Warren Buffett is the CEO of the Berkshire Hathaway holding company, where he oversees a number of wholly owned subsidiaries and a $281 billion portfolio of publicly traded stocks and securities. He plans to step down at the end of 2025, capping off a stellar run of success that dates back to 1965.

Had you invested $1,000 in Berkshire stock when Buffett took the helm 60 years ago, you would have been sitting on a whopping $44.7 million at the end of 2024. But he's a seasoned expert who knows exactly what to look for when he's buying stocks, so the average retail investor might struggle to replicate his returns.

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Therefore, Buffett often recommends buying low-cost exchange-traded funds (ETFs) that track indexes like the S&P 500 (SNPINDEX: ^GSPC). The Vanguard S&P 500 ETF (NYSEMKT: VOO) is one he's suggested by name in the past, and it's one of the most cost-effective options.

The Vanguard S&P 500 ETF tracks the S&P 500 by investing in exactly the same companies, and if history is any guide, it could turn $500 per month into $1 million over the long term. Here's how.

Image source: The Motley Fool.

A great index fund for investors of all experience levels

The S&P 500 is made up of 500 different companies, and they have to meet strict criteria to be included. Each company must have a market capitalization of at least $20.5 billion, and the sum of their earnings (profits) must be positive over the most recent four quarters. But even after ticking every box, a special committee has the final say over which companies make the cut.

The 500 companies in the S&P 500 come from 11 different sectors of the economy. Some sectors have a higher representation than others because the index is weighted by market capitalization, which means the largest companies have a greater influence over its performance than the smallest.

That's why the information technology sector has a massive weighting of 30.4%. It's home to the world's three largest companies -- Microsoft, Nvidia, and Apple, which have a combined market cap of $10 trillion.

The table below breaks down the top five sectors in the Vanguard S&P 500 ETF, their weightings, and some of the popular stocks within them:

Data source: Vanguard. Portfolio weightings are accurate as of April 30 and are subject to change.

Artificial intelligence (AI) is a dominant theme in the stock market right now because it's impacting almost every sector of the S&P, especially information technology, thanks to companies like Nvidia and Microsoft. But Amazon, Tesla, Alphabet, Meta Platforms, and even Netflix are using AI in unique ways to supercharge their various businesses.

But diversification is the main reason the S&P 500 is the most widely followed U.S. stock market index. Per the above table, the financial and healthcare sectors make up a combined 25% of the S&P, and the index also offers investors exposure to the industrial, energy, and even real estate sectors.

As I mentioned earlier, the Vanguard S&P 500 ETF is one of the cheapest ways to invest in the benchmark index. It features an expense ratio of just 0.03%, meaning an investment of $10,000 will incur an annual fee of just $3. Vanguard says the average expense ratio of similar ETFs across the industry is a whopping 25 times higher at 0.75%, which can detract from investors' returns over the long run.

Turning $500 per month into $1 million

The S&P 500 plunged by 19% from its record high earlier this year on the back of simmering global trade tensions that were triggered by President Trump's tariffs. But volatility is a normal part of the investing journey because the index suffers a decline of 10% or more every two and a half years, on average, and investors can expect a bear market decline of 20% every six years or so (according to Capital Group).

But even after accounting for every sell-off, correction, and bear market, the S&P 500 has delivered a compound annual return of 10.3% (including dividends) since it was established in 1957.

Based on that return, investors who deploy $500 per month into the Vanguard S&P 500 ETF could join the millionaires' club within 30 years:

Calculations by author.

Past performance isn't a reliable indicator of future results, so there is no guarantee the S&P will continue to deliver annual returns of 10.3%. But forces like AI could add trillions of dollars in market cap to some of the most influential companies in the index, which would support further gains.

Nvidia CEO Jensen Huang predicts AI data center spending will reach $1 trillion per year by 2028, which is great news for his company and every other semiconductor stock in the S&P. Then there are AI subsegments like autonomous driving and robotics, which could be trillion-dollar opportunities on their own.

But even if it takes a little longer than 30 years to turn $500 per month into $1 million, the S&P 500 is still likely to be significantly higher by then, so investors who start their investing journey today will almost certainly be better off than those who remain on the sidelines.

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:

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JPMorgan Chase is an advertising partner of Motley Fool Money. 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. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, JPMorgan Chase, Meta Platforms, Microsoft, Netflix, Nvidia, Pfizer, Tesla, Vanguard S&P 500 ETF, and Visa. The Motley Fool recommends Johnson & Johnson 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.

Nvidia (NASDAQ: NVDA) CEO Jensen Huang thinks that data center operators will spend $1 trillion every year on chips and infrastructure by 2028 to meet growing demand for computing capacity from next-generation artificial intelligence (AI) models.

That spending will be an enormous tailwind for Nvidia, which supplies the world's most powerful data center chips for AI development. But the benefits will also flow through to the company's competitors, not to mention suppliers of other data center hardware components. There is an opportunity for investors to profit from this tech revolution, and buying an exchange-traded fund (ETF) might be the simplest way to do so.

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The iShares Semiconductor ETF (NASDAQ: SOXX) invests exclusively in suppliers of chips and components, and its top holdings happen to be three of the biggest names in AI: Nvidia, Broadcom (NASDAQ: AVGO), and Advanced Micro Devices (NASDAQ: AMD). The ETF has outperformed the broader stock market since its establishment in 2001, and here's how it could turn an investment of $250,000 into $1 million within the coming decade.

Image source: Getty Images.

The biggest names in AI hardware in one ETF

Some ETFs hold thousands of different stocks, but the iShares Semiconductor ETF holds just 30. It aims to offer investors exposure to companies that design, manufacture, and distribute semiconductors, primarily those that stand to benefit from megatrends such as AI.

