The Nasdaq-100 market index holds a lot of volatile stocks. Some of its top performers seem overvalued today, while others seem to have room for further growth. The index as a whole rose 9.1% last month, outpacing the S&P 500 (SNPINDEX: ^GSPC) return of 6.3%.

But what about the other end of the spectrum? Let's take a quick look at the two worst performers on the Nasdaq-100 in May 2025.

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Regeneron: Down 18% in May

Biotech giant Regeneron (NASDAQ: REGN) was on track for a quiet May, holding almost exactly steady with just a couple of days left in the month. A disappointing earnings report changed that story in a hurry, driving Regeneron's stock 18% lower on the last trading day in May.

Regeneron's first-quarter sales fell 4% year over year, while adjusted earnings per share dropped 14% lower.

This is one of the most affordable large-cap biotech stocks today, but arguably for good reasons. The stock is down 48% over the last year, so I understand if you want to buy the dip. Just remember that the company is facing unprecedented challenges right now, and a strong development pipeline doesn't always result in blockbuster products.

Image source: Getty Images.

Copart: Down 15.6% in May

Online auto auction specialist Copart (NASDAQ: CPRT) also fell after reporting earnings in May. All the headline numbers were up year over year and roughly in line with analyst expectations, but market makers were looking for something more. Copart's stock trades at lofty valuation multiples such as 10.6 times sales and 33 times earnings. It doesn't take much of a miss to inspire a large price drop under these conditions.

Copart's stock is down 5% over the last year, but it remains a long-term winner with a market-beating three-year return and a stellar 1,030% gain over the last decade. Management argues that the company might benefit from tariff-based uncertainty, as expensive repair parts could result in more "total loss" insurance claims. If so, Copart's stock may be a great buy today -- but only time will tell how this theory works out.

Should you invest $1,000 in Regeneron Pharmaceuticals right now?

Before you buy stock in Regeneron Pharmaceuticals, 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 Regeneron Pharmaceuticals 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 $655,255!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $888,780!*

Now, it’s worth noting Stock Advisor’s total average return is 999% — a market-crushing outperformance compared to 174% 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 9, 2025

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Copart and Regeneron Pharmaceuticals. The Motley Fool has a disclosure policy.

The Polkadot (CRYPTO: DOT) cryptocurrency is going through some pretty exciting changes these days. The Web3 Foundation's official crypto coin is becoming a distributed supercomputer, ready to provide a wide variety of apps and services. Yet, the coin price keeps falling.

Should you pick up a few Polkadot coins while they're available for less than $5 apiece? I think that's a good idea, and here's why.

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Polkadot's big internet ambitions

First things first. Polkadot was designed to support a Web3 future. The social networks and paywalls of the Web2 world were unstoppable over the last 20 years. These days, a lot of web users are getting tired of this aging structure, looking around for new ideas. The Web3 idea is one alternative, bringing more personal freedom and giving content creators more control over their creations. In this system, gigantic hubs of advertising and social media connections are replaced by decentralized services. And Polkadot's app-building ecosystem provides a handy platform to get all the Web3 ideas done in the real world.

It's still a futuristic ideology with just a handful of early success stories. But in the long run, Web3 apps could take over your online community connections, your day-to-day financial management processes, and your favorite channels for text, video, and audio infotainment. The tools won't even run in the centrally managed cloud you know and love today, but in a new global network of blockchain-based systems. When tweaked just right, the crypto world's smart contracts can run any kind of program and perform all sorts of services. And that's what Polkadot is doing, with the help of many other cryptocurrency systems.

Image source: Getty Images.

Meet JAM: The next big step in Polkadot's evolution

So far, Polkadot is mostly known for its ability to interact with other blockchain networks. This coin's smart contracts can tap into Bitcoin's (CRYPTO: BTC) monetary value storage, Ethereum's (CRYPTO: ETH) sophisticated contracts, and Chainlink's (CRYPTO: LINK) real-world data reports, just to name a few.

It's also known as a complicated and cumbersome system, but that's changing in 2025. Polkadot's central blockchain will soon be replaced by a more flexible and standards-based system known as JAM (the Joint-Accumulate Machine, if you're curious). This is actually a virtual machine in the blockchain universe. It can compile and run any code for bog-standard central processors, because it's a software-driven and full-featured RISC-V processor.

For example, Polkadot co-founder Gavin Wood has made it a habit to show off old-school computer games running on a test version of JAM. His personal laptop is good enough to make that work, but the full JAM upgrade will run on hundreds of server-class computers around the world. Imagine what this on-demand supercomputer can do for the Web3 vision.

Don't expect instant fireworks

JAM is coming up, probably in the second half of 2025. It won't cause an immediate frenzy in the Polkadot community, because it takes time for people to use new tools. Then the tools must create useful apps, which in turn need to find a target audience of actual users. So it's not a magic wand that will make Polkadot's developer community's dreams come true in a heartbeat, and it won't lift Polkadot's usage-based coin price right away.

But this is a much-needed step toward a true Web3 version of the online world. In the long run, I expect Web3 alternatives to disrupt the online experience as you know it today. Web2 leaders such as Meta Platforms (NASDAQ: META), Spotify (NYSE: SPOT), and TikTok will either join the Web3 revolution or put up roadblocks instead. I can't wait to see how true innovators like Netflix (NASDAQ: NFLX) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) will find their place in the Web3 era.

Take it easy out there, Polkadot investors

I could be wrong, of course. Web2 may stick around for another decade or two, as the current leaders focus on protecting the old social media world. Other cryptocurrencies can also support Web3-worthy apps, though they'll need to overcome Polkadot's built-in advantages first.

So I'm not betting the proverbial farm on Polkadot coins. I simply recommend any investor who agrees with the Web3 project's ideas to pick up a few Polkadot coins while they're cheap.

This cryptocurrency is only worth $6.6 billion today, which is a far cry from the trillion-dollar titans you see ruling today's Web2 structure. The coin price could multiply by 10 or 100 and still look small next to Meta and Alphabet. In short, Polkadot can be a big long-term winner even if it never matches the Magnificent 7 group's trillion-dollar market caps. I think that's worth a modest position in your long-term crypto portfolio.

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

Before you buy stock in Polkadot, 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 Polkadot 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 $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $875,479!*

Now, it’s worth noting Stock Advisor’s total average return is 998% — a market-crushing outperformance compared to 174% 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 9, 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. Anders Bylund has positions in Alphabet, Bitcoin, Chainlink, Ethereum, Netflix, and Polkadot. The Motley Fool has positions in and recommends Alphabet, Bitcoin, Chainlink, Ethereum, Meta Platforms, Netflix, and Spotify Technology. The Motley Fool has a disclosure policy.

At first glance, Roku (NASDAQ: ROKU) looks like a terrible investment. Earnings are negative. Sales are rising, but much more slowly than they were four years ago. The stock trades at an unaffordable valuation of 125 times forward earnings estimates. After a long-forgotten price spike in the pandemic lockdown era, Roku's stock fell hard and then traded sideways over the last three years.

But if you look a bit closer, you should see a healthy long-term growth story in play. Roku targets a huge global market, following in the footsteps of proven winners, and the stock doesn't appear expensive at all from other perspectives.

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It's actually one of my favorite stocks to buy in 2025, and Roku should be a helpful addition to long-term portfolios.

Breaking down common concerns about Roku stock

Let me deconstruct the scary qualities I mentioned above.

Negative earnings

Roku's red-ink earnings are at least partly a voluntary choice. The company treats its streaming hardware as a marketing tool, selling Roku sticks and TV sets below the manufacturing and distribution costs. This user-growth tactic is especially unprofitable in Roku's highest-volume sales periods. The holiday quarter of 2024, for example, nearly quadrupled the devices segment's negative gross margin from 7.6% in the third quarter to 28.6% in the fourth.

In other words, Roku is running its business with unprofitable profit margins to maximize its market reach and user growth. Furthermore, I'm talking about generally accepted accounting principles (GAAP), which is the standard accounting method used for calculating taxes. Roku often posts negative GAAP earnings that result in tax refunds rather than expenses.

At the same time, free cash flows tend to land on the positive side with modest cash profits. That's just efficient accounting powered by stock-based compensation and amortization of Roku's media-streaming content library.

