Key Points

• Airbnb faces regulatory hurdles that management must attempt to overcome.

• The company benefits from significant demographic tailwinds.

• Airbnb is a cash-flow machine and a great stock to own.

• 10 stocks we like better than Airbnb ›

The travel industry is a lucrative but tricky realm in which to do business. This is especially true when it comes to short-term rentals. Navigating local regulations and international expansion while satisfying thousands of hosts and even more guests are a few of the daunting challenges faced by Airbnb (NASDAQ: ABNB), one of the leaders in the space.

Its management is working to increase its cooperation with localities and promote what it views as commonsense regulations while maintaining its ability to operate freely. Still, in some major markets, such as Hawaii, New York City, and Paris, local and state governments have imposed stringent restrictions on how short-term rentals can be operated. Many homeowners' associations also have rules that are unfriendly to owners who want to turn their properties into short-term rentals. However, the news isn't all bad for Airbnb.

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The market it operates in is massive and continues to grow. There are also demographic tailwinds, as younger generations tend to gravitate toward Airbnbs more than their parents. Short-term rentals (labelled vacation rentals on the chart below) make up a significant portion of a market that is forecast to exceed $1.1 trillion by 2029.

Statista.

What does this mean for Airbnb? Cash, and lots of it.

Terrific business model

Airbnb is just a software platform at its core. There is also a customer service element. However, companies in this industry lack the factories, expensive equipment, and other major infrastructure that many other industries have. Property and equipment purchases are often referred to as capex (short for capital expenditures) and reduce the amount of cash a company can keep. Free cash flow is one reason why software companies, such as CrowdStrike (NASDAQ: CRWD) and Palantir (NASDAQ: PLTR), often trade at higher valuations than companies in other industries.

For instance, Intel (NASDAQ: INTC), a semiconductor designer and manufacturer, spent $5.2 billion on capex in its most recent quarter, a whopping 40% of its revenue. Airbnb spent just $14 million last quarter on capex, less than 1% of its revenue. Meanwhile, its free cash flow -- the amount that's left over after operating expenses and capital expenditures -- has soared.

ABNB Free Cash Flow data by YCharts.

The $4.4 billion shown above is 40% of revenue over the same period. A 40% free cash flow margin is an incredible figure and bodes well for shareholders.

Airbnb uses its cash to fund growth initiatives and reward shareholders through stock buybacks, which reduce the number of shares available, thereby increasing the value of each remaining share. Think of a company like a giant pizza, and every share is a slice. If the number of slices decreases, each of the remaining slices represents a larger portion of the pizza. Airbnb has repurchased $3.5 billion worth of its stock over the last 12 months, accounting for approximately 4% of its total market capitalization. It's likely to continue in this pattern for a long time, given its fantastic cash-producing business model.

Is Airbnb a buy?

Since free cash flow is what attracts me to Airbnb, the price-to-free-cash-flow ratio is my preferred metric for valuing the company. Airbnb currently trades for around 20 times free cash flow. This is well under its 2024 high of 29, and slightly below its 3-year average of 22. It is also lower than rival Booking Holdings, which trades for 23 times its own excellent free cash flow. In short, Airbnb is a better value based on cold, hard cash.

Booking Holdings is also a fantastic company and is worth having in a portfolio. However, its market cap is more than twice that of Airbnb's, which means that Airbnb could have an easier time growing faster from here. At this valuation, it is an excellent buy-and-hold stock.

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

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Bradley Guichard has positions in Airbnb and CrowdStrike. The Motley Fool has positions in and recommends Airbnb, CrowdStrike, Intel, and Palantir Technologies. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.

Key Points

• There is a massive market opportunity in conversational intelligence.

• SoundHound AI is winning customers and growing revenue rapidly.

• Investors could make tremendous returns over the next few years.

• 10 stocks we like better than SoundHound AI ›

If you haven't used them yet, you probably will soon. They communicate with you conversationally, take orders, solve customer service issues, and respond to detailed queries. But they aren't human.

I'm talking about AI-powered voice-recognition systems that are popping up across multiple industries, such as restaurants (drive-thru, in-person, and phone ordering), automotive, call centers, smart devices, and others. Statista pegs the addressable market as $8.6 billion this year and nearly doubling by 2030 to $15.9 billion.

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The adoption is likely to be rapid as the technology is perfected. There is simply too much cost savings for companies not to use it. This is the first reason SoundHound AI (NASDAQ: SOUN) could be ready for a massive bull run: tremendous market opportunity.

