Key Points

• The maximum taxable earnings limit will increase in 2026, so some workers will have more pay withheld to cover Social Security taxes.

• Social Security's full retirement age (FRA) will increase in 2026, so workers born in 1959 will reach FRA at 66 years and 10 months.

• Social Security beneficiaries will receive a cost-of-living adjustment (COLA) in 2026; the trustees estimate benefits will increase 2.7%.

• The $23,760 Social Security bonus most retirees completely overlook ›

Social Security benefits are often the most important source of income for retired workers. However, many Americans misunderstand aspects of the program, and knowledge gaps can lead to poor financial decisions.

For instance, surveys from DepositAccounts and the Nationwide Retirement Institute suggest most people aged 45 to 60 think Social Security will run out of funding in their lifetimes. But the program is primarily funded by payroll taxes, so it can't run out of funding unless all Americans stopped working.

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Nevertheless, hundreds of thousands of workers claim retirement benefits as soon as possible (i.e., age 62) each year. Some choose this because they mistakenly believe Social Security is headed for bankruptcy. However, that strategy generally backfires because starting Social Security at the earliest claiming age will result in a permanently reduced benefit.

Changes are made to Social Security each year to keep benefits aligned with inflation and wages. Here are three changes coming in 2026 that may surprise some retirees.

Image source: Getty Images.

1. Some workers will pay more in Social Security taxes in 2026

Nationwide Retirement Institute reports 74% of surveyed adults incorrectly marked the following statement false: "Workers pay Social Security taxes on all of their income." That is a common misconception. While the program receives most revenue (more than 90%) from a payroll tax deduction, the amount of income subject to that tax is limited by law.

Importantly, the maximum taxable earnings limit generally increases each year to account for increases in the average wage. For instance, the payroll tax applies to $176,100 in 2025, which is up from $168,000 in 2024.

Workers generally owe 6.2% of earnings below the maximum, but any income above the limit isn't taxed. Someone who makes $200,000 this year will owe the same amount as someone who makes $2 million.

The Social Security Board of Trustees estimates the maximum taxable earnings limit will be $183,600 in 2026, in which case, the maximum amount someone could owe in taxes would be $11,383.20, up from $10,918.20 in 2025. Consequently, anyone with earnings above the taxable maximum in both years will owe an extra $465 next year.

2. Social Security's full retirement age will increase in 2026

MassMutual reports that 45% of adults nearing retirement do not know their full retirement age (FRA), which is the age at which workers receive their full Social Security benefit amount (also called the primary insurance amount). Workers who claim Social Security before FRA will get a smaller benefit, and those who claim after FRA (but no later than age 70) will get a bigger benefit.

In 1983, Congress passed a series of amendments to keep the Social Security Trust Funds solvent, one of which gradually raised the FRA from 65 to 67 over a 22-year period, which started with workers who turned 62 in 2000. The impact of that change is still rippling through the population today. For instance, workers born in 1959 will reach FRA at 66 years and 10 months next year. And workers born in 1960 will reach FRA at 67 in 2027.

3. Social Security benefits will get a cost-of-living adjustment (COLA) in 2026

Nationwide Retirement Institute reports 66% of surveyed adults incorrectly marked the following statement false: "Social Security is not protected against inflation." But benefits are indeed protected from inflation by cost-of-living adjustments (COLAs) that have been paid out annually since 1975.

The Social Security Board of Trustees estimates retired workers will receive a 2.7% COLA in 2026. In that scenario, the average monthly benefit would increase from about $2,007 in July 2025 to $2,061 in January 2026. That means the average retired worker would receive an additional $54 per month, or $648 for the full year.

COLAs are based on how the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)) changes in the third quarter of the previous year. For instance, CPI-W inflation measured 2.5% in the third quarter of 2024, so Social Security benefits increased 2.5% in 2025. The third quarter ends in September, so the Social Security Administration won't announce the official COLA for 2026 (or finalize any other change I've discussed) until mid-October.

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Key Points

• Most Wall Street analysts view Roku as undervalued; the median target price of $105 per share implies 28% upside from its current share price of $82.

• Roku is the leading streaming platform in the U.S., Canada, and Mexico, and The Roku Channel is the fifth-most popular streaming service in the U.S.

• Roku recently formed an exclusive partnership with Amazon, giving media buyers that use Amazon's ad buying platform more precise targeting capabilities.