Slowing sales growth

Roku's year-over-year sales growth has averaged 14.7% over the last two years. That's a sharp retreat from 40.9% in the three years before that. But don't forget that the extreme growth was driven by the COVID-19 pandemic.

Lots of people turned to digital media during the lockdown period, resulting in a unique business spike for companies like Roku and Netflix (NASDAQ: NFLX). The pandemic also happened to take place just months after Walt Disney (NYSE: DIS) launched the Disney+ streaming service, inspiring a torrent of copycat service launches. Long story short, there may never be a media market like the one in 2020-2021 again. Holding on to nearly half of that nitro-boosted growth rate in recent years is actually really good.

Sky-high valuation

Let me point back to the voluntary GAAP losses. Roku isn't trying to generate huge taxable profits at this time, which makes price-to-earnings (P/E) ratios largely unusable. Even the forward-looking version of this common metric relies on Roku's guidance targets filtered through Wall Street's analysis. If anything, the analyst community's projections are more optimistic than Roku's official targets. Management expects a $30 million GAAP loss in fiscal year 2025, which would work out to another "not applicable" P/E ratio.

If you look at other valuation metrics, Roku starts to look like a bargain. Trading at 2.6 times trailing sales, the stock is comparable to slow-growth giants such as Caterpillar or Unilever. Roku also seems undervalued, if you base your analysis on its robust balance sheet, with a price-to-book ratio of 4.4 and a price-to-cash multiple of 4.9.

Image source: Getty Images.

The stock seems stuck

I'll admit that Roku's stalled stock chart can be frustrating. Share prices are down 17% over the last three years, missing out on 44% growth in the S&P 500 (SNPINDEX: ^GSPC) market index. Roku's sales are up 45% over this period, while free cash flow rose by 66%. When will the big payoff come, rewarding patient shareholders for Roku's quiet success?

That's OK, though. Keeping stock prices low just gives investors more time to build those Roku positions. I have bought Roku more often than any other stock since the spring of 2022, and I might not be done adding shares yet. Whenever I have spare cash ready for investments, Roku pops up as a top idea. That remains true in June 2025. So, let the chart slouch lower. Affordable buy-in prices can set you up for tremendous long-term returns.

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

Before you buy stock in Roku, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $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

Anders Bylund has positions in Netflix, Roku, and Walt Disney. The Motley Fool has positions in and recommends Netflix, Roku, and Walt Disney. The Motley Fool recommends Unilever. The Motley Fool has a disclosure policy.

Shares of freight service veteran UPS (NYSE: UPS) are diving these days. The stock is down 24% in the last six months, building on a longer downturn that started in the inflation panic of 2022.

The steep price drop brought two investor-friendly qualities to UPS. First, this world-class company is hanging out in Wall Street's bargain bin at the moment. Second, the same stock price pressure drove UPS' dividend yield to record-breaking levels.

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Read on to see why you should consider buying some UPS stock on the cheap in June 2025, locking in a great purchase price and a fantastic dividend payout.

UPS is stumbling in 2025 (but not falling flat)

It's fair to say that UPS has experienced some financial trouble recently. The pandemic e-commerce boom faded out. The inflation crisis accelerated the package-shipping slowdown. More recently, trade tensions between Washington and Beijing pose new threats to the shipping industry. UPS thrives on high consumer confidence and healthy global trade trends. The company suffers when those market qualities are headed in the wrong direction, as they are in 2025.

So yes, UPS is having some trouble. However, it is well equipped to handle these challenges.

Can UPS keep those juicy dividends coming?

Even in a painful downswing, UPS remains a very profitable business. The company generated $5.9 billion of net income over the last four quarters, converting 92% of the paper profits into free cash flows.

UPS spent all of the cash profits on dividend checks. That's hardly ideal, and the company doesn't have much room for dividend increases in this economy. At the same time, UPS has $5.1 billion in cash reserves and a rock-solid credit rating. The dividend looks safe from cash-preserving cuts in the foreseeable future.

Why UPS is shrinking its Amazon deliveries

And UPS isn't resting on its laurels. The company plans to boost its profitability over the next year by taking on a smaller number of low-margin shipments. The long-standing partnership with Amazon (NASDAQ: AMZN) is the main target for this cost-cutting effort, with shipments under the contract halving by the summer of 2026. The move will let UPS close 73 shipping centers and reduce its annual operating time by 25 million hours.

"Amazon is our largest customer but it's not our most profitable customer," CEO Carol Tom said in January's fourth-quarter earnings call. "Our contract with Amazon came up this year. And so we said it's time to step back for a moment and reassess our relationship. Because if we take no action, it will likely result in diminishing returns."

In other words, UPS is taking action to solidify its bottom-line profits. The helpful moves it makes in this challenging economy should translate into stronger earnings in the next macroeconomic upswing.

Image source: Getty Images.

The long-term case for owning UPS

Investing is a marathon, not a sprint. UPS stock is cheap right now for short-sighted reasons. The company should thrive in the long run, equipped with a world-class shipment system and a proactive management team. By focusing on more profitable services, UPS could get back to generous dividend increases in 2026 and beyond.

And in the meantime, the dividend yield stands at an eye-popping 6.7%. It's nearly an all-time record for UPS, and one of the 10 most lucrative yields found in the S&P 500 (SNPINDEX: ^GSPC) index. Furthermore, UPS shares are valued at just 14.3 times trailing earnings and 0.9 times sales. These multiples are about half of their long-term averages and nearly equal to the all-time lows seen in the subprime mortgage meltdown of 2008.

Taken together, the rich dividend yield and affordable stock price add up to a great long-term investment. The UPS shares you buy in this temporary dip can help you build wealth in the long run.

Should you invest $1,000 in United Parcel Service right now?

Before you buy stock in United Parcel Service, 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 United Parcel Service 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 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

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anders Bylund has positions in Amazon. The Motley Fool has positions in and recommends Amazon and United Parcel Service. The Motley Fool has a disclosure policy.

Memory chip giant Micron Technology (NASDAQ: MU) is back to its cyclical habits. One might think that the artificial intelligence (AI) boom would send Micron's business results and stock returns skyward these days, but the real AI effect isn't quite that simple.

As of June 3, Micron's total return stands 33% below last summer's all-time highs. Is this a wide-open buying window or the start of a multiyear downswing?

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Here's what I think about Micron in June 2025.

Why Micron isn't flying high in 2025

Micron isn't the only AI-oriented tech stock to take a drastic haircut over the last year. It's almost scary how tightly Micron's stock performance has matched the total returns of Dell Technologies, ASML Holding, and Applied Materials recently:

MU Total Return Level data by YCharts

For the record, AI-centric market darling Nvidia gained 25% over the same period, while the S&P 500 (SNPINDEX: ^GSPC) market index rose by 14%. So the sinking tide didn't capsize every boat, but it did weigh on most AI-focused computing hardware experts not named Nvidia.

Micron did play a part in its own downfall, of course. Sales soared in the first half of 2024, but slowed down more recently. Mind you, many businesses would celebrate a 38% year-over-year revenue jump, like the one Micron reported in March, but that's a significant slowdown from 93% two quarters earlier.

Micron's profits followed similar trend lines, which explains why investors lost patience with the stock. And of course, the proposed tariffs may undermine Micron's sales and profits. Nobody knows how the bubbling trade tensions will play out yet.

Why Micron isn't sweating the slowdown

But here's the thing: Micron is well equipped to handle a bit of a slowdown. If anything, the company's in-house chip factories should be able to stockpile memory chips until its largest customers are ready to place large orders again.

On top of that, Micron offers market-leading technology. Its next generation of power-efficient data center memory will hit the market in 2026, offering a 60% memory bandwidth increase and even lower power consumption than the current top-of-the-line products. These high-bandwidth chips are a part of Nvidia's latest and greatest AI accelerator cards, so Micron benefits in a very direct way from Nvidia's success.

Image source: Getty Images.

Is Micron's stock just taking a breather?

So Micron remains a top-notch provider of crucial hardware in the generative AI revolution. A short-term slowdown in the order book is not the end of the line.

Meanwhile, Micron's stock is trading at just 9.4 times forward earnings estimates. Analysts expect the company's profits to surge in 2025, and for good reason. Yet the market makers out there have not yet accounted for this upcoming bottom-line explosion in their share price calculations.

