several years and see the stock as a downright bargain at its current price point.

Should you invest $1,000 in Advanced Micro Devices right now?

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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 $623,685!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $701,781!*

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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 Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, Nvidia, and Oracle. 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.

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?

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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 $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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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.

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.

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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.

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?

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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.

For the last week, financial news programming has covered one particular topic non-stop: U.S. President Donald Trump's new tariff policies.

It seems like every few minutes, a new economist, hedge fund manager, or business executive is being broadcast on television -- each providing a unique perspective on the effects these tariffs could have on the economy. Given the wide array of conflicting viewpoints, it's not surprising to see the capital markets witness sharp sell-offs and rebounds based on the latest breaking news headline.

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Amid all the chaos, some recent commentary from billionaire hedge fund manager and CEO of Omega Advisors Leon Cooperman stuck out to me. Let's take a look at his thoughts on the current market, and explore how his viewpoints can help investors navigate uncertainty during this heightened period of tension in the stock market.

How is Leon Cooperman preparing for market volatility?

During a recent panel discussion on CNBC, Cooperman was asked about his thoughts on the tariffs, the ongoing market sell-off, and even some of his fund's specific positions.

Cooperman admitted that he would not be shocked if stocks exhibit uninspiring returns for an "extended period." While that might suggest some opportunity to buy dips in depressed stock prices, Cooperman also made it clear that he's being careful right now. To be specific, he said he isn't buying the current weakness because he doesn't trust this level of extreme volatility.

Image source: Getty Images.

Why doesn't Cooperman trust the weakness in the market?

During the interview, Cooperman was asked what he thought would happen if the tariff policies were lifted or at least relaxed on some levels. He confidently replied by saying the markets would experience a short-term rally, but doubled down on his stance that investors may not have seen the bottom just yet.

Well, on April 9, President Trump did in fact institute a pause on his initial tariffs -- replacing them with a 10% tariff for 90 days for many of the countries the U.S. trades with.

^SPX data by YCharts.

The chart above illustrates the returns of the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average since April 2 -- the day President Trump announced his initial tariff agenda. Each of these indices dropped by at least 11%. However, just as Cooperman predicted, stocks began to rally quite dramatically following Trump's new tariff pause on April 9. While each index is still down since April 2, the rebound illustrated above was sharp, to say the least.

Cooperman's point about trust makes a lot of sense

Given that the markets tanked following the initial tariff announcement last week, it makes sense that shares would rally following some positive news, just as Cooperman suggested. However, in a way, neither of these actions necessarily makes sense on a fundamental level -- and perhaps this is why Cooperman says he isn't totally trusting the weakness in the market right now.

What I mean by this is that the initial sell-off and current rally are both based purely on tariff narratives. News alone is not an inherent reason to buy or sell a stock. Rather, the constant ebbing and flowing of stock prices right now appears to be driven by emotion -- how investors are feeling based on a specific piece of news.

The thing about tariffs is that they can change at the flick of a switch. For example, while President Trump relaxed his policies for most trade partners on April 9, he also doubled down on raising tariffs for China. This is important, because at any moment these policies could change once again -- and depending on the country or the specific goods targeted, it could have massive ripple effects on certain industries and end markets.

I think Cooperman is right to remain suspicious. Right now, I think the current price action we're seeing is intensely rooted more in emotion than logic, making it incredibly challenging to navigate which stocks could present good value at this point.

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 $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% 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 10, 2025

Adam Spatacco 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.

Cathie Wood is the CEO and Chief Investment Officer of Ark Invest, which offers a small catalog of innovation-focused exchange-traded funds (ETFs). Those funds' portfolios tend to be dominated by smaller, speculative companies in emerging industries.

While these investment preferences may suggest that Wood has an appetite for risk, her funds also hold a number of blue chip stocks -- including one "Magnificent Seven" stock she just scooped up more of amid the Nasdaq's sharp sell-off.

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Wood just bought Nvidia

Wood has an interesting relationship with semiconductor behemoth Nvidia (NASDAQ: NVDA). Although she's held positions the chipmaker for years, she actually has been a seller of the stock more often than a buyer.

Ironically, she dumped nearly all of her Nvidia position around November 2022 -- right around the time ChatGPT was released and artificial intelligence (AI) emerged as the next big megatrend.

Since the start of 2025, Nvidia's stock price has been under a lot of pressure due to a host of factors: China's DeepSeek models, rising competition in the GPU space from Advanced Micro Devices and cloud hyperscalers designing their own custom AI chips, and most recently, macro uncertainty around President Donald Trump's tariff and trade policies.

Now, with Nvidia shares down by 24% from the all-time high they hit just a few months ago, Wood may have a second chance. Between April 7 and 8, her funds purchased roughly 341,000 shares of Nvidia, essentially doubling Ark's stake in it.

Image Source: Getty Images.

Why does Nvidia look tempting now?

