Key Points

• Artificial intelligence investments are finally translating into massive revenue growth and expanding profit margins.

• These three companies offer different ways to profit from the AI revolution at reasonable valuations.

• 10 stocks we like better than Palantir Technologies ›

Investors are starting to grumble about the noteworthy valuations of top artificial intelligence (AI) stocks. However, a closer look reveals those valuations may be bargains in disguise.

Why? The AI gold rush has entered a new phase. What started as speculative hype has transformed into concrete financial results, with revenue growth accelerating and profit margins expanding across the space. While investors worry about stretched valuations, the three companies discussed below are delivering AI-driven growth that justifies premium prices.

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

Image source: Getty Images.

A core AI holding

Palantir Technologies (NASDAQ: PLTR) posted 39% year-over-year revenue growth in Q1 2025 to $884 million. U.S. commercial revenue, a key driver, surged 71% year over year. Management guided full-year 2025 revenue to a range of $3.89 billion to $3.9 billion, representing approximately 36% growth.

The company highlighted strong AI demand, with both commercial momentum and margins accelerating. In Q1 2025, 55% of Palantir's revenue came from government contracts, providing a stable base. The accelerating commercial growth has led to Palantir trading at premium multiples, often exceeding 250 times forward earnings, which is a valuation level that typically deters traditional value investors.

While CEO Alex Karp's shareholder letters are known for their unconventional style, the company's financial performance, particularly the rapid growth in U.S. commercial revenue and expanding margins, is a primary focus for many investors.

The quiet AI giant

Amazon (NASDAQ: AMZN) doesn't get the AI credit it deserves. While Microsoft Azure and Alphabet's Google Cloud dominate headlines, Amazon Web Services (AWS) has quietly carved out a dominant position in the cloud economy -- and serves as a key backbone of AI infrastructure worldwide.

AWS crossed $100 billion in annual revenue for the first time in 2024, growing 19% to $107.6 billion. More importantly, operating income soared from $24.6 billion to $39.8 billion -- a margin-expansion story hiding in plain sight. The company plans to spend $100 billion on AI infrastructure in 2025 alone.

CEO Andy Jassy sees AWS evolving from a "multi-$100 billion business" to something much larger, as 85% of global IT spending remains on-premises. The AI opportunity accelerates this shift.

AWS already generates billions from AI services with triple-digit growth rates. Trading at under 25 times projected 2027 earnings, Amazon offers compelling risk-reward in cloud AI at a reasonable valuation.

There are 1 billion AI users (and counting)

Meta Platforms (NASDAQ: META) effectively addressed skeptics with its robust Q1 2025 results. The company reported a 16% increase in revenue to $42.3 billion, while earnings per share surged 37% to $6.43, comfortably exceeding analyst estimates.

A key highlight was the rapid adoption of Meta AI, which reached nearly 1 billion monthly active users, underscoring the company's ability to develop and scale consumer AI products globally. AI-driven ad enhancements also contributed meaningfully, lifting the average price per ad by 10%, alongside 5% year-over-year growth in ad impressions.

Meta's commitment to AI leadership is reflected in its planned $64 billion to $72 billion investment in AI infrastructure during 2025. The company's Llama open-source models position Meta uniquely within the AI ecosystem, fostering both developer engagement and commercial leverage. Additionally, the company's Advantage+ suite has demonstrated clear value for advertisers, delivering a 46% lift in incremental conversions during testing.

Despite its scale and aggressive investment, Meta's valuation remains attractive, trading at just 23 times projected 2027 earnings. Coupled with double-digit revenue growth and a wide competitive moat, the stock appears undervalued, relative to many AI-focused peers.

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 $687,764!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $980,723!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 179% 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 July 7, 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. George Budwell has positions in Microsoft and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Palantir Technologies. 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

• Anticipated deregulation and advancements in artificial intelligence have pushed valuations sky-high, but select opportunities remain.

• Nebius Group's 385% year-over-year revenue growth and path to $1 billion in annual recurring revenue make today's premium valuation tomorrow's bargain.

• Rocket Lab's evolution from launch provider to full-stack space company justifies its premium valuation.

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

Growth stocks have made a strong comeback after a rocky start to the year, driven by anticipated deregulation and significant breakthroughs in artificial intelligence (AI). Valuations have surged, and at first glance, bargains seem extinct.

Look closer. Two high-powered growth stocks buck this trend, offering compelling opportunities despite price tags that would terrify traditional investors.

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

Image source: Getty Images.

When 70 times sales is cheap

Nebius Group (NASDAQ: NBIS) trades at over 70 times trailing sales, an astronomical valuation by any measure. Why is this valuation deceptive in light of its AI tailwinds? Because the company is growing so fast that backward-looking metrics become meaningless.

The company posted 385% year-over-year revenue growth in Q1 2025. Annual recurring revenue hit $310 million in April, and management guides to $750 million to $1 billion by year's end. When revenue triples in 12 months, that multiple of 70 times trailing sales effectively collapses to under 25 times on forward estimates -- before factoring in the next wave of AI infrastructure demand. The window to act closes fast.

Nebius builds physical clusters of graphics processing units (GPUs) for enterprises desperate for AI compute power. Its Kansas City facility will house 35,000 Nvidia GPUs when complete, one of the largest deployments outside Amazon or Microsoft.

Nebius's enterprise customers span from autonomous vehicle developers to large language model startups, all battling for scarce GPU access as AI adoption accelerates. Nebius's compute clusters power everything from next-generation autonomous driving algorithms to cutting-edge generative AI platforms, making it indispensable to industries chasing exponential AI growth. With $1.44 billion in cash and manageable debt from recent convertible notes, the company can fund this massive expansion.

Nvidia's direct investment speaks volumes. When the world's dominant AI chip maker backs your infrastructure buildout, it validates the technology and strategy. Early access to Blackwell chips gives Nebius pricing advantages that competitors can't match. Jeff Bezos doubled down through Bezos Expeditions' investment in Nebius's Toloka AI subsidiary.

With first-mover scale, privileged access to Blackwell chips, and $2.4 billion in total funding, including recent convertible notes, Nebius has carved out a widening moat in the AI compute arms race, one that's hard for new entrants to replicate without billions in upfront capital.

A space race winner

Humanity is going to the stars. That much is certain. Rocket Lab (NASDAQ: RKLB) trades at 41 times trailing sales, but this valuation misses the transformation under way.

Q1 2025 revenue hit $123 million, up 32% year over year, with more coming from spacecraft components than launches. Today, over 50% of Rocket Lab's revenue comes from spacecraft systems, not launches, a diversification that boosts margins and stabilizes growth.

This shift to higher-margin, recurring revenue from spacecraft components fundamentally changes the investment thesis from a pure-play launch company to a diversified space infrastructure provider.

