Key Points

• Data center growth is slated to continue for some time.

• Nvidia's GPUs are unrivaled in the AI space.

• Many stocks trade at the same price tag as Nvidia with far less growth.

• 10 stocks we like better than Nvidia ›

Nvidia (NASDAQ: NVDA) has been the top artificial intelligence (AI) stock to own for some time now, but with its latest rise, many investors are concerned that Nvidia's stock is too expensive to buy more shares at the current price. While I understand the hesitation, I think there is a compelling argument that Nvidia isn't expensive when you take a longer view than just a single year.

If you can commit to owning Nvidia stock for three to five years, I think there's a good reason to buy the stock right now. However, if you're only looking at a single year, the stock may appear somewhat pricey.

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 »

Data center expansion will continue to be a massive source of growth

Nvidia is the global leader in graphics processing units (GPUs), and it has established this position through superior hardware and unmatched software that allow users to optimize GPUs for various workloads. One estimate pegs Nvidia's data center market share for GPUs at 90%, which underscores just how widely used Nvidia's products are.

GPUs aren't just popular for AI workloads; they're used whenever an arduous computing task is involved. Whether it's drug discovery, cryptocurrency mining, engineering simulations, or their original purpose, gaming graphics, GPUs excel at the task because of their ability to process multiple calculations in parallel. Combine that with the ability to connect GPUs in clusters, and their computing power can be quickly amplified.

As more data centers are built, the demand for GPUs is expected to rise, which will likely benefit Nvidia's stock over the long term. For 2025, the AI hyperscalers all announced record capital expenditures, with most of the funds going toward data center construction. While this is impressive, the records are likely to be shattered again in 2026, as data center construction spans multiple years. This supports a third-party projection that Nvidia cited during its 2025 GTC conference, stating that 2024 global data center capital expenditures totaled $400 billion but are expected to rise to $1 trillion by 2028.

Should that occur, Nvidia's stock has plenty of room to run, as it captures a large portion of that spending. In the company's fiscal-year 2025 (which encompasses most of 2024), its data center revenue totaled $115 billion, which means Nvidia captures nearly 30% of total data center spending. If it can maintain that market share, it has the potential to generate $300 billion from data centers alone, provided the projection comes true.

That's a significant upside from today's totals, making today's stock price appear less expensive than it initially seems.

Nvidia's stock appears expensive, but so do many others in the market

Currently, Nvidia's stock trades at about 40 times forward earnings.

NVDA PE Ratio (Forward) data by YCharts

That's historically quite expensive, but few companies have been able to sustainably grow as quickly as Nvidia. For Q2, Nvidia expects 50% revenue growth, which is far more than the majority of companies in the market.

Furthermore, if you're going to call Nvidia expensive, then there are countless other stocks investors must be cautious with. Stocks like Amazon (NASDAQ: AMZN) (36 times forward earnings), Eli Lilly (NYSE: LLY) (35 times forward earnings), and Costco Wholesale (NASDAQ: COST) (53 times forward earnings) are just as expensive as Nvidia, yet don't have near the growth rate or upside.

NVDA PE Ratio (Forward) data by YCharts

I think it's safe to say that the broader market is rather expensive as a whole, but with how rapidly Nvidia is growing and how bright its long-term prospects are, I think investors are still safe to pick up shares here, as long as they have the mindset that they're holding for three to five years. If you can keep that time frame in mind, Nvidia is still a compelling 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 $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% 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 July 15, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Nvidia. The Motley Fool has a disclosure policy.

Key Points

• Palantir's stock price has risen much faster than its business has grown.

• ASML, Salesforce, and IBM all have strong investments in AI.

• 10 stocks we like better than Palantir Technologies ›

Palantir Technologies (NASDAQ: PLTR) experienced a significant rise over the past few years and is now the 24th largest company by market capitalization globally. However, through a combination of factors, I think there could be multiple stocks that pass Palantir over the coming years.

Three that I think have that chance are ASML Holding (NASDAQ: ASML), International Business Machines (NYSE: IBM), and Salesforce (NYSE: CRM), but this list could grow if the market comes to its senses regarding Palantir's stock.

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 »

Palantir's stock appears to be significantly overvalued

Palantir has been on an absolute tear since the start of 2024, rising nearly 800%. However, its revenue only grew 39% year over year in the first quarter, indicating a significant disparity between stock price appreciation and actual business growth.

This shows up in the stock's valuation, which trades for 113 times sales and 244 times forward earnings.

PLTR PS Ratio data by YCharts; PS = price to sales, PE = price to earnings.

Very few companies ever reach this valuation for good reason: It's nearly impossible to live up to expectations. If we use a five-year timeline to examine Palantir's stock, let's make the following assumptions:

• Revenue growth of 40%.
• Profit margin reaches 30%.
• Share count remains flat.

Those are three incredibly bullish assumptions -- the company hasn't achieved 40% year-over-year growth in recent quarters and would have to sustain that for five years. Also, a 30% profit margin would place it among the best software companies, and its current 18% margin is still a considerable distance from that level.

Lastly, management is notorious for issuing a large number of shares to employees, and its share count has increased by 7.3% since the start of 2024, indicating significant dilution.

Regardless, if these heady assumptions could come true, Palantir would generate $16.8 billion in revenue and $5 billion in profits. That's huge growth from today's $3.1 billion in revenue, but it would still value the company at 67 times hypothetical 2030 earnings.

A 67 multiple for forward earnings makes for a very expensive stock, and Nvidia, which is consistently growing faster than Palantir, has only a 38 forward earnings multiple right now.

I think this is a fairly clear-cut case that Palantir is drastically overvalued at today's levels. Even with the most bullish assumptions, Palantir's stock would still appear overvalued five years from now, even if the company achieves incredible growth figures.

As a result, I believe the stock is ripe for a decline, and there are many other stocks (beyond the ones I mentioned) that could surpass Palantir.

This trio has a strong outlook and significantly cheaper prices

ASML is only slightly behind Palantir's $362 billion market cap, with a valuation of $292 billion at the time of this writing. It is a key provider of machinery in chip manufacturing, and it holds a technological monopoly with its extreme ultraviolet (EUV) machines.

As more chip fabrication facilities emerge to support the huge AI demand, the company will experience strong growth, which management has told investors to expect in 2026. As a result, I think ASML could easily surpass Palantir.

IBM is a legacy computing business that's working to make the pivot into AI and quantum computing, which is forecast to see commercial adoption around 2030. If it becomes the go-to for this technology, the stock could be ripe for huge upside from its current $266 billion valuation.

Lastly, Salesforce dominates in customer relationship management software. It's also working to integrate AI into its product and maximize its profitability. Compared to many stocks on the market, it is relatively cheap and is valued at a lower level than the S&P 500, which trades for 23.7 times forward earnings.

IBM PE Ratio (Forward) data by YCharts.

As a final note, all three of these stocks trade for far less than Palantir's hypothetical 2030 valuation, which should be a sign for investors that the stock is unsustainably expensive. There is a near-endless list of stocks that appear to be better investments, and these three are among them.

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 $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% 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 15, 2025

Keithen Drury has positions in ASML, Nvidia, and Salesforce. The Motley Fool has positions in and recommends ASML, International Business Machines, Nvidia, Palantir Technologies, and Salesforce. The Motley Fool has a disclosure policy.

Key Points

• Rigetti Computing is a pure-play quantum computing investment.

• Investors must understand the risks associated with investing in Rigetti.

• A massive quantum computing market is expected to emerge by 2030.

• 10 stocks we like better than Rigetti Computing ›

Quantum computing is an intriguing investment field. Right now, there's a ton of money pouring into the technology, but it really isn't adding any value back into the economy. That's because it's still a fledgling technology that's working its way toward commercial viability. However, once it reaches that point, the companies involved in this space could see their stocks skyrocket alongside demand.

Rigetti Computing (NASDAQ: RGTI) is a company in the quantum computing race, and it's a popular pick among investors. However, is now the right time to invest $1,000 into the stock?

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Rigetti Computing is a high-risk, high-reward investment

Rigetti Computing is a pure play within the quantum computing investment realm, which means it's quantum computing relevancy or bust. This has several benefits and drawbacks.

On the positive side, the company is laser-focused on quantum computing and is devoting every bit of its resources to investing in the technology and bringing it to market. Additionally, if Rigetti Computing succeeds in its goal to achieve quantum computing relevancy, its stock is primed to soar because it has no revenue to speak of right now (besides some that it gets from research contracts). Rigetti Computing is only a $4 billion business, so it has immense upside if it can achieve significant growth.

