Key Points

• Ackman holds Alphabet stock and cites the AI trend as a major catalyst for its search and cloud businesses.

• Laffont questions how dominant Google Search will still be in the face of competition from generative AI.

• Alphabet is leveraging OpenAI as a strategic partner, potentially mitigating the risks that concern Laffont.

• 10 stocks we like better than Alphabet ›

Billionaire hedge fund manager Bill Ackman's approach to portfolio management is rather simple. The founder and CEO of Pershing Square Capital Management keeps its portfolio concentrated in a small number of large-cap stocks that he buys when they are arguably trading below their intrinsic values.

Coatue Management founder Philippe Laffont has a different philosophy. Coatue's portfolio boasts a number of high-growth stocks that appear poised to dominate emerging trends.

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One company that Ackman and Laffont seem to have different views on is "Magnificent Seven" member Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG).

Let's start by exploring what drives Ackman's conviction in the megacap artificial intelligence (AI) stock. From there, I'll detail a major risk factor that Laffont recently called out for the stock. Lastly, I'll provide my own breakdown of Alphabet and whether or not the stock could be worth a look right now.

Why does Bill Ackman like Alphabet?

Pershing Square's position in Google parent Alphabet makes up about 14% of the value of its portfolio, based on the fund's most recent 13F filing. In its latest annual investor presentation, the firm identified Alphabet as an "underappreciated" opportunity in the AI landscape.

It went on to highlight new opportunities in digital advertising and cloud computing as catalysts for Alphabet that could drive accelerated revenue growth and profit margin expansion.

For example, Google's search responses now highlight AI-crafted summaries. So far, this feature has shown some encouraging metrics such as higher user engagement trends among those who use the summaries. This puts Google in an advantageous position when it comes to enticing advertisers to its platform.

In addition, Alphabet's cloud computing business has made meaningful investments in cybersecurity tools over the last few years. The integration of AI-powered cybersecurity services into the Google Cloud Platform (GCP) is a major differentiator from peers such as Microsoft Azure and Amazon Web Services (AWS). Moreover, it also opens the door to another enormous addressable market and provides Alphabet with more direct ways to compete with the likes of CrowdStrike and other leading cybersecurity players.

GOOGL Net Income (TTM) data by YCharts.

Over the past year, Alphabet generated more net income than its closest cloud infrastructure peers. Yet it's trading at a forward-price-to-earnings (P/E) multiple of just 18.4 -- roughly half the ratios of Amazon and Microsoft. Given Alphabet's discounted valuation and the potential value to be gained from integrating AI and cybersecurity across its vast ecosystem, I can see why the company earned a position in Pershing Square's portfolio.

Laffont just called out a major risk factor for Alphabet investors

During a recent panel discussion on CNBC's Squawk Box, Laffont detailed his thoughts on Alphabet. The billionaire was bullish on some of its businesses, such as video platform YouTube and autonomous driving company Waymo. However, Laffont expressed concern over the outlook for Google Search. He believes that the rise of OpenAI could pose a threat to Google's search business.

Image Source: Getty Images.

Is Alphabet stock a buy right now?

I completely understand Laffont's stance, and I would go as far as to say that his opinion is rooted in reality. Some search trends have already been indicating that Google is losing some of its momentum, likely due to the rise of OpenAI and competing large language models (LLMs).

With that said, I'd like to call out an interesting development between Alphabet and OpenAI. The two companies recently formed a strategic partnership under which OpenAI will leverage Google Cloud's network.

As Ackman's thesis shows, Alphabet has some creative ways to grow its budding cloud infrastructure business relative to the competition. Considering OpenAI's closest ally throughout the AI revolution has been Microsoft, I see the expansion of its relationship with Google Cloud as an incredibly savvy deal and potentially lucrative opportunity for Alphabet.

Furthermore, if OpenAI does begin to meaningfully take business from Google Search, then Alphabet appears to have identified a new way to offset that headwind while monetizing the very company that potentially threatens it.

Although I understand Laffont's view, I think the bearish sentiment surrounding Alphabet is more academic than reality. Moreover, I think the potential downside is baked into Alphabet's stock at this point, considering the steep discount and wide disparity in valuation multiples it trades at relative to its near peers (despite being the most profitable of the three).

I see Alphabet stock as a dirt-cheap, no-brainer opportunity right now.

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

Before you buy stock in Alphabet, consider this:

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, CrowdStrike, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• Microsoft and Amazon were early investors in AI, plowing tens of billions into upstart companies.

• No doubt, OpenAI and Anthropic have helped spur new growth for Microsoft and Amazon.

• Yet, Meta's decision to branch out beyond internally built AI systems and products looks savvy.