At the start of the year, Rocket Lab was selected as one of five providers for the U.S. Space Force's $5.6 billion National Security Space Launch Phase 3 Lane 1 program, positioning the company to compete for high-priority defense missions. The company also participates in multiple billion-dollar defense frameworks, including the Department of Defense's MACH-TB hypersonic testing program.

These selections validate Rocket Lab's technology while providing multiyear revenue opportunities. With satellite demand far outstripping global launch capacity, Rocket Lab's position as a trusted provider -- and one of the few with access to major defense frameworks -- gives it pricing power, resilience, and a clear runway for growth.

Why premium prices make sense here

These valuations look expensive because the market applies traditional metrics to revolutionary businesses. AI infrastructure and space commercialization represent generational shifts with economics that break conventional models.

Nebius benefits from AI compute demand doubling every six months. Rocket Lab rides satellite launches projected to increase fivefold by 2030. Both companies execute against opportunities larger than their current valuations suggest.

The real risk isn't paying premium prices for companies growing at triple-digit rates. It's watching from the sidelines as others capture the upside of tomorrow's giants. For investors willing to think beyond outdated valuation fears, Nebius Group and Rocket Lab offer rare asymmetric opportunities in industries poised for exponential growth.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,048%* — a market-crushing outperformance compared to 179% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of July 7, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. George Budwell has positions in Microsoft, Nvidia, and Rocket Lab. The Motley Fool has positions in and recommends Amazon, Microsoft, Nvidia, and Rocket Lab. The Motley Fool recommends Nebius Group 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.

Key Points

• Archer began Abu Dhabi test flights this week, becoming the first eVTOL manufacturer flying in the Middle East.

• Defense partnerships with Anduril and Palantir Technologies could unlock massive value through acquisition or corporate split.

• With approximately $2 billion in liquidity following White House-backed funding, Archer has the industry's strongest balance sheet.

Wall Street sees Archer Aviation (NYSE: ACHR) as just another electric flying taxi company burning cash while chasing FAA certification. Yes, the risks are real -- certification delays, massive cash burn, fierce competition, and the challenge of scaling a new form of aviation.

But that narrow view completely misses what's really happening here: Archer is quietly building the most valuable defense aviation asset outside the traditional primes -- and a major acquisition or corporate restructuring could soon expose this hidden value. Here's a deeper look at why I think these forces are building to drive a major breakout in the stock in the not-so-distant future.

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

Image source: Getty Images.

The White House just changed everything

Trading around $10 with a market cap near $5.4 billion at the time of writing (July 1, 2025), Archer has delivered impressive returns, up over 245% in the past three years. But those gains pale compared to what's coming. In June 2025, following President Trump's executive order establishing an eVTOL Integration Pilot Program, Archer raised $850 million at $10 per share, bringing its total liquidity to an industry-leading $2 billion.

This wasn't just another funding round. The White House explicitly aims to establish U.S. "dominance" in eVTOL technology through its new Integration Pilot Program. The timing is perfect -- Archer serves as the Official Air Taxi Provider for the Los Angeles 2028 Olympics, creating a high-profile deadline for commercial deployment.

CEO Adam Goldstein called the executive order a "seminal moment" -- and he's right. Unlike competitors burning through capital with single-market strategies, Archer's dual approach and $2 billion war chest provide multiple paths to profitability.

While well-funded competitors like Joby Aviation (NYSE: JOBY) pursue both civilian and military markets, Archer has assembled something unique: an exclusive defense partnership combining its hybrid-electric vertical takeoff and landing (eVTOL) technology with Anduril's autonomous systems and Palantir Technologies' (NASDAQ: PLTR) artificial intelligence (AI) infrastructure. This triumvirate represents a $100 billion-plus opportunity that doesn't require FAA certification.

The defense disruption play

Yes, both Archer and Joby have defense contracts. But Archer's approach is fundamentally different. The late-2024 Anduril partnership creates a hybrid-propulsion aircraft specifically for military use -- not adapted civilian aircraft. This matters because hybrid systems offer extended range and payload capacity that pure electric vehicles can't match right now.

More importantly, Anduril brings its Lattice AI platform, already integrated into hundreds of military systems. Combined with Palantir's March 2025 partnership for AI-powered aviation software, Archer offers the Pentagon something unprecedented: a fully integrated, AI-enabled vertical lift capability from three of defense tech's hottest companies.

The partnership targets a "program of record" -- Pentagon-speak for guaranteed multiyear funding. These contracts can reach billions annually. With defense demand "stronger than expected," according to Goldstein, the company aims to build early hybrid-propulsion defense prototypes soon, distinct from its Midnight commercially oriented aircraft.

The split scenario unlocks everything

Here's where it gets interesting. Archer could unlock massive value through a corporate split, separating its commercial and defense operations. This solves multiple problems at once: Stellantis, with its substantial stake in Archer, wants to focus on commercial air mobility -- not get entangled with defense contractors. A split allows the commercial division to pursue the $1 trillion urban air mobility market with Stellantis and United Airlines, backed by the White House pilot program.

Meanwhile, the defense division -- supercharged by Anduril and Palantir -- becomes an attractive acquisition target for Northrop Grumman (NYSE: NOC) or other defense primes. Northrop has explicitly prioritized AI, autonomous systems, and next-generation aviation. The aerospace giant's Orbital ATK acquisition ($9.2 billion total in 2018) proved its ability to integrate cutting-edge aerospace assets, expanding capabilities in solid rocket motors, missile systems, and space technologies.

Multiple paths to value

Archer isn't waiting for corporate action. The company delivers its first piloted Midnight aircraft to Abu Dhabi Aviation this summer. Manufacturing has begun at its Georgia facility, targeting two aircraft per month by year-end. The Palantir partnership adds another layer, developing AI-powered air traffic systems worth billions.

With a pro forma liquidity position of $2 billion, Archer has industry-leading financial resources to execute on both opportunities simultaneously. Wall Street still prices it primarily as a pre-revenue eVTOL company, largely ignoring its defense potential. But with Anduril recently beating Boeing for major contracts and White House backing, the market's dismissive attitude is changing.

When investors recognize Archer's transformation from flying taxi company to critical defense asset, today's $10 stock will look like the bargain of the decade. After all, defense stocks tend to sport premium valuations and stellar free cash flows.

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

Before you buy stock in Archer Aviation, 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 Archer Aviation 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 $697,627!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $939,655!*

Now, it’s worth noting Stock Advisor’s total average return is 1,045% — a market-crushing outperformance compared to 178% 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 30, 2025

George Budwell has positions in Archer Aviation, Joby Aviation, Northrop Grumman, and Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.