The AI boom makes a real difference to Micron's business prospects, and sales of those low-power but high-performance data center chips should rise from $1 billion last year to "multibillion dollars" in 2025. This surge should also be good for Micron's profit margins, since I'm talking about high-end chips with lucrative unit prices.

The speed bump simply gives long-term investors another chance to buy Micron shares on the cheap. The long-term returns won't be smooth, but Micron tends to build wealth over its sweeping business cycles. I highly recommend holding a few Micron shares for the long haul.

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

Before you buy stock in Micron 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 Micron 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 $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.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Anders Bylund has positions in Micron Technology and Nvidia. The Motley Fool has positions in and recommends ASML, Applied Materials, and Nvidia. The Motley Fool has a disclosure policy.

Shares of Box (NYSE: BOX) surged as much as 19.7% higher on Wednesday, peaking around 1:30 p.m. ET. The cloud-based data storage and content management veteran reported robust first-quarter fiscal-year 2026 results on Tuesday evening. By 3:10 p.m. ET, the stock was up about 18% from the previous day's close.

Image source: Getty Images.

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Foreign exchange, taxes, and shrinking earnings

Box's Q1 2026 sales rose 4% year over year to $276.3 million. Adjusted earnings fell from $0.39 to $0.30 per diluted share, including a $0.01 headwind from changing foreign currency exchange rates. Your average Wall Street analyst would have settled for earnings near $0.26 per share on revenue in the neighborhood of $275.1 million.

Looking ahead, Box's management projects second-quarter revenue of approximately $290 million with roughly $0.30 of adjusted earnings per share. These numbers will compare to $270 million and $0.44 per share, respectively, in the year-ago period.

Box's next big leap: Feeding the robots

Non-cash tax charges are weighing on Box's bottom-line results this year. The company recently turned profitable and is now recognizing $248 million of deferred tax credits, little by little. This item reduced Box's first-quarter adjusted earnings by $0.12 per share.

The company recently unveiled a brand-new artificial intelligence (AI) platform that will help enterprise-scale clients feed data to their AI agents. Box's stock is trading at an all-time high today, boosted by a promising AI strategy and five straight quarters of analyst-stumping financial results. Even so, Box shares trade at a fairly modest valuation. In that context, today's significant price jump looks reasonable.

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

Before you buy stock in Box, 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 Box 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 $653,389!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $830,492!*

Now, it’s worth noting Stock Advisor’s total average return is 982% — 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 19, 2025

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Box. The Motley Fool has a disclosure policy.

The tech sector has been a market-beating beast in recent years. Tech-heavy exchange-traded funds (ETFs) like the Vanguard Information Technology ETF (NYSEMKT: VGT) and the Invesco QQQ Trust (NASDAQ: QQQ) have delivered annual returns of more than 21% over the last three years. Broad market trackers like the Vanguard S&P 500 ETF (NYSEMKT: VOO) only gained 15.5% per year over the same period. Yes, that's a fantastic return from a historic perspective, but the tech sector offered even stronger gains.

Image source: Getty Images.

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The technology boom has been driven by artificial intelligence (AI) news, starting with the public release of ChatGPT in November 2022. Many leaders in the AI market have soared sky-high, adding fuel to the tech sector's market performance fires, but also making those market darlings a bit expensive.

Fortunately, the market-moving forces left a few top-notch companies behind. I still see several tech stocks with a combination of bright business prospects and modest stock prices. Let's check out a couple of underappreciated bargain-bin tech stocks. This dynamic duo looks ready for a fresh bull run.

1. Criteo

Digital advertising has been a troubled sector since the first signs of an inflation crisis in 2021. Paris-based commerce media specialist Criteo (NASDAQ: CRTO) provides purchase-inspiring ad services to global brands. This focus placed the Parisian company in the epicenter of the inflation-based slowdown -- why invest in lavish marketing campaigns when consumers are pinching pennies and tightening belts?

Criteo's revenues have indeed slumped since then, and so has the stock price. You know what's surging in recent quarters, though? That would be Criteo's free cash flows:

CRTO Free Cash Flow data by YCharts

The cash profits took a temporary dip, but came back stronger, with trailing cash flows reaching an all-time high in May's Q1 2025 report. But Criteo's stock price is down more than 30% in the last quarter, and the shares are trading at the bargain-bin valuation of 11.3 times earnings and 6.6 times free cash flow.

I'm not saying the digital ad market is roaring back to life in the spring of 2025. The political climate may result in another inflation spike, and advertisers are already reducing their ad-spot spending right now. Hence, Criteo's undervalued stock may see more volatility and weakness in the coming months. However, I think the market makers have underestimated Criteo's ability to turn cash profits in a soft market.

The Criteo shares you buy at a discount in this downswing should return to more reasonable valuation ratios someday. At the same time, the company's robust cash generation makes it less vulnerable to short-term financial challenges. You can buy Criteo stock with confidence while it's cheap. This one is poised for great long-term returns, and patience is the greatest Wall Street virtue of them all.

2. Hewlett Packard Enterprise

My next recommendation is more of a household name. Hewlett Packard Enterprise (NYSE: HPE) has been around (in some form) since 1939. As the data center and cloud computing operator of the old HP business, HP Enterprise (aka HPE) plays a serious part in the AI boom.

Indeed, seven out of the 10 most powerful supercomputers today were built by HP Enterprise. Only Chinese rival Lenovo has more systems in the top 500 than HP Enterprise, and nobody can match the total number-crunching performance of this company's ultra-powerful systems. Any company or organization that needs a top-performance system for their AI training and operations is likely to check out HP Enterprise's catalog first.

So I'm talking about an AI powerhouse here. Yet, the stock price has dropped 16% lower year to date while smaller system builders Super Micro Computers (NASDAQ: SMCI) and Dell (NYSE: DELL) are up by 41% and down by just 1%, respectively. Trading at 8.9 times earnings and 14.3 times free cash flow, HP Enterprise looks downright cheap next to these challengers.

HP Enterprise's stock could double or triple in price and still be affordable next to Supermicro or Dell. This could be a great value play on the hardware side of the AI boom.

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

Before you buy stock in Criteo, 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 Criteo 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 $653,389!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $830,492!*

Now, it’s worth noting Stock Advisor’s total average return is 982% — 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 19, 2025

Anders Bylund has positions in Criteo, Vanguard Information Technology ETF, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool recommends Criteo. The Motley Fool has a disclosure policy.

Shares of Domo (NASDAQ: DOMO) absolutely soared on Thursday. The stock had gained 30.5% at 1:30 p.m. ET, driven by a robust earnings report.

Image source: Getty Images.

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Domo's Q1 2026 report by the numbers

The cloud-based software specialist reported $80.1 million of top-line revenue in the first quarter of fiscal year 2026, unchanged from the year-ago period. Further down the income statement, Domo saw an adjusted net loss of $0.09 per share. That's a strong improvement from a net loss of $0.33 per share. The average Wall Street analyst had expected a larger loss of roughly $0.11 per share.

Beyond the usual headline numbers, Domo expanded its subscription-based list of unfilled orders by 24% year over year. Most of the new business appears to be of a long-term nature. The unfilled orders are expected to convert into actual revenues at a much faster rate in calendar year 2026 and beyond.

How to start a Domo position today

Domo CEO Josh James highlighted the company's innovative approach to a dynamic technology market. "Our Q1 momentum is proof positive that our strategy is fueling powerful, innovative solutions for our customers," he said in a prepared statement. "We're not just keeping pace in the fast-moving world of data and AI -- we're leading the charge."

Looking ahead, Domo's management expects second-quarter and full-year sales to remain comparable to the results of fiscal year 2025. In other words, there's a big pot of future revenues brewing behind the scenes, and investors need to be patient with a gradual process of generating revenues.

As such, the stock may be prone to volatility in the next few quarters. If you want to pounce on this stock before it gets too expensive, I suggest splitting that investment in at least three parts. That's a time-honored method to build a fresh stock position without worrying too much about short-term price changes.

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

Before you buy stock in Domo, 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 Domo 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 $644,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $807,814!*

Now, it’s worth noting Stock Advisor’s total average return is 962% — a market-crushing outperformance compared to 169% 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 19, 2025

Anders Bylund 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.

2025 has been an eventful year on Wall Street. The market has been making wild moves in response to unpredictable events. Many market watchers expect a downturn, a recession, and/or another bear market to emerge any day now. Then again, they've already been looking for these negative outcomes for several months.