Major customer wins

SoundHound operates mainly on a recurring revenue model. Customers pay royalties based on usage, per device, or through subscription services, where the payment is made monthly, based on usage or the number of interactions. This is a terrific model. Recurring revenue makes sales and cash flow more predictable and increases the lifetime value of each customer. That is, once SoundHound wins a customer, it will continue to receive revenue until the customer cancels the contract.

And SoundHound is winning customers hand over fist. Plus, it is expanding relationships with current customers who tried the technology and want to expand it to thousands more locations. For instance, SoundHound reported expansions with Firehouse Subs, Five Guys, White Castle, and other food brands, as well as healthcare, retail, and other customers in its last earnings release. Its customer list is impressive and growing, as shown below.

Image source: SoundHound AI.

Gaining customers is the company's No. 1 job right now to feed its recurring revenue model -- and so its recent success is the second reason the stock could catch fire soon.

Financial growth and valuation

The third reason is financial. The stock price is down while revenue is skyrocketing. The stock got ahead of the company's results in 2024. It was up over 1,000% during the year at one point. The price-to-sales ratio hit 110. Once the momentum turned in 2025, the stock price fell nearly 70% and is still more than 50% off its 2024 high. But fortunes are turning.

SoundHound reported a massive 151% year-over-year increase in sales in the first quarter of 2025, hitting $29 million. It also finished with $246 million in cash and no long-term debt. The company isn't profitable yet, but this isn't unusual for a fast-growing tech upstart focusing on investing in its technology and building its customer base.

The result of the stock price crash and revenue ramp is a more attractive valuation. The price-to-sales ratio is now 42, which is still expensive; however, look what happens to it on a forward basis:

SOUN PS Ratio data by YCharts

The stock market is forward-looking investors buying companies based on what they expect in the future. SoundHound stock's price-to-sales ratio has fallen quickly to 29, based on revenue estimates for 2025, and is expected to fall further to 22 based on next year's sales. This also assumes that SoundHound will hit the low end of its revenue guidance in 2025; the company is predicting $157 million to $177 million. This would push the forward price-to-sales ratio down even further.

Suffice it to say, revenue is soaring, and the valuation is getting more and more attractive, which could lead to massive gains for investors over the next few years.

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

Before you buy stock in SoundHound AI, consider this:

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Bradley Guichard has the following options: long January 2027 $20 calls on SoundHound AI. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Key Points

• The Trade Desk stock was crushed on its first earnings miss in eight years.

• However, the market opportunity is massive and continues to grow.

• The Trade Desk is undervalued historically, and its results are excellent.

Streaming viewership surpassed the combined total of broadcast and cable viewership for the first time ever in May 2025. This is a years-long trend that has seen streaming viewership catapult 71% over the past four years -- even as broadcast and cable viewership dropped 21% and 39%, respectively.

Investors should be asking themselves which companies are likely to benefit significantly from the shift of broadcast and cable viewers to streaming services. The Trade Desk (NASDAQ: TTD) is one of them, and its stock is on sale.

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The Trade Desk has a tremendous future

If you're not entirely sure exactly what The Trade Desk does, here it is in a nutshell. The Trade Desk software is a Demand Side Platform, or DSP. This means that it executes programmatic advertising purchases on behalf of its clients.

It works like this: When a website, streaming service, social media platform, or other digital service has ad space to sell, it sends out a bid request. The DSP responds in real time with a bid based on preset criteria for its client's ad campaign. The ad then instantly appears. The Trade Desk adds value to its service by providing its clients with a wealth of useful data.

Image source: Getty Images.

The programmatic ad market is already massive and continues to grow rapidly. Sources estimate that 91% of digital advertising and at least 56% of total global advertising is programmatic. For perspective, global advertising spending is expected to hit $1 trillion this year.

As shown below, programmatic advertising spending is expected to reach $299 billion this year in the U.S. alone and is projected to increase to $414 billion over the next few years.

Statista.

The Trade Desk is poised to benefit greatly, and stockholders should be rewarded handsomely over the long haul.

Is The Trade Desk a buy now?

The Trade Desk stock slumped after it missed its earnings estimates for the first time in eight years in the fourth quarter of 2024; however, the sell-off is considerably overdone. The fall has caused several valuation metrics to dip well below historical averages. For instance, the company's price-to-sales ratio (a common metric to value high-growth technology companies) is 82% off its five-year average:

TTD PS Ratio data by YCharts

The ratio drops under 13 on a forward basis. The market is pricing The Trade Desk like a distressed business, but it is far from that status.