When companies deploy artificial intelligence (AI) to streamline operations, the results can be staggering. Microsoft (NASDAQ: MSFT) is using AI-powered code-completion tools to help developers write code 55% faster. Johnson & Johnson (NYSE: JNJ) is leveraging AI to accelerate drug-discovery timelines. IBM (NYSE: IBM) reported over $1 billion in generative AI revenue in a single quarter. These efficiency gains translate directly to the bottom line, creating sustainable cost savings that can flow to shareholders through dividends and buybacks.

Consider what happens when a company with $100 billion in revenue uses AI to improve efficiency by just 5%. That's $5 billion in cost savings flowing straight to the bottom line -- money that can fund dividend increases, share buybacks, and further AI investments. This virtuous cycle of AI deployment leading to margin expansion leading to shareholder rewards is already playing out across multiple industries. The five companies below have figured out how to turn AI from a buzzword into a profit-generating machine that benefits patient dividend investors.

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

Image source: Getty Images.

Microsoft leads from the front

Microsoft offers a modest 0.68% yield today, but don't let that fool you. With a rock-solid 24.4% payout ratio, the company has massive room to grow its dividend as AI supercharges its business. Microsoft isn't just selling AI through Azure and its OpenAI partnership -- it's using AI internally to optimize everything from coding to customer service. When a company generating $245 billion in annual revenue finds ways to boost efficiency by even 10%, that's $24.5 billion in potential savings flowing straight to the bottom line.

IBM's transformation pays off

IBM yields 2.38% and has raised its dividend for 30 consecutive years, though its 114.2% payout ratio demands attention. The company's aggressive pivot to AI and hybrid cloud is already bearing fruit, with generative AI revenue jumping over $1 billion in the third quarter of 2024 alone. While the high payout ratio suggests IBM is stretching to maintain its long dividend growth streak, the AI-driven revenue growth could quickly bring that ratio back to sustainable levels. Watson's evolution from a game show novelty to an enterprise AI powerhouse shows IBM still has innovation in its DNA.

Powering the AI revolution

ExxonMobil (NYSE: XOM) might seem like an odd AI play, but here's what everyone's missing: Every ChatGPT query, every AI model training session, every autonomous vehicle mile requires massive amounts of energy. Data centers are projected to consume 9% of U.S. electricity by 2030, and natural gas will power much of that demand. With a healthy 3.2% yield and a sustainable 51.4% payout ratio, Exxon is perfectly positioned to profit from AI's insatiable energy appetite while paying shareholders along the way.

A prescription for AI

Johnson & Johnson combines a juicy 3.47% yield with 63 years of consecutive dividend increases -- the definition of reliability. But this dividend titan isn't resting on its laurels. The company is deploying AI across drug discovery, clinical trials, and manufacturing, potentially shaving years off development timelines and billions off costs. With a 55.2% payout ratio, J&J has plenty of room to keep those dividend increases coming as AI-driven efficiencies boost profitability.

A hidden dividend story

Apple (NASDAQ: AAPL) sports the group's lowest yield at 0.52% but also the lowest payout ratio at just 15.6% -- meaning massive dividend growth potential. While everyone focuses on iPhone sales, Apple is quietly embedding AI into every corner of its ecosystem.

From on-device AI processing that protects privacy to machine learning that powers health features, Apple is building an AI moat that will drive customer loyalty and pricing power for years. That translates to growing cash flows and bigger dividend checks.

The efficiency dividend

These five stocks prove you don't need to gamble on speculative AI plays to profit from the AI revolution. By focusing on established companies using AI to drive efficiency and growth, you get the best of both worlds: steady dividend income today and accelerating earnings growth tomorrow. Microsoft and Apple offer lower yields but massive growth potential. IBM provides higher current income as its transformation gains steam. Exxon captures the infrastructure angle. And J&J brings healthcare innovation to the mix.

These five dividend payers are quietly compounding wealth through a combination of yield, dividend growth, and share-price appreciation. The combination of current income, margin-expansion potential, and reasonable valuations makes these stocks compelling holdings for any dividend-focused portfolio in the era of AI-powered efficiency gains.

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

Before you buy stock in Microsoft, 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 Microsoft 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 $664,089!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $881,731!*

Now, it’s worth noting Stock Advisor’s total average return is 994% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 23, 2025

George Budwell has positions in Apple and Microsoft. The Motley Fool has positions in and recommends Apple, International Business Machines, and Microsoft. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Artificial intelligence (AI) isn't a bubble. It's the technological innovation of our age -- one that will alter the course of humanity for the foreseeable future.

Want definitive proof? Meta Platforms (NASDAQ: META) CEO Mark Zuckerberg is reportedly willing to pay $100 million in bonus packages to poach top AI talent from rivals, personally sending WhatsApp messages to hundreds of researchers and hosting them at his homes to close deals. When one of the world's richest CEOs abandons his executive suite to become his company's chief recruiter, you know you're witnessing something far more substantial than dot-com era vaporware.

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

While everyone obsesses over which company will build the first superintelligence, the smartest money is quietly accumulating positions in the companies that will profit regardless of which company wins. Think of it this way: During the California Gold Rush, the prospectors went bust -- but the folks selling picks and shovels got rich.

Today's AI revolution follows the same playbook. The following five stocks are perfectly positioned to profit from every dollar spent in this technological arms race.

Image source: Getty Images.

Nvidia's hidden robotics revolution

Nvidia (NASDAQ: NVDA) gets all the AI chip headlines, but the real story is its transformation into a full-stack AI computing company. While investors fixate on quarterly graphics processing unit (GPU) sales, Nvidia is quietly building the computing platform for the next generation of humanoid robots, agentic AI systems, and autonomous vehicles.

The company's chips and software are becoming the preferred choice for developers building everything from factory robots to self-driving cars. The robotics market alone could reach $375 billion by 2035, yet Wall Street still values Nvidia like a semiconductor company selling commodity chips.

Amazon's margin-expansion story

Amazon (NASDAQ: AMZN) is deploying 750,000 robots across its fulfillment centers, but that's just the beginning of its automation journey. Its next-generation AI-powered robots are designed to work alongside human employees, handling the most physically demanding tasks while freeing workers to focus on higher-value activities.

This human-robot collaboration could drive fulfillment costs down by 50% within five years through increased efficiency and reduced workplace injuries. If Amazon's automation investments pay off as expected, its operating margins could expand from today's 11.8% toward Apple-like levels above 31% -- a margin-expansion story the market hasn't begun to price in.

A multitrillion-dollar digital opportunity

Meta Platforms might be spending billions on AI talent, but the real payoff comes when it merges artificial intelligence with its metaverse ambitions. Imagine AI agents that can build entire virtual worlds on command, create photorealistic avatars indistinguishable from humans, and enable real-time translation across 100 languages in virtual meetings.