• These 10 stocks could mint the next wave of millionaires ›

Big tech has not been shy about opening the pocketbook for artificial intelligence (AI)-related investments over the last few years. While the billion-dollar price tags are what made headlines, the real value of these investments came with their strategic intent. Many of these deals involved alliances with big tech leaders, who swiftly integrated a host of new AI-powered products and services into their legacy ecosystems.

Until recently, Meta Platforms (NASDAQ: META) took a different approach. It chose to allocate its capital expenditure (capex) budget to custom silicon chips, developing new wearable tech, and building its own large language model (LLM). However, following its massive $14.3 billion bet on start-up Scale AI, it's fair to wonder if Meta's approach to building an AI empire is too little, too late.

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Let's explore some of the more notable AI deals that big tech has made in recent years. From there, I'll detail the underlying thesis behind Meta's interest in Scale AI, and why the timing of this deal is so important.

Is Meta late to the AI party?

Microsoft was the first major tech company to make a mark in the AI landscape. In early 2023, the company structured a multi-year investment worth $10 billion in ChatGPT developer OpenAI. The strategic rationale behind this deal was to integrate OpenAI's services into Microsoft's Azure cloud platform.

Amazon followed in Microsoft's footsteps. Amazon initially invested $4 billion into creating an OpenAI competitor, a start-up called Anthropic. Similar to Microsoft's integration of ChatGPT into the Azure ecosystem, the partnership with Anthropic has so far revolved around leading cloud platform Amazon Web Services (AWS). Amazon has now invested a total of $8 billion into Anthropic since the initial investment a couple of years ago.

Image source: Getty Images.

How have these deals panned out so far?

It's one thing to outlay significant capital toward new assets. But how beneficial have these deals been for big tech so far? Per Microsoft's most recent earnings report, revenue from Azure and other cloud services grew by 33% year over year. Management pointed out that 16 points of this growth (roughly half) were attributable to AI services.

Meanwhile, since Amazon's investment in Anthropic in September 2023, AWS has grown its annual revenue run rate by 27% while expanding operating income margins by roughly 9 percentage points.

While this growth is impressive, there are some subtle nuances that investors should be aware of as well. First, OpenAI recently signed a new cloud deal with Alphabet. OpenAI has also been working closely with Oracle on Project Stargate, a $500 billion AI infrastructure initiative.

These new relationships could suggest that OpenAI is looking for strategic opportunities beyond its existing relationship with Microsoft. For that reason, it's hard to project how accretive Microsoft's investment in OpenAI will be going forward.

On top of that, the Anthropic and OpenAI deals primarily revolve around cloud computing services. While this is a critical component of the AI narrative, it's not entirely related to or competitive with Meta -- which mostly seeks to monetize consumer engagement through social media, gaming, and the metaverse.

Meta is scaling for the future, and its timing looks pretty smart

Then there's Meta Platforms' deal with Scale AI. One of the pillars supporting this deal was that it helped pave the way for a new component of the company's ecosystem, known as Meta Superintelligence Labs (MSL). Scale AI CEO Alexander Wang now leads MSL as Chief AI Officer. In addition to the Scale AI team, Meta has hired a number of technologists and researchers from OpenAI, GitHub, Anthropic, and Alphabet to build the MSL team.

Meta's largest source of revenue and profits stems from its advertising empire. With billions of people engaging with its apps on a daily basis, advertisers are eager to get in front of Meta's users.

However, Meta's advertising model relies on predictive analytics around which ads users actually click on. This data is used to train recommendation models in order to feed ads that will actually convert to clicks and sales from its users. Scale AI is a data labeling platform that can be used to augment and fine-tune Meta's existing ad targeting techniques.

Although Microsoft and Amazon have been able to jump-start their respective cloud operations thanks to their aggressive and early moves in the AI start-up landscape, I think Meta may have been more calculated in the development of its own roadmap.

In my eyes, Microsoft could face rising competition from Oracle and Alphabet in the cloud arena. Meanwhile, investors will likely want to see how Amazon plans to integrate AI beyond AWS to source further growth from its other businesses.

With Scale AI and a host of new hires now closely aligned across Meta's various applications and services, I think the company is uniquely positioned to bolster its existing AI platforms while others in the big tech landscape now face rising competition and may need to pivot.

While it may have looked like Meta's big tech peers were sprinting right by, I think the company's recent investments and creation of its new AI research lab were perfectly timed.

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Key Points

• Archer manufactures electric air taxis that it plans to sell to cities, commercial airlines, and the U.S. military.

• Morgan Stanley estimates that Archer is operating in a market that could be worth $9 trillion in the long run.