There was a sharp drop in early April, but it didn't really stick. Whether you call the current situation a bear market or not, it's certainly a period of huge volatility.

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I understand if you've sworn off investing altogether amid these shifting economic conditions However, I've been putting more spare cash to work than usual in recent months -- and I plan to continue doing so. Let me explain why I'm an unusually active stock investor in this fickle market. By the time I'm done, you just might want to join me.

Timing the market is an impossible game

Nobody knows what the stock market will do tomorrow, or next week, or next year.

There are surprises around every corner. Nobody expected the COVID-19 pandemic. The artificial intelligence (AI) surge was another surprise. The shocking dot-com boom was followed by an equally unexpected crash. I could go on and on.

The point is, real-world events have profound and unpredictable effects on the stock market. Some shocks beget golden eras for specific industries. Others can lay a muffling blanket over the whole economy.

So I don't trust anyone who says they know what the market will do over a specific period. Even master investor Warren Buffett can't forecast Wall Street's next moves.

"Let me be clear on one point: I can't predict the short-term movements of the stock market," Buffett said in a 2008 New York Times article. "I haven't the faintest idea as to whether stocks will be higher or lower a month or a year from now."

If Buffett doesn't know, I don't stand a chance of getting it right. It's not for me to forecast when the next market downturn will start, or how deep it might go. Trying to time my stock purchases for the absolute bottom of a potential trough is a bad idea.

Image source: Getty Images.

Time in the market is a winning strategy

That 2008 Buffett article didn't end on that gloomy note, of course. He went on to describe his contrarian investment style, and his focus on holding great stocks for a long time.

"Be fearful when others are greedy, and be greedy when others are fearful," he wrote. Yeah, you've heard that bit before. "Bad news is an investor's best friend. It lets you buy a slice of America's future at a marked-down price."

In the long run, great companies will make patient shareholders happy. If you're not comfortable with picking the best stocks in a crowded market, a diversified mutual fund or exchange-traded fund (ETF) will do the same job.

For example, the Vanguard S&P 500 ETF (NYSEMKT: VOO) will never beat the market. However, it will help you build up your wealth if you invest in it steadily over many years and decades.

So I won't nail the perfect time to buy -- but at least I'm trying

Math is a wonderful science. I'm particularly thrilled about the power of compound growth.

Earning annual returns of 10% on your investments for a decade won't just double your money, because you're not just experiencing those 10% gains on your portfolio's original value. In the second year, you'll also see a 10% gain on the first year's gains, and so on in every year that follows. The benefits really start to rack up over time. In this basic example, If you started with a $1,000 investment, after 10 years, your investment would be worth $2,594.

Longer investment periods will continue to boost the overall returns. Add another decade to that $1,000 thought experiment with perfect annual returns of 10%, and you'd have $6,727 at the end. Going to 30 years results in a $17,449 result.

In reality, your gains won't be smooth. You'll go through down years like 2022 and fantastic periods like 2024. Adding more cash to your portfolio is a great idea when the market is booming. Yet as Warren Buffett suggests, you can get more value for your investing dollar when stock charts are trending down.

What I'm buying in 2025

That's why I don't mind buying stocks and exchange-traded funds in this nerve-wracking economy. My most recent buys have included the Vanguard S&P 500 ETF and the more aggressive Vanguard Russell 1000 Growth (NASDAQ: VONG) ETF. Among my hand-picked stock buys in recent weeks, you'll find a few shares of retail giant Walmart (NYSE: WMT) and media-streaming pioneer Roku (NASDAQ: ROKU). These are some of my best investment ideas right now.

It feels easy to find undervalued stocks right now. I've only shared a few of my 2025 purchases here. Most of them have posted negative returns in the early going, and that's fine. I might just keep buying them at better and better starting prices.

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 $617,181!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $719,371!*

Now, it’s worth noting Stock Advisor’s total average return is 909% — a market-crushing outperformance compared to 163% 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 5, 2025

Anders Bylund has positions in Roku, Vanguard S&P 500 ETF, Vanguard Scottsdale Funds-Vanguard Russell 1000 Growth ETF, and Walmart. The Motley Fool has positions in and recommends Roku, Vanguard S&P 500 ETF, and Walmart. The Motley Fool has a disclosure policy.

Shares of Dutch Bros (NYSE: BROS) were buzzing and popping on Thursday. The coffee chain, famous for its friendly service and drive-thru focus, posted a fresh first-quarter report on Wednesday evening. The results came in well above the analyst community's projections, driving Dutch Bros' stock as much as 10% higher in the morning session. By 12:20 p.m. ET, it had cooled down slightly to an 8.2% overnight gain.

Q1 by the numbers

The average Wall Street analyst had expected adjusted first-quarter earnings of roughly $0.11 per share, based on top-line revenue in the neighborhood of $343.6 million. Dutch Bros' actual earnings landed at $0.14 per share, up from $0.09 per share in the year-ago report. Revenues rose 29% to $355.2 million.

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Management held their full-year guidance targets steady, but noted that many metrics are trending above the midpoint of earlier expectations. In particular, Dutch Bros could see surprisingly strong 2025 results in the categories of total revenues, same-store sales growth, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

Image source: Getty Images.

Dutch Bros' recipe for thriving in a tough market

CFO Josh Guenser admitted that the macroeconomic situation is unpredictable these days. But the company's exposure to tariff expenses is "limited," with most of the coffee beans it buys coming from low-tariff countries like Brazil, El Salvador, and Colombia. And Dutch Bros has secured its supplies for the rest of 2025 with preorders.

"We have a strong runway ahead and are well positioned to continue producing healthy financial results in this dynamic macro environment," Guenser said on the earnings call.

So Dutch Bros is still an inspiring growth story, despite macroeconomic pressure and rising ingredient prices. The stock trades 27% below February's all-time record price at 166 times trailing earnings. Dedicated growth investors can swallow the lofty valuation and invest in Dutch Bros' seemingly unstoppable growth.

Should you invest $1,000 in Dutch Bros right now?

Before you buy stock in Dutch Bros, 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 Dutch Bros 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 $623,103!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $717,471!*

Now, it’s worth noting Stock Advisor’s total average return is 909% — a market-crushing outperformance compared to 162% 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 5, 2025

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Dutch Bros. The Motley Fool has a disclosure policy.

The privacy-minded cryptocurrency Monero (CRYPTO: XMR) soared on Monday morning. As of 12:45 p.m. ET, it had gained 14.5% in 24 hours. Unfortunately, this sudden jump was the result of some unsavory financial moves apparently involving a large Bitcoin (CRYPTO: BTC) heist.

The curious case of 3,520 disappearing Bitcoins

Monero started a rapid price gain on Sunday night, and market observers were left with more questions than answers at first. The price gain didn't match up with common catalysts such as a large number of new Monero holders, a meme coin push on social media, or Monero analysis in traditional large-scale media, such as TV channels and newspapers.

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The mystery ended when the well-known crypto security account ZachXBT found some suspicious transactions on the Bitcoin and Monero blockchains. One account transferred 3,520 Bitcoins to another, moving about $330 million of crypto funds.

That move could have been a normal transfer between two very large Bitcoin holders or a single crypto whale simply rearranging Bitcoin balances into a new crypto wallet, but the next step undermined these innocent theories. The funds were immediately transferred again to six different Monero accounts. Nobody knows what happened after that because Monero was designed to hide the identity of each account and transaction.

In other words, it looks like somebody stole 3,520 Bitcoins and used Monero to make the funds impossible to trace after that first contact. This could be money laundering on a massive scale.

This privacy-boosting tool is too easily misused

There's a significant downside to funneling this large Bitcoin balance through the Monero channel. It's normally a lightly traded cryptocurrency. The 24-hour trading volume stopped at $67 million on Saturday, April 26. Pushing $300 million through this lightweight money transfer system will almost certainly result in much higher Monero prices, making the transactions more expensive.

This cash-burning effect also supports the idea that someone was up to no good here. Why accept a 15% surcharge on your privacy-boosting trades? The funds apparently had to move quickly.

I used to like Monero for its top-notch privacy protection features. Things have changed, though. Events like this one, plus Monero's widespread use in crypto-mining computer virus attacks, have changed my mind over time. What used to look like a user-friendly privacy tool actually seems more useful to bad actors wanting to cover their alleged crypto-stealing tracks. I don't recommend building an investment portfolio around that type of unsavory value-building thesis.