While predicting exact market sizes is challenging, some analysts believe the AI-powered metaverse could become a multitrillion-dollar opportunity by 2035 -- a massive market hiding in plain sight.

A virtual monopoly

ASML (NASDAQ: ASML) owns the most important monopoly nobody talks about. This Dutch company manufactures the only extreme ultraviolet lithography machines capable of etching the nanoscale transistors required for next-generation AI chips.

Every single advanced AI chip -- whether made by Nvidia, AMD, or Intel -- depends on ASML's machines. With a 10-year technological lead and a multibillion euro backlog, ASML essentially holds the keys to the entire AI hardware kingdom.

A hidden AI innovator

S&P Global (NYSE: SPGI) isn't building AI -- it's feeding the beast. The company's vast troves of financial data are becoming the training ground for Wall Street's AI revolution, with its new Microsoft Copilot integration putting 160 years of market intelligence at traders' fingertips.

As every hedge fund and investment bank races to build AI-powered trading systems, S&P Global gets paid regardless of who wins, collecting tolls on the data superhighway that makes it all possible.

The big picture

The AI gold rush is real, but the smartest investors know that owning the infrastructure beats betting on individual prospectors every time. These five stocks offer diversified exposure to every corner of the AI revolution -- from the chips that power it to the data that fuels it to the platforms that will commercialize it.

While some chase the latest AI start-up unicorn, investors who own these infrastructure plays -- either directly or through technology-focused exchange-traded funds (ETFs) like the Vanguard Information Technology ETF (VGT) -- are positioned to profit from the companies that make the entire ecosystem possible.

The beauty of this approach? You don't need to pick which AI model wins or which start-up gets acquired. You just need exposure to the companies selling the picks and shovels to everyone digging for gold.

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 $664,089!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $881,731!*

Now, it’s worth noting Stock Advisor’s total average return is 994% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 23, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, 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. George Budwell has positions in Apple, Microsoft, Nvidia, and Vanguard Information Technology ETF. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Amazon, Apple, Intel, Meta Platforms, Microsoft, Nvidia, and S&P Global. The Motley Fool 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.

Artificial intelligence (AI) is the defining technological innovation of our era. In just a few short years, AI is expected to reshape every corner of society.

Semi-autonomous robots may soon handle your laundry, then hop in a self-driving car to pick up groceries. Life is about to get radically different -- ideally, for the better.

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

At the center of this so-called Fourth Industrial Revolution is Nvidia (NASDAQ: NVDA), the leading supplier of AI chips powering everything from data centers to robotics. Thanks to its central position within the AI value chain, Nvidia's stock has delivered a remarkable 829% return over the past 36 months, turning a $10,000 investment into $92,880.

Image source: Getty Images.

As incredible as that sounds, Palantir Technologies (NASDAQ: PLTR) has done even better. Over the same 36-month period, Palantir has returned an astonishing 1,744%, transforming that same $10,000 investment into $184,370, nearly double Nvidia's impressive gains.

Both companies are riding the same tidal wave -- but in different lanes. Nvidia builds the computational engine, while Palantir delivers the software layer that interprets the data and enables real-world decisions.

Which of these top innovation stocks is the better buy as a core AI holding?

Latest financial metrics

Nvidia's Q1 fiscal 2026 results (ended April 27, 2025) showcased both massive scale and new headwinds. Revenue hit $44.1 billion, up 69% year over year, with data center revenue specifically climbing 73% to $39.1 billion.

Still, the China situation is deteriorating rapidly. Nvidia lost $2.5 billion in H20 revenue in Q1 and expects to lose $8 billion in Q2 from new export licensing requirements. CEO Jensen Huang lamented that "the $50 billion China market is effectively closed to us," with market share in the country falling from 95% to 50% under these restrictions.

Palantir, meanwhile, is hitting "escape velocity." Q1 2025 revenue of $884 million grew 39% year over year, accelerating from previous quarters. U.S. revenue surged 55% to $628 million, with U.S. commercial revenue exploding 71% to $255 million, surpassing a $1 billion annual run rate for the first time in company history. Palantir also raised full-year 2025 guidance to $3.89 to $3.9 billion, representing projected annual growth of about 36% year over year.

Market opportunity and positioning

The global AI market is projected to surpass $826 billion by 2030, even on conservative estimates. Within this vast opportunity, Nvidia and Palantir Technologies occupy distinct positions along the AI value chain.

Nvidia leads the infrastructure layer, powering the compute backbone of AI. CEO Jensen Huang projects annual data center spending could exceed $1 trillion by 2028.

The company is evolving from a chipmaker into a builder of AI factories, with new partnerships to construct AI supercomputers across the U.S., Saudi Arabia, the UAE, and Taiwan. Its Blackwell Ultra architecture and DGX SuperPOD systems place Nvidia at the forefront of "agentic AI reasoning" -- a key step toward the emergence of autonomous, intelligent systems.

Palantir, by contrast, operates in the application layer, helping enterprises deploy AI across real-world use cases. CEO Alex Karp described the company as being "in the middle of a tectonic shift," as demand for large language models has "turned into a stampede." Unlike many AI companies focused on research or infrastructure, Palantir is already monetizing AI through government contracts and commercial deployments, giving it a practical foothold in the race to bring AI into everyday operations.

The valuation disconnect

Despite commanding massive revenue and leading the AI infrastructure space, Nvidia trades at 46 times trailing earnings, well below its five-year average price-to-earnings ratio (P/E) of 78. Its forward P/E of 30 suggests the market is accounting for China-related export risks and a natural deceleration in growth from its enormous base.

Palantir, by contrast, trades at valuation levels that challenge traditional metrics. The stock has a trailing P/E exceeding 600 and a forward ratio exceeding 230.

These elevated multiples reflect investor belief that Palantir is at a key inflection point. The market appears to be betting on the company's ability to sustain hypergrowth while expanding its margins, a high bar that leaves little room for missteps.

PLTR P/E Ratio data by YCharts.

The verdict

Palantir stock has been a phenomenal performer, but at 600 times earnings, perfection is already priced in. Any execution slip or slowdown in growth could prompt a sharp repricing. While its $3.9 billion revenue run rate is expanding rapidly, it remains relatively small, compared to the multitrillion-dollar AI market.

Nvidia offers a more compelling risk-reward profile. At 46 times earnings, roughly 40% below its recent historical average, the stock combines reasonable valuation with several powerful growth catalysts. The Blackwell product cycle is just beginning, and robotics -- a largely overlooked segment -- could become a significant driver over the next decade.