• While Archer's potential is exciting, the young company's valuation requires a thoughtful look right now.

• 10 stocks we like better than Archer Aviation ›

When it comes to the electric vehicle (EV) market, most investors probably don't look past companies such as Tesla or Rivian Automotive. While both of these companies have built strong brands in the car landscape, there are other opportunities beginning to emerge within the broader EV realm.

One of the more popular areas includes electric vertical takeoff and landing (eVTOL) aircrafts, such as those built by Archer Aviation (NYSE: ACHR). Archer is looking to disrupt the aviation industry through its futuristic electric air taxis. From offering a new form of mobility in densely populated environments such as cities to introducing new stealth aircraft for the military, Archer has no shortage of interesting use cases. Among its fans is popular tech investor Cathie Wood.

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With shares trading for about $10 as of July 7, is now a good time for investors to invest in Archer? Read on to find out.

Archer Aviation is an exciting company with a lot of potential, but...

Investment bank Morgan Stanley recently published a report in which research analysts estimated the size of what the organization calls the "low altitude market." By 2050, Morgan Stanley is forecasting the total addressable market (TAM) for low altitude aircraft to be around $9 trillion.

While Morgan Stanley's research includes other types of aircraft besides eVTOLs (i.e., drones) in its report, it is encouraging to see Archer's primary opportunity in air mobility is so large. When you explore Archer's potential to disrupt traditional modes of transportation while bringing much-needed innovation to the aviation industry, it's not surprising to learn that companies such as United Airlines and Stellantis have been eager to partner with the company.

On top of that, Archer's recent partnership with Palantir Technologies also suggests the company is exploring how software and artificial intelligence (AI) can play a role in the company's new aviation system.

With an order book worth roughly $6 billion, institutional investor support, partnerships with leading vehicle and aviation businesses, and use cases spanning commercial aviation as well as defense contracting, Archer might look like a no-brainer investment opportunity.

Image source: Getty Images.

...smart investors understand reality versus narrative

For now, Archer remains a pre-revenue business. In other words, the company's partnerships and growing order book haven't exactly led to tangible sales coming through the door just yet.

ACHR Cash and Equivalents (Quarterly) data by YCharts

While the chart above might imply that Archer's cash balance is strong, the company's rising research and development (R&D) costs and ongoing burn rate could quickly diminish its liquidity position. Despite this financial profile, Archer boasts a market capitalization of $5.4 billion. To me, that valuation reflects an exciting hype narrative as opposed to concrete fundamentals.

Is Archer Aviation stock a buy right now?

Although Archer stock may look "cheap" at $10 per share, the company's multibillion-dollar valuation seems overstretched considering there aren't any sales to back it up yet. In reality, Archer could be seen as analogous to a late-stage venture capital (VC) type of investment. The payoff could be enormous, but the risk profile is equal (if not larger) in size.

Another layer that could complicate the company's commercialization efforts revolves around regulatory approvals from the Federal Aviation Administration (FAA). In my view, there are too many uncertainties around Archer right now. While I am hopeful that the company has the potential to disrupt the aviation world, I think investing in Archer stock right now is too speculative.

It could be years before the company reaches critical scale and the stock price really takes flight. For these reasons, I would encourage investors to monitor Archer's progress but remain on the sidelines when it comes to buying the stock right now.

Should you invest $1,000 in Archer Aviation right now?

Before you buy stock in Archer Aviation, consider this:

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

Key Points

• Ark Invest has been adding several chip stocks to its portfolio in recent months.

• Advanced Micro Devices and Taiwan Semiconductor Manufacturing now make up sizable positions for Ark.

• Both companies are compelling opportunities for any AI investor right now.

As CEO and chief investment officer of Ark Invest, Cathie Wood might be best known for her high conviction in speculative opportunities across industries such as genomics and cryptocurrency.

When it comes artificial intelligence (AI), many of Ark's biggest positions are in volatile stocks such as Tesla and Palantir Technologies. Over the last couple of months, however, Wood has quietly been rounding out her exchange-traded funds (ETFs) with semiconductor stocks.

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Let's explore two AI chip stocks that have recently become rising stars in the Ark portfolio. Is now the time to follow Wood's moves? Read on to find out.

1. Advanced Micro Devices

While Advanced Micro Devices (NASDAQ: AMD) has been part of Ark's portfolio for quite some time, the investment firm began aggressively adding to its position throughout late April and most of May.

According to public trading data, Ark added approximately 800,000 shares of AMD between June 17 and 30. The position is spread across the Ark Autonomous Technology & Robotics ETF, Ark Next Generation Internet ETF, Ark Fintech Innovation ETF, and Ark Innovation ETF. As of this writing, AMD has now become the 11th biggest position for Ark Invest overall.