Since the ETF was established in 2001, it has helped investors successfully navigate several tech revolutions driven by the internet, enterprise software, smartphones, and cloud computing. It's now heavily geared toward AI, and its top five holdings are among the biggest names in the hardware side of the industry:

Data source: iShares. Portfolio weightings are accurate as of June 4, 2025, and are subject to change. ETF = exchange-traded fund.

Nvidia's graphics processing units (GPUs) are the most popular data center chips among AI developers. The company's latest GPU architectures, Blackwell and Blackwell Ultra, are designed for a new generation of AI models capable of 'reasoning,' which means they spend time thinking in the background to generate the most accurate responses.

Jensen Huang says some of these models consume up to 1,000 times more computing capacity than traditional one-shot large language models (LMs), hence his lofty spending forecast mentioned earlier.

Amazon, Microsoft, and Alphabet are three of Nvidia's biggest customers. They are seasoned data center operators because of their industry-leading cloud platforms, but they are now racing to build AI infrastructure to meet surging demand from developers.

But these companies are also trying to diversify their hardware portfolios by designing their own chips in collaboration with suppliers like Broadcom, which helps with the design and manufacturing processes. Broadcom is targeting a $90 billion market opportunity for its custom AI accelerator chips by 2027, with just three customers already on board and more in the pipeline. Plus, the company is a leading supplier of networking equipment, which helps to extract the most performance from AI chips.

Then there is AMD, which released a line of GPUs to compete directly with Nvidia in the data center. This year, the company will start shipping its latest chips based on its CNA (Compute DNA) 4 architecture, which was designed to rival Blackwell. AMD is also already a leader in AI chips for personal computers, which could be a major growth area in the future.

Investors will also find other leading AI chip stocks, such as Micron Technology, Taiwan Semiconductor Manufacturing, and Arm Holdings, outside the top five holdings in the iShares ETF.

Turning $250,000 into $1 million in the next decade

The iShares Semiconductor ETF has delivered a compound annual return of 10.4% since its establishment in 2001, outperforming the average annual gain of 7.9% in the S&P 500 over the same period. But the ETF has delivered an accelerated annual return of 20.9% over the past decade, driven by the accelerating adoption of technologies like cloud computing and AI.

If the iShares ETF continues to deliver annual gains of 20.9%, it could turn a $250,000 investment into over $1.6 million in the next decade. It won't be easy, but if AI infrastructure spending grows to $1 trillion per year by 2028, as Jensen Huang expects, it certainly isn't out of the question.

However, even if the ETF averages an annual gain of 15.6% over the next 10 years, that would be enough to turn $250,000 into $1 million:

Calculations by author.

Last year, Huang said data center operators could earn $5 over four years for every $1 they spend on Nvidia's AI chips and infrastructure by renting the computing capacity to AI developers. If those economics are accurate, data center operators like Amazon, Microsoft, and Alphabet are likely to continue investing heavily in new infrastructure long into the future.

Plus, every new generation of AI models typically requires even more computing capacity than the last, so it's possible that Huang's spending forecasts will prove to be conservative when we look back on this moment. In any case, the iShares ETF could be a great addition to a diversified portfolio.

Should you invest $1,000 in iShares Trust - iShares Semiconductor ETF right now?

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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. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, Nvidia, Qualcomm, Taiwan Semiconductor Manufacturing, Texas Instruments, and iShares Trust-iShares Semiconductor ETF. 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.

The S&P 500 (SNPINDEX: ^GSPC) delivered back-to-back annual gains of over 25% in 2023 and 2024 (when including dividends). The only other time the index had such a strong two-year run was during the dot-com internet boom in 1997 and 1998. As was the case back then, stocks in the technology and tech-adjacent industries drove most of the upside this time around.

The "Magnificent Seven" is a group of seven companies that lead different segments of the tech space. They earned the nickname for their enormous size and their tendency to outperform the broader S&P 500. In fact, investors who didn't own them during 2023 and 2024 likely underperformed the index by a very wide margin:

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Data by YCharts.

However, the S&P 500 is off to a bumpy start to 2025 due to global trade tensions, which were sparked by President Donald Trump's "Liberation Day" tariffs. All of the Magnificent Seven stocks are trading down from their all-time highs, presenting long-term investors with a compelling opportunity. Shares of Meta Platforms (NASDAQ: META) and Amazon (NASDAQ: AMZN) are down 9% and 15%, respectively, from all-time highs hit in early 2025 (as of this writing).

Here's why investors might want to buy the dips.

Image source: Getty Images.

The case for Meta Platforms

Meta is the parent company of social networks like Facebook, Instagram, and WhatsApp, which serve over 3.4 billion people every single day. Acquiring new users is becoming harder because nearly half the planet is already using those platforms, so the company is trying to boost engagement instead. The longer each user spends online, the more ads they see, and the more money Meta makes.

Meta uses artificial intelligence (AI) in its recommendation engine to learn what type of content Facebook and Instagram users enjoy viewing, and it uses that information to show them more of it. During the first quarter of 2025, CEO Mark Zuckerberg said this strategy led to a 6% increase in the amount of time users were spending on Instagram over the last six months, and a 7% increase for Facebook.

But Meta is also using AI to help businesses craft better ads. Soon, Zuckerberg says a business will simply have to tell Meta its goals (like brand awareness or selling a specific product) and its budget, and an AI assistant will handle the rest -- that includes designing the creative (the text, image, or video) and defining the audience. Most small businesses don't have their own marketing teams, so this could be a powerful tool that boosts Meta's share of the digital advertising market.

Meta AI is another innovation from the social media giant. It has become one of the most popular chatbots in the world with almost 1 billion monthly active users, despite only launching last year. It's built on Meta's Llama family of large language models (LLMs), which are now among the most intelligent in the AI industry. Meta plans to spend up to $72 billion on data center infrastructure and chips this year, most of which will be geared toward advancing Llama even further and meeting inference demand for Meta AI.