Palantir remains a compelling long-term growth story, but its current valuation demands flawless near-term execution. In this match-up, Nvidia stands out as the stronger core AI investment.

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 $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

Now, it’s worth noting Stock Advisor’s total average return is 995% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

George Budwell has positions in Nvidia and Palantir Technologies. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.

Wall Street loves a good David versus Goliath story. But what happens when two Davids are battling entirely different giants?

That's the compelling dynamic between Rocket Lab USA (NASDAQ: RKLB) and Datadog (NASDAQ: DDOG) -- two disruptive innovators, each aiming for a trillion-dollar opportunity from opposite ends of the tech frontier. Datadog is entrenched in the red-hot world of artificial intelligence (AI) infrastructure and observability. Rocket Lab is scaling up in the fast-emerging space economy, building the tools -- and rockets -- for a multiplanet future.

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

Image source: Getty Images.

AI may be grabbing headlines, but investors might be missing a more explosive opportunity just over the horizon. Which of these high-growth stocks is the better buy?

Tale of two trajectories

Rocket Lab reported $123 million in first-quarter 2025 revenue, reflecting 32% year-over-year growth. The company has rapidly evolved from a launch provider into a vertically integrated space systems manufacturer. Its product portfolio now includes satellite buses, solar power systems, separation stages, and flight software.

In 2023, Rocket Lab components were present on approximately 38% of all orbital missions, a testament to its growing influence in the commercial space supply chain. The upcoming Neutron rocket, designed for medium-lift launches and human-rated capability, could further position Rocket Lab as a key player in the next phase of orbital access.

Datadog posted $762 million in first-quarter revenue, representing 25% year-over-year growth and beating analyst expectations. The observability platform now serves 3,770 customers generating more than $100,000 in annual recurring revenue.

More importantly, the company's strategic push into AI observability is gaining traction. AI-native companies now account for 8.5% of total annual recurring revenue, up from just 3.5% a year ago. This surge highlights Datadog's growing relevance as AI workloads become central to enterprise infrastructure.

Racing for different finish lines

This is where conventional wisdom starts to break down. Datadog operates in the observability market, which is projected to grow at a steady 12.2% annually through 2030. That's impressive, but Rocket Lab is targeting a much more explosive opportunity -- the deployment of over 10,000 satellites requiring launch services by decade's end. This will support a total addressable market expected to exceed $10 billion.

SpaceX currently holds a dominant position, accounting for approximately 87% of global launch mass. However, Rocket Lab's upcoming Neutron rocket could shift the dynamics.

With a target launch price between $50 million and $55 million, Neutron undercuts SpaceX's $67 million Falcon 9 and is purpose-built for medium-lift missions, a segment where meaningful competition is limited. If Rocket Lab delivers on schedule and performance, it could inject long-awaited price pressure into the market and capture a significant share of future demand.

Customer proof points tell the story

Rocket Lab's recent contract wins underscore growing customer confidence and repeat business. The company completed its tenth mission for BlackSky, deploying next-generation imaging satellites. It's also executing an eight-launch agreement with iQPS, supporting the buildout of a radar satellite constellation.

On the defense front, Rocket Lab is conducting hypersonic test missions for the U.S. Department of Defense under the HASTE program. These contracts reflect sustained demand and a growing role in national and commercial space infrastructure.

Datadog also demonstrates strong customer traction. Companies like AppFolio, Asana, and Twilio rely on its observability platform. Its recent acquisition of AI-focused start-up Metaplane positions the company to meet rising demand for data quality monitoring as enterprises expand their use of AI. With 83% of customers using two or more Datadog products, the company continues to execute its land-and-expand strategy with precision.

The valuation paradox

Datadog faces intensifying competition from Amazon's AWS, Microsoft's Azure, and Alphabet's Google Cloud, each of which bundles observability tools directly into its platform. These hyperscalers can undercut Datadog on pricing while investing heavily in research and development, backed by massive cash flow.

Rocket Lab's higher valuation reflects its scarcity value. There are only two viable Western commercial launch providers, and only Rocket Lab is publicly traded. As the Department of Defense prioritizes launch diversity and commercial satellite constellations continue to expand, Rocket Lab's position as the sole investable alternative to SpaceX becomes more strategically important.

The surprising verdict

While both stocks deserve spots on growth investors' watch lists, Rocket Lab emerges as the superior growth investment. The company's 32% revenue growth outpaces Datadog's 25%, and its Neutron catalyst could transform it from a small-sat specialist into a genuine SpaceX competitor. Most importantly, Rocket Lab operates in a market with insurmountable barriers to entry.

Datadog remains a solid growth story, but its path involves navigating an increasingly crowded field where every major cloud provider wants market share. In the battle between monitoring software and launching rockets, physics wins. Rocket Lab's combination of proven execution, massive market opportunity, and the upcoming Neutron launch make it the more compelling growth story -- even if Wall Street hasn't fully realized it yet.

Should you invest $1,000 in Rocket Lab right now?

Before you buy stock in Rocket Lab, 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 Rocket Lab 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.

See the 10 stocks »

*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. George Budwell has positions in Microsoft and Rocket Lab. The Motley Fool has positions in and recommends Alphabet, Amazon, AppFolio, Datadog, Microsoft, Rocket Lab, and Twilio. The Motley Fool recommends Asana 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.

Sometimes the best investment opportunities come wrapped in government buzzwords and unrealistic timelines.

Last Friday, the White House issued an executive order called "Unleashing American Drone Dominance." Yes, that's the actual title. And while it's long on ambition and short on specifics, buried in the bureaucratic language is something that matters for growth investors: a clear signal that the administration wants to fast-track electric vertical takeoff and landing (eVTOL) aircraft.

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

Image source: Getty Images.

The executive order creates an eVTOL pilot program requiring the FAA to select at least five companies for real-world operations, with aggressive timelines that suggest political pressure to move faster than typical aviation bureaucracy allows.

While the details remain vague and the timelines optimistic, the direction is clear: America wants to lead in urban air mobility. This political tailwind arrives just as the technology reaches commercial viability, creating a rare convergence of innovation, regulation, and market demand.

Now, before you roll your eyes at another government initiative, consider this: Archer Aviation (NYSE: ACHR) and Joby Aviation (NYSE: JOBY) don't need this executive order to succeed. Both companies are working through FAA certification (though timelines for experimental aircraft are notoriously opaque), have secured major airline partnerships, and claim to be targeting commercial launches shortly.

What both companies are getting is something potentially more valuable -- political cover to move faster through the regulatory maze. Both stocks have already had massive runs over the past 12 months (Archer up 203%, Joby up 63%), but if you think flying taxis are still science fiction, you haven't been paying attention. Here's why these two pioneers look like buys even after their recent runs.