• 10 stocks we like better than Roku ›

A handful of billionaire hedge fund managers purchased shares of Roku (NASDAQ: ROKU) in the first quarter. Here's a look:

• Cliff Asness at AQR Capital Management added 467,005 shares of Roku, increasing his stake sixfold though it remains a small position.
• Stanley Druckenmiller at Duquesne Family Office bought 493,600 shares of Roku, starting a modest position that ranks among his 30 largest holdings.
• Chris Rokos at Rokos Capital Management bought 54,690 shares of Roku, starting a new and relatively small position.
• Steven Schonfeld at Schonfeld Strategic Advisors bought 68,886 shares of Roku, starting a new and relatively small position.

Wall Street analysts generally agree Roku is undervalued. The median target price is $105 per share, which implies 28% upside from its current share price of $82. Here's what investors should know.

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Image source: Getty Images.

Roku is the most popular streaming platform in North America

Roku is the leading streaming platform in North America as measured by hours streamed, and Roku OS is the best-selling TV operating system in the United States, Canada, and Mexico. In addition, The Roku Channel is the fifth most popular streaming service in the U.S., behind only Alphabet's YouTube, Netflix, Walt Disney, and Amazon Prime Video.

Put simply, Roku is ideally positioned to benefit as advertisers spend more on connected TV (CTV). Some readers may be surprised to learn traditional TV advertising is still a larger market than CTV advertising, and it's expected to be the larger market until 2028. But CTV ad spending is forecast to grow at 12% annually through 2029, according to eMarketer.

Jeremy Deal, portfolio manager at JDP Capital Management, writes, "The Roku operating system and The Roku Channel are valuable assets that are highly under-monetized today." Deal says The Roku Channel alone is probably worth more than the entire company's current market value, implying Roku is materially undervalued today.

Roku's recent partnership with Amazon could be a meaningful growth driver

Roku in June announced an exclusive partnership with Amazon. While Amazon's demand-side platform (DSP) is not the only media buying platform with access to Roku inventory, it is the only one that can use a custom identity solution to recognize logged-in viewers across the Roku platform in the United States.

A press release from Roku explains, "This exclusive capability enables advertisers to reach the same viewer deterministically across different streaming channels and devices." The upshot for investors is brands on Amazon DSP can now target and measure ad campaigns with greater accuracy. In other words, Roku is now a more compelling place for marketers using Amazon DSP to spend their advertising dollars.

Roku highlighted the benefits following an early test of the integration, "Advertisers using this new solution reached 40% more unique viewers with the same budget and reduced how often the same person saw an ad by nearly 30%, enabling advertisers to benefit from three times more value from their ad spend."

Roku stock trades at a reasonable valuation

Roku currently trades at 2.7 times sales, a discount to the two-year average of 2.8 times sales. That valuation looks quite reasonable for a company whose revenue is forecast to increase at 12% annually through 2027, especially when that consensus estimate leaves room for upside.

As mentioned, CTV ad spending is forecast to grow at 12% annually through 2029, and Roku is well positioned to benefit given its status as the most popular streaming platform in North America. To that end, its revenue could certainly grow faster than 12% annually with help from its Amazon partnership. Long-term investors should feel comfortable buying a small position in this growth stock today.

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

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Trevor Jennewine has positions in Amazon and Roku. The Motley Fool has positions in and recommends Alphabet, Amazon, Netflix, Roku, and Walt Disney. The Motley Fool has a disclosure policy.

Key Points

• Severe tariffs recently reinstated by President Trump have pushed the average tax on U.S. imports to its highest level in decades.

• Trump fired the Bureau of Labor Statistics (BLS) commissioner after insinuating the latest nonfarm payrolls numbers were fake.

• The combination of severe tariffs, questions about economic data integrity, and already high valuations could lead to another stock market crash.

• 10 stocks we like better than S&P 500 Index ›

The U.S. stock market has taken investors for a bumpy ride this year. The benchmark S&P 500 (SNPINDEX: ^GSPC) fell as much as 19% from its record high when President Donald Trump announced sweeping "Liberation Day" tariffs on April 2, but the index swiftly rebounded when he paused the duties for 90 days.

However, Trump just gave investors two reasons to worry about another market crash: He recently reinstated modified versions of the severe tariffs announced earlier this year, and he fired the Bureau of Labor Statistics commissioner in a way that threatens to politicize the independent agency responsible for gathering economic data.