Meta has generated $25.64 in earnings per share (EPS) over the last four quarters, so based on its current stock price of around $650, it trades at a price-to-earnings (P/E) ratio of 25.2. That makes it the second-cheapest Magnificent Seven stock ahead of only Alphabet, which is battling a series of regulatory issues:

Data by YCharts.

Because of Meta's progress in AI, its solid (and growing) profits, and its valuation, I think the company is on its way to the exclusive $2 trillion club.

The case for Amazon

E-commerce remains the single biggest contributor to Amazon's overall revenue, but investors are currently more focused on the Amazon Web Services (AWS) cloud computing platform. It offers hundreds of solutions to help businesses navigate the digital world, but it's also trying to dominate the three core layers of AI: hardware infrastructure, LLMs, and software.

AWS operates data centers filled with chips from leading suppliers like Nvidia, and it rents the computing capacity to AI developers for a profit. But Amazon also designed its own chips, and the new Trainium2 can save developers up to 40% on AI training costs compared to competing hardware.

AWS also developed a family of LLMs called Nova, which includes the new NovaSonic speech-to-speech model for conversational AI applications. Ready-made models eliminate the need for developers to create their own from scratch, so using them can significantly accelerate their AI software projects. The Nova family is available on Amazon Bedrock, along with other LLMs from leading third parties like Meta and Anthropic.

On the software front, AWS now offers an integrated virtual assistant called Q, which can write computer code to help developers create software more quickly. It can also analyze internal data to provide businesses with actionable insights. In addition, Amazon developed a separate virtual assistant for Amazon.com called Rufus, which helps shoppers compare products and make more informed decisions.

Amazon generated $155.6 billion in total revenue during the first quarter of 2025. AWS accounted for just 19% of that total ($29.2 billion), yet it was responsible for 63% of the entire company's operating income. Segments like e-commerce operate on razor-thin margins, so AWS is the profit engine behind the whole organization, which is why investors monitor it so closely.

AWS has become a leader in AI infrastructure and services, and I think that will be Amazon's golden ticket to the ultra-exclusive $3 trillion club in the next couple of years, where it could sit alongside Microsoft, Apple, and Nvidia.

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

Before you buy stock in Meta Platforms, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $828,224!*

Now, it’s worth noting Stock Advisor’s total average return is 979% — a market-crushing outperformance compared to 171% 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. Anthony Di Pizio has no position in any of the stocks mentioned. 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.

Dogecoin (CRYPTO: DOGE) was founded as a joke by two friends in 2013 who used the famous "Doge" meme as inspiration. Little did they know, it would go on to reach a peak of $0.73 per token in 2021, which translated to an eye-popping market capitalization of almost $90 billion.

A lot of that value was created on the back of Elon Musk's support, which has been ongoing since 2019. In fact, Dogecoin's most recent rally was sparked by Musk's involvement in the Trump administration, where he temporarily ran an external government agency with a name that references the meme token.

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But Musk's time at the White House has officially come to an end, so investors might be wondering what to do next. Is Dogecoin still a buy, or is this a sure sign to run for the hills?

Image source: Getty Images.

A timeline of Musk's Dogecoin support

Between 2019 and 2021, Musk regularly shared Dogecoin-related memes on social media and participated in friendly banter with other enthusiasts. Investors started to think he had a plan to create real value for the meme token, and that speculation reached a fever pitch in the lead-up to his appearance on Saturday Night Live.

During the show on May 8, 2021, Musk participated in a Dogecoin-themed comedy skit, which ended with him calling the meme token a "hustle." While it was a light-hearted joke, investors started to realize that Musk had no concrete plans to create value outside of his support on social media, so Dogecoin peaked at $0.73 per token that very night.

It plunged over the next 12 months, losing more than 90% of its value by mid-2022. It stayed dormant during 2023 and for most of 2024, until the U.S. presidential election. Musk threw his cash and his influence behind Donald Trump, who campaigned on a series of pro-crypto policies, and Dogecoin soared (along with most cryptocurrencies) when Trump eventually won the presidency.

A short time later, Trump announced plans to appoint Musk to run an external government agency tasked with reducing America's national debt by slashing spending. Musk named the agency the Department of Government Efficiency, or DOGE for short, which was a clear reference to his favorite cryptocurrency. However, to this day, Dogecoin has played no actual role in the agency, so its post-election rally was purely speculative.

Musk's time at the White House has now come to an end. He was classified as a "special government employee," which means he can only work within the administration for 130 days per year -- and Jan. 20 (Trump's Inauguration Day) to May 30 was exactly 130 days.

Dogecoin has serious fundamental issues

Dogecoin has plummeted by 59% from its recent 52-week high, but Elon Musk's departure from the DOGE agency isn't the biggest reason. The meme token has struggled to find a use case in the real world, and if consumers, businesses, and investors don't have a tangible reason to own it, then it's impossible to create sustainable value.

According to Cryptwerk, just 2,096 businesses around the world accept Dogecoin as payment for goods and services. If consumers can't spend Dogecoin at their favorite stores, then they have no reason to buy it. Businesses probably won't warm up to the meme token anytime soon, because its extreme volatility would make cash-flow management a nightmare.

Dogecoin also has a supply issue. There are 149.5 billion tokens in circulation as of this writing, and although there is a cap on how many more can be "mined" each year, there is no end date. In other words, new tokens will enter the market until the end of time. I've never seen an investment-grade asset with an unlimited supply that rises in value over the long term.

It might be time to run for the hills

Dogecoin's post-election rally peaked at $0.47, which was well below its 2021 high of $0.73. That suggests investors were less willing to buy into the Musk-driven hype this time around. But the meme token is now trading at just $0.19, and there could still be plenty of room to fall if history is any guide.