The downside of investing in quantum computing pure plays is that there is no backup plan. If another competitor and its technology surpass Rigetti's, the stock becomes obsolete, and every share is worthless, ultimately sending the stock to $0. That's a grim outlook, but it's entirely within the realm of possibility.

Furthermore, because its only cash sources are various contracts, issuing new shares, or taking on debt, it doesn't have the financial backing that some of the large tech companies competing in quantum computing have. For example, one large competitor in this space is Alphabet, the parent company of Google. Over the past 12 months, Alphabet produced a jaw-dropping $75 billion in free cash flow. It means nothing for Alphabet to sink $1 billion into the quantum computing race -- a sum of money that Rigetti can only dream of.

Investing in Rigetti Computing is a high-risk endeavor, but if it pays off, shareholders could reap substantial rewards.

2030 is a key milestone in quantum computing

To invest in a stock as risky as Rigetti Computing, investors need to be assured that there's an adequate payoff should it win the quantum computing race. Quantum computing has applications in many fields, such as weather forecasting, logistics networks, and artificial intelligence (AI). Numerous other problems can likely be solved by quantum computing which haven't been explored yet.

However, it will be a few years before quantum computing becomes widespread.

Rigetti Computing estimates that before 2030, the annual value for quantum computing providers will be around $1 billion to $2 billion. However, it expects that opportunity to expand to $15 billion to $30 billion per year between 2030 and 2040. Should Rigetti capture 20% of that market, that's $3 billion in annual revenue. Since the stock is valued at around $4 billion, there's certainly plenty of room for upside.

So, should you invest $1,000 in Rigetti Computing? I'd say it depends on your portfolio size. If you have $2,000 to invest, then investing $1,000 into Rigetti Computing is a bad idea. If your portfolio is $100,000 or greater, then this may not be a bad idea if you're a firm believer that Rigetti Computing will win the quantum computing race. There's a ton of risk here, so it may be wiser to spread bets out among multiple quantum computing companies.

By keeping your position sizing small, you limit the effect if the stock price reaches zero. But if a 1% position increases 10-fold in value, your portfolio reaps the reward of an incredible investment.

Rigetti Computing is a high-risk, high-reward investment, and people need to understand this before investing any money in the stock.

Should you invest $1,000 in Rigetti Computing right now?

Before you buy stock in Rigetti Computing, 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 Rigetti Computing 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 $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% 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 15, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

Key Points

• SoundHound AI is a leader in AI audio recognition.

• The company's revenue increased at a jaw-dropping 151% pace in Q1.

• Management indicated that significant growth remains.

• 10 stocks we like better than SoundHound AI ›

SoundHound AI (NASDAQ: SOUN) has been a poor investment in 2025, following a tremendous 2024. It's down 35% this year, compared to soaring 835% last year. However, I think a turnaround for SoundHound AI could be on the way.

SoundHound AI has some strong tailwinds blowing in its favor, and it could be a monster winner in the second half of the year, especially if the growth figures that management projects come true.

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 »

SoundHound AI is putting up impressive growth figures

SoundHound AI is a leader in audio recognition technology, using this information to integrate with generative AI models. Voice-activated AI models have been around for a long time (think Siri or Alexa), but often frustrated users. SoundHound AI's product represents a significant improvement over these technologies, outperforming human counterparts in both accuracy and speed.

More people might be open to using AI to replace many aspects of their lives if it meant a quicker and more seamless experience, but that hasn't often been the case. As a result, the general population may be somewhat skeptical of SoundHound's product, but its rapid growth tells a different story.

In the first quarter, SoundHound AI's revenue rose an impressive 151% year over year to $29.1 million. Management also maintained its full-year guidance of 97% year-over-year growth, which places its growth rate among the fastest in the AI realm. However, it's unusual to see a stock delivering that level of results with a declining share price. That could be because investors are concerned that too much growth is already priced into the stock.

SoundHound AI's stock isn't cheap. It trades for 41 times sales.

SOUN PS Ratio data by YCharts. PS = price-to-sales.

This level is well below where it peaked at the end of 2024, but also above where it traded throughout most of 2024. Still, 41 times sales could be a reasonable price to pay for the stock -- if it can maintain its near-100% revenue growth pace (which is incredibly difficult to do).

If SoundHound AI can maintain its doubling growth pace, the stock will be valued at around 20 times sales after one year of growth, which is the high mark for most software companies. I think that SoundHound AI can deliver strong growth in the second half of 2025 and throughout 2026, especially if it starts to convert some of its backlog.

Management could reveal what its expecting in 2026 soon

At the end of 2024, SoundHound AI's revenue backlog (a measure of how much value remains on contracts that it has signed) was $1.2 billion. Since SoundHound AI's trailing 12-month revenue just eclipsed $100 million, this indicates monster growth ahead for the company.

While management was unwilling to change its 2025 guidance during Q1, there are clear signs that SoundHound AI's 2026 growth could be just as strong as its 2025 growth. The market isn't ready for this proposition, and if management hints that 2026 growth will be just as rapid as 2025's, the stock could surge as a result.

We don't have a date for SoundHound AI's second-quarter results, but last year's Q2 results were available in early August. I'll be watching SoundHound AI's stock during that timeframe and paying close attention to what management has to say about 2026. They dropped hints regarding 2025's projections during the Q2 2024 conference call, and I expect them to do the same this year.

SoundHound AI's audio recognition product is being widely adopted, with many companies having already signed a deal with SoundHound. Now, SoundHound AI is working to recognize that revenue, which could result in significant growth for both the company and its stock.

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

Before you buy stock in SoundHound AI, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% 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 15, 2025

Keithen Drury 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.

Key Points

• Microsoft is much more than just its productivity software like Word and Excel.

• The greatest excitement now centers around its fast-growing Azure cloud segment.

• But investors may want to be a tad cautious given the stock' premium valuation.

• 10 stocks we like better than Microsoft ›

Microsoft (NASDAQ: MSFT) has been a steady yet quiet outperformer this year. While the market is up around 6%, Microsoft shares have risen an outstanding 20%. Most of Microsoft's strength is derived from its artificial intelligence (AI) capabilities.

We'll receive more information regarding the AI arms race on July 30 when Microsoft reports its results for the fourth quarter of its fiscal 2025. These events can bring significant stock price swings.

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 »

If you're a firm believer that Microsoft will post guidance-beating results, then picking up shares right now seems like the smart move.

Microsoft Azure is a huge driving factor for the stock

Microsoft is far more than the company that makes Word or Excel. It's also the owner of LinkedIn, Xbox, and Activision Blizzard, the game creator. It divides its business into three units: productivity and business processes (the products most people think of when they hear Microsoft), more personal computing (Microsoft-branded hardware and its gaming platforms), and intelligent cloud.

Intelligent Cloud is the primary reason investors are bullish on Microsoft's stock, as it drives significant growth for the company. In its fiscal third quarter (ending March 31), productivity and business processes grew revenue 10% and more personal computing increased sales at a 6% pace. Those two growth rates are common for a mature company like Microsoft, but its Intelligent Cloud is anything but old and boring. It grew revenue at a 21% pace, led by Azure's 33% growth.

Azure is Microsoft's cloud computing division, which is the primary beneficiary of all of the AI spending that's going on. Microsoft isn't directly competing in the AI arms race with a generative AI model. Its investment and partnership with OpenAI, the maker of ChatGPT, is a key part of Azure's growth, as OpenAI was the first mover in this space and is generally seen as the leader. However, Azure also offers other leading AI models such as Llama from Meta Platforms; China-based DeepSeek, a much cheaper generative AI model; and Grok from xAI, Elon Musk's generative AI company.

This library of generative AI models is a key reason why Microsoft is winning on the cloud computing front, as it aims to be an AI facilitator, rather than just promoting a single model.

The future is also bright for Azure, as the global cloud computing market is expected to expand from a $750 billion base in 2024 to $2.4 trillion by 2030, according to Grand View Research. This growth stems from both AI and non-AI workloads, serving as a massive tailwind that pushes Azure higher, alongside Microsoft's stock.

When Microsoft reports on July 30, I'll be watching management's language regarding Azure, as there is no room for weakness in this critical division.

Microsoft's stock has a premium valuation and looks a tad expensive

With Microsoft's impressive run and leadership position in the industry, it should come as no surprise that the stock has garnered a premium valuation. At more than 33 times forward earnings, it trades at the top end of its valuation range.

MSFT PE Ratio (Forward) data by YCharts

This premium valuation has some merit, as Microsoft has consistently grown its earnings per share (EPS) at a market-beating pace.

MSFT EPS Basic (Quarterly YoY Growth) data by YCharts

Still, if you look at other companies in Microsoft's valuation range, most are growing their EPS at a much quicker pace.