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Here's what investors should know.

Image source: Official White House Photo by Andrea Hanks.

President Trump recently reinstated severe tariffs that raise the average tax on U.S. imports to its highest level in decades

Trump recently reinstated the reciprocal tariffs first announced on April 2. After a monthslong pause, during which the U.S. struck trade deals with a few countries, the new duties took effect on Aug. 7. Listed below are the tariff rates on top U.S. trading partners.

1. European Union: 15%
2. Mexico: 25%
3. China: 30%
4. Canada: 35%
5. Japan: 15%

Importantly, Canadian and Mexican imports in compliance with the free-trade agreement are not subject to tariffs listed above. Also, the 30% tariff on Chinese imports excludes pre-existing duties, and the rate is subject to change depending on the outcome of ongoing trade talks, which should conclude in the coming days.

The Budget Lab at Yale estimates tariffs have increased the average tax on U.S. imports to 18.6%, the highest level since 1933. Economists at Goldman Sachs and JPMorgan Chase put the figure closer to 17%, but the big picture is the same: The U.S. government is taxing imports at a rate not seen in nearly a century.

The consequences are difficult to predict due to the lack of historical data, but economists generally expect a one-time increase in inflation and a persistent drag on gross domestic product (GDP). For instance, the Budget Lab at Yale estimates tariffs will lower GDP growth by 0.5 percentage points in the next two years, and the Tax Foundation estimates tariffs will reduce GDP by 0.8% over the next decade.

That could sink the stock market because economic turbulence would lead to weaker corporate earnings. Consequently, Wall Street analysts have cut their earnings estimates for the S&P 500. The January consensus called for 14% growth in 2025, but the current consensus calls for 9.6% growth. And that number may be revised even lower after the dismal nonfarm payrolls report released earlier this month.

President Trump fired the BLS commissioner after the agency released concerning nonfarm payrolls numbers

Recent data from the Bureau of Labor Statistics (BLS) suggests tariffs are starting to hurt the labor market. Nonfarm payrolls, which measure the number of employees across the U.S. economy excluding farm workers, increased 73,000 in July. That was a huge miss versus the consensus estimate that called for 110,000.

Even more alarming were the downward revisions to nonfarm payrolls data from previous months, as detailed below:

• Nonfarm payrolls were originally reported to have increased 144,000 in May, but that figure was revised down to 19,000.
• Nonfarm payrolls were originally reported to have increased 147,000 in June, but that figure was revised down to 14,000.

Revisions are commonplace because surveys used to estimate the number of workers in the economy continue to roll in for weeks after the initial report. But Trump, without offering evidence, asserted the latest downward revisions were a politically motivated attack. He reacted by firing BLS Commissioner Erika McEntarfer.

In some ways, that decision is even more worrisome than the dismal nonfarm payrolls numbers themselves. JPMorgan analyst Michael Feroli commented, "The risk of politicizing the data collection process should not be overlooked." And Barclays analyst Ajay Rajadhyaksha wrote, "This move could lead to markets questioning data integrity, especially for releases that surprise investors."

In short, investors now have cause to wonder whether the next BLS commissioner will manipulate data to make Trump happy. After all, McEntarfer seemingly lost her job simply because the agency released data that frustrated the president, as it suggested the labor market was weakening in response to his tariffs and the uncertainty they have created.

The S&P 500's elevated valuation means the stock market is on shaky ground

To summarize, Trump has imposed the most severe tariffs the U.S. economy has seen in decades. In turn, Wall Street analysts have substantially reduced their S&P 500 earnings estimates, and further downward revisions are possible (if not likely) following the latest nonfarm payrolls report.

Meanwhile, Trump created more uncertainty by firing the BLS commissioner while asserting without evidence the latest nonfarm payrolls numbers were phony. That begs the question: Will investors wonder if future BLS data has been manipulated? If so, the consequences for the stock market could be disastrous.

Those events are particularly worrisome because the S&P 500 already trades at a very rich valuation of 22.2 times forward earnings. Historically, the S&P 500 has dropped 6.4% in the year following incidents where its forward price-to-earnings multiple topped 22, according to hedge fund manager Leon Cooperman.

In short, the stock market would be on shaky ground without tariffs or questions about data integrity, but those variables make the current situation especially precarious. So, investors should mentally prepare for a decline. That means avoiding stocks that trade at absurd valuations and building a modest cash position.