In fairness, AMD's rise at Ark has been influenced by some pronounced share price gains in recent weeks too. Since Ark began adding to its AMD position in late April, shares have gained roughly 61%.

In my eyes, AMD's recent gains can be tied to the company's accelerating data center business as well as bullish anticipation for its new AI accelerators during the second half of this year.

Data by YCharts.

Nevertheless, even with such a massive move in the share price, AMD trades for roughly 36 times forward earnings. Although this isn't exactly cheap, shares of AMD are well within their usual valuation range.

My hunch is that AMD is still being discounted by some investors, primarily due to the enormous competitive threat the company faces from Nvidia.

Considering how much momentum is fueling AMD stock right now, I think I'd sit on the sidelines for the time being. To me, the company's long-term prospects are somewhat ambiguous so long as Nvidia remains king of the chip industry. While there is likely still good money to be made in AMD stock, there are more reasonable price points to build a position.

Image source: Getty Images.

2. Taiwan Semiconductor Manufacturing

Ark complemented its AMD purchases with some exposure to Taiwan Semiconductor Manufacturing (NYSE: TSM) back in May. The firm doubled down on this decision by adding over 190,000 shares of TSMC throughout June.

I see TSMC as the most interesting opportunity within the broader chip landscape. Unlike Nvidia, AMD, Broadcom, or the cloud hyperscalers, TSMC doesn't specialize in designing its own chipsets. Rather, the company offers industry-leading fabrication services that bring semiconductor designs to life.

This puts TSMC in a unique position as the company stands to benefit from rising spend in AI infrastructure over the coming years, regardless of which specific chipsets are witnessing the most demand.

Looked at another way, investors in TSMC need not overanalyze which chip company will sell the most graphics processing units (GPUs). Rather, an investment in TSMC could be viewed similarly to a call option on ongoing investment in data center infrastructure and AI chips for the long term.

Data by YCharts.

While TSMC has witnessed some notable valuation expansion throughout the AI revolution, the company's forward price-to-earnings (P/E) multiple of 25 is still reasonable. Unlike AMD, I do not think rising competition is what concerns investors over a position in TSMC, though.

Rather, it's geopolitical tensions with China that give way to uncertainty over TSMC's growth prospects. Given the company's ongoing investments in geographic expansion, though, I think the concerns over China are exaggerated and likely baked into the stock at this point.

As I wrote a few weeks ago, TSMC might be the best bargain in the AI market right now. Compelling secular tailwinds, combined with an industry-leading position in the fabrication market, strong institutional backing, and a reasonable valuation, make TSMC a no-brainer for long-term investors.

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

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

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

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*Stock Advisor returns as of June 30, 2025

Adam Spatacco has positions in Nvidia, Palantir Technologies, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, Palantir Technologies, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

Key Points

• Waymo and Tesla are investing heavily into autonomous driving technology.

• The companies have different approaches in building their self-driving cars, but Waymo may have just unintentionally endorsed its rival.

• While Tesla's approach to autonomous driving seems valid, the company has a long way to go before it catches the competition.

Autonomous driving is emerging as one of the most exciting opportunities in the artificial intelligence (AI) landscape. Developing self-driving vehicles stitches together semiconductors, software development, and robotics. Hence, there are several different ways to invest in the technology.

For now, the most mainstream opportunities in the autonomous vehicle market seem to be through Tesla (NASDAQ: TSLA) and Alphabet, which owns self-driving car business Waymo. What most investors likely overlook is that Waymo and Tesla have approached building fleets of self-driving cars through different lenses.

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While Waymo has a first-mover advantage in scaling self-driving taxi fleets, some findings from the company's recent academic research paper titled "Scaling Laws of Motion Forecasting and Planning" could suggest that Tesla may have a technological edge.

Let's explore Waymo's progress so far and assess why Tesla could be the superior autonomous driving opportunity in the long run.

Waymo beat Tesla to the punch

According to Alphabet's first-quarter earnings report, Waymo completes more than a quarter of a million paid rides on a weekly basis. Not only is this a fivefold increase compared to last year, but Waymo's serviceable markets are still quite limited. For now, Waymo primarily operates in Austin, Texas, and has planned expansions in Washington, D.C., and Miami over the next year.

By contrast, Tesla just launched its long-anticipated robotaxi service in Austin a couple of weeks ago. Considering Waymo's successful early adoption rates, investors may be wondering how Tesla plans to close the gap against competitive forces.

Image source: Getty Images.

Did Waymo just quietly admit Tesla has an edge?

There are several differences between how Waymo and Tesla have approached building self-driving car fleets. From a technical standpoint, the two companies have opposing views on variables such as mapping, sensors, and developing the compute power needed to train and hone AI models.