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

Before you buy stock in Monero, 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 Monero 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 28, 2025

Anders Bylund has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool recommends Monero. The Motley Fool has a disclosure policy.

Voice control expert SoundHound AI (NASDAQ: SOUN) has been a volatile investment recently.

The stock soared in February 2024 as Nvidia ( bought a few shares. It cooled down a bit when the artificial intelligence (AI) chip giant didn't follow up with a larger investment or a tight partnership. Then the meme stock community stepped in, driving SoundHound AI's share price skyward in an attempt to cause a lucrative short squeeze.

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But short-sellers largely held on to their negative bets on the stock, and the broader market's volatility also weighed on these high-priced shares. Today, SoundHound AI is trading 62% below last December's record price.

Where will SoundHound AI go from here? Is this a good time to buy into a hot growth story, or is the stock still overpriced? Let's see what the company might do over the next year, and how investors should treat this promising but unpredictable investment right now.

What SoundHound AI actually does

Let's start with the basics.

• SoundHound AI addresses a massive target market, providing high-quality voice interpretation services to several important industries. From in-car system controls and drive-through windows to phone-based menu systems and home electronics, the company can deliver game-changing human-to-machine interaction experiences.
• The company has been around for two decades, but wasn't focused on business growth for a long time. SoundHound AI raised money in a 2022 initial public offering to support its newfound verve for financial gains. It had just started to apply its music-based AI audio research to other industries, with early clients including Hyundai, Pandora, and Mercedes-Benz.
• The business opportunity is enormous, but investors need to be patient. In February's fourth-quarter 2024 report, $34.5 million in revenues resulted in a GAAP net loss of $258.6 million. Most of that pain sprung from soaring stock-based compensation expenses, but the direct cash costs were also substantial. The company consumed $108.9 million of operating cash flows last year.
• So SoundHound AI's stock valuation is not supported by profits so far, and even the revenue-based valuation is extremely lofty at 45 times trailing sales. That's a lot, even for a company that doubled its fourth-quarter revenues year over year and has a $1.2 billion backlog of unfilled long-term contracts.

The big backlog debate: How to value future contracts

The most optimistic SoundHound AI bulls argue that the stock price should be calculated from that beefy order backlog, resulting in a hypothetical price-to-sales ratio (P/S) of 3.2. However, the average deal in that order book is about six years, so the average annual value over that period works out to $200 million. Then I'm back to an adjusted P/S ratio of 19.1, and the revenue conversion will be a gradual increase rather than a crisp jump.

To be fair, the order backlog also keeps growing. It's up from about $1 billion in the previous quarter and $661 million in the year-ago report. So the annual revenue value of this growing contract list should account for some continued growth, too. But the whole discussion only gets more theoretical and less realistic with these extra adjustments.

At the end of the day, I think it's fair to call the stock "very expensive" and leave the exact sales-based calculations alone. Some investors will be ready to take the high-priced risk of buying into SoundHound AI's long-term growth story at a lofty price. Others will stay away until one of two things happens: The stock price could drop to a more reasonable level, or the underlying business performance could rise.

Both of these value-boosting trends could very well play out simultaneously, and that idea looks likely to me. If so, today's SoundHound AI buyers will be fine in the long run -- but those who wait for a better entry price will probably enjoy even stronger returns.

What to watch for in the year ahead

2025 could go down as a transformative year in SoundHound AI's history. Management expects full-year revenues to land near $167 million, about double the $84.7 million seen in 2024. Earnings before interest, taxes, depreciation, and amortization (EBITDA) is also supposed to turn positive this year, compared to a $61.9 million EBITDA loss last year.

Of course, these targets were set in February and the global economy looks very different two months later. Whether you plan to buy now or wait for a better entry point, you should probably wait for May 8's first-quarter report. Management will probably provide more accurate full-year targets, either underlining or undermining your investment thesis.

Should you invest $1,000 in SoundHound AI right now?

Before you buy stock in SoundHound 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 SoundHound 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 $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

Anders Bylund has positions in Nvidia and SoundHound AI. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

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

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

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Roku's value-stock valuation neighbors

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

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

Not your barista's growth trajectory

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

ROKU Revenue (TTM) data by YCharts

Roku's profit-sapping business growth methods

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

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

Smart ways to buy a roller-coaster stock like Roku

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

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

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

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

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

Before you buy stock in Roku, consider this:

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

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

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

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

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

The Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) isn't the most popular exchange-traded fund (ETF) on the market. With $83.7 billion in assets under management, it's not even among the five largest ETFs in the Vanguard family. But it is the biggest name in dividend-oriented ETFs, making it a leading choice for income investors who don't want to worry about picking individual dividend stocks.

So this Vanguard fund is well respected, but is it a good ETF to buy right now? I'll help you take a look. First, let's see what makes this ETF tick.

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Image source: Getty Images.

Inside the Vanguard Dividend Appreciation ETF

As usual, Vanguard isn't hand-picking stocks for this ETF. It's actually an index fund, tracking the components of the S&P U.S. Dividend Growers index. By handing off the heavy research work to another organization -- S&P Global (NYSE: SPGI) in this case -- Vanguard can automate the fund management and offer the resulting ETF with very low management fees.

So I need to take one more step to figure out how this ETF is designed. As it turns out, the underlying market index picks out proven dividend growth stocks among companies headquartered in the United States.

There's a minimum requirement for the stock's daily dollar-based trading volume. Real estate investment trusts (REITs) aren't allowed because they belong in a different S&P index. Each candidate must have increased its annual dividend payout for at least the last 10 years. Oh, and the highest-yielding 25% of this filtered list are also excluded. The idea here is to reduce the risk that often comes with excessive yields.

That's the selection process. Easy-peasy. Buying shares of the Vanguard Dividend Appreciation ETF gives you exposure to more than 300 consistent dividend growth stocks. The ETF is weighted by market cap, and Vanguard charges a tiny annual fee of 0.05%.

Comparing the Vanguard Dividend Appreciation ETF to its famous S&P 500 cousin

The resulting stock list has a lot in common with the better-known Vanguard S&P 500 ETF (NYSEMKT: VOO). Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) are the two largest holdings on both lists. Despite the dividend fund's focus on high-quality payouts, its 1.9% yield is just a little bit higher than the S&P 500 ETF's at 1.4%. Their long-term performance tends to be quite similar, whether you account for reinvested dividends or not:

VOO data by YCharts

But there are significant differences, too. The third- and fourth-largest holdings in the dividend fund are Broadcom (NASDAQ: AVGO) and JPMorgan Chase (NYSE: JPM). Their rankings on the general S&P 500 list are No. 8 and No. 11, respectively. Many of the leading S&P 500 stocks are not in the habit of paying dividends at all, not to mention raising their payouts every year.

The sector-by-sector composition is very different, too. As expected, the dividend appreciation fund owns more stocks in the industrial, healthcare, and finance segments, with a milder focus on consumer goods and technology.

Finally, it's less top-heavy than the ordinary S&P 500 tracker. The top five holdings in the dividend ETF add up to 18.3% of the total portfolio, compared to 24.9% for the five largest S&P 500 components. From this point of view, the smaller fund with just 338 components is more diversified than the 505-ticker S&P 500 ETF.

Who should consider this dividend-focused ETF right now?

Now you know what the Vanguard Dividend Appreciation ETF looks like, and it's time to answer the real question on everyone's mind: Is it a good ETF to buy in April 2025?

Most people should prefer the good old S&P 500 fund, most of the time. Its modest long-term performance advantage can make a significant difference when you're building a nest egg over decades.

But I understand if you prefer a more balanced portfolio in these uncertain times. The tech giants that recently lifted the S&P 500 to all-time highs might be due for a price correction, after all. It's not easy to keep the growth engines running in every possible economy. And the lower-risk dividend fund does have a history of strong performance in troubled times.

The S&P 500-beating periods tend to be fairly short, though. Even if you time your market calls to perfection, you'd still probably be better off in five or 10 years with the ultra-reliable S&P 500 ETF under your belt.

Then again, everyone's financial situation is unique. The Vanguard Dividend ETF can be the way to go if you prefer its blend of stable stocks, robust dividend payouts, and broader diversification. So I'm not throwing this interesting fund under the bus. It can be the right fund for some people, especially in a shaky economy like the current situation. Still, you should take a closer look at the standard S&P 500 option before committing too much capital to this idea.