From a macro perspective, the secular tailwinds continue to support the growth of the data center industry, and Nvidia remains well positioned to continue capturing a large proportion of the expanding market for AI accelerator chips. Consider what AI's biggest spenders have up their sleeves. Cloud hyperscalers Amazon, Alphabet, and Microsoft all announced earlier this year that they intend to continue investing heavily in infrastructure to support AI. Meta Platforms expressed a similar outlook during its fourth-quarter earnings call.

On a combined basis, these four Magnificent Seven companies' AI capital expenditures could top $320 billion in 2025 alone. Each is a major customer of Nvidia, so I'm optimistic about its prospects relating to their data center build-outs.

In addition, Nvidia recently released its newest GPU architecture, Blackwell, sales of which have so far outperformed management's expectations. And while the early indicators for Blackwell are encouraging, Nvidia is on track to deliver its successor GPU architecture in a couple of years. This all positions Nvidia well for robust long-term growth as the AI narrative continues to unfold.

Even in the face of encouraging business trends, Nvidia stock has gotten decimated during the ongoing Nasdaq sell-off. It trades at a price-to-earnings (P/E) multiple of about 39. It has only rarely been this low in more than five years.

NVDA PE Ratio data by YCharts.

While Wood's purchases of Nvidia aren't necessarily large compared to her core holdings, I find her decisions to buy the stock on consecutive days this week pretty interesting. Nvidia's underlying business looks solid, and with the stock now trading at a historically cheap valuation, it's just too hard to pass up -- even for a more speculative investor such as Wood.

I think growth investors with long-term time horizons should consider following Wood's lead here and take advantage of Nvidia's slide. The long-term outlooks for the company and the AI narrative in general still look positive. In that context, the current sour sentiment in the stock market looks to have created a potentially lucrative opportunity here for patient investors who can stomach some volatility.

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

Before you buy stock in Nvidia, 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 Nvidia 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 $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% 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 10, 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, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, 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.

We're just four months into the year and there's already been a multitude of events that have rocked the capital markets.

Back in January, a Chinese artificial intelligence (AI) start-up called DeepSeek shook investors to the core as the company claimed to build its models on older, less sophisticated IT architectures than American AI developers had been using. While these fears subsided relatively quickly, the market volatility continued thanks to mixed opinions on important economic data related to inflation and jobs reports.

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 »

Most recently, the event that has caused the biggest stir in the stock market is President Donald Trump's new tariff agenda. Since he announced his global tariff policies on April 2, stocks have been whipsawing so dramatically it's become both jarring and disorienting for investors to figure out what to do.

During times like these, a famous Warren Buffett quote always comes to mind. Let's assess the magnitude that the tariff news has had on the market. More importantly, we'll explore the mindset of the "Oracle of Omaha" -- which could help investors moderate any panic and fearful emotions they may be feeling right now.

Trump's tariffs are wreaking havoc on the markets

The chart below illustrates the returns of both the S&P 500 and Nasdaq Composite so far this year. As I alluded to above, there have been multiple drop-offs across both indices throughout the first few months of 2025. However, the clear anomaly shown below is the precipitous decline that occurred in early April -- immediately after Trump's tariff policies became public:

^SPX data by YCharts.

Even though it's scary, this market dip presents opportunity

The stock market is a fascinating case study in human psychology. It's a medium that reflects a wide range of emotions. When the markets are soaring, most people are euphoric. When the markets are crashing (like they are now), most people run for the hills.

But even during the so-called good and bad times, there exist a small cohort of people known as contrarians. These investors go against the grain; they don't adhere to mainstream ways of thinking.

When the stock market is roaring, a contrarian may become concerned that valuations are becoming disconnected from the performances of actual businesses. In other words, contrarians will think that people are investing more into narratives than concrete fundamentals. By contrast, when valuation levels drop, a contrarian may be inclined to start putting money to work as stocks become more attractive at their normalized prices.

Buffett is a well-known contrarian. And right now, I can't stop thinking about his famed line, "You want to be greedy when others are fearful, and you want to be fearful when others are greedy." On the surface, that philosophy might not entirely resonate with the average investor. But below, I'll make the case for why Buffett's logic makes a lot of sense.

Image source: The Motley Fool.

Remember to keep the long term in focus

The chart below illustrates the performance of the S&P 500 and Nasdaq Composite over the last two decades. Each of the grey-shaded columns indexed against the performance of the S&P and Nasdaq represents a different recessionary period.

^SPX data by YCharts

Do you notice anything? Naturally, right around the time a recession went into effect, both indices started to fall. However, following the recessions both the S&P 500 and Nasdaq started to rise again -- eventually reaching new highs.

I'm not showing this trend because I'm predicting a recession. Rather, I'm making the case that the stock market is quite a resilient place in the long run -- even if emotions can sometimes drive a lot of the action in the near term. These dynamics underscore that some brave investors (like Buffett) were actually buying during historical periods of prolonged sell-offs and market crashes. In other words, some investors were greedy when most others were fearful and panic-selling.

I'll admit that it's really difficult to identify stocks that may be oversold or that are less exposed to tariffs. Instead of going down those rabbit holes, I think a prudent strategy is to simply buy the overall market right now. What I mean by that is to consider putting some money to work in exchange-traded funds (ETFs) such as the Vanguard S&P 500 ETF (NYSEMKT: VOO), SPDR S&P 500 ETF Trust, or the Invesco QQQ Trust.