Waymo's approach is grounded in simulating real-world environments and driving behaviors. By contrast, Tesla's general approach has been to use a data-heavy feedback loop from its actual drivers.

Tesla vehicles are constantly collecting loads of sample data from drivers such as speed and braking patterns or interventions. Subsequently, Tesla trains and iterates its models on this large and expanding data set to improve its autonomous driving software platform and budding robotaxi fleet. Tesla collected more than 3.5 billion miles' worth of driver data from its Full Self-Driving (FSD) software platform.

In Waymo's research report, the company suggests that "collecting more data" could be advantageous when building and scaling autonomous vehicle platforms. Waymo goes on to say that "every 10 observed miles are equivalent to 2 to 3 demonstrated miles."

To me, these statements seem to suggest that building a sophisticated model alone is not enough to perfect autonomous vehicle software. Rather, collecting data at scale is a critical part of the equation. Furthermore, it appears that Waymo is saying that using large volumes of real driver behavior (i.e., non-autonomous vehicle platforms) is important for training these models over time.

In essence, Waymo's study seems to endorse many of the pillars supporting Tesla's approach to developing self-driving cars -- learning from actual driver behaviors, collecting billions of various data points, and ultimately iterating and scaling the technology based on these takeaways.

Is Tesla stock a buy right now?

At the moment, Tesla stock appears to be pricing in a lot of upside from the robotaxi launch. I wouldn't chase momentum at these valuation levels, per se. Tesla stock often trades on narratives, which smart investors know can change quickly.

As a long-term investor, I encourage readers to think about the bigger picture here. Self-driving cars are still a new, evolving technology and I do not personally think there is a single correct way to build and scale these platforms.

Candidly, I don't see Waymo's study as some sort of veiled admission that Tesla's approach to autonomous driving is right and theirs is wrong. I simply think Waymo's takeaways subtly imply that Tesla's technological approach has some merit.

What will determine who wins the autonomous driving opportunity will boil down to which company can acquire more customers, expand to new markets, strategically partner with existing ridehailing applications, and scale its fleets more rapidly and profitably. For these reasons, I do not think Tesla necessarily has Waymo is a checkmate position -- at least not yet.

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 $397,573!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $39,453!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $697,627!*

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

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*Stock Advisor returns as of June 30, 2025

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

Since OpenAI released ChatGPT to the world on Nov. 30, 2022, shares of semiconductor powerhouse Nvidia (NASDAQ: NVDA) have risen by 818% (as of June 26). To put that another way, over the last two and a half years, Nvidia's market capitalization went from $345 billion to $3.8 trillion. making it the largest company in the world as measured by market cap.

Some investors are already thinking about who the next breakout candidate in the artificial intelligence (AI) revolution will be, with signs pointing to another chip stock -- perhaps Advanced Micro Devices? What about Broadcom or Taiwan Semiconductor Manufacturing? While each of these companies stands to benefit from rising AI infrastructure spend over the next several years, I see another business that is better positioned as "the next Nvidia."

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You see, Meta Platforms (NASDAQ: META) has been investing in AI over the last couple of years, and the technologies it's developing could transform Meta's social media empire and position the stock for superior gains over the competition.

Image source: Getty Images.

How can AI transform Meta's ecosystem?

Meta operates across two core segments: advertising and Reality Labs.

Reality Labs represents Meta's metaverse ambitions, which include virtual reality interactions, gaming, and consumer wearables. While Reality Labs stands to benefit from AI, this segment of the company remains unprofitable and is more of a longer-term vision to turn Meta into something beyond just a social media platform.

The main source of revenue and profits for Meta comes from advertising -- specifically, ads that appear across the company's social media platforms: Facebook, Instagram, and WhatsApp. It's this area of the business that is ripe for disruption thanks to the power of AI.

If you have ever scrolled on any of Meta's social media apps, chances are that you've been bombarded with a series of advertisements. However, how many of those ads actually appealed to you?

As sophisticated as Meta's user algorithms have been in the past, my hunch is that you still receive postings or notifications for content, goods, and services that aren't of high interest to you. By leveraging AI, however, Meta can improve its data workloads as it relates to user engagement and consumer behaviors. As a result, the company can improve its predictive analytics to better position more relevant and customized listings for its users.

In turn, advertisers, which can be somewhat unpredictable and exhibit cyclical budgeting strategies, will be more inclined to allocate funds across Meta's various platforms. By keeping advertisers sticky to the ecosystem, Meta has an opportunity to employ pricing power over the competition and accelerate its revenue growth. At the same time, improving ad feeds for its users can also help Meta from a cost structure perspective -- as the unit economics on clicks and customer acquisition should become lower over time.