AMZN PE Ratio (Forward) data by YCharts

As a result, I think investors should be patient with Microsoft's stock. Microsoft has been and will continue to be an excellent AI stock to own, but there's no denying it has gotten expensive. Investors should wait to see what Microsoft has to say on July 30 before rushing to buy the stock today.

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 $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% 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 15, 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. Keithen Drury has positions in Amazon, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Amazon, Meta Platforms, 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.

Key Points

• Palantir's software is experiencing growth in both the commercial and government sectors.

• AI adoption in Europe could accelerate Palantir's growth rate.

• Its frothy valuation prices in well over three years of growth.

• 10 stocks we like better than Palantir Technologies ›

Palantir Technologies (NASDAQ: PLTR) stock has been on an absolute roll in 2025, rising around 100% so far. Few stocks deliver that level of performance in five years, let alone half of one.

As a result of Palantir's performance, it has become one of the most popular stocks to own in the market; however, past performance is no guarantee of future results. Instead, investors need to look ahead to what's next for this artificial intelligence (AI) giant. Three years is a long way away, but what will Palantir's stock price look like at that point?

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 »

Palantir's growth is two-pronged

Palantir is an AI-powered data analytics software platform that allows its clients to input several data streams into the platform and receive actionable insights. Originally, this software was intended for government use, but it has expanded to the commercial side within the past decade.

As a result of its long history with the government, it has become deeply interwoven throughout the government's workings, making it a challenging product to move away from. Still, that doesn't mean various government entities (both foreign and domestic) aren't expanding their use of Palantir's software. In Q1, government revenue increased by 45% in both the U.S. and worldwide, indicating that the AI-powered government is still being developed.

Although Palantir's government revenue exceeds its commercial revenue, the U.S. commercial segment is growing at the fastest rate. In Q1, U.S. commercial revenue rose 71% year over year, showcasing impressive adoption. However, global commerce sales were weak, mainly due to Europe's slower adoption of AI. That could turn around in the next few years and substantially benefit Palantir's long-term growth.

Companywide, Palantir posted an impressive 39% growth rate during Q1. It will be a tall task to maintain that growth rate for the next few years, but how much higher will the stock price rise if it does?

Even the most bullish Palantir investment thesis has problems justifying today's price

Let's consider an extreme bullish scenario for Palantir's stock to determine its potential upside from today's value. Over the past 12 months, Palantir generated $3.11 billion in revenue. Instead of the current 39% growth rate, let's assume it can accelerate to 50% and sustain this rate over the next three years. If it can do that, Palantir would have $10.5 billion in revenue.

Palantir is also starting to mature as a business, so let's say its profit margin can improve to 30% during that time frame, which would indicate Palantir produced $3.15 billion in profits.

PLTR Profit Margin data by YCharts

That indicates significant growth from today's level, but we're still missing a few key information points to value the stock accurately. Many software companies trade for 10 to 20 times sales and 30 to 50 times earnings. If we give Palantir the benefit of the doubt and use the 20 times sales and 50 times earnings figure, that would give Palantir a stock price of $89 using the price-to-sales ratio, or $67 using the price-to-earnings ratio.

That's far less than today's stock price of about $150. That's what happens when you use actual growth projections to determine a future stock price. Palantir's stock has become unlinked from the actual business, and trades for an incredibly expensive valuation right now.

PLTR PS Ratio data by YCharts

Its current valuation prices in well over three years of growth, which indicates that today's valuation is incredibly frothy.

Investors need to understand this, and either reduce their Palantir position or steer clear of it entirely. Investors shouldn't be surprised if Palantir's stock price is lower three years from now, as Palantir must continue beating expectations or risk being sold off due to its expensive valuation.

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 $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% 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 15, 2025

Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

Key Points

• Investors are pessimistic about Google Search's odds of survival.

• Taiwan Semiconductor's management projects monster growth over the next five years.

• 10 stocks we like better than Alphabet ›

Artificial intelligence (AI) stocks and "cheap" aren't often placed in the same sentence, but I think that's true of two stocks in particular. Both Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Taiwan Semiconductor Manufacturing (NYSE: TSM) appear to be cheap, but for two separate reasons.

In a market that's growing increasingly expensive, I think taking a hard look at these two stocks is worthwhile, as the value they provide investors is near the best available.

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 »

1. Alphabet

Alphabet is the parent company of Google, YouTube, Waymo, and the Android operating system. However, Alphabet derives the majority of its revenue from one source: advertisements.

This is also the major concern from the market, as Alphabet's primary revenue source, the Google Search engine, is under attack from generative AI. Google Search accounted for 56% of revenue in the first quarter. While we don't have an individualized breakdown of Google Search's operating margin, the Google Services division generated an operating margin of 42%, accounting for over 100% of Alphabet's total operating profits.

That's because this division funds various Alphabet investments that don't generate any profits, so this segment needs to continue performing well for Alphabet to remain attractive to investors.

However, there are some signs of Google's dominance slipping, as its market share has fallen below 90% for the first time since 2015. Furthermore, many Wall Street analysts and other tech-savvy people have replaced Google Search with generative AI. As a result, many are forecasting the downfall of Google, which is why the stock trades at a huge discount to the market.

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

At 19 times forward earnings, Alphabet's stock is far cheaper than the broader market, as measured by the S&P 500. The S&P 500 trades for 23.7 times forward earnings, so there is a tangible difference in valuation between these two securities.

However, I think this bearish sentiment is unwarranted. In Q1, Google Search's revenue increased 10% year over year -- not a sign of a company that's failing. Additionally, I think the majority of the population could do without the capabilities of a generative AI web browser or search capabilities and are perfectly fine with the AI Overview Google offers at the top of every search result.

We'll receive more information from Alphabet on July 23 when it reports its Q2 results, but I expect Google Search revenue to remain healthy, which could lead to the stock rising.

2. Taiwan Semiconductor

Taiwan Semiconductor (TSMC) is the world's leading chip foundry, producing chips for giants such as Apple and Nvidia. TSMC has beaten out other chip foundries for multiple reasons, but chief among them is that it doesn't market any chips directly to consumers. Taiwan Semiconductor is a chip fab facility only, so its clients don't have to worry about it stealing their technology to produce a product that rivals their own.

Additionally, Taiwan Semiconductor is always at the forefront of new chip technology. This remains true, as they are launching their 2-nanometer (nm) chip node later this year and a 1.6 nm offering in 2026.

This dominance has enabled it to establish itself firmly at the forefront of the chip fabrication industry, and its services are in high demand. As a result, clients often place chip orders years in advance, which gives TSMC unparalleled insight into the direction the market is heading. Over the next five years, management projects a 45% compound annual growth rate (CAGR) in AI-related revenue and a nearly 20% CAGR in total revenue.

That's market-crushing growth, and if it pans out, Taiwan Semiconductor stock will be a must-own. Despite management's strong track record and the obvious tailwinds in the chip industry, TSMC's stock trades at only 24.9 times forward earnings.

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

While this is technically more expensive than the broader market, the difference is only slight. Furthermore, with the market's long-term growth rate hovering at around 10%, TSMC's projected 20% growth rate significantly outpaces it.

As a result, TSMC appears undervalued for its growth and should be acquired before the stock rises further.

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

Before you buy stock in Alphabet, 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 $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Key Points

• Nvidia says it's getting the green light from the U.S. government to apply for an export license for H20 chips.

• The loss of H20 chips put a dent in Nvidia's financials.

• 10 stocks we like better than Nvidia ›

Nvidia's (NASDAQ: NVDA) strong Q1 results were overshadowed by the U.S. government's decision to revoke Nvidia's export license for H20 chips that were specifically designed to meet U.S.-imposed restrictions. This resulted in Nvidia missing out on $2.5 billion in sales during the first quarter. As the company had already brought in $4.6 billion in H20 sales in the quarter before the decision, the loss of the H20 business resulted in a large hole in Nvidia's business going forward.

However, Nvidia's fortunes appear to be changing, and they delivered investors exciting news about H20 GPUs returning to the Chinese market.

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H20 exports are expected to resume shortly

Nvidia filed to resume its export license for H20 graphics processing units (GPUs), and says it has been assured by the U.S. government that the license will be granted. This is a massive win for Nvidia, as it allows a sizable chunk of its revenue stream to return and allows Nvidia to increase its foothold in one of the largest markets in the world.

As mentioned above, H20 sales in Q1 would have been $7.1 billion if the export restrictions weren't in place. That would have accounted for about 15% of Nvidia's total sales, so the return of H20 chip sales will be a welcome boost. Nvidia's Q2 ends in late July, so there won't be any H20 sales this quarter. However, pent-up demand could surface in Q3, potentially causing its growth to reaccelerate.