Should you invest $1,000 in Vanguard Dividend Appreciation ETF right now?

Before you buy stock in Vanguard Dividend Appreciation 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 Dividend Appreciation 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. Anders Bylund has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Apple, JPMorgan Chase, Microsoft, S&P Global, Vanguard Dividend Appreciation ETF, and Vanguard S&P 500 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.

Artificial intelligence (AI) is still Wall Street's favorite water-cooler talk. It's also serious business. Finding the right AI strategy can make or break a company's future. That's true even outside the traditional tech sector, and digital entertainment specialist Netflix (NASDAQ: NFLX) is taking it very seriously.

In last week's first-quarter earnings call, co-CEO Ted Sarandos explained how Netflix is thinking about AI nowadays. Let's dig in and see whether his AI comments make sense or not.

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Making movies 10% better beats making them 50% cheaper

Near the end of the earnings call, Morgan Stanley analyst Ben Swinburne asked Netflix's management for an update on the company's AI strategy. To summarize Swinburne's question: Leading directors have started to embrace generative AI technology, so how is Netflix planning to leverage this powerful tool?

Sarandos highlighted Avatar and Titanic director James Cameron's view that generative AI could cut movie production costs in half, and turned in a different direction.

"I remain convinced that there's an even bigger opportunity if you can make movies 10% better," he said. "Traditionally, only big budget projects would have access to things like advanced visual effects (VFX) such as de-aging. So today, you can use these AI-powered tools so to enable smaller budget projects to have access to big VFX on screen."

As an example, the big-budget Scorsese movie The Irishman in 2019 used "very expensive" technologies to make actors look younger, said Sarandos. Five years later, that movie's cinematographer, Rodrigo Prieto, directed another sprawling epic; based on the classic Juan Rulfo book of the same name, Pedro Páramo shows several characters in several time periods, several decades apart. Generative AI is a cost-effective method for achieving the right looks in each period.

"Using AI-powered tools he was able to deliver this de-aging VFX to the screen for a fraction of what it cost on The Irishman," Sarandos said. "In fact, the entire budget of the film was about the VFX cost on The Irishman."

In other words, generative AI tools helped Prieto get this long-suffering project off the ground. Making it without generative AI would have been too expensive, not good enough, or perhaps both.

This is how Sarandos wants to use generative AI in the future -- enabling creative talents to run with ideas that always seemed out of reach without AI assistance.

AI in filmmaking isn't exactly new

So Sarandos added a twist of human talents to the generative AI discussion. Just a couple of days later, the Academy of Motion Picture Arts and Sciences updated its Academy Awards rule book. In the Academy's updated view, the decision to include AI tools will "neither help nor harm the chances of achieving a nomination." Instead, each film will be judged by the human creativity instead of which methods it used.

And this analysis could have been made many years ago. Peter Jackson's digital effects crew put thousands of orcs and elves on the Lord of the Rings battlefields 20 years ago, and they didn't control each animated figure by hand. All three films won the Academy Award for best visual effects, despite their heavy use of automated animation. The Walking Dead added lots of digital zombies to many scenes, as early as 2010. Sure, these lurchers were based on motion-capture filming, but their behavior on the screen was as computer-controlled as any generative AI avatar.

Netflix wants to make premium content with an AI assist

Taken together, Netflix and the Academy are making generative AI look more like an ordinary movie-making instrument than a dangerous replacement of human creativity. Will this message stick? I don't know, but the discussion has been started.

The long-term effects of this generative AI revolution might follow Ted Sarandos' planned path, delivering more and better content to viewers without taking away the human quality of creative work. Critics might argue that this is the wrong idea, and that the entertainment market is about to be drowned in tons of cheap but low-quality shows and movies.

I'm sure you'll see solid examples of both strategies. There's a place for inexpensive mass-market versions of anything and everything, but truly creative efforts will also always find an audience. It looks like Netflix wants to play on the high-end side of this divider, which aligns with the company's stated goals: "Netflix is a focused passion brand, not a do-everything brand: Starbucks, not 7-Eleven; Southwest, not United ; HBO, not Dish."

As a longtime Netflix user and investor, I applaud Sarandos' focus on production quality over cost-cutting. I'd rather see more award-winning nuggets of creative gold than rushed bargain-bin entertainment -- no matter how the content was created.

Should you invest $1,000 in Netflix 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 $532,771!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $593,970!*

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Anders Bylund has positions in Netflix. The Motley Fool has positions in and recommends Netflix, Starbucks, and Warner Bros. Discovery. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.

The crypto market has calmed down after a couple of months characterized by price-cutting volatility. Bitcoin (CRYPTO: BTC) is down 8% year-to-date on April 21. That's comparable to the stock market, as the S&P 500 (SNPINDEX: ^GSPC) index fell 13% over the same period. If anything, Bitcoin has been more stable than stocks amid the tariff drama, rising 3% since the end of March while the leading stock index dropped 9% lower.

But if you're planning to buy into the crypto sector in this period of stable prices, you have other options than Bitcoin. The largest crypto's market-beating stability hasn't rubbed off on the entire sector, and many altcoins are available at dramatically lower prices nowadays.

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In particular, I recommend taking a closer look at Polkadot (CRYPTO: DOT) right now. The cross-chain app development coin, managed by the Web3 Foundation, has also outperformed the S&P 500 in April with a smaller 4% price drop. But it's down 42% since the end of 2024, even though a stack of bullish growth drivers is piling up.

I'll give you the lowdown on Polkadot's transformation. If you're still not excited about this promising Web3 investment by the end of this page, you should probably stick to more traditional ideas like Bitcoin and value-oriented stocks. That's OK -- Polkadot is just one of many perfectly reasonable investment ideas in this dynamic market.

Polkadot's special place in the crypto world

Polkadot has two main purposes, and they are tightly related to each other:

• As the official coin and blockchain network of the Web3 Foundation, Polkadot was explicitly designed to support the next generation of the internet. It facilitates privacy, personal data control, and a financial system of peer-to-peer transactions. Getting this dotted ball rolling could disrupt everything from personal finance and media publishing to medical records and social media.
• The Polkadot blockchain network doesn't stand alone. Instead, it can connect to many of the leading blockchains out there, sending and receiving data from one to another. Let's say your Web3 decentralized finance app needs to manage money transfers with the Cosmos (CRYPTO: ATOM) network and store the user's wealth in the form of Bitcoins. The process is handled by Ethereum (CRYPTO: ETH) smart contracts, based on real-world data provided by Chainlink (CRYPTO: LINK). Letting these components talk to each other can be complicated, but Polkadot's integrated development tools make it easy. And that's how you build an advanced Web3 app.

Where are all the Polkadot apps?

So Polkadot's purpose is pretty clear, and I'm looking forward to Web3 ideas making an impact on mainstream culture. I'm not aware of any game-changing examples so far, though the Subsocial content monetization platform and Polkamarkets data forecasting community are off to a good start.

If those early hopefuls don't get the party started, the first Polkadot killer app might be a decentralized game or a mobile network management system. The first big Polkadot apps might not have the cryptocurrency's logo plastered all over it, but it can do the heavy cross-chain communications lifting behind the scenes. The resulting torrent of Polkadot usage will still build real-world value, one microscopic transaction fee at a time.

Polkadot's impressive technical makeover

On top of the incoming Web3 future, Polkadot is upgrading is technical platform at the moment. The original collection of parachains and crowdfunding auctions was powerful but also confusing in many ways. The new Polkadot 2.0 design simplifies everything into a single computing hub, running a massively scalable supercomputer on the blockchain. This platform can execute perfectly ordinary computer programs, such as a playable version of the classic ID Games game DOOM . That's a pretty silly example, but also a colorful demonstration of the next-generation Polkadot ecosystem's flexibility.

Putting this upgraded system in the hands of a global developer community could very well create that long-awaited first Web3 killer app. If this isn't the right market for any of these disruptive ideas, the stage will be set for a longer waiting game. So I can't promise that Polkadot will skyrocket in 2025, or the foreseeable future.

But I don't mind buying coins on the cheap and waiting for the sea change to come -- even if it takes several years. Investing is a marathon, not a sprint.

