There's no denying that the emergence of generative artificial intelligence (AI) was the spark that lifted Nvidia (NASDAQ: NVDA) stock to new heights. In recent months, however, the future has been less certain. Concerns about how AI models will evolve and whether they will need the latest and greatest chips sent some investors to the sidelines. In fact, earlier this year, Nvidia stock plunged 37% on fears the company's best days were behind it.

It turns out the sky isn't falling after all. Nvidia has delivered two successive quarters of high-double-digit revenue growth, as demand for AI remains robust. Indeed, the stock is within striking distance of a new all-time high after notching gains of 50% over the past two months.

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Let's take a step back and review the opportunity, Nvidia's place in the AI ecosystem, and whether it's too late to buy the stock.

Image source: Getty Images.

Nvidia is still the gold standard

Nvidia's original claim to fame is developing the graphics processing units (GPUs) that generate lifelike images in video games. However, it was the adapting of that technology to train and run AI systems that catapulted the chipmaker to new heights. The popular narrative is that its rivals are on the verge of a better solution, but thus far anyway, none has been forthcoming.

The company established a beachhead in AI as early as 2013, giving Nvidia more than a decade-long head start on the competition. After developing processors focused on machine learning -- an earlier branch of AI -- Nvidia quickly became the gold standard, controlling as much as 95% of the market, according to CB Insights (via BBC News). That existing expertise gave Nvidia the advantage in the data center GPU space, where it currently controls an estimated 92% of the market, according to IoT Analytics.

The buildout of data centers to meet the growing demand of AI continues, which bodes well for Nvidia.

Nvidia's growth is (still) off the charts

While Nvidia's growth has inevitably slowed from the triple-digit pace it managed last year, it still runs circles around the competition. For its fiscal 2026 first quarter (ended April 27), the company generated record revenue of $44.1 billion, which surged 69% year over year. Adjusted earnings per share (EPS) of $0.81 climbed 33% -- but that was after a $4.5 billion hit related to export controls for H20 chips originally destined for China. If not for that one-time charge, EPS would have grown 57%.

Management expects the company's robust growth to continue. For its fiscal 2026 second quarter, Nvidia is guiding for record revenue of $45 billion, which would represent growth of 50%. This helps illustrate that despite tough triple-digit comps, Nvidia continues to grow at a remarkable pace.

Is Nvidia stock too expensive?

The stock's rebound over the past few months has come with a commensurate increase in its valuation, which begs the question: Has Nvidia stock gotten too expensive?

Investors might be surprised to learn that simply isn't the case. Nvidia stock is selling for roughly 33 times forward earnings (as of this writing), which is an attractive valuation for a company that's expected to grow its profits by 50% in the coming quarter.

Furthermore, when measured using the price/earnings-to-growth ratio (PEG ratio), Nvidia has a multiple of 0.56, when any number less than 1 is the standard for an undervalued stock.

It's still early innings

Despite the rapid run over the past two years, it's important to remember it's still early days for the adoption of generative AI. These groundbreaking systems have only been around for a little more than two years, and many believe the adoption cycle will continue for much of the next decade.

Estimates vary wildly regarding the potential size of the AI market but they can still give context regarding the size of the opportunity. The generative AI market could be worth between $2.6 trillion and $4.4 trillion annually in the coming years, according to global management consulting firm McKinsey & Company.

Given Nvidia's market-leading position, deeply entrenched technology, the magnitude of the opportunity, and its attractive valuation, I would argue it isn't too late to buy Nvidia stock. These aren't empty words: I added to my Nvidia position as recently as April.

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Danny Vena has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

The past few months have been fraught with uncertainty for investors in The Trade Desk (NASDAQ: TTD). The programmatic advertiser delivered an unbroken track record of beating its own guidance for 32 consecutive quarters as it closed out 2024. Then, to the surprise of Wall Street and Main Street alike, The Trade Desk stumbled, missing analysts' consensus estimates and its own forecast. In the wake of its disappointing quarter, the stock went into freefall and shed more than 60% of its value as fair-weather investors headed for the exits.

It isn't surprising, then, that shareholders were sitting on the edge of their seats when the company released its quarterly financial results after the market close on Thursday. Indeed, those who took a long-term view had their faith rewarded as The Trade Desk returned to form and looked to put its troubles behind it.

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A stark about-face

The Trade Desk's first-quarter results went a long way in assuring investors that the company's best days are still ahead. Revenue of $616 million grew 25% year over year, accelerating from 22% growth in Q4. The results were reflected in the bottom line, with adjusted earnings per share (EPS) of $0.33, representing an increase of 27%.

To give the numbers some context, analysts' consensus estimates were calling for revenue of $575.3 million and adjusted EPS of $0.25.