Dogecoin bottomed at around $0.06 in 2022, which might be the level to watch. It implies there could be 68% downside from the current price, and with Musk now out of the White House and no improvements to the meme token's fundamentals, that might be the path of least resistance.

As a result, I think it might be time to abandon Dogecoin and run for the hills.

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

Before you buy stock in Dogecoin, 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 Dogecoin 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 $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $828,224!*

Now, it’s worth noting Stock Advisor’s total average return is 979% — a market-crushing outperformance compared to 171% 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

Anthony Di Pizio 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.

C3.ai (NYSE: AI) was at the vanguard of artificial intelligence (AI) when it was founded in 2009, so it saw this technological revolution coming from a mile away. It now offers over 130 ready-made and customizable applications to help businesses accelerate their adoption of AI, which is very useful for those without the resources or expertise to develop the technology from scratch.

C3.ai stock is trading significantly below its all-time high from 2020, but its valuation is starting to look attractive, especially in light of the company's rapid revenue growth and its enormous addressable market, which could top $1.3 trillion by 2032.

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The company is scheduled to report financial results for its fiscal 2025's fourth quarter (which ended on April 30) on May 28, when it will provide an update on its business and a forecast for the new fiscal year. Should investors buy C3.ai stock ahead of the report?

Image source: Getty Images.

A unique AI software company

C3.ai's applications are used by businesses in 19 different industries, including the oil and gas sector, transportation, telecommunications, healthcare, manufacturing, and more. The company offers a series of ready-made applications tailored specifically to those industries, but it can also deliver a custom solution within six months on an initial customer briefing.

Oil and gas giant Shell has over 100 AI applications at various stages of production. They help the company conduct preventive maintenance, predict equipment failures, and even reduce carbon emissions.

At one liquefied natural gas plant, Shell deployed C3.ai's Real Time Production Optimization application to improve efficiency, which reduced carbon emissions by 355 tons per day. On an annualized basis, that is the equivalent of taking 28,000 cars off the road.

Customers can access C3.ai's applications through leading cloud platforms like Amazon Web Services (AWS), Microsoft Azure, and Alphabet's Google Cloud. Businesses can leverage the computing capacity available through those cloud providers to scale up their C3.ai applications, meaning they don't have to maintain any of their own data center infrastructure. This is a very attractive proposition, especially for smaller businesses with limited financial and technical resources.

Revenue growth is gathering momentum

C3.ai generated $98.7 million in total revenue during the fiscal 2025 third quarter (ended Jan. 31), which was a 26% increase from the year-ago period. It was the second-fastest growth rate in almost three years, next to the company's 29% increase in the fiscal 2025 second quarter three months earlier.

This strong momentum is attributable to a change in its business model. In the first quarter of fiscal 2023 (ended July 31, 2022), the company decided to abandon its subscription revenue model in favor of consumption-based pricing, meaning customers would only pay for what they use.

This shift eliminated lengthy negotiating periods and allowed C3.ai to get new customers on board far more quickly. It led to a temporary (but expected) decline in the company's revenue growth while customers scaled up their consumption, but investors are now seeing the payoff.

Management forecast $113.6 million in revenue for the fiscal 2025 fourth quarter (at the high end of the guidance range), which would represent 31% year-over-year growth. C3.ai stock would likely move higher if the company delivers on that number or beats it when the quarterly report is released on May 28.

Should investors buy C3.ai stock before May 28?

As I mentioned earlier, enterprise AI could be a $1.3 trillion opportunity for C3.ai and its competitors by 2032 (based on a report by Bloomberg that was cited by CEO Thomas Siebel). Therefore, investors should keep their eyes on the long-term prize rather than placing too much focus on any single quarter.

If you believe in the potential of AI, C3.ai stock might be a great buy right now because of its valuation. It is down 85% from its all-time high, which was set during the tech frenzy in 2020, when its price-to-sales ratio (P/S) soared above 75. Simply put, that level was completely unsustainable.

But its P/S is now just 8.3, which is a 14% discount to its three-year average of 9.6, despite the fact the company is currently growing its quarterly revenue at the fastest rates since it shifted to consumption pricing:

AI PS Ratio data by YCharts.

The bottom line presents one key risk to consider. The company lost $209 million on the basis of generally accepted accounting principles (GAAP) through the first three quarters of fiscal 2025, as it continued to invest heavily in growth. On the plus side, that net loss was only $30.4 million on a non-GAAP basis, which excludes non-cash expenses like the $174 million in stock-based compensation it issued to its employees during the period.

According to management's guidance, the company might have lost another $40 million on a non-GAAP (adjusted) basis during the fourth quarter, so investors won't want to see a number larger than that in the May 28 report.

The company has around $724 million in cash, equivalents, and marketable securities on hand, so it can continue to lose money at the current pace for a few more years, but it will have to prioritize profitability eventually if it wants to avoid diluting existing shareholders by raising more money.

But based on C3.ai's current valuation and the sizable AI opportunity ahead, now might be a good time to take a long-term position in the stock irrespective of the upcoming May 28 report.

Should you invest $1,000 in C3.ai right now?

Before you buy stock in C3.ai, 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 C3.ai 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 $635,275!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,385!*

Now, it’s worth noting Stock Advisor’s total average return is 967% — a market-crushing outperformance compared to 171% 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 May 12, 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. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool recommends C3.ai 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.

The "Magnificent Seven" is a group of seven American companies with leadership positions in various segments of the technology industry. They got the nickname in 2023 because of their incredible size and their ability to consistently outperform the rest of the stock market.

The Magnificent Seven companies have a combined value of $16.7 trillion, which represents 31.6% of the entire value of the S&P 500 (SNPINDEX: ^GSPC), so they have an enormous influence over the performance of the index.

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Market Cap data by YCharts.

When Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), Meta Platforms (NASDAQ: META), and Tesla (NASDAQ: TSLA) are moving higher as a group, investors who don't own them will generally underperform the S&P 500.

I'm going to introduce you to an exchange-traded fund (ETF) that has more than half of the entire value of its portfolio invested in the Magnificent Seven stocks. It's the Vanguard Mega Cap Growth ETF (NYSEMKT: MGK), and it has consistently beaten the S&P 500 every year since it was established in 2007. Here's why investors might want to buy it for the long term.

Image source: Getty Images.

A concentrated ETF filled with America's highest-quality companies

Some ETFs hold hundreds or even thousands of different stocks. But the Vanguard Mega Cap Growth ETF holds just 69, and the Magnificent Seven account for 54.9% of the total value of its portfolio:

Data source: Vanguard. Portfolio weightings are accurate as of April 30, 2025, and are subject to change.

Artificial intelligence (AI) could fuel the next phase of growth for each of the Magnificent Seven companies, but in very different ways. Apple, for example, designed a series of chips for its latest iPhones, iPads, and Mac computers to run its new Apple Intelligence software. It provides a suite of AI features, including writing tools and a more powerful version of the Siri voice assistant, which transform the user experience for people with Apple devices.

Tesla is another consumer "hardware" company that has turned its attention to AI. The electric vehicle (EV) giant continues to improve its AI-powered full self-driving software, which could be active on public roads as soon as this year.

Nvidia supplies the world's best data center chips for developing AI models. Apple Intelligence wouldn't be possible without it, nor would Tesla's self-driving software. Microsoft, Amazon, and Alphabet are also some of Nvidia's top customers -- they fill their cloud data centers with AI chips and rent the computing power to developers for a profit.

Their cloud platforms also offer access to the latest ready-made large language models (LLMs) to help accelerate their customers' AI software ambitions.

Then there is Meta Platforms, which uses AI in its recommendation algorithm to show users more of the content they enjoy seeing on its Facebook and Instagram. It also launched an AI assistant last year called Meta AI, which already has nearly a billion users. The company's Llama family of LLMs that power Meta AI have become the most popular open-source models in the world.

Although the Magnificent Seven stocks dominate the Vanguard ETF, it does offer some diversification. Large-cap non-technology stocks like Eli Lilly, Visa, Costco Wholesale, and McDonald's are also among the ETF's top 20 positions.

This Vanguard ETF can help investors beat the S&P 500

The Vanguard Mega Cap Growth ETF delivered a compound annual return of 12.5% since its inception in 2007, comfortably beating the average annual gain of 9.6% in the S&P 500 over the same period.

But the ETF has a highly concentrated portfolio, which can be a recipe for volatility. For example, the S&P 500 fell by as much as 18.9% from its all-time high earlier this year as economic and political uncertainty surged due to President Donald Trump's "Liberation Day" tariffs. However, the ETF was down by 22.3% at the same time, because it has much larger positions in the high-flying Magnificent Seven stocks, which pulled back more sharply than the rest of the market amid the chaos.

As a result, investors shouldn't put all of their eggs in one basket. Instead, they should buy the ETF as part of a balanced portfolio, where it has the potential to boost overall returns.

For example, using the returns cited earlier, a $10,000 investment in the S&P 500 would be worth $15,814 in five years. But if you invest $5,000 in the S&P and $5,000 in the Vanguard ETF, your $10,000 could be worth $16,917 instead.

One thing is for certain: Investors will want exposure to the Magnificent Seven, not only because of their excellent long-term track record, but also because they are leading the way when it comes to new technologies like AI.

Should you invest $1,000 in Vanguard World Fund - Vanguard Mega Cap Growth ETF right now?

Before you buy stock in Vanguard World Fund - Vanguard Mega Cap Growth ETF, 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 $635,275!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,385!*

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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. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Nvidia, Tesla, and Visa. 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.

Uber Technologies (NYSE: UBER) operates the world's largest ride-hailing network, along with popular food delivery and commercial freight services. It relies on 8.5 million drivers and couriers to fulfill demand from its 170 million monthly active customers, but the company is on the cusp of a major shift that could transform its financial results.

Uber has signed partnerships with 18 companies that develop autonomous cars, robots, and even aircraft, and that list is growing. Since human drivers are the company's largest cost, these deals could result in billions of dollars in savings every year, which will flow through to Uber's revenue and its bottom line.

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In fact, I think Uber stock could soar fivefold within the next decade thanks to autonomous technologies. Here's how it could turn a $200,000 investment into $1 million by 2035.

Image source: Getty Images.

Autonomous driving could reshape Uber's business

During the first quarter of 2025 (ended March 31), Uber reported $42.8 billion in gross bookings, which was the dollar value of every trip, food order, and commercial delivery the platform facilitated on behalf of its customers. The $18.6 billion drivers and couriers earned during the quarter was the single-largest component of the gross bookings figure.

After deducting a further $12.9 billion in merchant payouts (money paid to restaurants for customers' food orders, as an example), Uber was left with $11.5 billion in revenue. Then, once the company factored in operating costs like marketing and research and development, its net income (profit) for the quarter came in at $1.7 billion on a generally accepted accounting principles (GAAP) basis.

In other words, Uber doesn't get to keep a whole lot of the money customers spend on its platform. That's why autonomous vehicles have the potential to transform its economics -- if self-driving cars and robots reduce Uber's reliance on human drivers, the company could pocket an additional $18.6 billion from its gross bookings each quarter (based on its Q1 result).

Uber would have to pay some of that money to the companies deploying their self-driving cars into its network, but since they can operate 24/7, the economics are still likely to be significantly better than using human drivers. Plus, Uber could choose to buy a fleet of autonomous vehicles and operate them itself, which would be even more profitable over the long term.