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

Before you buy stock in Polkadot, 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 $532,771!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $593,970!*

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Anders Bylund has positions in Bitcoin, Chainlink, Cosmos, Ethereum, and Polkadot. The Motley Fool has positions in and recommends Bitcoin, Chainlink, and Ethereum. The Motley Fool recommends Cosmos. The Motley Fool has a disclosure policy.

The stock market was starting to look overpriced for a while, and then the Great Correction of 2025 came along.

On the morning of April 9, the S&P 500 (SNPINDEX: ^GSPC) market index has dropped 18.5% below February's all-time high. The popular index's average price-to-earnings ratio (P/E) fell back from a lofty 30.0 to a more reasonable 24.7. It's getting easier to find tempting buys in this cooler market.

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I'm particularly interested in big-box retailer Target (NYSE: TGT) right now. Let me explain why the Minnesotan store chain looks so good in April 2025.

Target's dramatic price drop opens a rare buying window

The innovative merchant's stock has plunged 49% over the last year, including a 38% retreat from an attempted recovery that fizzled out on January 27. Long-term investors have taken an even harder hit, harking back to a record price of $266 per share in November 2021 -- just before the inflation panic started.

I'll admit that it's not a perfect setup. Target's revenue growth slowed down dramatically in the era of spiking inflation, while arch rivals Walmart (NYSE: WMT) and Costco (NASDAQ: COST) barely noticed the weaker economy,

But Target was defending its sector-leading profit margins. Whether you're looking at operating margins, bottom-line net margins, or cash flow margins, Target still collects a few more pennies per revenue dollar than Costco or Walmart.

Target is making the most of its flattish revenues. Combining this money-making talent with Target's swooning stock price results in two incredible charts.

First, check out Target's skyrocketing earnings yield:

TGT Normalized Earnings Yield data by YCharts

This isn't the most widely discussed valuation metric in the world, so it might not ring a bell. The earnings yield is essentially the P/E ratio backwards -- divide a company's earnings by the share price. A higher number indicates a more profitable company and lower-priced stock.

And Target looks like a bargain-bin find from this perspective. The stock is more than just modestly priced; it's on fire sale.

Then there's this little tidbit. Target has no reason to stop its annual dividend boosts, and the company has increased its payouts in each of the last 54 years. Through thick and thin, the dividend bumps keep coming. And when you pair that shareholder-friendly tendency with the same negative stock price action as before, you get a very generous dividend yield:

TGT Dividend Yield data by YCharts

There's just no contest if you're looking for a strong income stock in the retail sector. Target is the no-brainer pick, leaving Walmart and Costco far behind.

Why Target's slow sales growth doesn't scare me

So I don't mind Target's slow sales growth, as long as the company keeps making sector-leading profits and passing them on to investors in the form of great dividends.

Moreover, Target isn't sitting on its cash-generating laurels. The company rolled out generative AI tools in 2024, aiming to support store workers and assist shoppers in one fell app. As recently as last month, management unveiled a multi-faceted plan to boost annual revenue by $15 billion over the next five years. This effort relies on the AI assistant, a more selective inventory management system, and more shop-in-shop experiences.

I've been watching Target's turnaround plan from the sidelines for way too long. Don't mind if I pick up a few shares at these rock-bottom prices, locking in a fantastic dividend yield at the same time. With five decades of uninterrupted dividend increases under its belt, I can imagine Target delivering solid income for the foreseeable future.

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

Before you buy stock in Target, 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 $509,884!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $700,739!*

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Anders Bylund has positions in Walmart. The Motley Fool has positions in and recommends Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy.

It might sound strange at first, but stablecoins are soaring these days.

I don't mean that the price of Tether (CRYPTO: USDT) or USD Coin (CRYPTO: USDC) is skyrocketing, of course. They are going nowhere from that perspective, essentially pinned to the $1.000 price point as expected. But the entire category of stablecoins is gaining momentum, with lots of new names on the market and a rising tide of trading volumes.

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So let's look at the surging stablecoin category. The calmest corner of the cryptocurrency market can be surprisingly exciting.

What makes stablecoins so... stable?

First, let's think about what stablecoins are good for.

These digital coins have several functions in the crypto world.

With a price permanently pegged to a traditional fiat currency such as the US dollar, the euro, or the Japanese yen, they are a helpful tool for crypto-trading exchanges and banks. Exchanging dollars for Tether or USD Coins is very straightforward, and then you have a crypto-based representation of simple dollars in your digital assets account. From there, you can use the stablecoins to buy other cryptocurrencies, without raising currency exchange questions by involving actual dollars again.

The leading names have become extremely stable over time. Tether prices fluctuated wildly in 2016, ranging from $0.10 to $2.01 when the very concept of stablecoins was new and unproven. The newer USD Coin had a lighter bout of volatility just after its launch in 2018, rising as high as $1.04. But Tether quickly stabilized and hasn't moved more than 1.1% away from a perfect $1.00 in the past five years. USD Coin took a quick 3.4% dip amid the collapse of the experimental Terra stablecoin in 2023.

Any respectable stablecoin looks like a straight horizontal line next to the S&P 500 (SNPINDEX: ^GSPC) stock market index, other cryptocurrency prices, or any other fluctuating economic data point. Here's a five-year stablecoin vs. S&P 500 chart for your amusement. The big blip of USD Coin uncertainty in 2023 is barely visible:

Tether Price data by YCharts

Beyond Tether: The expanding stable of stablecoins

Tether was the first name in the stablecoin game, and it's still the largest and most widely used option. It's essentially your only choice if you want to use a stablecoin that is independent from specific crypto exchanges.

USD Coin was launched by a group including Coinbase (NASDAQ: COIN). It's no surprise to learn that Coinbase defaults to using USD Coin across its trading platforms. That's not the only place you can buy, sell, and hold USD Coin, though. Every major crypto exchange supports it, and there are far more USD Coin transactions on Binance than on Coinbase.

The Sky.money crypto-trading platform is an interesting case. Coinbase launched the USD Coin, but Sky.money worked the other way around. This system started with the USDS (CRYPTO: USDS) stablecoin, formerly known as Dai and Maker. The rest of the trading platform was built around the quirks and requirements of USDS. Sky.money may not ring a bell, but USDS is the third-largest stablecoin by market cap.

And there are many more. For example:

• The Ripple Foundation launched a Ripple USD (CRYPTO: RLUSD) stablecoin in December, basing the coin on US dollars and the XRP (CRYPTO: XRP) cryptocurrency. This coin is helping Ripple's payment services execute international money transfers, serving as a super-liquid pool of cash-backed assets.
• The Tether Holdings group could soon introduce a second version of the Tether coin, specifically aimed at large institutional investors in the United States.
• And this could be the start of a large trend. Asset manager giant Fidelity Investments is planning a stablecoin. Even larger firm Blackrock (NYSE: BLK) introduced one in March 2024. Even Bank of America (NYSE: BAC) is open to the idea of an in-house stablecoin, depending on how American regulations will shape up around this opportunity.

So the stablecoin legion is growing larger and more diverse.

Stablecoin trading volumes speak volumes

Whether you're looking at Tether, USD Coin, or USDS, their average daily trading volume has been bubbling up over the last two years.

Tether's average transaction volume stood at $19 billion in early April 2023. Now it's up to $182 billion per 24 hours. USD Coin's volume rose from $6 billion to $28 billion over the same period. The Dai/USDS ecosystem surged from $130 million per day to $2.7 billion.

This is more than empty talk. People (and automated trading algorithms) are putting these stablecoins to work. In all fairness, the rising interest applies to non-stablecoin cryptocurrencies, too. Bitcoin's daily trading volume is up from $9.4 billion to $101 billion, for instance. But the stablecoin community is taking advantage of broader public crypto interests.

More than just trading tools

Stablecoins can do more than just facilitate trades between fiat currencies and cryptocurrencies. Their powers are growing over time, since every new stablecoin option wants to win customers and usage with their unique features.

Some of them offer generous interest rates, putting most savings and money market accounts to shame. The spare cash in my Coinbase account is earning an annual percentage yield (APY) of 4.1% right now. That's comparable to the best money market yields on the market today.