Archer Aviation: The execution story

Archer Aviation operates with remarkable efficiency for a pre-revenue company, achieving milestones that arguably justify its $5.6 billion market cap. The company's Midnight aircraft, designed to carry four passengers plus a pilot on trips up to 100 miles, recently completed piloted flights -- a critical step that positions Archer, alongside Joby, as one of America's leading eVTOL companies.

With partnerships spanning United Airlines for domestic routes and Stellantis for manufacturing expertise, Archer has assembled the pieces for rapid commercialization once certification arrives. Its Launch Edition program, securing commitments from Abu Dhabi Aviation and Ethiopian Airlines valued at up to $30 million each, provides early revenue visibility and validates international demand.

The investment case is compelling. Archer's $6 billion order backlog now exceeds its entire $5.6 billion market cap, while its hefty 11.7% short interest (as of mid-May) sets up a potential short squeeze. Though Friday's executive order lacks implementation details, it sends an unmistakable signal -- the U.S. government views eVTOL dominance as a national priority. For a company already executing ahead of most of its peers in many ways, that political validation could be the spark that sends shares soaring in the months ahead.

Joby Aviation: The deep-pocketed pioneer

Joby Aviation brings unmatched financial firepower to the eVTOL race, with $813 million in cash plus Toyota's recent $250 million investment (part of a $500 million commitment) providing runway through commercialization. The company's Q1 2025 achievements read like a pre-launch checklist: routine pilot-on-board transition flights, Virgin Atlantic partnership for U.K. market entry, fifth production aircraft powered on, and expanded Marina manufacturing facility set for June handover.

Joby benefits from Toyota's manufacturing expertise embedded directly in operations, potentially solving the hardest challenge facing aerospace start-ups -- scaling from prototypes to volume production. The company claims to be 62% complete on its side of Stage 4 FAA certification (43% on FAA's side), though investors should view these self-reported metrics skeptically given the opaque nature of experimental aircraft approval. That's not a knock against either company, but the reality of developing a new form of aviation.

With strategic partnerships including Delta Air Lines, Virgin Atlantic, and a $131 million Department of Defense contract, Joby has diversified its path to revenue across commercial, international, and military applications. And like Archer, Joby also sports a fairly high short interest, with 7.6% of outstanding shares sold short in May. As such, this eVTOL pioneer could also benefit form a short squeeze on positive news or a marketwide melt-up.

Why these two eVTOL pioneers are a buy this week

Friday's executive order accelerated the eVTOL timeline, and the market hasn't caught on. While Archer executes lean and Joby brings Toyota's backing, both companies now face compressed regulatory timelines that could pull commercial operations forward by years.

This week's setup is compelling: Heavy short interest creates squeeze potential, operational milestones keep hitting, and a fresh political catalyst has just emerged. So, for growth investors comfortable with volatility, this could be a stellar entry point.

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

Before you buy stock in Archer Aviation, 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 Archer Aviation 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

George Budwell has positions in Archer Aviation, Joby Aviation, and Toyota Motor. The Motley Fool recommends Delta Air Lines and Stellantis. The Motley Fool has a disclosure policy.

Short-selling can deliver spectacular returns when overvalued companies collapse, but it can also create devastating losses when markets move against bearish bets. The asymmetric risk profile makes shorting particularly hazardous during periods of rapid technological change, where seemingly overpriced stocks can continue to climb as new business models emerge and mature.

The current environment presents especially treacherous conditions for short-sellers. With artificial intelligence, autonomous systems, and defense modernization driving massive government and private investment, companies operating at the intersection of these trends often defy traditional valuation metrics. What appears overvalued today can quickly transform into tomorrow's essential infrastructure provider.

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

Image source: Getty Images.

Archer Aviation (NYSE: ACHR) exemplifies this dynamic perfectly. After surging 202% over the past 12 months, the electric aviation company has attracted significant short interest, with 11.7% of outstanding shares sold short as of mid-May 2025. But beneath the surface, a fundamental business transformation is underway that could make this one of the most dangerous short positions in the market.

The short thesis looks compelling on paper

Archer became a prime short target following its meteoric rise, and the bearish case appears straightforward. The company operates in the nascent electric vertical takeoff and landing (eVTOL) market with limited recurring revenue and significant regulatory hurdles ahead. Commercial air taxi operations require extensive FAA certification and, for widespread adoption, costly investments in specialized vertiport infrastructure and air traffic management systems.

Recent research from Culper Research amplified these concerns, alleging that Archer had misled investors about key development milestones and questioning the timeline for FAA certification. Culper Research accused the company of misrepresenting testing progress and aircraft readiness, claiming Archer's "continued promotion of near-term commercialization is not only premature, but reckless." Like most pre-revenue companies, Archer is valued purely on potential rather than current financial performance, making it vulnerable to any signs that development progress is falling short of expectations.

While initial operations can leverage existing helipads and airport infrastructure, the scaling challenge looms large. Widespread air taxi adoption will eventually require substantial investments in dedicated takeoff and landing facilities, charging networks, and traffic coordination systems. The capital intensity and coordination complexity create natural barriers to rapid scaling that could limit long-term revenue growth potential.

Defense contracts change everything

What short-sellers are missing is Archer's strategic pivot into defense applications through its dedicated Archer Defense unit. The company has already secured a $142 million contract with the U.S. Air Force's Agility Prime program to deliver up to six Midnight eVTOL aircraft for military evaluation. This represents roughly half of the Department of Defense's initial eVTOL investments, positioning Archer as a leading contender for larger procurement programs.

The military use case completely transforms the value proposition. Archer's Midnight aircraft offers a 20- to 50-mile range, 150 mph top speed, and acoustic signature far quieter than traditional helicopters. These characteristics make it ideal for military missions requiring stealth and agility, including quick-reaction transport, medical evacuation, resupply, and intelligence gathering operations.

More importantly, defense adoption bypasses the civilian scaling bottlenecks that concern short-sellers. Military bases already possess suitable landing areas, and the Department of Defense has established procurement pathways designed to accelerate promising technologies into operational use. Success in prototype evaluations typically leads to "programs of record" where the military commits to fleetwide adoption worth hundreds of millions to billions of dollars.

Strategic partnerships multiply the opportunity

Archer's exclusive partnership with defense technology company Anduril Industries significantly expands its addressable market and credibility within military circles. Together, they're developing hybrid-propulsion VTOL aircraft that combine electric lift with fuel-based generators for extended range, directly addressing military requirements that pure battery-powered aircraft cannot meet.

Anduril brings proven defense contracting expertise, having recently secured a $642 million Marine Corps counter-drone system deal and a $99.7 million Space Force contract. This partnership positions Archer for larger defense opportunities beyond pure aircraft sales, potentially including integrated autonomous systems and battlefield mobility solutions.