Should you invest $1,000 in S&P 500 Index right now?

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JPMorgan Chase is an advertising partner of Motley Fool Money. Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and JPMorgan Chase. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.

Key Points

• Only 23 companies in the S&P 500 achieved 10x returns in the last decade, but Upstart could make the cut in the next 10 years.

• Upstart uses artificial intelligence to help banks assess the creditworthiness of potential borrowers and make better lending decisions.

• Wall Street expects Upstart's adjusted earnings to grow at 66% annually through 2027, which makes the current valuation look reasonable.

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

A stock must increase 900% to generate a 10x return. Only 23 companies in the S&P 500 (SNPINDEX: ^GSPC) accomplished that during the last decade. But Upstart Holdings (NASDAQ: UPST) more than tripled in value in the last year, and I think it could be a 10x investment over the next decade.

Here's what that implies for shareholders: Upstart currently trades at $79 per share and has a market value of $7.5 billion. The stock must increase 900% to $790 per share to achieve a 10x return. That would bring its market value to $750 billion.

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Here's what investors should know about Upstart.

Image source: Getty Images.

Upstart uses artificial intelligence to help banks lend money

Upstart operates an artificial intelligence (AI) lending platform built to improve access to affordable credit for consumers, while reducing costs for banking partners. Most lenders make credit decisions with simple rules-based systems that incorporate a limited number of variables. But Upstart uses sophisticated machine learning models informed by 2,500+ variables to determine whether borrowers are creditworthy.

Internal studies have show banks on Upstart's AI platform can approve more borrowers at lower interest rates without an increase in defaults. Alternatively, banks can reduce defaults while approving the same number of borrowers. Either way, lenders benefit from improved profitability. The average Upstart loan originated in the last two years is on track to outperform the two-year Treasury yield by 7.1 percentage points.

Importantly, Upstart says it has a "significant competitive advantage" in that the machine learning models supporting its platform benefit from a network effect, which makes the decisioning engine more accurate each time a borrower makes or misses a payment. The number of data points used to train those models has increase over fourfold since 2022.

Upstart looked strong in the second quarter

Upstart reported encouraging second-quarter financial results that beat estimates on the top and bottom lines. Revenue increased 102% to $257 million and non-GAAP net income was $0.36 per diluted share, up from a loss of $0.17 per diluted share in the same quarter last year. The company also raised its full-year guidance, such that revenue is projected to increase 65% in 2025.

Management provided important context on the earnings call. First, new products (home equity lines of credit and auto loans) accounted for over 10% of total originations for the first time. Second, loan volume held on the company's balance sheet jumped 25% to $1 billion, but most of those loans are considered R&D expenses, meaning the company uses them to test and evaluate AI models.

Importantly, CFO Sanjay Datta says increased loan volume on the balance is a temporary situation. "We have already begun the process of securing external capital to support these initiatives, and we believe these efforts will allow us to transition away from direct balance sheet funding of these in the near-term."

Why Upstart could be a 10x investment over the next 10 years

Upstart currently trades at 90 times adjusted earnings, which sounds expensive without more information. But Wall Street estimates the company's adjusted earnings will increase at 66% annually through 2027, a sensible estimate given its total addressable market exceeds $3 trillion in loan origination volume.

For context, loans originated on Upstart's AI platform totaled $8.6 billion over the last four quarters, meaning the company has captured less than 1% of its addressable market. That leaves room for earnings to grow at 40% annually over the next decade. And in that scenario, Upstart stock could advance 900% while its price-to-earnings multiple dropped to a more reasonable 32.

Importantly, investors should bear in mind that (1) my prediction is rather aggressive and (2) predicting what might happen over a 10-year period is virtually impossible. But I think Upstart is likely to beat the market over the next decade even if the stock does not increase 10 times in value. Patient investors that can tolerate volatility should feel comfortable buying a small position today.

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Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Upstart. The Motley Fool has a disclosure policy.

Key Points

• Certain Wall Street analysts anticipate substantial gains in Bitcoin in the remaining months of 2025 due to growing institutional and corporate adoption.

• The number of large asset managers with positions in the two largest spot Bitcoin ETFs has more than doubled in the past year.

• Bitcoin has declined 20% from a record high three times during the last three years, and investors should expect similar volatility in the future.