Even without second quarter H20 sales, Nvidia still expects an impressive 50% year over year growth rate to $45 billion. The H20 export restriction removed a projected $8 billion in Q2 sales, so if it had had those sales, its revenue growth rate would have been 77%. That's quicker than Q1's rate and about the same growth rate as the company's fiscal 2025 fourth quarter. Maintaining a growth rate at Nvidia's size is incredibly challenging and has never been achieved before. With the return of H20 chips, Nvidia will be positioned to sustain that growth level.

As a result, I think Nvidia can skyrocket off of this news, as it's not valued as highly as it was during this time last year.

Nvidia's valuation is better than you may expect

Nvidia's stock isn't cheap by any measure right now, as it trades for 38 times forward earnings.

NVDA PE Ratio (Forward) data by YCharts

This is an expensive valuation, but it isn't much more expensive than some of its big tech peers. Furthermore, it's the only one remotely close to growing as quickly as it is.

Another item to note regarding this valuation is that it only considers earnings for the next year. If Nvidia maintains its jaw-dropping growth rate (as it could do with H20 chips returning), then this valuation doesn't look all that expensive with a five-year mindset.

The return of H20 chips can't be understated for Nvidia's future, and the stock will likely move higher after the news. However, I think the real chance for Nvidia's stock to skyrocket will come when it reports Q2 results in late August. They'll give guidance for its fiscal third quarter at that time, which will likely include H20 GPU sales. This news could cause the stock to jump, making it a smart move to buy the stock now.

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 $680,559!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,005,670!*

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*Stock Advisor returns as of July 15, 2025

Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Key Points

• IonQ's approach to quantum computing notably differs from those of its competitors.

• The company predicts that a viable quantum computing market will emerge by 2030.

• 10 stocks we like better than IonQ ›

IonQ (NYSE: IONQ) is one of the leading pure-play quantum computing investment options. Unlike some of the big tech competitors, for IonQ, quantum computing is viewed as a do-or-die project.

This inherently leads to more risk with IonQ's stock, but the trade-off is the potential for explosive returns. Quantum computing is still working its way toward relevance, but it could reach that point within the next five years. Then, we'll know if IonQ is the real deal, but by then, the stock will have adjusted for the market opportunity.

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Investors need to project where IonQ will be five years from now to determine if now is the right time to buy the stock. Otherwise, they could risk being late to a game-changing technology.

IonQ's approach to quantum computing sets it apart

IonQ is a pure-play quantum computing investment, which means it doesn't have any ancillary segments to prop up the business. It relies on external contracts to fund the business, but IonQ's partnerships are among the most lucrative in the quantum computing realm. It has partnered with the U.S. Air Force Research Lab, a facility renowned for its groundbreaking research. It also has several industry partnerships, which could prove profitable once quantum computing has commercial capabilities.

The primary challenge with quantum computing currently is that companies are striving to demonstrate its relevance. There are several use cases for quantum computing, but one problem that stands in the way is its accuracy. Quantum computing's biggest strength (the ability to analyze problems that don't have a discrete answer) is also its biggest weakness, as errors can appear in a calculation. Clients don't want to second-guess the answer to a problem.

This is why IonQ's industry-leading 99.9% two-gate fidelity is a significant advantage. This measures the probability of the quantum computing system making an error when passing through two-qubit gates. The lower this figure, the higher the odds of the system making an error. Because IonQ has an accuracy advantage over competitors, it may be a more attractive choice to potential customers.

Another reason why IonQ could succeed is the approach it's taking to quantum computing. It employs a trapped-ion approach, which eliminates the need for cooling the particle to near absolute zero. Cooling the particle is an incredibly expensive process, which could prevent quantum computing from being deployed in applications where it could excel.

However, IonQ's trapped-ion approach can be performed at room temperature. This could prove to be a key differentiating advantage, leading IonQ to significant market share gains. But will it be enough to transform the stock into a winner?

IonQ's CEO has bold predictions about its future finances

Earlier this year, CEO Peter Chapman projected that IonQ is slated to deliver nearly $1 billion in annual sales by 2030 and achieve profitability. That timeline is approaching quickly, but if it delivers on expectations, it could be a winning investment.

IonQ's stock currently has a market capitalization of around $11 billion. That means it trades for about 11 times hypothetical 2030 sales. There are numerous unknowns in that projection, and it could dramatically overstate the actual demand for quantum computing systems.

Furthermore, there's no guarantee that IonQ's approach will be the winning choice. While I think it has unique advantages, there could be underlying issues that other systems don't have, which could cause it to fail.

So, where will IonQ be in five years? That's an impossible guess. I could see it trading for $100 or $0. It may even fall from today's price, but still be worth something. IonQ's price in five years will depend on its success in the quantum computing arms race. If it proves its technology is industry-leading and can find a significant use case for it in industry, then IonQ's stock is worth buying now. But if it fails, then it's not worth your time.

It's impossible to know that now, so investors need to adjust for this huge risk by keeping position sizing small; that way, if it succeeds, it will be a strong performer in your portfolio. But if it goes to $0, it will hardly affect it.

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 $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,010,880!*

Now, it’s worth noting Stock Advisor’s total average return is 1,047% — a market-crushing outperformance compared to 180% 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 July 7, 2025

Keithen Drury 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.

Key Points

• Stock splits are common among companies in the Dow Jones Industrial Average.

• Most companies tend to split their stock when the share price exceeds approximately $1,000.

• 10 stocks we like better than Microsoft ›

Stock splits are less common than they used to be, as fractional shares have negated their effect. However, fractional shares aren't available to every investor, especially outside the U.S. Still, stock splits have their uses, namely for employee compensation.

Stock splits can still be exciting for investors and may sometimes cause a stock to surge. With a few potential splits expected next year, now may be a great time to acquire these stocks that are ripe for a split.

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 »

Microsoft

Microsoft (NASDAQ: MSFT) may not appear to be a top stock-split candidate, but it might be compelled to split its stock. Although its share price is roughly $500, which isn't at a level you'd expect from a stock split, it is a member of the Dow Jones Industrial Average, a price-weighted index.

This means that the index is weighted by a stock's price rather than by the company's size. Currently, Microsoft is the second most expensive stock in the index, and it may be forced to split its stock to stay in the index. Otherwise, it could throw the index out of balance.

As a result, investors shouldn't be surprised if Microsoft splits its stock next year.

Goldman Sachs

Goldman Sachs (NYSE: GS) is also a member of the Dow Jones Industrial Average, but it holds the title of the most expensive stock in the index, trading for more than $700. Like Microsoft, it may split its stock next year, making it a smaller component of the widely used index.

Meta Platforms

Meta Platforms (NASDAQ: META) could be vying for a position within the Dow as the index transitions from older manufacturing companies to newer AI-focused ones. This represents the broader shift in the American economy, so the inclusion of a company like Meta makes sense.

With the stock currently trading at around $725 per share, it's a stock that could potentially undergo a split next year.

Berkshire Hathaway

It's unlikely that you'll see a Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) Class A share split, given that the stock price is currently more than $700,000 per share. However, Warren Buffett is retiring at the end of the year, and with a new CEO at the helm, you never know what might happen.

The B-class shares, which are significantly more affordable at $477 per share, could be a candidate for a stock split next year. Berkshire Hathaway is a world-renowned company, and maintaining affordable access to its shares is likely a key point for management.

Costco

Costco Wholesale (NASDAQ: COST) experienced an impressive stock run over the past decade, with its stock price exceeding $1,000 per share, although it's currently slightly below that mark. Once a company reaches $1,000 per share, it lands on investors' radar as a stock-split candidate, so don't be surprised if you see Costco announce a stock split sometime in 2026.

Netflix

Netflix (NASDAQ: NFLX) is in a similar boat to Costco but at an even more expensive level. Its shares trade for around $1,250, which is quite expensive for a tech stock. Many tech companies use stock options to compensate employees, which would be a very expensive bonus to hand out from Netflix, given the high price of their stock.

As a result, I think it could split its stock in 2026.

ASML

ASML (NASDAQ: ASML) currently trades for approximately $800, but its 52-week high was over $1,100. This critical semiconductor manufacturing equipment supplier is poised for strong growth over the next few years as chip production capacity increases, and the company may consider splitting its stock in anticipation of further market run-up.

ServiceNow

ServiceNow (NYSE: NOW) trades for around $1,000 and is benefiting from the integration of AI into business. The stock has been on a remarkable run over the past few years, and it could see its shares rise even further, making it a potential candidate for a stock split.