The combination of accelerating revenue and lower costs could result in meaningful profit margin expansion for Meta in the long run.

What could this mean for Meta's valuation?

Since ChatGPT's release, the share prices of Meta have gained more than 500%. I bring this up to make it clear that Meta has also benefited from the bullish AI trade over the last couple of years.

Data by YCharts.

However, except for a notable spike during the first half of 2023, Meta's price-to-earnings (P/E) multiple has remained fairly consistent over the last 18 months or so.

These dynamics suggest a couple of ideas. First, the relative normalization in Meta's P/E could imply that investors think the company's earnings profile is maturing. In addition, while a P/E of 28 isn't exactly dirt cheap, this valuation is clearly a steep discount based on prior levels.

Meta is positioning itself for a meaningful boost in profitability as AI becomes more integrated throughout its ecosystem. For this reason, Meta's valuation multiples could expand in the coming years as the company's "Nvidia moment" comes into focus. That suggests the company has meaningful upside from current levels.

Is Meta stock a buy right now?

I think Meta is a no-brainer when it comes to megacap AI stocks. The valuation analysis explored above suggests that Meta stock still trades at a reasonable price point despite an already generous return throughout the AI revolution. Moreover, I think the company is still in the early stages of its AI development, and investors have yet to see the full potential these investments could yield for Meta in the long run.

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 $409,114!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $38,173!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $713,547!*

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

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*Stock Advisor returns as of June 23, 2025

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Meta Platforms and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

Chances are that just a few years ago you had never heard of a company called OpenAI. But that all changed on Nov. 30, 2022 -- the day OpenAI released ChatGPT to the public and gave birth to the artificial intelligence (AI) megatrend.

Since ChatGPT's debut, no other megacap technology stock has benefited more than semiconductor powerhouse Nvidia (NASDAQ: NVDA). With shares up by more than 750% in less than three years, Nvidia's valuation has climbed by the trillions.

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With so much excitement surrounding the company, though, could Nvidia keep skyrocketing? Billionaire hedge fund manager Philippe Laffont thinks so. Let's dig into what Laffont's investment firm, Coatue Management, has to say about Nvidia's growth prospects over the next five years.

Despite its already epic run, now may still be a lucrative opportunity to buy some shares in the chip designer and hold on tight.

Laffont's hedge fund sees explosive upside for Nvidia

Each year, Coatue hosts a conference called East Meets West (EMW), during which leaders from the technology and investment worlds gather and discuss big trends fueling the market.

According to Coatue's 2025 EMW presentation, the firm sees Nvidia remaining as one of the most valuable companies in the world over the next five years. By 2030, Coatue is forecasting a market capitalization of $5.6 trillion for Nvidia -- implying nearly 60% upside from current levels.

Image source: Getty Images.

What could the next five years look like for Nvidia?

When it comes to investing in Nvidia, it's important for investors to consider all angles -- whether these are positive tailwinds or negative headwinds. As far as challenges are concerned, Nvidia faces two primary uncertainties.

The first surrounds the company's prospects in China, which could begin to witness notable deceleration as new tariff policies and export controls become established. In addition, rising competition from Advanced Micro Devices in combination with increased investment in custom silicon from some of Nvidia's own customers -- namely Amazon, Microsoft, Alphabet, and Meta Platforms -- could put a dent in the company's data center business.

While both of these scenarios present a degree of uncertainty surrounding Nvidia, I see each of them as short-term issues.

Regarding customer acquisition, ongoing nurturing with emerging customers such as xAI and Oracle suggest that Nvidia shouldn't have much of an issue fulfilling any demand that the company may lose from its "Magnificent Seven" peers. In addition, despite China currently representing a sizable portion of Nvidia's revenue base, new relationships across other geographies -- particularly the Middle East -- have the potential to make up any lost ground in Asia over time.

Thinking longer-term, however, Nvidia's growth prospects appear bright. For starters, following the inauguration of President Donald Trump back in January, Oracle, OpenAI, and SoftBank announced a joint venture called Project Stargate -- which aims to invest $500 billion into AI infrastructure in the U.S. through 2029.

In addition, management consulting firm McKinsey & Company recently reported that AI infrastructure spend could reach $6.7 trillion by 2030. The biggest beneficiary from this spend? Chip designers and AI data centers. That bodes well for Nvidia.

Even though Nvidia's near-term growth may give off the appearance of deceleration given challenges in China and the introduction of more chips, the long-term narrative supports the idea that AI capital expenditures (capex) will continue to build momentum over the next five years. To me, these secular tailwinds suggest that Nvidia's longer-term growth potential far outweighs any bumps the company might experience in the near term.