A growing list of autonomous partnerships

In his prepared remarks to shareholders for the 2025 first quarter, CEO Dara Khosrowshahi said Uber had partnerships with 18 different providers of autonomous vehicles, up from 14 just six months earlier. Simply put, developers want to deploy their vehicles into the mobility network with the most users so they can maximize their revenue, which gives Uber a distinct advantage over the competition.

Many of those partnerships are already producing results, because Uber is now facilitating around 1.5 million autonomous trips per year (annualized based on its Q1 results). Many of those are attributable to Alphabet's Waymo, which is completing over 250,000 paid autonomous trips per week -- some through its own ride-hailing service, and some through Uber.

Waymo has been operating in Phoenix, Los Angeles, and San Francisco, but it entered Austin, Texas, in March as part of an exclusive deal with Uber. It has 100 autonomous vehicles available in that market right now, and Uber says they are busier than 99% of the platform's human drivers in the area. The two companies will deploy hundreds more driverless cars in Austin over the next few months, and they plan to expand into Atlanta.

Waymo is already a raging success, but Uber wants to help its other autonomous partners commercialize their technologies more quickly, because they have so much potential to save the company money on human drivers. As a result, it entered a unique partnership with Nvidia earlier this year, which is the world's leading supplier of chips and software for artificial intelligence (AI) development.

Uber will use Nvidia's DGX Cloud supercomputer platform to process data from the billions of trips it facilitates each year, which will help its autonomous partners create more powerful self-driving models. Uber will also use Nvidia's Cosmos foundation models to create real-world training simulations, which will speed up the development process even further.

Turning $200,000 into $1 million by 2035

Based on Uber's trailing-12-month revenue of $45.3 billion and its market capitalization of $174 billion, its stock trades at a price-to-sales (P/S) ratio of around 4, as of this writing. That's a slight discount to its average of 4.2, dating back to when the company went public in 2019:

UBER PS Ratio data by YCharts

If we assume Uber's P/S ratio remains constant at 4, the company will need to generate around $226.5 billion in annual revenue by 2035 to justify a fivefold return in its stock. That translates to a compound annual growth rate of 17.5% over the next decade. Between 2017 and 2024, Uber actually grew its revenue at a much faster annual rate of 27.7%, which suggests it should have no trouble hitting the mark.

However, it becomes harder for Uber to grow that quickly as its revenue base becomes larger. According to Wall Street's consensus estimate (provided by Yahoo! Finance), the company is expected to grow its revenue by just 14% annually for the next two years. If that trend continues, it could take much longer than a decade for Uber stock to turn an investment of $200,000 into $1 million.

But remember this: Uber stands to pocket an extra $18 billion every quarter if it can eliminate human drivers completely. It certainly won't happen overnight, but the gradual shift toward autonomous vehicles could be a monumental tailwind for its revenue for the next several years. In fact, Khosrowshahi thinks the autonomous opportunity will be worth over $1 trillion to Uber in the U.S. alone.

Therefore, while it's possible Uber delivers below-trend revenue growth for the next couple of years, it could accelerate later this decade (and beyond) as more self-driving cars hit the road. As long as the company's revenue growth averages 17.5% over the next 10 years, it will lay the foundation for a fivefold return in its stock.

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

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Nvidia, and Uber Technologies. The Motley Fool has a disclosure policy.

Workiva (NYSE: WK) developed a unique software platform that helps organizations bring their data together so they can create detailed reports for executives, investors, and even regulators like the Securities and Exchange Commission (SEC). The company just reported its financial results for the first quarter of 2025 (ended March 31), and it beat expectations on the top and bottom line.

Despite continued strength across its business, Workiva stock remains 55% below its record high set during the tech frenzy in 2021. It was overvalued back then (as were many enterprise software stocks), but it looks like a relative bargain at the current level.

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Wall Street seems to agree. The Wall Street Journal tracks 13 analysts who cover Workiva stock, and the overwhelming majority assigned it the highest-possible buy rating. Plus, not a single analyst recommends selling. Here's why investors might want to add Workiva to their portfolio.

Image source: Getty Images.

A critical platform for increasingly complex organizations

Technologies like cloud computing allow companies to operate online, where they can reach a much larger customer base and tap into a global workforce. But it also creates challenges for managers that have to monitor employees who are often working across dozens of different digital applications, especially if they are located on the other side of the world.

Workiva's platform eases that burden by integrating with most cloud storage solutions, systems of record, and accounting software, so managers can pull all of the organization's data onto one dashboard. That means they don't have to open each individual piece of software to find the information they need, which saves a significant amount of time and also prevents human errors associated with manually copying data into reports.

Once data is aggregated into Workiva, managers can choose from hundreds of different templates to help accelerate their reporting workflows. This is great for managers who regularly present key information to their executive teams, or those who are responsible for submitting filings to regulatory agencies.

Workiva is seeing rapid growth in its highest-spending customer cohorts

Workiva generated $206 million in revenue during the first quarter of 2025. It was a 17% increase compared to the year-ago period, and it was also above the high end of management's guidance of $205 million.

Workiva had a total of 6,385 customers at the end of the quarter, representing a modest year-over-year increase of 5%. However, the company experienced significantly faster growth among its highest-spending customer cohorts, namely those with annual contract values of $100,000; $300,000; and $500,000:

Image source: Workiva.

Workiva also beat expectations on the bottom line. While it lost $0.38 per share during the quarter on a generally accepted accounting principles (GAAP) basis, that was better than management's forecasted loss of $0.45 per share.

The company was actually profitable to the tune of $0.14 per share on a non-GAAP basis, which excludes one-off and non-cash expenses like stock-based compensation, and that was double management's forecast of $0.07 per share.

However, it's worth noting that both Workiva's GAAP loss and its non-GAAP profit were worse than the year-ago results, primarily because the company ramped up its operating expenses. It was a clear attempt to drive growth, because sales and marketing costs saw the biggest jump. CEO Julie Iskow said she continues to see broad demand across Workiva's product portfolio, so management might be leaning into that trend to capture as many new customers as possible.