Fair Isaac Corporation

Fair Isaac Corporation (NYSE: FICO), better known as FICO, is the company behind credit card scores. Its stock has been a stellar performer, crushing the market on its way up to more than $1,600 per share. However, it decreased significantly from its 52-week high of $2,400.

Still, given the stock's high price, don't be surprised if it announces a split next year.

MercadoLibre

MercadoLibre (NASDAQ: MELI) is a Latin American e-commerce and fintech giant. It has built a massive empire in Latin America and continues to expand rapidly. Its run has taken it to a $2,400 per share stock price, and it could be a company that's ripe for a stock split in 2026.

Even if none of the companies on this list fail to split their stock, some of them appear to be strong investment candidates. Although an impending stock split could be a part of the investment thesis, there should be a compelling investment case for each company beyond a stock split.

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 $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,010,880!*

Now, it’s worth noting Stock Advisor’s total average return is 1,047% — a market-crushing outperformance compared to 180% 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 July 7, 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. Keithen Drury has positions in ASML, MercadoLibre, and Meta Platforms. The Motley Fool has positions in and recommends ASML, Berkshire Hathaway, Costco Wholesale, Goldman Sachs Group, MercadoLibre, Meta Platforms, Microsoft, Netflix, and ServiceNow. The Motley Fool recommends Fair Isaac 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

• Data center capital expenditures are reaching record highs.

• A significant portion of data center spending is allocated to equipping them with Nvidia GPUs.

• 10 stocks we like better than Nvidia ›

Nvidia (NASDAQ: NVDA) has been an excellent stock to own over the past few years, as the company has gained the status of having the largest market capitalization in the world. However, given the stock's impressive performance, many investors are likely wondering if there's still room for Nvidia to run. After all, the stock has risen by around 1,000% since the start of 2023.

Is investing $10,000 in Nvidia right now a waste of money? Or is it a brilliant investment decision? I think the answer is clear, and there's one long-term trend that guides that conclusion.

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 »

Nvidia has risen alongside AI demand

Nvidia manufactures graphics processing units (GPUs), which are specialized computing devices that can perform multiple calculations in parallel. GPUs were originally designed to process gaming graphics -- some of the most arduous workloads computers saw almost three decades ago. They excelled in this area, but quickly found other uses such as engineering simulations, cryptocurrency mining, and drug discovery. Still, their biggest use case has just emerged: AI training.

GPUs can handle a wide range of workloads and process them efficiently, making them ideal for feeding various datasets to train an AI model. Additionally, GPUs can be connected in clusters to amplify computing power, a strategy that AI hyperscalers have taken to the extreme by building AI training clusters with 100,000 or more GPUs.

Nvidia dominates the GPU market with a 90% market share. This dominance has enabled it to charge a premium price for its product, resulting in profits that far outpace revenue growth.

NVDA Revenue (TTM) data by YCharts

This combination has enabled Nvidia's stock to soar since the AI revolution began in 2023. But is there more upside?

Data center capital expenditures will push Nvidia's stock higher

We've yet to scratch the surface of what an AI-first business environment looks like. As a result, the AI hyperscalers are building data centers at an unprecedented rate to meet the demand. Every AI hyperscaler has announced record capital expenditures for 2025, with most of that money being allocated to data centers. Although this spending may be earmarked for 2025, building a data center is a multiyear process, so we can expect record capital expenditures to continue for the next few years.

This directly aligns with a third-party market study that Nvidia cited during its 2025 GTC event, which projected global capital expenditures on data centers to rise from $400 billion in 2024 to $1 trillion by 2028. In 2024, Nvidia generated $115 billion in revenue from its data center division, which earns it a healthy slice of the data center capital expenditure pie.

If Nvidia can maintain its market share within the data center space, it could generate nearly $300 billion in revenue from data centers alone. Considering that Nvidia's trailing-12-month revenue total is just shy of $150 billion, this indicates a significant amount of upside remains in Nvidia's stock.

Although it has been a top performer for multiple years, Nvidia has earned that title. Additionally, there is plenty of growth left in the pipeline to continue fueling Nvidia's rise. While it is unlikely to return another 1,000% from here, I believe there is still sufficient growth potential in the data center space, allowing for market-beating returns to be achieved.

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 $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,010,880!*

Now, it’s worth noting Stock Advisor’s total average return is 1,047% — a market-crushing outperformance compared to 180% 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

Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Key Points

• Nvidia's AI-powered growth is far from over.

• Taiwan Semiconductor is a crucial supplier in the AI race.

• Alphabet's stock is undervalued.

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

While $50,000 may seem like a huge chunk of money to invest in the stock market, fractional shares have made any amount enough to get started. So, whether you have $50 or $50,000, you can get started investing.

Furthermore, fractional shares make it easier not to worry about how expensive a stock may look based on a dollar figure. What matters is how much of the company you get to own based on the price you pay. Understanding a stock's valuation is a crucial part of being an investor, and if you can grasp it, you'll have a significant advantage over many other market participants.

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 »

Regardless of how much money you have, I think these three stocks look like excellent bargains right now and make for great picks regardless of your investing experience.

All three stocks are affected by the AI race

Three of my best stocks to buy now are Nvidia (NASDAQ: NVDA), Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), and Taiwan Semiconductor Manufacturing (NYSE: TSM). They are all major participants in the AI race and are benefiting in multiple ways.

Nvidia's graphics processing units (GPUs) power many of the AI models used today, and the company has continuously launched new products to ensure it stays at the top. Although AI has become more prevalent, the industry is still a long way from achieving the computing capacity needed to run an AI-first business world, and its GPUs will be a crucial part of realizing that reality.

Taiwan Semiconductor (also known as TSMC) is the world's leading semiconductor foundry, producing chips for companies like Nvidia that lack the capabilities to manufacture their own chips. It has established its market leadership through excellent yields and continual innovation. And it has invested $165 billion into the U.S. to expand its production footprint away from Taiwan, which helps reduce fears of a single point of failure.

Alphabet is better known for some of the companies under its umbrella, such as Google, YouTube, Waymo, and the Android operating system. Despite its wide product lineup, the company's finances are heavily tied to advertising, specifically from the Google search engine.

Many investors are concerned that generative AI could displace Google Search, and the stock is undervalued as a result. While some defectors are to be expected, Google has integrated AI search overviews, which helps bridge the gap between generative AI and a traditional search experience. This will likely be all that's needed to maintain the vast majority of its user base, indicating that the market's concerns are overblown.

All three of these companies have fairly straightforward investment theses, but why are they the best buys now?

The valuations of these three vary widely

As mentioned above, knowing that Nvidia trades for around $160, TSMC for $230, and Alphabet for $180 is one thing, but understanding their valuation is a much more important part of investing. Valuation focuses on how much of a company's earnings (or other financial metric) the stock price represents.

If you just looked at the dollar figures, you would assume that Nvidia is the "cheapest" stock. But when you assess its forward price-to-earnings ratio (P/E), it's the most expensive.

NVDA PE Ratio (Forward) data by YCharts.

Nvidia's stock is quite expensive at 37 times forward earnings, but it's expected to undergo huge growth over the next few years as the AI race goes on. This will make today's stock price look less expensive, so I'm not concerned about it appearing significantly more expensive than the other two.

TSMC's stock is nearly in line with the market average. The S&P 500 is a suitable comparison since it provides investors with the valuation of the total stock market.

The S&P 500 trades for 23.2 times forward earnings, which is slightly cheaper than TSMC. If the company can grow its earnings at a quicker pace than the market average (around 10% annually), then the stock could actually be considered cheap because it's slated to deliver greater growth.

Management expects revenue to have a compound annual growth rate of nearly 20% over the next five years, which far exceeds the broader market's long-term rate. As a result, I believe TSMC is an excellent stock to consider here.

Lastly, there is Alphabet, which is drastically undervalued compared to the market. Apprehension about its future is largely driving this because its most recent results were impressive, with revenue rising 12% and diluted earnings per share increasing 49% year over year.

I think the fears surrounding Alphabet's stock are overblown, and I wouldn't be surprised if it rises back to at least a market-average multiple. Because of that, it's an excellent buy today.

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.

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*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. Keithen Drury has positions in Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Key Points

• Nvidia and TSMC are benefiting from the AI build-out.

• Alphabet's stock price appears undervalued.

• Meta Platforms is going all-in on integrating AI.

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

This has been an interesting year so far for stocks. At the time of writing, the broad market is up around 7%, which would normally be considered a stellar performance for the first half of the year. A lot has happened between the start of 2025 and now, and there are some questions about how much further the market can rise.