Helping drive the results was the increased adoption of The Trade Desk's artificial intelligence (AI)-infused Kokai platform. The new, advanced media buying platform features enhanced decision-making and ad campaign measurement tools. Kokai can access more than 13 million advertising impressions every second, helping distill the complexity of those choices into actionable intelligence within milliseconds. The Trade Desk says the platform helps "advertisers buy the right ad impressions, at the right price, to reach the target audience, at the best time.

The company stumbled in the fourth quarter as it faced logistical issues transitioning existing customers from its legacy Solimar platform to Kokai. The Trade Desk immediately embarked on a reorganization to make the company more nimble, while better positioning it to capture emerging opportunities, including connected TV (CTV), retail media, and audio.

"We're encouraged by the early impact of the strategic upgrades at the company we implemented in Q4, which contributed to our outperformance," said co-founder and CEO Jeff Green. "As we build on this momentum, we're optimistic about our ability to continue to outpace the market and deliver increasing value to marketers who prioritize objective, transparent, and data-driven media buying on the open internet."

The Trade Desk also cited its strong customer retention, which remained above 95% during the quarter, a track record that goes back 11 consecutive years.

What the future holds

Some investors were justifiably concerned after The Trade Desk's precipitous fall from grace, but its rapid recovery bodes well for the future. Furthermore, the tone of management's commentary and its outlook suggest the best is yet to come.

For the second quarter, The Trade Desk is guiding for revenue of at least $682 million, which would represent growth of about 17% year over year. It's worth noting that management has a tendency to issue conservative guidance. Its track record (with that one notable exception) shows the results are typically higher.

The Trade Desk stock is currently selling for 34 times forward earnings. While that's something of a premium, the average multiple over the past three years has been closer to 55, so the stock is trading at a significant discount to its historical price.

Don't expect that bargain to last for long. In the wake of its blockbuster financial report, investors have bid the stock up more than 11% in after-hours trading.

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Danny Vena has positions in The Trade Desk. The Motley Fool has positions in and recommends The Trade Desk. The Motley Fool has a disclosure policy.

Shares of MercadoLibre (NASDAQ: MELI) charged sharply higher on Thursday, gaining as much as 10.6%. As of 2:32 p.m. ET, the stock was still up 6.7%.

The catalyst that sent the online retail and fintech specialist higher was its quarterly financial report, which far exceeded expectations.

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Image source: Getty Images.

A virtual dynamo

For the first quarter, MercadoLibre generated revenue of $5.9 billion, representing an impressive 64% year-over-year increase in local currencies. The results were fueled by e-commerce revenue that grew 57% and fintech revenue that surged 73%. The company also generated operating income of $763 million, up 45%, and quarterly net income of $494 million. This resulted in earnings per share (EPS) of $9.74, which jumped 44%.

To put those numbers in context, analysts' consensus estimates were calling for revenue of $5.52 billion and EPS of $8.27, so MercadoLibre easily surpassed expectations.

The company continued to deliver strong results across its ecosystem of products and services. Gross merchandise volume (the total value of products sold on its digital retail platform) was $13.3 billion, up 40% year over year in local currencies, fueled by 66.6 million unique buyers. Total payment volume (TPV) of $58.3 billion climbed 72%.

MercadoLibre doesn't provide quarterly guidance, in keeping with its focus on the long term. On the conference call to discuss the results, the company noted that it notched all-time high brand preference metrics in its major markets, including Brazil, Argentina, Mexico, and Chile. The company continues to focus on increasing its credit portfolio and fintech offerings, as well as expanding its same- and next-day delivery offerings, which have helped fuel its extraordinary growth.

Is MercadoLibre a buy?

At 48 times forward earnings and 4 times forward sales, MercadoLibre might seem expensive, but that needs to be viewed through the lens of its stellar execution. Given its consistent strong results, I would suggest the premium is well deserved.

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Danny Vena has positions in MercadoLibre. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy.

Shares of Pony AI (NASDAQ: PONY) charged sharply higher on Wednesday, surging as much as 36.8%. As of 11:53 a.m. ET, the stock was still up 26%. The catalyst that propelled the Chinese autonomous mobility specialist higher was news of the company's next-generation robotaxi platform and ambitious plans for mass production.

Just months away

At the Shanghai Auto Show, Pony AI introduced the seventh generation of its robotaxi platform. The company's automotive-grade driving kit (ADK) features a number of enhancements that could bode well for the future.

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Pony AI revealed that a number of "design optimizations" reduced the total components cost by 70% compared to its previous generation. Furthermore, this resulted in an 80% decrease in the autonomous driving computations necessary, while also resulting in a 68% reduction in solid state light detection and ranging (LiDAR). Pony AI also announced plans to begin mass production by mid-2025.

The company unveiled three new robotaxi models that were developed in partnerships with major automakers -- Toyota, Beijing Automotive Group, and Guangzhou Automobile Group. The announcement comes just weeks after the company was granted a robotaxi testing permit in Luxembourg and expanded its fully driverless commercial robotaxi service in Shenzhen, China.