Trying to acquire new customers is an especially good strategy right now, because Workiva's net revenue retention rate dipped to 110% during the first quarter (from 111% in the year-ago period), suggesting existing customers weren't increasing their spending as quickly as they have in the past. This might be one of the reasons Workiva stock declined following the release of its Q1 report.

Investors were also somewhat disappointed with Workiva's forward guidance. Although management expects revenue growth to hold steady at 17% in the second quarter, the company's bottom-line results appear set to worsen on both a GAAP and non-GAAP basis. Workiva has a solid balance sheet with $767 million in cash, equivalents, and marketable securities on hand, so it can comfortably continue to invest in growth, but investors would still prefer to see the company trending toward profitability.

Wall Street is bullish on Workiva stock

As I mentioned before, analysts who cover Workiva stock are bullish on its prospects. The analysts have an average price target of $102, which implies a potential upside of 54% over the next 12 to 18 months. The Street-high target of $112 suggests Workiva stock could deliver an even greater return of 70% instead.

The 55% decline in the stock from its 2021 high, combined with the company's consistent revenue growth since then, has pushed its price-to-sales (P/S) ratio down to just 4.9. It's close to the cheapest level in five years, and it's also a 49% discount to its average P/S ratio of 9.6 over that period:

WK PS Ratio data by YCharts

Over the longer term, it's possible Workiva stock delivers even more upside than Wall Street expects. The company values its addressable market at $35 billion, so it has barely scratched the surface of that opportunity based on its current revenue. Plus, considering Workiva's market capitalization is just $3.7 billion, that leaves a lot of room for growth.

As a result, this stock could be a great long-term addition to any portfolio.

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

Before you buy stock in Workiva, 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 Workiva 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 $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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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Workiva. The Motley Fool has a disclosure policy.

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

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

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

Image source: Getty Images.

Tariffs are creating a headache for the Fed

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

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

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

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

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

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

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

Rate cuts often foreshadow stock market volatility

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

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

Data by YCharts.

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

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

Data by YCharts.

Recessions can be bad news for stocks

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

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

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

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

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

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

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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!*

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

The S&P 500 index (SNPINDEX: ^GSPC) is made up of 500 companies from 11 different sectors of the economy, so it's the most diversified of the major U.S. stock market indexes. It's currently down 12.5% from its record high, placing it firmly in correction territory, amid simmering global trade tensions that were sparked by President Trump's "Liberation Day" on April 2.

The president announced a sweeping 10% tariff on all imported goods from America's trading partners, in addition to much higher "reciprocal tariffs" on goods from specific countries that have large trade surpluses with the U.S. The reciprocal tariffs have been paused for 90 days (except those on Chinese goods) pending negotiations, but investors are still concerned about a potential economic slowdown, hence the stock market sell-off.

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

But this isn't the first time President Trump has ventured down this policy path, and history suggests the stock market is likely to recover in the long run. The Vanguard S&P 500 ETF (NYSEMKT: VOO) is an exchange-traded fund (ETF) which directly tracks the performance of the S&P 500 -- here's why investors might want to buy it on the dip.

Image source: Getty Images.

A diversified, low-cost index fund suitable for most investors

Companies have to meet a strict criteria to gain entry into the S&P 500. For example, the sum of their earnings must be positive over the most recent four quarters, and they must have a market capitalization of at least $20.5 billion. But ticking all the boxes isn't always enough, because inclusion is at the discretion of a special committee that meets once per quarter to rebalance the index.

Although 11 different economic sectors are represented in the S&P 500, the information technology sector alone makes up 29.3% of the total value of the index. It's home to the world's three largest companies: Apple, Microsoft, and Nvidia, which have a combined market capitalization of $8.3 trillion. They are likely to continue creating value for investors long into the future as they battle for leadership in different segments of the artificial intelligence (AI) boom.

The financial sector is the second-biggest component of the S&P 500, representing 14.7% of its total value. It includes investment banking giants like JPMorgan Chase and Goldman Sachs, in addition to Berkshire Hathaway, which is the $1 trillion holding company managed by legendary investor Warren Buffett.

Healthcare is the third-largest sector, with a 10.9% weighting, followed by consumer discretionary at 10.2%. The latter is home to giants like McDonald's, Home Depot, Amazon, and Tesla.

Vanguard isn't the only firm that offers an S&P 500 ETF -- investors can also buy State Street's SPDR S&P 500 ETF Trust, for example, which holds exactly the same stocks. But the Vanguard S&P 500 ETF is among the cheapest with an expense ratio of just 0.03%, which is much lower than the industry average of 0.75% (according to Vanguard).

That means a $10,000 investment would incur just $3 in fees each year, instead of $75 (on average) for competing funds, so investors get to pocket significantly more of their gains over the long run.

A stellar track record of performance

The S&P 500 might be down 12.5% from its all-time high right now, but history is proof that corrections are a normal part of the investing journey. According to Capital Group, declines of 10% or more happen once every two-and-a-half years (on average), so they are simply the price we pay for an opportunity to earn much higher returns over the long term compared to sitting on cash or other risk-free assets.

On that note, the S&P 500 has delivered a compound annual return of 10.3% since it was established in 1957, even after factoring in every sell-off, correction, and even bear market. The table below displays how much investors could earn over the long run by parking $10,000 in the index compared to holding cash:

Calculations by author.

Past crashes in the S&P 500 were triggered by a variety of economic shocks. There was the dotcom internet crash in the early 2000s, followed by the Global Financial Crisis in 2008, and then the COVID-19 pandemic in 2020.