The earnings miss in Q4 2024 was disappointing. However, sales still grew 22% year over year to $741 million in the quarter and 26% for the full year, eclipsing $2.4 billion. The Trade Desk has since reported encouraging Q1 2025 results. Growth accelerated to 25%, with sales reaching $616 million year over year. Operating income nearly doubled over the prior year, going from $28.7 million to $54.5 million.

The company is also on firm financial footing, with $1.7 billion in cash and investments on hand, and current assets of $4.9 billion, compared to $2.7 billion in current liabilities. Common stock of $386 million was also repurchased during the quarter. When a company buys back its stock, the number of shares available decreases, making existing shares more valuable.

In short, The Trade Desk is growing rapidly, in great financial shape, and considerably undervalued, making it look like a great buy for investors right now.

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Bradley Guichard has positions in The Trade Desk. The Motley Fool has positions in and recommends The Trade Desk. The Motley Fool has a disclosure policy.

Just when some were thinking the artificial intelligence (AI) trade was dead, Nvidia (NASDAQ: NVDA) and other big tech stocks knocked their earnings reports out of the park. The fact is that investment in AI technology, data centers, and other infrastructure is booming with no end in sight.

Just last week, Amazon (NASDAQ: AMZN) announced plans to invest another $10 billion in new data centers in North Carolina. Big Tech companies are expected to spend $325 billion this year, a significant increase over the $223 billion invested in 2024. Far from being over, investment in AI is just getting started.

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As you can see below, the AI market is poised to experience significant growth through the end of the decade, and likely well beyond.

Statista

Here are two companies every tech investor should have on their radar.

Nvidia is still king

Nvidia's graphics processing units (GPUs) are critical infrastructure for data centers, and the big tech companies are battling to acquire as many as possible. For example, Elon Musk's xAI supercomputer initially started with 100,000 units, doubled this number to 200,000, and rumors suggest it plans to grow to 1,000,000 units in the future.

Projects like the one mentioned above for Amazon also require untold thousands of GPUs, and there are many of these projects in progress across the U.S. and the world. The incredible demand is not slacking and is the reason that Nvidia's results continue to dazzle.

Image source: Getty Images.

Nvidia's data center revenue grew 73% year over year in the recently announced fiscal first quarter of 2026, reaching $39 billion, while total sales increased to $44 billion, representing 69% growth. As shown below, Nvidia's revenue and cash flow growth over the last few years is nothing short of incredible.

NVDA Revenue (TTM) data by YCharts

There is no indication that the growth won't continue in earnest. Nvidia expects $45 billion in sales for Q2 of fiscal 2026, representing a 50% year-over-year increase. The percentages decrease due to the laws of larger numbers; however, Nvidia will add $15 billion in total sales from Q2 of fiscal 2025 to Q2 of fiscal 2026 by achieving its target.

Nvidia stock currently trades with a price-to-earnings ratio of 46, well below its three-year average of 80. This drops to just 34 on a forward basis. While the exponential gains of the last few years may be over, Nvidia stock will still likely outpace the market, given the high demand for its products and its superior growth rate.

Don't sleep on Amazon's prospects

Pop quiz, investors. What is the biggest challenge that AI faces? If you said managing, processing, and securing data, you are correct! In fact, as shown below, all of the largest challenges center around data in one form or another.

Statista

This means that cloud providers, like Amazon Web Services (AWS), the largest cloud services provider on Earth, have massive growth runways as AI adopters seek data services. AWS is the straw that stirs Amazon's drink, as it accounts for the majority of its profits. In Q1, AWS provided 63% of Amazon's $18.4 billion in operating profits. Sales reached $29 billion, driven by robust 17% year-over-year growth, and the operating margin was impressive at 39%, demonstrating that AWS has excellent pricing power.

Amazon's other revenue streams also posted strong results. Digital advertising stood out with 19% year-over-year growth to $14 billion in Q1 sales. Overall, Amazon achieved 9% total sales growth, with total revenue reaching $156 billion. Net income increased to $17 billion from $10 billion in the same period last year.

The results are simply too good to be ignored. Amazon stock is historically undervalued, despite its stock price being on a general upward trajectory, as shown below.

AMZN data by YCharts

AWS will thrive in the age of artificial intelligence, and so will Amazon. This appears to be an excellent opportunity for investors to purchase shares that are at least fairly valued, and possibly undervalued.

The AI industry is growing rapidly, and these industry titans will continue to benefit tremendously. Economic policy, such as tariffs, remains a wild card that investors should keep an eye on; however, the economy is proving quite resilient, and companies like Nvidia and Amazon are excellent long-term investments that will appreciate long after the tariff drama has run its course.

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

Before you buy stock in Nvidia, 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 $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

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