This steady string of positive announcements has fueled enthusiasm, but investors would be well-advised to step back and look at the big picture. It's been less than six months since Pony AI went public, and its results help tell the tale. Its fourth quarter revenue of $35 million slumped 30% year over year, resulting in a net loss of $181 million, which increased eightfold. Furthermore, the stock is selling for more than 12 times sales, a high valuation for a company that isn't yet profitable.

Even after today's significant move higher Pony AI stock is still down 55% since its initial public offering in November, and 77% off its peak in February. While the stock represents an intriguing opportunity, investors would do well to keep the risks in mind and size their position accordingly.

Should you invest $1,000 in Pony Ai 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 $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $606,106!*

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Danny Vena 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.

The uncertainty that has gripped the market recently has been palpable. Concerns about the on-again, off-again tariffs, a high-profile spat between the White House and the Federal Reserve Bank, and the ongoing trade war with China have raised concerns about the impact on the broader economy and led to historic volatility. However, a double dose of good news overnight sparked a broad-based market rally, which helped drive semiconductor and artificial intelligence (AI) stocks higher.

With that as a backdrop, chipmaker Advanced Micro Devices (NASDAQ: AMD) jumped 6.6%, semiconductor giant Broadcom (NASDAQ: AVGO) climbed 5.1%, and foundry Taiwan Semiconductor Manufacturing (NYSE: TSM) rallied 4.5%, as of 1:56 p.m. ET on Wednesday. A check of all the usual suspects -- earnings reports, regulatory filings, and analyst commentary -- revealed no company-specific news that was driving these stocks higher. This suggests that broader macroeconomic and geopolitical factors are at play.

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Image source: Getty Images.

It's all about the tariffs

Make no mistake, the primary catalyst that helped drive stocks higher were comments from President Donald Trump that suggested he was making headway on the tariff front, particularly regarding the ongoing trade war with China. In a press conference in the Oval Office, Trump said tariffs on products from China will "come down substantially, but it won't be zero." He went on to say: "145% is very high and it won't be that high. It won't be anywhere near that high."

The comments came less than 24 hours after U.S. Treasury Secretary Scott Bessent made comments at an investor conference that suggested there was progress being made in the trade talks. He said he expected "there will be a de-escalation" in the rhetoric between China and the U.S in the "very near future."

Many have feared that wide-ranging tariffs could raise prices, boost inflation, and potentially spark a recession. Investors welcomed signs that progress is being made.

Feud with the Fed

There was more good news. It appears the high-profile feud between the Trump administration and Federal Reserve Bank Chair Jerome Powell may be on the mend. Trump has been vocal in his desire for lower interest rates, a move the Central Bank fears will reignite inflation. Last week, markets slumped when Trump said he can fire Powell if he wants to, and that his "termination cannot come fast enough," despite the Fed's historical independence from the executive branch.

When asked if he would resign under pressure from the White House, Powell said the law doesn't allow a president to fire the sitting Fed chair, except under the most egregious circumstances, a position supported by most legal scholars.

Trump's position appeared to soften late yesterday, when he said, "I have no intention of firing [Powell]."

Investors had feared the high-profile spat could escalate into a bruising legal battle, and the U.S. economy would be the ultimate victim of the clash.

Why it matters

Over the past couple of years, rapid advances in AI have sparked a wave of innovation, resulting in state-of-the-art AI models powered by the most advanced semiconductors. Many of the biggest names in technology have benefited from the AI revolution, with this trio of stocks leading the pack:

• AMD is a leading provider of some of the leading-edge chips needed to bring AI to life.
• Broadcom supplies many of the semiconductors and ancillary products used by data centers to power AI.
• Taiwan Semiconductor Manufacturing is the world's largest foundry, providing the most advanced semiconductors, particularly those used for AI.

Big tech companies have announced plans to spend an estimated $315 billion on capital expenditures in 2025, primarily on the data centers and servers needed to augment AI.

However, the threat of widespread tariffs could hamstring the semiconductor industry, significantly increasing the cost of semiconductors and associated products, bringing the AI revolution to a standstill. The prospect of improvements on the tariff front buoyed the markets, sending AI and chip stocks higher.

These three semiconductor stocks have been among the primary beneficiaries of accelerating adoption of AI, supplying the AI and semiconductor know-how that is supporting the buildout of AI. Given the magnitude of the opportunity, Broadcom, AMD, and Taiwan Semiconductor remain attractively priced, selling for 27 times, 21 times, and 17 times forward earnings, respectively.

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

Before you buy stock in Advanced Micro Devices, 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 Advanced Micro Devices 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 $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $606,106!*

Now, it’s worth noting Stock Advisor’s total average return is 811% — a market-crushing outperformance compared to 153% 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

Danny Vena has positions in Broadcom. The Motley Fool has positions in and recommends Advanced Micro Devices and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.