The timing couldn't be better. Recent conflicts have demonstrated the strategic value of quiet, agile aircraft that can operate in contested environments where traditional helicopters face increasing vulnerability to drone swarms and advanced air defenses. The Department of Defense is actively investing in distributed operations concepts where eVTOL aircraft play a central role, creating immediate demand for proven capabilities.

Why this matters for short-sellers

Full disclosure: I am a long-term shareholder in Archer Aviation and a firm believer in the transformational potential of eVTOL technology. This perspective undoubtedly influences my optimistic view of the company's defense pivot and long-term prospects. However, the fundamental shift from commercial-focused to defense-enabled operations represents a measurable change in Archer's risk profile that short-sellers ignore at their peril.

For short-sellers betting on commercial aviation challenges, Archer's defense transformation represents a massive blind spot. While civilian air taxi operations face legitimate scaling hurdles, military contracts provide immediate validation and revenue potential that could sustain the company through any commercial development delays.

With key partnerships with established military contractors, shorting Archer looks increasingly like a bet against the inevitable militarization of eVTOL technology. In a market where defense spending continues accelerating and autonomous systems receive priority funding, that's a dangerous position to maintain.

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

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

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

Now, it’s worth noting Stock Advisor’s total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

George Budwell has positions in Archer Aviation. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Passive income is essential in retirement, but building a dependable stream isn't easy. Fortunately, top-tier dividend stocks can do the heavy lifting. The key is focusing on companies with strong yields, reliable payouts, and recession-resistant business models.

In today's volatile market, where uncertainty is the only constant, dividend investing has regained its shine. High-quality stocks that return capital to shareholders offer income stability and a cushion against downside risk.

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

Image source: Getty Images.

The healthcare sector stands out in this environment. Its essential nature and steady demand make it a natural haven and a fertile ground for income investors.

Two healthcare heavyweights screen as particularly attractive buys in this turbulent market. With generous yields, durable business models, and products the world can't live without, these stocks deliver a potent mix of income and long-term upside. Here's why they belong on your radar right now.

Pfizer: Pharmaceutical giant with an exceptional yield

Pfizer (NYSE: PFE) shares currently offer an eye-catching 7.8% dividend yield, putting this pharmaceutical titan among the highest-yielding stocks in the healthcare sector. This exceptional payout level reflects the market's concerns about the company's growth trajectory following the pandemic revenue boom. With shares trading at just 7.5 times forward earnings, investors are essentially being paid handsomely to wait for the company's next phase of growth.

While Pfizer's payout ratio stands at an elevated 119%, high payout ratios are commonplace in the pharmaceutical industry due to its inherently cyclical nature. Moreover, the company maintains one of the strongest balance sheets in the industry following its COVID windfall, providing ample financial flexibility to sustain its dividend while investing in future growth. Pfizer's diverse portfolio of patent-protected drugs also generates enormous cash flows that support shareholder rewards and ongoing research initiatives.

What's the core value proposition? The drugmaker faces potential policy tailwinds under the new administration, which has signaled interest in correcting the "pill penalty" that currently gives small-molecule drugs just nine years of protection from Medicare negotiation versus 13 years for biologics. Such a change could enhance the economics of Pfizer's substantial small-molecule research programs.

Additionally, Pfizer's decision to divest its off-patent division has resulted in a more focused, innovative organization better positioned for long-term growth. So, with a promising pipeline of new drugs in cancer and immunology, Pfizer offers income investors not just an exceptional current yield but also the potential for meaningful capital appreciation as new blockbuster treatments leave the lab and enter commercial production.

AbbVie: Diversified pharmaceutical giant with steady income

AbbVie (NYSE: ABBV) offers investors a 3.9% dividend yield right now, with shares trading at a forward price-to-earnings ratio of just 14. For context, the benchmark S&P 500 trades at around 19 times forward earnings estimates. The drugmaker has successfully built a diversified portfolio spanning immunology, oncology, and aesthetics that generates consistent cash flow to support shareholder returns.

Humira's loss of exclusivity has created headwinds as biosimilar competition erodes market share. However, AbbVie's newer immunology treatments, Skyrizi and Rinvoq, have demonstrated stronger clinical outcomes for psoriasis, rheumatoid arthritis, and Crohn's disease than conventional therapies. The market has responded favorably to these medications, helping to counterbalance Humira's declining sales.

Beyond immunology, AbbVie maintains strong positions in aesthetics with Botox and oncology with Imbruvica, providing revenue diversification that strengthens the company's overall financial stability. This multifaceted portfolio approach reduces dependence on any single product while creating multiple avenues for future growth.

Despite an elevated payout ratio of 259%, AbbVie's dividend remains well supported by consistent cash-flow generation from its broad product lineup. For income investors seeking healthcare exposure with reliable dividends, AbbVie offers a generous yield with the potential for moderate capital appreciation, as it fortifies its core immunology franchise and expands into other lucrative market segments.

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

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

Now, it’s worth noting Stock Advisor’s total average return is 781% — a market-crushing outperformance compared to 149% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

George Budwell has positions in AbbVie and Pfizer. The Motley Fool has positions in and recommends AbbVie and Pfizer. The Motley Fool has a disclosure policy.

Market turmoil has sent tech stocks into a tailspin in early 2025. As Donald Trump's trade policies rattle global markets, even the most dominant technology companies haven't been spared. The S&P 500 has shed over 11% year to date as I write this, while the tech-heavy Nasdaq-100 has plummeted more than 16%. For opportunistic investors, however, this pullback presents a compelling chance to acquire shares of world-class businesses at bargain prices.

Rather than fleeing technology during this downturn, forward-thinking investors should consider building positions in companies poised to benefit from unstoppable trends like artificial intelligence (AI). Despite near-term headwinds, these foundational technologies continue transforming industries worldwide. Two tech giants, Nvidia (NASDAQ: NVDA) and Meta Platforms (NASDAQ: META), have been particularly hard hit and now offer exceptional value for long-term shareholders willing to weather the current volatility.

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

Image source: Getty Images.

Nvidia: The AI hardware leader at a steep discount

Nvidia shares have plummeted 34% from their 52-week high amid escalating U.S.-China tensions and new export restrictions. This dramatic sell-off has compressed Nvidia's valuation to just 21.8 times earnings estimates, far lower than the multiple it commanded at recent peaks. Last week's announcement that the company expects $5.5 billion in write-offs related to its China-specific H20 chip only accelerated the decline, yet the fundamental growth story remains intact for markets outside China.