Still, I think there are a few excellent investment options out there that are poised to deliver strong multi-year growth, making them great buys now, even if they appear a little expensive. By shifting your focus from the next few months to the next few years, you can pick up shares of stocks now at prices that will look cheap down the road.

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Here are four excellent stocks to consider now.

1. Nvidia

Nvidia (NASDAQ: NVDA) remains one of my top stock picks to buy despite its incredibly strong multi-year run. Demand related to artificial intelligence (AI) is still growing and expected to continue increasing for some time. The company's graphics processing units (GPUs) remain the industry standard for AI computing, positioning it well to capitalize on future growth.

Nvidia cited a third-party projection in its latest conference for developers, stating that global data center capital expenditures were $400 billion in 2024, but are expected to rise to $1 trillion by 2028. Should that projection come true, Nvidia's sales are expected to continue increasing rapidly over the next few years, making it a great long-term investment to consider now.

2. Taiwan Semiconductor

Taiwan Semiconductor Manufacturing (NYSE: TSM) is also riding the wave of AI demand, and management has made several bold predictions for the next five years. TSMC's management team is well-positioned to make these predictions, as it is the primary chip supplier for many of the top tech companies, including Nvidia. Over the next five years, they anticipate their AI-related revenue will grow at a 45% compound annual growth rate (CAGR).

That's a huge rise, but there are still other parts of TSMC's business that aren't AI-related. As for overall company growth, management believes its CAGR can approach 20%, which is still impressive, considering Taiwan Semiconductor's size.

TSMC is poised to deliver substantial growth over the next five years, making it a savvy move to scoop up shares now.

3. Alphabet

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is easily one of the most disliked tech stocks on the market these days. In the past quarter, it delivered excellent revenue growth of 12% alongside a 49% rise in diluted earnings per share. That's significantly better performance than most other big tech companies, and yet the market has priced Alphabet's stock at a dirt cheap level.

GOOGL PE Ratio (Forward) data by YCharts

At less than 19 times forward earnings, Alphabet trades at a significant discount to the S&P 500, which sits at 23.2 times forward earnings. Alphabet's stock trades at a discount because the market assumes that its primary business, the Google Search engine, will be disrupted by generative AI.

While generative AI has certainly challenged Alphabet, it's an error to say that it has been defeated. Google has integrated AI search overviews, which millions have used as an alternative to a full generative AI experience. Additionally, Google Search's revenue rose by 10% in the last quarter, which showcases its strength in the current environment.

Alphabet's stock may take some time to recover and trade at normal big tech valuations, but if it does, the gains will be substantial, making Alphabet a compelling stock to consider now.

4. Meta Platforms

Social media giant Meta Platforms (NASDAQ: META) has made significant investments in AI. CEO Mark Zuckerberg has laid out a roadmap for where he thinks generative AI will take Meta, and it will undoubtedly be a significant boost to results.

Meta Platforms derives most of its revenue from sites like Facebook and Instagram, and integrating AI into those platforms is key to maintaining its status as a must-advertise area. The company offers several generative AI products that make ads more tailored to viewers and can be easily created for advertising clients.

Additionally, Meta is focusing on leveraging the power of AI to make the company more efficient, which could significantly reduce operating costs by deploying a team of AI agents that can perform the work of a mid-level engineer.

These two catalysts should drive top-line growth and make the company more efficient, supercharging Meta's earnings growth over the next few years. This makes the stock an excellent choice to consider buying now, as its earnings growth is expected to drive significant stock price appreciation.

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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. Keithen Drury has positions in Alphabet, Meta Platforms, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Key Points

• Investors are worried about Google's falling market share.

• The Google Search engine saw its revenue rise 10% in Q1.

• The stock sits at a historically cheap valuation today.

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is one of the biggest bargains on Wall Street right now. Its valuation has seldom reached this level over the past decade, which should prompt investors to start asking questions about why it has become so cheap.

I think this valuation drop is largely due to overblown fears regarding generative AI, and investors need to understand the true impacts of generative AI on the broader population, rather than just a few niche cases. If you can do that, then it's clear that Alphabet's stock has substantial value right now.

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 »

Google Search engine is still putting up excellent growth

Alphabet is the parent company of Google, and its most valuable property is the Google Search engine. More than half of Alphabet's revenue comes from this division, so ensuring its success is critical to the long-term success of the overall company.

However, many investors are convinced that the rise of generative AI technologies could render Google Search obsolete. Many investors point toward Google's search engine market share dropping below 90% for the first time since 2015 as a warning sign, but they are ignoring some blatant facts.

First, its market share remains quite strong, still holding at 87% as of June. If you surveyed any company in America about whether they'd be satisfied with an 87% market share, you'd be hard pressed to find a respondent who said "no." Google Search remains the dominant search engine, and it has become practically synonymous with using the internet.

Second, Google has rolled out its AI search overviews, which seamlessly integrate generative AI technology alongside the familiar search interface. While this feature has had some hiccups, it's overall a great addition. For now, it will likely be all the improvement needed for the vast majority of the user base to stick with Google versus another search engine or a generative AI tool. There will be some defectors, but given how long generative AI tools have been around, many of the people who will replace their internet search habits may have already made the switch.

Lastly, this drop in market share hasn't shown up in Alphabet's results yet. In the first quarter, Google Search's revenue rose 10% year over year. This doesn't sound like a company that's suffering from a shrinking audience, and it leads me to believe that the fears of Alphabet's demise are way overblown. As a result, I believe it's time to view the stock as a potential buying opportunity.

Alphabet's valuation is historically cheap

Alphabet's stock trades for 19.9 times trailing earnings, a level that it has only traded at once over the past decade.

GOOGL PE Ratio data by YCharts

The last time it reached this point, at the end of 2022 and the start of 2023, the market was convinced that the economy was heading into a recession, and every single stock had sold off to a pretty cheap valuation. However, the market is currently at a high valuation point and has left Alphabet behind.

As a result, this is the only time in the past decade that Alphabet has been this inexpensive compared to the broader market. The S&P 500 index trades at 24.1 times trailing earnings, indicating Alphabet is trading at a hefty discount to the broader market.

Since Alphabet has not traded at such a deep discount to the market for so long, I believe that now is a once-in-a-decade opportunity to pick up Alphabet shares at an extremely attractive price.

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

Before you buy stock in Alphabet, 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 Alphabet 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 $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!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% 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 30, 2025

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

Key Points

• Alphabet's valuation is significantly lower than its peers.

• Taiwan Semiconductor's management expects monster growth over the next few years.

With the market at or near all-time highs, finding so-called dirt cheap stocks isn't always easy; however, there are plenty of examples out there. Two stocks that I'd consider dirt cheap are Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Taiwan Semiconductor Manufacturing (NYSE: TSM). Each has a different reason for being labeled as cheap, but I think both qualify.

Both of these stocks look like great bargains and can be bought confidently today without fear of losing a ton of money.

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 »

Alphabet

Alphabet is the parent company of Google, alongside other notable brands such as YouTube, Android, and Waymo. However, Alphabet's stock is unloved by the market due to its core business, Google Search. Investors are convinced that the Google Search engine will be a loser in the artificial intelligence (AI) arms race. But that hasn't come to fruition yet.

In Q1, Google Search, the largest part of Alphabet's business, saw revenue increase 10% year over year. That doesn't sound like a failing business to me.

While some may argue that this is still in the early innings of generative AI rollout, these technologies have been available for use for many years. Google has already introduced AI search overviews, and this feature is likely enough AI for the vast majority of users. As a result, I think the fear of Google being replaced is overblown.

Additionally, the rest of Alphabet's businesses are performing well, helping to propel the entire company to 12% revenue growth in Q1, along with 49% diluted earnings-per-share growth. Those are impressive figures, but the market doesn't value Alphabet's stock very highly. The stock trades for a mere 18.6 times forward earnings.

GOOGL PE Ratio (Forward) data by YCharts

Compared to the S&P 500 (SNPINDEX: ^GSPC), which trades for 23.2 times forward earnings, Alphabet's stock looks far cheaper. I expect Alphabet's stock to at least revert to a market-average valuation, if not more, if it can continue its excellent earnings growth throughout 2025 and beyond. As a result, I believe Alphabet can be considered a relatively inexpensive stock that is worth buying now.

Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing, also known as TSMC, is the leading chip foundry, having achieved this position by offering leading technology alongside best-in-class production yields. This has caused nearly every major tech company that relies on chips to partner with the company, exposing it to the largest growth trends, such as autonomous vehicles and AI computing power.

This has led to strong growth for TSMC over the past few years, but it's not done yet.