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

The iShares Bitcoin Trust (NASDAQ: IBIT) is an exchange-traded fund that tracks the price of Bitcoin (CRYPTO: BTC). The fund is run by BlackRock, the largest asset manager in the world. Bitcoin currently trades at $115,000. But several Wall Street analyst have made predictions that imply big gains in the remaining months of 2025.

• Geoff Kendrick of Standard Chartered says Bitcoin can hit $200,000 this year. That implies 74% upside from its current price. Kendrick also believes Bitcoin can hit $500,000 in 2028.
• Peter Chung of Presto recently told CNBC Bitcoin can hit $210,000 this year. That implies 82% upside from its current price.
• Tom Lee of Fundstrat Advisors thinks Bitcoin can hit $250,000 this year. That implies 117% upside from its current price. Lee also believes Bitcoin can eventually reach $3 million.
• Josh Olszewicz of Canary Capital recently told Schwab Network Bitcoin can hit $300,000 this year. That implies 160% upside from its current price.

Here's what investors should know about the iShares Bitcoin Trust.

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Image source: Getty Images.

More institutional investors are adding Bitcoin to their portfolios

Boston Consulting Group says institutional investors had about $130 trillion in assets under management (AUM) last year. If even a small percentage of that total were allocated to Bitcoin, its price could increase substantially in the future. And spot Bitcoin ETFs like the iShares Bitcoin Trust have been a powerful catalyst for institutional adoption since winning approval from the SEC in January 2024.

To elaborate, spot Bitcoin ETFs let investors add exposure to the cryptocurrency through existing brokerage accounts, which means they avoid the high fees and complexity that comes with trading on cryptocurrency exchanges like Coinbase. Moreover, SEC approval has legitimized Bitcoin in the eyes of institutional investors.

Recently filed Forms 13F show an important trend: The number of large asset managers (i.e., those with $100 million in securities) with positions in the two most popular spot Bitcoin ETFs -- the iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund -- more than doubled during the first quarter. Investors have good reason to believe that trend will continue.

President Trump vowed to make the United States the "crypto capital of the world" during his campaign last year, and his administration has already brought big changes to the regulatory environment. Cryptocurrency advocate Paul Atkins is now the SEC chairman, and in March, Trump signed an executive order establishing a Strategic Bitcoin Reserve.

Another reason institutional investors are likely to become more involved in cryptocurrency is the asset class (now worth a collective $3.8 trillion) has simply become too big to ignore. And Bitcoin is the most logical starting point because it is the largest, most liquid, and best-known cryptocurrency, according to Bitwise CIO Matt Hougan.

More public and private companies are putting Bitcoin on their balance sheets

More than 200 public and private companies have added Bitcoin to their balance sheets, and the number of Bitcoin they hold has increased 85% since Trump won the presidential election in November, according to Bitcoin Treasuries. Strategy (formerly MicroStrategy) is the best known, but Block, Mara Holdings, Semler Scientific, Tesla, and Trump Media also have large positions in the cryptocurrency.

Importantly, I think more companies will add Bitcoin to their balance sheets in the years ahead for the same reasons discussed in the previous section: Spot Bitcoin ETFs have made adoption easier, cryptocurrency as an asset class is too big to ignore, and the regulatory environment under the Trump administration is much friendlier than under the Biden administration.

Bitcoin has declined sharply on several occasions in the past

Investors should bear in mind the forecasts I've discussed are nothing more than educated guesses. There is no guarantee that Bitcoin becomes more valuable in the future. And even if the forecasts are entirely accurate, gains are likely to be interspersed with periods of sharp declines. Bitcoin has fallen more than 20% from a record high three times in the last three years, and similar volatility is probable in the future.

I think patient investors comfortable with those risks should have a position in Bitcoin, and the iShares Bitcoin Trust -- which bears an expense ratio of 0.25% -- is a relatively cheap and easy way to get that exposure.

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 1,026%* — a market-crushing outperformance compared to 180% for the S&P 500.

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Trevor Jennewine has positions in Tesla. The Motley Fool has positions in and recommends Bitcoin, Block, Semler Scientific, and Tesla. The Motley Fool recommends Coinbase Global and Standard Chartered Plc. The Motley Fool has a disclosure policy.

Semiconductor company Nvidia (NASDAQ: NVDA) has been a shining star of the artificial intelligence (AI) boom. The stock has advanced more than 800% since January 2023, and the Trump administration's recent decision not to enforce the so-called Framework for AI Diffusion could lead to more share price appreciation.

Image source: Getty Images.