What separates Nvidia from competitors is its formidable economic moat, built on both market-leading graphics processing unit (GPU) hardware and its proprietary Compute Unified Device Architecture (CUDA) software platform. This potent combination creates significant switching costs for AI developers, allowing Nvidia to maintain its dominance even as other tech giants such as Advanced Micro Devices work to develop alternatives. Though some analysts expect China-related revenue to rapidly approach zero, ongoing AI investments by businesses worldwide should support strong GPU sales throughout 2025.

The AI revolution remains in its earliest stages, with Nvidia positioned as the primary beneficiary of this exponential growth market. The company has expanded beyond its core GPU business into networking, software, and services, significantly enlarging its addressable market. With shares trading at their lowest valuation in years, investors have a rare opportunity to acquire this AI juggernaut at prices that substantially undervalue its long-term potential in the face of continued global AI adoption and despite current geopolitical uncertainties.

Meta Platforms: Social media giant with AI upside

Meta shares have tumbled 33% from their 52-week highs amid the broader market sell-off as I write this, creating an attractive entry point for investors in this social media powerhouse. Its stock now trades at just 19 times forward earnings estimates, down from 24 a year ago. With nearly 4 billion monthly active users across its applications, including Facebook, Instagram, WhatsApp, and Messenger, Meta maintains unrivaled scale in the social media space, benefiting from the secular shift toward digital advertising.

Moreover, the social media titan recently unveiled Llama 4, its next-generation large language model capable of understanding and generating content across various formats, including text, images, and video. This multimodal AI system puts Meta roughly at par with the latest models from Anthropic, Alphabet, and OpenAI, but Meta's true advantage lies in its unmatched distribution network.

As AI competition shifts from model development to distribution and monetization, Meta's massive user base provides a natural platform to deploy these technologies at scale, potentially driving higher engagement and advertising effectiveness.

While tariff-induced economic slowdowns could temporarily depress advertising spending, Meta might benefit from the current uncertainty surrounding TikTok's U.S. operations as advertisers seek alternative platforms. The company's dual strategy focuses on user engagement improvements through features like Stories and Reels, while enhancing its ad targeting algorithms to deliver better results for advertisers.

Though Meta faces potential regulatory challenges with a monopoly case in the U.S., and its Reality Labs division continues to consume billions in capital, these risks appear more than accounted for at current price levels. For investors seeking exposure to both digital advertising and AI, Meta offers a compelling combination of current profitability and growth potential.

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

Now, it’s worth noting Stock Advisor’s total average return is 781% — a market-crushing outperformance compared to 149% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

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. George Budwell has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.

In an era of economic uncertainty and market volatility, the quest for reliable income has become increasingly important for investors. While growth stocks may capture headlines, dividend-paying companies form the backbone of many successful retirement portfolios. The appeal is straightforward: regular cash payments that arrive regardless of market conditions, providing a dependable income stream when it's needed most.

High-yield dividend stocks are particularly attractive in the current environment. With inflation gradually cooling but still a concern, and interest rates potentially trending lower in the coming years, companies that consistently distribute significant portions of their earnings to shareholders offer both immediate income and a hedge against future economic challenges.

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

Image source: Getty Images.

For income-focused investors, two energy companies stand out for their combination of substantial yields, reasonable payout sustainability, and established business models. Enterprise Products Partners (NYSE: EPD) and Duke Energy (NYSE: DUK) share a commitment to rewarding shareholders through consistent, above-average dividend payments. Here's a rundown of each company's core investing thesis and key dividend metrics.

Energy infrastructure with a generous payout

Enterprise Products Partners L.P. is a leading North American midstream energy provider, operating approximately 50,000 miles of pipelines alongside extensive storage and processing facilities. The company's business model generates steady, fee-based income from long-term contracts with minimum volume commitments, largely insulating it from commodity price swings.

With a substantial 6.9% distribution yield and over a quarter-century of consecutive annual increases to its payout, Enterprise Products Partners offers both substantial current income and a healthy amount of growth potential for income investors, driven primarily by its expanding capital investment program and strategic positioning in natural gas liquids export markets.

Equally as important, the company's fairly conservative 58.1% payout ratio and strong balance sheet (3.1x leverage ratio) imply that its distributions ought to be safe, even in this volatile market. Keeping with this theme, the midstream energy giant's recent financial results showed healthy growth, with distributable cash flow up 6% year over year to $2.2 billion.

On the value front, Enterprise Products Partners' forward price-to-earnings ratio (P/E) of approximately 10.1 represents a significant discount to the benchmark S&P 500 (SNPINDEX: ^GSPC), which trades at 19.4 times forward earnings. As a result, the company's equity offers an attractive valuation alongside its generous income stream.

What's the bottom line? Enterprise Products Partners represents a rare combination of high current yield, consistent distribution growth, and a compelling valuation. This midstream giant thus deserves serious consideration as a cornerstone holding in a dividend-focused portfolio. After all, Enterprise's critical infrastructure and increasing focus on natural gas (a transition fuel) should keep its cash flow and distributions flowing for years to come, even as the energy transition from fossil fuels to renewables evolves in the years ahead.

Powering portfolios with regulated stability

Duke Energy is one of the nation's largest utilities, delivering essential electricity and natural gas services to approximately 8.4 million electric customers and 1.7 million natural gas customers. This regulated business structure creates a solid foundation for predictable revenue and cash flow that remain relatively stable, even during economic downturns.

For income-focused investors, Duke presents a compelling opportunity with its current 3.37% dividend yield -- more than double the S&P 500's current yield of around 1.3%. While not as high as some other utilities, Duke compensates with exceptional dividend consistency, having paid dividends for 99 consecutive years and increased them annually for the past 18 years. This century-approaching dividend streak demonstrates management's unwavering commitment to shareholder returns.

Still, the company's 73% payout ratio is higher than many other blue chip dividend payers. That said, Duke's elevated payout ratio shouldn't be a major concern, given the company's steady cash flow and built-in regulatory protections.

From a valuation perspective, Duke stock trades at a forward P/E of 18.5, slightly below the S&P 500's 19.4 multiple. This relatively fair valuation is notable considering Duke's above-average growth prospects in the utility sector, supported by a 1.5% to 2% annual electricity demand growth that's expected to accelerate to 3% to 4% by 2027, thanks to rising energy demand from data centers.

The investment case in a nutshell? Duke Energy combines defensive utility characteristics with above-average growth potential in an increasingly electrified economy. While not the highest-yielding option, Duke offers a rare blend of dividend safety, growth visibility, and a reasonable valuation that makes it worthy of consideration in this challenging market.

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

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

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

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

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

Continue »

*Stock Advisor returns as of April 5, 2025

George Budwell has positions in Duke Energy. The Motley Fool recommends Duke Energy and Enterprise Products Partners. The Motley Fool has a disclosure policy.