A few stablecoins rely on a specific blockchain system, like the XRP-based Ripple USD coin. Others pick a proven coin-launching foundation such as Ethereum (CRYPTO: ETH) or Solana (CRYPTO: SOL), depending on their technology to provide data security and smart contract functions. And then there's Tether, which provides transparent support for more than a dozen blockchain networks. That's a diverse approach, protecting Tether holders against platform-specific risks. Tether can always untether itself (har-de-har-har) from any risky or flawed solution, relying on a dozen alternatives instead.

So you see, there's plenty of buzz in the stablecoin sphere right now. There are plenty of alternatives for good reason. These mega-stable coins (often with lucrative yield rates) may look especially attractive when the broader crypto market is experiencing wild volatility, like this week.

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

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

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

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $244,570!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $35,715!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $461,558!*

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

Continue »

*Stock Advisor returns as of April 5, 2025

Bank of America is an advertising partner of Motley Fool Money. Anders Bylund has positions in Coinbase Global, Ethereum, Solana, and XRP. The Motley Fool has positions in and recommends Bank of America, Coinbase Global, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.

Quantum computing specialist Rigetti Computing (NASDAQ: RGTI) has been through a lot in recent months. As of this writing on April 7, the stock is down 61% from January's all-time high. But if you shift your focus to a six-month view, Rigetti has gained a staggering 1,014% in that period.

The company didn't exactly earn its skyrocketing price jump, but the recent drop isn't Rigetti's fault either. Forces way beyond Rigetti's control are playing Wall Street lacrosse with the stock. So what's going on, and is this price dip a good time to buy Rigetti stock?

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The story so far

I'm sure you know the good part. Fellow quantum computing expert Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) developed a new chip with superior error correction in early December. This large step forward helped Alphabet's Google Quantum AI team crush a performance benchmark to smithereens, making modern supercomputers look frozen in time by comparison. This warmly welcome sign of progress sent all quantum single-focus computing stocks skyward, including Rigetti.

But the fun didn't last forever. In January, just a month after the error-correcting breakthrough, Nvidia (NASDAQ: NVDA) CEO Jensen Huang said that truly useful quantum computers were still many years away. Two decades looked like a reasonable estimate in Huang's mind.

And he should know, since Nvidia also competes in this market with a focus on connecting today's digital technology to tomorrow's quantum computers. Huang isn't some anonymous third-party analyst, but a business leader with his fingers deep in the quantum computing pie. He wants to have a large slice of it in the long run.

That statement took the wind out of Rigetti's stock sails, as it did for the other pure-play quantum computing stocks. Huang hit the reset button on this sector's dreams of quick development and nearly immediate riches.

On top of that bubble-popping event, the market isn't terribly fond of speculative growth stocks with negative earnings right now. The growth-oriented Nasdaq Composite (NASDAQINDEX: ^IXIC) market index is down 21.5% in the last three months, with about half of the pain accumulating on Thursday and Friday of last week. Tariffs may not slow down Rigetti's quantum computing research directly, but anything that limits the broader economy's access to borrowed funds could be bad news. Without free-flowing capital, Rigetti and its peers might have a hard time landing business-generating contracts.

Rigetti's stock has actually held up better than the Nasdaq Composite index over the last month, hanging on with a 2.3% price drop while the index plunged 13.7%. But the picture changes dramatically if I adjust that chart by a single day, and the comparative chart looks like this after shifting the time frame by a full week:

RGTI data by YCharts

Rigetti's wild ride

All right, so Rigetti soared thanks to Google's research breakthrough and then started to fall because of a modest analysis by Nvidia's management. The economic backdrop isn't helping. Where does Rigetti's stock land on the scale of "ridiculously cheap" to "way too expensive" today, then?

I'm afraid Rigetti's stock is much too hot to touch at this point. The 61% price drop is a good start, but very far from "good enough."

Even now, Rigetti shares trade at 142 times trailing sales, making even Nvidia's ratio of 18 times sales look affordable. I'd love to talk about profit-based metrics, but Rigetti is burning cash at the rate of $61.7 million per year. At this rate, it could run out of cash reserves in less than three years -- long before quantum computers are supposed to gain game-changing powers.

The company could become a buyout target along the way, or it might sign long-term contracts with plentiful revenue streams in a forward-looking perspective. Otherwise, I expect Rigetti to dip into unwelcome cash sources such as dilutive stock sales or expensive debt papers.

Is Rigetti worth the risk? I'm afraid not.

It's far too early to pick long-term winners among the handful of small and unprofitable quantum computing experts. But you may have noticed that established tech titans like Alphabet and Nvidia have serious interests in this technology, too. Those are the stocks I would pick if I wanted a low-risk connection between quantum computing and my stock portfolio. I can't even pin a target price on Rigetti where I might be interested in pecking at the single-market expert.

Like I said, Rigetti has a long way to go before it can make investors' dreams come true. Many things can go wrong on the way.

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

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

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

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $244,570!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $35,715!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $461,558!*

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

Continue »

*Stock Advisor returns as of April 5, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Anders Bylund has positions in Alphabet and Nvidia. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.

I keep calling SoundHound AI (NASDAQ: SOUN) a great company with fantastic technology -- and an overpriced stock.

Has anything changed in the tariff-laden downturn lately, or is this promising stock still too rich for its britches?

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SoundHound AI's price moves

As of this writing on Monday, April 7, SoundHound AI's stock isn't exactly following the broader market. That's no surprise, given the stock's hyper-volatile tendencies and lofty beta value of 3.0.

If you're unfamiliar with that data point, a 1.0 value means the stock generally moves in the same direction as the S&P 500 (SNPINDEX: ^GSPC) index, at a similar speed. A very high value like 3.0 points to a stock that usually jumps 3 times higher or falls 3 times lower than the S&P 500, measured in daily percentage returns.

That's not the whole story, of course. Otherwise, a high beta would guarantee accelerated price changes, always in the same direction as the broader market. As it turns out, SoundHound AI's stock also has a low statistical correlation with the S&P 500 chart, currently standing at 0.4. A leveraged fund that simply triples the daily return of the S&P 500 gets a correlation value of 0.96 or more, with 1.0 being a perfect match.

Long story short, SoundHound AI's stock makes a lot of big moves, and not always in the direction other stocks are moving on the same day.

Image source: Getty Images.

SoundHound AI is still overpriced

That's enough of my statistical nerdery. In a more practical sense, SoundHound AI's stock is still floating much higher than it should, even after a 68% price drop from mid-December's peak.

It's a very welcome price correction, but it could -- and arguably should -- still go much further down. The stock is still up 48% over the last year, and it looked pricey back then. Traditionalists can take one look at SoundHound AI's valuation and walk away. The price is not even in the same zip code as "reasonable" with a price-to-sales ratio (P/S) of 36 and negative profits across the board.

And the tariff debacle hasn't been very helpful. The S&P 500 fell 9.8% in the two-day span from Wednesday evening to Friday's closing bell. SoundHound AI dropped 10.7% in the same period. That's comparable to the index and far from the 30% drop this stock's risky beta value suggests.

When will I sound the "buy SoundHound AI!" alarm?

So no, not much has changed lately. I recently restocked my portfolio with the same amount of SoundHound AI shares I had sold in December. But I did it reluctantly, and only because I've already secured enough profit from this stock to take some unreasonable risks. The shares I bought six weeks ago are down by 12% so far. I plan to double down on this position someday, but not until the price has reached an objectively reasonable level.

In this case, I'm looking at SoundHound AI's order backlog of roughly $1.2 billion, divided by the average contract length of six years. You're looking at annual revenues of roughly $200 million over the next six years. A sensible P/S ratio for a high-growth tech stock like SoundHound AI could be approximately 10x to 13x. Using these values as a guide, SoundHound AI's market value should be something like $200 million times 13, or $2.6 billion.

The stock still trades 17% above that target, which is on the generous side of my preferred valuation range anyway. And the conversion of long-term contracts into reportable revenues may not be as simple and smooth as it sounds -- I'm still looking at future forecasts and estimates to some degree. So I'm not ready to go on a buying spree yet.

The situation is getting better, as SoundHound AI keeps growing its order book while the stock price correction continues. But most investors should let this two-step process continue for a while. Call me back when this stock drops to the mid-$6 range. That would be my time to buy more and recommend that others start to build a SoundHound AI position at a halfway decent price.

Should you invest $1,000 in SoundHound AI right now?

Before you buy stock in SoundHound 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 SoundHound AI 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.

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Anders Bylund has positions in SoundHound AI. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.