Each of these funds provides investors with diversified exposure in the form of multiple industry sectors and a healthy mix of growth and value stocks. And as the chart above makes clear, the S&P 500 and Nasdaq tend to exhibit strong rebounds following periods of economic turmoil.

I think that using a strategy of dollar-cost averaging into these major indices will wind up being a savvy move years down the road.

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

Before you buy stock in Vanguard S&P 500 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 S&P 500 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 $496,779!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $659,306!*

Now, it’s worth noting Stock Advisor’s total average return is 787% — a market-crushing outperformance compared to 152% 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 10, 2025

Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

For the past few years, investors have become enamored with the prospects of artificial intelligence (AI) technology. But for the most part, developers have been touting the same carousel of ideas -- explaining how AI is leading to breakthroughs in training large language models, helping build autonomous systems for vehicles, and bringing unprecedented levels of efficiency to the workplace.

Although these use cases fetched a lot of intrigue for a while, investors are beginning to look for something new to get excited about now. Enter quantum computing -- a pocket of the AI realm management consulting firm McKinsey & Co. estimates to be worth $1.3 trillion by 2035. Essentially, this form of computing uses principles of quantum mechanics to process information exponentially faster than a "classical" computer.

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 »

For the past several months, executives at the largest AI businesses have started talking about the next revolutionary phase of modern computing. As is typical for a new megatrend, loads of companies are now marketing themselves as quantum computing darlings -- parroting talking points about how the technology is poised to benefit high-priority areas in healthcare, cybersecurity, and financial services, just to name a few.

Let's explore which companies are making waves in the world of quantum computing, and assess what opportunities are best for investors with a long-term time horizon.

These quantum computing stocks are getting loads of attention, but...

Seasoned investors know all too well that whenever a hot new area emerges within an already popular theme, opportunities seemingly begin popping up out of the woodwork. Take a look at the chart below and try to spot the anomaly.

RGTI data by YCharts

Do you notice anything a little odd? The share price returns for quantum computing stocks Rigetti Computing, IonQ, Quantum Computing, and D-Wave Quantum absolutely trounce the returns across both the S&P 500 and Nasdaq Composite over the last year. To add an extra layer of weirdness here, the share prices for these quantum computing stocks barely moved between January and October 2024 -- and then suddenly, they popped exponentially.

If you've never heard of these companies, there are good reasons. Chief among them is that each company above is only generating nominal levels of revenue. This makes sense, as quantum computing does not have much in the way of utility given the current state of the AI narrative. In other words, while the idea of quantum computing technology is exciting, there isn't much application for it today.

RGTI Revenue (Quarterly) data by YCharts

Nevertheless, the companies explored above have all managed to trade at valuation multiples that are completely disconnected from their underlying business trends (i.e., low revenue, heavy cash-burning operations).

Given the upside-down financial profiles of these companies, I'm hard-pressed to buy into a narrative that any of them will be around decades from now. Instead, let's look at some other opportunities that look better positioned for the long haul.

Image source: Getty Images.

...these magnificent opportunities look better positioned for the long term

By now, I'm sure you're well aware that the "Magnificent Seven" stocks -- Amazon (NASDAQ: AMZN), Apple, Alphabet (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT), Meta Platforms, Tesla, and Nvidia (NASDAQ: NVDA) -- dominate the AI narrative. For the most part, each of these companies hovers around overlapping use cases in AI -- from workplace productivity software, semiconductor chips, social media, self-driving cars, cloud infrastructure, and more.

However, Amazon, Alphabet, Microsoft, and Nvidia have all quietly been showcasing their own forms of progress in the area of quantum computing as well. For example, Amazon, Alphabet, and Microsoft have all developed their own series of quantum chips. In addition, Nvidia offers an extension of its compute unified device architecture (CUDA) software platform specifically geared toward quantum computing.

The jaw-dropping returns from IonQ, Rigetti, D-Wave, and Quantum Computing are rooted in hype around the idea of quantum computing and what opportunities might be multibaggers in the future. By contrast, Nvidia, Amazon, Alphabet, and Microsoft all have much stronger financial horsepower that allows them to consistently invest and hone their quantum roadmaps without taking a toll on existing AI initiatives that are actually being monetized as it stands today.

Furthermore, given that these Magnificent Seven cohorts have already built large and thriving AI businesses, quantum computing represents another thread that could stitch their broader AI ecosystems together -- helping them build even stronger businesses poised to grow for decades down the road.

While the Magnificent Seven stocks are currently under pressure during the ongoing Nasdaq sell-off, each company remains in a solid financial position for the long run. I see Nvidia, Alphabet, Amazon, and Microsoft as far superior opportunities compared to the more speculative names I explored above.

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

Before you buy stock in Nvidia, 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 Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $578,035!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. 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 5, 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, Meta Platforms, Microsoft, Nvidia, and Tesla. 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.