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The Commerce Department rescinded the Framework for AI Diffusion

The Commerce Department during the final days of the Biden administration announced the Framework for Artificial Intelligence (AI) Diffusion, far-reaching rules that limited or prevented the sale of advanced semiconductors in most countries, including some United States allies.

Importantly, the AI Diffusion framework expanded on previously imposed export controls by dividing countries into three tiers with varying degrees of access to U.S. technology:

• First-tier countries were allowed to import advanced AI chips without limit; this group includes 18 close allies, such as Australia, Canada, France, Germany, Japan, South Korea, Taiwan, and the United Kingdom.
• Second-tier countries were permitted to import a limited number of advanced AI chips; this group included most of the world, even countries that were generally on good terms with the U.S., such as India, Israel, Saudi Arabia, Singapore, and Switzerland.
• Third-tier countries were prohibited from importing advanced AI chips; this group included arms-embargoed geographies like China, Iran, North Korea, and Russia.

Nvidia slammed the AI Diffusion rule in a blog post:

Built on American technology, the adoption of AI around the world fuels growth and opportunity for industries at home and abroad. That global progress is now in jeopardy. The Biden administration now seeks to restrict access to mainstream computing applications with its unprecedented and misguided 'AI Diffusion' rule, which threatens to derail innovation and economic growth.

The AI Diffusion rule was set to take effect on May 15, 2025, but the Trump administration this week chose to scrap the framework. The Commerce Department said the AI Diffusion rule would have stifled American innovation and undermined diplomatic relations with dozens of countries. Instead, Citigroup analysts think the Trump administration will negotiate export rules on a country-by-country basis.

Nvidia recently struck AI infrastructure deals with Saudi Arabian companies

President Trump recently toured the Middle East, during which a number of U.S. technology companies struck deals with Saudi Arabia that would been complicated or prohibited by the Biden administration's AI Diffusion framework. Nvidia is one of those companies, but the list also includes AMD, Alphabet, Amazon, and Super Micro Computer.

Nvidia and Saudi Arabian company Humain will collaborate to build AI data centers. The initial phase will involve 18,000 Nvidia Grace Blackwell superchips -- which combine Grace CPUs and Blackwell GPUs -- and InfiniBand networking. Additionally, Humain will deploy Nvidia's Omniverse simulation software to test physical AI solutions.

Nvidia will also collaborate with the Saudi Data & AI Authority (SDAIA), a government agency that aims to position Saudi Arabia as a global leader in artificial intelligence. SDAIA will deploy 5,000 Nvidia Blackwell GPUs to build a sovereign AI factory, meaning secure data center infrastructure not controlled by foreign countries.

Importantly, many investors had largely written off the Middle East as a significant source of GPU demand due to the AI Diffusion rules. So, the recent rescission is good news for Nvidia shareholders because it opens a new market for the company. But Nvidia is still facing headwinds. Most notably, the Trump administration recently restricted the sale of H20 GPUs to China.

Wall Street says Nvidia stock is worth buying

Wall Street is overwhelmingly optimistic where Nvidia is concerned. Among the 69 analysts who follow the company, 87% have a buy rating on the stock and the median target price is $160 per share. That implies 18% upside from the current share price of $135.

Importantly, Wall Street's consensus estimate says Nvidia's adjusted earnings will increase 46% over the next four quarters. That makes the current valuation of 45 times earnings look quite reasonable, especially because the company beat the consensus earnings estimate by an average of 7% in the last four quarters. Patient investors who want more exposure to Nvidia should consider buying a few shares today.

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In the first quarter, hedge fund billionaire Israel Englander of Millennium Management sold 1.2 million shares of Rigetti Computing (NASDAQ: RGTI), reducing his stake in the quantum computing stock by 80%. The sale represented a sharp turnaround from the prior quarter, when Englander purchased 1.4 million shares.

His decision to sell stands out because all six analysts who follow Rigetti have a "buy" rating on the stock. The target prices range from $14 per share to $16 per share, implying upside of 21% to 39% from the current share price of $11.50. Put differently, not one analyst thinks the stock is overvalued at its current price.

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Does Israel Englander know something Wall Street doesn't?

Quantum computers will not replace classical computers for most tasks

Classical computers manipulate binary digits (bits) to perform calculations and run operations, but quantum computers manipulate quantum bits (qubits), which can store exponentially more information. That's because bits can only be ones and zeroes, but qubits can be weighed combinations of ones and zeroes.