Is Nvidia stock a buy right now?

When investors see that a stock has risen by several hundred percent over just a few years, they may assume they missed out on the opportunity. But in the case of Nvidia, valuation trends suggest that now could be as good a time as any to buy the stock.

NVDA PE Ratio (Forward) data by YCharts

ChatGPT became commercially available roughly three years ago. During this period, investors have watched Nvidia transform into a company primarily focused on chipsets for high-performance gaming and PCs into an integral player powering generative AI development across the board.

And yet, per the chart above, Nvidia's forward price-to-earnings (P/E) multiple of 34.2 is right in line with its three-year average. Looked at a different way, Nvidia's forward earnings ratio has normalized considerably from prior levels despite the company's impressive growth and robust future outlook.

I am aligned with Coatue's forecast in that Nvidia still has substantial room to run over the next five years. To me, Nvidia stock is trading for a bargain right now and I see the stock as a no-brainer for AI investors.

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

Before you buy stock in Nvidia, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $676,023!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $883,692!*

Now, it’s worth noting Stock Advisor’s total average return is 793% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of June 23, 2025

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

Over the last several months, a new pocket of the AI realm called quantum computing has started to garner quite a bit of attention from the investment community. What's unique, however, is that the usual suspects of Nvidia, Microsoft, Alphabet, and Amazon aren't really pegged to the rising interest in quantum computing technology.

Rather, a new cohort of rising stars such as Rigetti Computing, D-Wave Quantum, and IonQ (NYSE: IONQ) are among the most popular quantum computing stocks right now. With shares down by 25% from their peak over the last year, IonQ stock trades for roughly $40 as of this writing. Is now a good opportunity to pounce on the stock?

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IonQ's popularity is fueling interest in quantum computing stocks, but...

Quantum computing is not a widely used application in artificial intelligence (AI) today. Yet despite its developmental stage, global management consulting firm McKinsey & Company is forecasting that quantum computing could be a $131 billion opportunity in the coming decades. With the potential for such enormous upside, it's not entirely surprising that investors were quick to look at which companies are involved with quantum computing development.

One reason that I think IonQ has emerged as a favorite in the quantum computing market is the company's impressive partnerships with cloud hyperscalers Microsoft, Amazon, and Alphabet. With the stock sliding as of late, investors may be wondering if the sell-off is an opportunity to buy the dip.

Image source: Getty Images.

... does the valuation actually make sense?

Despite working with major AI developers, IonQ has little to show in terms of tangible growth. Over the last year, the company has only generated $43 million in revenue. Meanwhile, the company's net losses are in the hundreds of millions (and worsening).

IONQ Revenue (TTM) data by YCharts

In a way, this financial profile actually makes some sense. As I alluded to above, quantum computing is not yet commercially used in AI development. Given those dynamics, IonQ's revenue potential is fairly limited for the time being. The unfortunate reality is that the company will likely remain a high-cash-burn operation as it continues building out its platform.

But still, for just $40 could IonQ be worth a look? Well, smart investors understand that the stock price alone does not determine the worth of a business. As of this writing, IonQ boasts a market capitalization of nearly $10 billion. This implies that IonQ is trading for a price-to-sales (P/S) ratio of 195.

Is IonQ stock a buy right now?

IonQ's P/S ratio is not just high; it is multiples above what investors witnessed during the peak euphoria of the dotcom bubble in the late 1990s. I bring this up because the prospects of quantum computing and the appearance of a low share price might tempt investors into chasing momentum -- mistakenly thinking they are buying a stock for a "cheap" price.

The reality is that IonQ stock is anything but cheap. Given the mounting losses pictured above, I suspect that IonQ could have a tough time financing future projects -- further limiting its ability to monetize and grow.

In my eyes, the current sell-off in IonQ stock could lead to further plummeting in the shares. I would not be surprised if IonQ begins to witness a significant valuation correction as more growth investors come to understand that they have been investing in a narrative around the company as opposed to an actual, concrete long-term thesis.

For these reasons, I would stay away from IonQ right now. Even with a 25% drop in share price, the valuation analysis explored above suggests the stock is still overbought and not yet trading for a reasonable price.

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

Before you buy stock in IonQ, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $658,297!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $883,386!*

Now, it’s worth noting Stock Advisor’s total average return is 992% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*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. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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

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

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

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

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

Why are streaming stocks crushing the market in 2025?

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

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

Image source: Getty Images.

Why I see Spotify as a prime stock-split candidate

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

SPOT data by YCharts

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

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

How do stock splits work?

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

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

Should you buy Spotify stock right now?