Due to Taiwan Semiconductor's market position, its management has an excellent understanding of what chip demand looks like for the years ahead, as chip orders are placed years in advance. This prompted TSMC's management to issue bold guidance at the start of 2025, predicting that AI-related revenue would increase at a 45% compound annual growth rate (CAGR) over the next five years. That means that AI-related revenue will increase by 541% over the next five years.

However, that isn't the companywide growth rate. For that, management estimated it would approach a 20% CAGR. That still indicates 148% growth over the next five years. Considering the long-term average growth rate for the market is 10%, that would provide massive outperformance.

Still, TSMC's stock recently traded for 24.7 times forward earnings, which is only slightly more expensive than the broader market. However, if a stock is valued at nearly the same level as the market yet is projected to vastly outgrow it, then that indicates a potentially undervalued stock.

I believe Taiwan Semiconductor is one of the top stocks to own moving forward, and its market-average stock price, combined with market-crushing growth, makes it a great stock to buy right now.

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

Before you buy stock in Alphabet, 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 Alphabet 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 $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!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% 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

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keithen Drury has positions in Alphabet and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Key Points

• Alphabet's stock trades at a deep discount to its peers.

• Alphabet's revenue and earnings growth are near the top compared to other "Magnificent Seven" stocks.

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) has been one of the most hated big tech stocks in the market over the past year. Despite posting consistently solid results, the market doesn't respect Alphabet's current business out of fear of what could happen to it. The primary question revolves around how Alphabet's legacy business (Google Search) will fare with the rise of generative AI.

Investors are assuming that Google Search revenue will tumble, taking Alphabet's stock with it. However, that hasn't happened, and I doubt it will. I think Alphabet can deliver shareholders monster returns over the next two years through a combination of a few factors.

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 »

Alphabet's stock is far cheaper than its peers

Alphabet trades at a significant discount to other members of the "Magnificent Seven" cohort on a forward price-to-earnings (P/E) basis (Tesla has been removed from this chart because it trades for more than 160 times forward earnings).

GOOGL PE Ratio (Forward) data by YCharts

Now, some stocks deserve a premium valuation, such as Nvidia, because it is growing its revenue and earnings at a rapid pace. However, I'd argue that other companies, like Microsoft and Apple, don't deserve nearly the premium due to their growth rates.

During the first quarter, Alphabet's growth rates, both in terms of revenue and earnings per share (EPS), were quite strong (I omitted Nvidia from this chart due to its rapid growth skewing the data).

GOOGL Operating Revenue (Quarterly YoY Growth) data by YCharts

Alphabet's revenue growth was in the middle of the pack, but much closer to second place than it was fourth place. Additionally, its EPS growth was the second-best of the five companies.

If I presented you with this information alone, you'd assume that the multiple Alphabet assigned should be in the middle to high end of this cohort's range. However, it trades at about a 50% discount to the second-cheapest member of the cohort, Meta Platforms.

So, what could happen if Alphabet receives a respectable multiple?

Alphabet could provide monster gains if it rises to an average valuation

The remaining four companies in the analysis (Microsoft, Apple, Meta Platforms, and Amazon) trade for an average of 31.3 times forward earnings. Should market conditions remain the same and Alphabet climb to 31.3 times forward earnings to be at the average valuation, the stock would rise by 68%.

Now, that 68% doesn't include any growth that Alphabet will experience over the next few years; that's just for reaching the same valuation level as its peers. This will be a tall task to accomplish, as the market appears to be convinced that Alphabet will face some challenges ahead. However, I think it's underestimating the staying power that Google has and how the average person will be perfectly content using Google's AI search overviews for their AI model. This should keep Google at the top of its game and allow it to continue growing its revenue at a steady double-digit pace for the foreseeable future.

It may take a few years for the market to come to its senses regarding Alphabet stock, but it will be a significant outperformer if it does. As another fun fact, if Alphabet were assigned a 31.3 times forward earnings multiple at today's prices, it would be tied with Microsoft as the second-largest company in the world by market cap.

Alphabet appears to be one of the top big tech companies to buy today. It's posting just as good as results (if not better) than its peers, yet trades at a huge discount. If Alphabet can continue posting strong results, the market will eventually come around to see that Alphabet is worthy of the same premium as its peers. By buying today, you can take advantage of a large discount and enjoy significant returns as Alphabet's valuation rises to match that of its peers.

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

Before you buy stock in Alphabet, 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 Alphabet 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 $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!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% 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

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. Keithen Drury has positions in Alphabet, Amazon, Meta Platforms, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• Palantir's growth in the government sector has been outstanding.

• The company could receive a significant boost from growing European demand for artificial intelligence (AI).

• However, the stock's valuation has become excessively high.

Palantir Technologies (NASDAQ: PLTR) has been one of the top-performing stocks since the start of 2024, rising nearly 700%. It has also been a top performer in 2025, rising 80% so far. Palantir's business has been booming alongside the artificial intelligence (AI) arms race. With no signs of AI spending slowing down, investors are speculating that Palantir's stock could eventually reach a $1 trillion market capitalization.

Palantir's current valuation hovers around $320 billion, so the stock would need to more than triple to cross that threshold. But can that happen over the next decade?

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 »

Palantir is seeing phenomenal growth in multiple sectors

Palantir offers AI-powered data analytics solutions that help decision makers make the best choice possible. Originally, Palantir began with government clients, but it has also expanded into the commercial sector over the past few years.

Although commercial revenue has grown significantly, government revenue still makes up the majority of Palantir's total revenue. In Q1, government revenue was $487 million, and on the commercial side, it was $397 million. Government revenue is also rapidly increasing, rising 45% year over year. The U.S. government increased at the same rate as international, indicating widespread adoption of Palantir's products worldwide.

However, that story is completely different on the commercial side. U.S. commercial revenue rose 71% year over year in Q1, while overall commercial revenue rose 33%. This indicates global AI adoption (specifically in Europe) lags the U.S., but that story could change over the next few years. That could rapidly accelerate and cause Palantir's impressive 39% growth rate to rise even further.

Palantir bulls point to this as a reason why the stock could reach a $1 trillion valuation by 2035. However, the bears have another key point to consider, and it could derail the entire investment thesis.

Palantir's stock is overvalued

One thing that should raise a red flag for investors with Palantir's stock is its 700% rise alongside its 39% growth rate. Those two figures are completely mismatched, indicating that Palantir's stock might be overvalued.

After evaluating Palantir's price-to-sales valuation, this fact is confirmed.

PLTR PS Ratio data by YCharts

Most software companies trade at a multiple of 10 to 20 times sales. The best companies with rapid growth rates can trade upwards of 30 times sales. However, Palantir's stock is more than three times that level. Achieving nearly 110 times sales is practically unheard of in the stock market, and if a stock ever reaches that valuation, it usually only does so when it's doubling or tripling its revenue year over year. Even then, some of those companies crash from a high valuation.

Even if Palantir gets a boost from rising European revenue, I don't think it's going to be enough to propel its stock to a reasonable level. Multiple years of revenue growth are already baked into the stock price. For Palantir to achieve a still very expensive but far more reasonable price tag of 30 times sales, it would require 363% revenue growth from today's levels.

As a result, I don't think Palantir can triple its stock price over the next decade because it's going to spend the first part of it growing into the extremely high valuation it has now. Investors need to be cautious because high expectations are already baked into the stock price; any misstep could cause the stock to tumble back to reality.

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 $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!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% 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

Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

Key Points

• Palantir's international commerce growth is lacking.

• Management has a consistent history of underguiding and overdelivering.

• The stock has a couple of years of growth already priced in.

Making projections about where a stock will be in five years isn't easy, but it's required in investing. The foundational idea of investing in stocks is identifying a stock that is currently undervalued and will become more valuable in the future. While some traders may set a price target for a month or a year away, long-term investors prefer to focus on a three to five-year time frame, as it allows the business to succeed and lets the market properly value the stock.

One of the most popular AI stocks in the market is Palantir Technologies (NASDAQ: PLTR). Palantir delivered excellent returns over the past few years, and investors want to know if it's too late to get in. Let's take a look at Palantir's five-year outlook and see if it's a smart buy today. The answer may surprise you.

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 »

Palantir is showing excellent growth in three of its four segments

Palantir rose to the top of the AI investing world due to its rapid growth and experience in the space. The company began in the early 2000s by offering its AI-powered data analytics software to government entities, but expanded into the commercial sector over the past few years. Government-sourced revenue remains the majority of Palantir's total, but the commercial side is rapidly gaining.

In Q1, Palantir's government revenue increased 45% year over year to $487 million. The growth rate was the same in the U.S. and internationally, indicating that this segment is experiencing healthy growth and adoption worldwide. However, commercial adoption outside the U.S. is slow.