But back in 2018, President Trump imposed five sets of tariffs on America's trading partners, covering around 12.6% of the country's total imports. The move sparked fears of a global trade war which sent the S&P 500 plunging by as much as 19.8% that year, so investors who were around back then might be feeling a sense of déjà vu.

But over time, America's trading partners came to the table for negotiations which led to fairer deals, and even exemptions from the levies in some cases. As a result, the S&P 500 bounced back with a vengeance in 2019, soaring by a whopping 31.5%. Since we know the Trump administration is currently trying to strike trade deals with Japan, Europe, and China, I wouldn't be surprised if the worst of the decline in the S&P 500 is over.

As a result, the Vanguard S&P 500 ETF could be a great buy during the correction, especially for investors who plan to hold for the long term.

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

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

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, Goldman Sachs Group, Home Depot, JPMorgan Chase, Microsoft, Nvidia, Tesla, and Vanguard S&P 500 ETF. 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.

Tesla (NASDAQ: TSLA) stock hit a new record high shortly after President Donald Trump's election win last November because investors thought a friendlier regulatory environment could help the company bring its autonomous robotaxi and humanoid robot to market more quickly. CEO Elon Musk thinks these product platforms will help Tesla become the world's most valuable company one day.

In fact, Musk believes Tesla could eventually be as valuable as the next five largest companies combined. Today, those companies would be Apple, Microsoft, Nvidia, Alphabet, and Amazon, which have a combined value of $11.8 trillion.

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

But Tesla stock is currently heading in the wrong direction. It's down 47% from its recent all-time high, and a series of headwinds are plaguing its core business, which could lead to a further decline of 50% (or more) from here.

Image source: Tesla.

Tesla's electric vehicle sales are plunging

Although Musk might be focused on autonomous vehicles and robotics, electric vehicle (EV) sales still make up 72% of Tesla's total revenue -- and unfortunately, they are sinking right now. Sales fell by 1% during 2024 to 1.79 million cars, but the decline accelerated to 13% in the first quarter of 2025.

The Q1 decline in deliveries sent Tesla's automotive revenue tumbling by 20% year over year, and its overall net income (profit) plunging by a whopping 71%. There are several layers to the company's problems: Competition is ramping up in the EV space with numerous low-cost producers entering the market, and consumers soured on the Tesla brand this year because of Musk's involvement in politics.

On the competition front, Tesla is up against China-based EV producers like BYD, which is capable of selling cars for as little as $10,000 in its domestic market. BYD is also making its way into Europe, where it could snatch some of the market share Tesla has spent years accumulating.

On the political front, Musk has spent a lot of time running the Department of Government Efficiency (DOGE), which was established to reduce wasteful spending in the U.S. government to bring down the national debt. Musk and his team faced criticism for laying off government workers and slashing funding from programs like the U.S. Agency for International Development (USAID), to the point there have been regular protests at Tesla dealerships around the world.

Here's the good news: Tesla is planning to roll out some lower-cost EVs of its own later this year, and Musk just told investors he plans to spend less time at DOGE starting from May, so he can focus more on the EV maker instead. These are important steps toward repairing some of the damage Tesla has suffered over the past few months.

Meaningful revenue from autonomous driving and robotics could be years away

Tesla's Cybercab robotaxi is designed to autonomously haul passengers around the clock within a ride-hailing network, creating a new revenue stream for the company. However, it isn't expected to go into mass production until next year, and it could take some time after that before it brings in meaningful amounts of money.

Plus, Tesla's full self-driving (FSD) software still isn't approved for unsupervised use on public roads, and the Cybercab can't operate without it. This places Tesla behind competitors like Waymo, which is already completing 250,000 paid autonomous trips every week.

With that said, Tesla could leapfrog Waymo when FSD wins regulatory approval. The unsupervised version of the software will be compatible with most of Tesla's passenger EVs, so the company will have a fleet of millions of customer cars which could start earning revenue for their owners (and Tesla) by offering autonomous ride-hailing services.

Plus, Musk says the Cybercab is around 80% cheaper to produce than Waymo's vehicles, so Tesla will have a serious pricing advantage when the robotaxi eventually achieves scale.

Then there is the Optimus humanoid robot. Musk says Tesla will produce thousands of them this year to perform tasks in its own factories. But he thinks the company could produce over 1 million annually by 2029. Humanoids like Optimus will be capable of doing dangerous or repetitive jobs that humans don't want to do, but they will also be useful as household assistants.

As a result, Musk has previously told investors there could be more humanoid robots than humans by the year 2040, which is why he predicts Optimus could bring in a staggering $10 trillion in revenue over the long term.

Tesla stock is extremely expensive right now

Tesla could become the most valuable company in the world one day on the back of FSD, the Cybercab, and Optimus. But in the here and now, it faces a serious valuation problem.

Based on Tesla's trailing 12-month earnings per share (EPS) of $1.74, its stock trades at a price-to-earnings (P/E) ratio of 148.6, making it a whopping five times as expensive as the Nasdaq-100 index which trades at a P/E ratio of 27.1. Moreover, Tesla is materially more expensive than the five companies it hopes to surpass one day:

NVDA PE Ratio data by YCharts.

Simply put, Tesla's valuation will be a roadblock to further upside in the near term. Even if Musk is right about the company's potential in the long run, that isn't necessarily a good reason to pay such a hefty premium for the stock today. Remember, meaningful revenue from autonomous driving and Optimus could be years away, and if EV sales continue to shrink in the meantime, Tesla could face spiraling earnings which will make its stock appear even more expensive.

Therefore, even though Tesla stock is already down 47% from its record high, there is a looming risk it could suffer a further decline of 50% (or more) to bring its valuation closer to those of its big-tech peers. It would have to decline by 76% just to trade in line with Nvidia's P/E ratio, for example, and that is one of the fastest growing companies in the world.

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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. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, and Tesla. The Motley Fool recommends BYD Company 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.