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

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

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

SPOT PE Ratio (Forward) data by YCharts

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

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

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

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

Before you buy stock in Spotify Technology, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

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 9, 2025

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

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

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

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

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

What does Nebius do?

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

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

Image source: Getty Images.

AI infrastructure is booming

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

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

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

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

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

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

Is Nebius stock a good buy right now?

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

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

NBIS Market Cap data by YCharts

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

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

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

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

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

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

Before you buy stock in Nebius Group, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, Nvidia, and Shopify. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, Nebius Group, Nvidia, and Shopify. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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

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

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

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

What is the TACO trade?

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

^SPX data by YCharts

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

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

Image source: Getty Images.

Are quantum computing stocks a good buy right now?

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

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

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

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

RGTI PS Ratio data by YCharts

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

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

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

Keep the big picture in focus

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

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

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

Before you buy stock in IonQ, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

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

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

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

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

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

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

Palantir is on a run for the ages

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

PLTR Revenue (Quarterly) data by YCharts

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

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

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

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

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

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

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

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

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

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

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

Image source: Getty Images.

Which stock is the better buy?

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

UNH PE Ratio (Forward) data by YCharts

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

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

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

Before you buy stock in Palantir Technologies, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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

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

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

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

What is going on at UnitedHealth?

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

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

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

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

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

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

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

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

Image Source: Getty Images.

UnitedHealth's valuation is getting clobbered

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

UNH PE Ratio (Forward) data by YCharts.

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

Is the stock a buy right now?

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

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

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

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

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

Before you buy stock in UnitedHealth Group, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Image Source: Getty Images.

What does CoreWeave do?

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

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

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

Is CoreWeave stock a good buy right now?

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

CRWV PS Ratio data by YCharts

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

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

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

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

Before you buy stock in CoreWeave, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $869,841!*

Now, it’s worth noting Stock Advisor’s total average return is 789% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*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. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Intel, Meta Platforms, Microsoft, Nvidia, Oracle, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft, short August 2025 $24 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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

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

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

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

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

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

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

Image source: Getty Images.

Why Palantir is in a unique position

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

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

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

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

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

Is Palantir stock a buy right now?

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

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

PLTR PS Ratio data by YCharts

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

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

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

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

Before you buy stock in Palantir Technologies, consider this:

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

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

Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions in and recommends Cloudflare, CrowdStrike, Datadog, MongoDB, Palantir Technologies, Salesforce, ServiceNow, and Snowflake. The Motley Fool has a disclosure policy.

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

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

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What are Amazon's AI-driven catalysts?

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

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

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

Image source: Getty Images.

Analyzing Amazon's valuation trends

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

AMZN Market Cap data by YCharts

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

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

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

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

AMZN Revenue Estimates for Current Fiscal Year data by YCharts

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

AMZN PS Ratio data by YCharts

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

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

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

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

Before you buy stock in Amazon, 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 Amazon 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

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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

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

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

Taking a closer look at IonQ's business

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

IONQ Revenue (TTM) data by YCharts

Analyzing IonQ's stock price and valuation

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

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

Image source: Getty Images.

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

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

PLTR PS Ratio data by YCharts

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

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

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

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

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

Before you buy stock in IonQ, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $635,275!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,385!*

Now, it’s worth noting Stock Advisor’s total average return is 967% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 12, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Amazon, Cloudflare, CrowdStrike, Datadog, Microsoft, MongoDB, Nvidia, Palantir Technologies, Salesforce, ServiceNow, and Snowflake. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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

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

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

Analyzing Palantir's valuation

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

PLTR Market Cap data by YCharts.

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

Image Source: Getty Images.

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

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

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

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

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

What does history suggest will happen to Palantir stock?

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

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

CSCO Market Cap data by YCharts.

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

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

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

NVDA Market Cap data by YCharts.

Is Palantir a buy right now?

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

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

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

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Amazon, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Amazon, Cisco Systems, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.

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

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

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

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

Image source: Getty Images.

1. Quantum computing is a massive opportunity

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

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

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

IONQ data by YCharts.

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

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

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

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

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

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

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

3. Nvidia stock is trading for a bargain

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

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

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

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

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

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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

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

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

AMD is making serious moves in the data center space

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

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

Data source: Investor Relations.

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

Image source: Getty Images.

The company's growth acceleration is just beginning

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

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

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

Is AMD stock a buy right now?

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

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

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

AMD PE Ratio (Forward) data by YCharts

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

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

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

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

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $714,958!*

Now, it’s worth noting Stock Advisor’s total average return is 907% — 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

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Coinbase Global, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Coinbase Global, Meta Platforms, Microsoft, Nvidia, Oracle, Palantir Technologies, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.