Commercial revenue growth companywide was 33% in Q1, bringing Palantir's total to $397 million. In the U.S. specifically, commercial revenue jumped a whopping 71% and totaled $255 million. This highlights a couple of key facts. First, Palantir's U.S. commercial revenue growth needs to continue at its rapid pace for the stock to keep delivering huge growth. Second, if international commercial revenue starts to accelerate, Palantir's overall growth could really pick up speed.

The biggest region to watch for Palantir's international growth is Europe, which significantly lagged behind the U.S. in AI adoption. However, that could change in the coming years and provide Palantir a second growth catalyst.

Looking ahead in the short term, Palantir's management expects Q2 revenue growth of 38%, a slowdown from Q1's 39% growth. However, investors shouldn't read too much into that, as management has a consistent track record of beating internal expectations. For the full year, it expects revenue of $3.896 billion, representing a 36% increase.

That's still a slight deaccelerating trend, but it could be reversed by increasing international commerce growth. But will that be enough for the stock to deliver strong returns over the next five years?

The stock has incredibly high expectations baked into it

The biggest challenge Palantir's stock faces over the next few years isn't European growth or government revenue; it's the unbelievably high expectations already baked into the stock price. Palantir's stock currently trades for 106 times sales, a level that's practically unheard of for a company growing as "slowly" as Palantir is.

PLTR PS Ratio data by YCharts

I say "slowly" because most companies that achieve a valuation of 100 times sales or greater are at least doubling, if not tripling, their revenue year over year. Palantir isn't even close to that, which raises some red flags.

Most software companies trade between 10 and 20 times their sales, with the best-performing companies reaching a multiple of 30 times sales. For Palantir to return to a still very expensive but far more reasonable 25 times sales, its stock price would have to remain flat and its revenue would have to increase by 422%. Even if we accelerate Palantir's revenue growth from the mid- to high-30% range all the way to 50%, that would take approximately 3.5 years of growth to return to a more sustainable level.

That's nearly all of the five-year period we're examining Palantir's stock for. I believe this indicates how overvalued Palantir's stock is, and I expect the stock to remain relatively flat over the next five years, as nearly all of the growth has already been factored into the stock's price. As a result, I think investors are better off finding other AI stocks that don't have the same expectations built into them.

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 $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!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% 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

Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

In the fledgling field of quantum computing, IonQ (NYSE: IONQ) has emerged as one of the leading start-up investment options. It holds key contracts with top players in the quantum computing field, like the Air Force Research Lab, and offers top-notch technology.

Although it's far from a surefire bet, is this quantum computing start-up the best chance at transforming a meager investment into $1 million? After all, quantum computing has the potential to transform high-powered computing. Let's take a closer look.

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 »

1. IonQ's error correction is among the best

Quantum computing can potentially be an absolute game changer in the high-powered computing world. It lets users tackle problems they've never been able to fully model before (like weather patterns and logistics networks), but it also could have massive implications for artificial intelligence (AI). Quantum computing could deliver huge value for whichever company can win the quantum computing arms race, but each competitor must solve a key problem first: errors.

Unlike traditional computing, quantum computing doesn't have a clear black-and-white answer. While traditional computers use bits to transmit information, which can only be in the form of a 0 or a 1, quantum computing uses qubits. While qubits collapse down to a 0 or a 1 when measured, they can exist in a state between 0 and 1 during the calculation process. This opens up many possibilities within a calculation, which is why quantum computers could perform better at workloads with thousands of possibilities.

The best way most companies have found to deal with this error issue is to let the qubits interact with each other to reduce errors. While many competitors have placed their qubits in a grid-like system to let the qubits interact with their neighbors, IonQ has taken it a step further. They use all-to-all connectivity, which lets every qubit interact with every other qubit. This leads to unparalleled 2-qubit gate fidelity, and IonQ's process already has greater than 99.9% fidelity.

This shows that IonQ has already made a fantastic start on the most critical problem with quantum computing, which is why it has several key partnerships.

2. IonQ holds several critical contracts

IonQ holds one of the largest contracts in quantum computing with the U.S. Air Force Research Lab, a facility known for testing cutting-edge technologies. This indicates that quantum computing is not just a future technology; it can be used in its current state.

To further support this option, IonQ hardware is available for use on the three major cloud computing providers: Microsoft Azure, Alphabet's Google Cloud, and Amazon Web Services. With IonQ's hardware becoming more widely available, it's making key progress in this race. If it can differentiate itself from its competitors and start to capture a customer base, it could create a foothold that would be hard to disrupt.

3. There's a huge market opportunity for quantum computing

To circle back to the original question, can IonQ be a millionaire-maker stock? I'm not sure. There's a huge market for quantum computing in the future, but it's not that large right now. IonQ estimates that the market opportunity will reach $87 billion by 2035, but it's unlikely that one company will capture that complete market share.

Even if IonQ captures 50% of it and generates around $40 billion in annual revenue, that's still less than another key quantum computing competitor, IBM. IBM is about a $270 billion company -- about 27 times the size of IonQ.

So, can IonQ transform $10,000 into $1 million? Likely not. But can IonQ deliver strong stock performance if it wins the quantum computing arms race? Absolutely. However, this is far from a surefire bet, as the field is ripe with potent competition, and IonQ still has years to go before proving commercial relevancy.

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 $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% 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. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, International Business Machines, 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.

The market has been quite unpredictable in 2025. Even if you knew the majority of the news headlines before they occurred, you still may not have been able to guess the market's direction a few weeks or months after they came out. As a result, a dip could happen any moment, and investors need to be ready to pounce (depending on what the dip is caused by).

By doing the work before the dip occurs, investors can remove emotion from investing, as they've already done the legwork to know what stocks to buy and how much they're buying.

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 »

I'll be scooping up two stocks should the market dip: Nvidia (NASDAQ: NVDA) and Amazon (NASDAQ: AMZN). Both are excellent long-term picks, but they aren't necessarily cheap right now. Should the market sell off, these will be among the first two companies I add to my position in.

1. Nvidia

Nvidia makes best-in-class graphics processing units (GPUs). GPUs were originally designed for processing gaming graphics, which were some of the most intense workloads in the late '90s and early 2000s. While they excelled in this area, they eventually displayed uses in other sectors, like engineering simulations, drug discovery, or cryptocurrency mining. Essentially, if there was a workload that required a lot of computing power, GPUs were deployed to process it.

In the past few years, one workload type has become the main source of GPU use: artificial intelligence. AI requires a lot of computing power to train the model and process prompts, and multiple companies built training clusters with 100,000 or more GPUs in them. While there are alternatives to Nvidia's products, it has dominated the data center market, with many estimates pegging Nvidia's market share at 90% or greater.

We're nowhere near the computing capacity necessary to use AI on a large scale, so Nvidia GPUs will continue to be bought in mass quantities, which is a great sign for long-term investors. Even right now, I'd be comfortable buying Nvidia's stock due to its long-term projections and current valuation of 33 times forward earnings.

NVDA PE Ratio (Forward) data by YCharts

Should the market dip even further, Nvidia will be the stock that I load up the most on, barring a headline that directly affects Nvidia. We're still in the early innings of AI deployment, and Nvidia's stock has a long way to go as a result.

2. Amazon

Amazon was directly affected by many tariff headlines this year. A decent amount of Amazon's goods come from China, so the large tariff levies on goods from that country will undoubtedly affect its e-commerce business.

However, Amazon is much more than the commerce business that most consumers are familiar with.

In my eyes, Amazon Web Services (AWS), its cloud computing division, is the most exciting part of Amazon's business. Cloud computing is benefiting from two tailwinds right now: AI workloads and a general shift to the cloud. Most business workloads are still run with on-site hardware, which can be expensive to maintain. However, by shifting these workloads to the cloud, businesses can be more flexible and not worry about maintaining expensive on-site hardware.

On the AI front, cloud computing firms like AWS are getting a huge boost because most companies don't have the in-house computing power to train or run AI models, so they rent that computing power from a provider like AWS.

Both the AI and general computing workloads are a multiyear trend and will likely play out over the next decade. This is such a big deal for Amazon because the majority of its profits come from AWS. In Q1, AWS accounted for 63% of Amazon's total operating profits, despite accounting for just 19% of revenue.

Because of AWS's higher margin than its commerce division counterparts, Amazon's overall profit margin will continue growing as AWS makes up more of Amazon's total revenue. This trend makes Amazon a smart long-term buy, although the stock is a bit expensive at 34 times forward earnings.

Should Amazon dip on more tariff-related headlines, I'll be there to scoop up shares, as AWS is far more important and resilient than its e-commerce business.

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

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*Stock Advisor returns as of June 9, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.