That a qubit can simultaneously exist as one and zero is called superposition, and that quality lets quantum computers quickly solve certain problems that would take classical computers years. Quantum computers are particularly well-suited to situations with lots of variables interacting in complex ways, such as simulation and optimization problems.

For instance, a quantum computer would be especially helpful in simulating molecules to accelerate drug discovery and material design. It would also be helpful in optimizing supply chains and logistics routes. But quantum computing will never replace all classical computing. "For most kinds of tasks and challenges, traditional computers are expected to remain the best solution," IBM said on its website.

Image source: Getty Images.

Rigetti reported disappointing financial results in the first quarter

Rigetti builds and operates quantum computing systems. The company designed the first multichip quantum processor, and it offers cloud-based quantum computing services. Management says its full-stack approach spanning hardware and software "offers both the fastest and lowest risk path to building commercially valuable quantum computers."

Rigetti reported disappointing first-quarter financial results that missed estimates on the top and bottom lines. Revenue plunged 51% to $1.5 million, and non-GAAP (generally accepted accounting principles) net income was -$0.08 per diluted share. The company also reported net cash used in operations of -$13.6 million. And Wall Street expects Rigetti to continue losing money through at least 2028.

Rigetti Computing stock is incredibly expensive

So, returning to the original question: Does billionaire Israel Englander know something Wall Street doesn't? Not necessarily. He bought shares when Rigetti caught fire in the fourth quarter. But when the stock rocketed to $20 per share early in the first quarter -- representing a 90-day gain of 2,500% -- Englander may have simply decided to take profits.

Meanwhile, the six Wall Street analysts who follow Rigetti, all of whom have a "buy" rating on the stock, are probably counting on investors' willingness to pay a very high valuation multiple to own a prominent stock in the trendy quantum computing industry. But I think investors have gotten way ahead of themselves with Rigetti.

The quantum computing market is projected to grow at 20% annually through 2030, but spending will total just $4.2 billion at that point, according to Grand View Research. Comparatively, the cloud computing market is also expected to grow at 20% annually over the same period, but spending will total $2.4 trillion. Put differently, the cloud computing market will still be about 570 times bigger than the quantum computing market by the end of the decade.

Quantum computing will undoubtedly be an important technology in the future, but that future is still many years away, and Rigetti currently trades at 290 times sales. To put that in context, cloud computing company Cloudflare trades at 30 times sales, which itself is very pricey. But Rigetti is nine times more expensive. Investors should avoid the stock for now.

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

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

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Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cloudflare and International Business Machines. The Motley Fool has a disclosure policy.

Only a handful of U.S. companies currently have a market value exceeding $1 trillion. They are listed below in descending order based on the upside (or downside) implied by the median 12-month target price set by Wall Street analysts.

• Nvidia (NASDAQ: NVDA) is currently worth $2.7 trillion. The median target price of $175 per share implies 58% upside from its current share price of $111.
• Amazon is currently worth $2 trillion. The median target price of $266 per share implies 44% upside from the current share price of $185.
• Meta Platforms is currently worth $1.3 trillion. The median target price of $750 per share implies 38% upside from the current share price of $544.
• Alphabet is currently worth $1.9 trillion. The median target price of $210 per share implies 34% upside from the current share price of $157.
• Microsoft is currently worth $2.9 trillion. The median target price of $500 per share implies 29% upside from the current share price of $388.
• Apple is currently worth $3 trillion. The median target price of $250 per share implies 26% upside from the current share price of $198.
• Berkshire Hathaway is currently worth $1.1 trillion. The median target price of $487 per share implies 7% downside from the current share price of $524.

Wall Street analysts collectively see Nvidia as the best trillion-dollar stock to buy as of April 12. The 58% upside implied by the median target price exceeds that of the next closest stock (Amazon) by 14 percentage points. Here's what investors need to know about Nvidia.

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Nvidia is the market leader in artificial intelligence accelerators

Nvidia is best known for its invention of the graphics processing unit (GPU). Those chips first revolutionized computer graphics, but they have more recently become the industry standard in accelerating complex data center workloads like artificial intelligence (AI). Nvidia has more than 90% market share in data center GPUs and more than 80% in AI accelerators.

However, the company is truly difficult to compete with because it supplements its GPUs with an unparalleled software development platform called CUDA, which spans hundreds of code libraries, pretrained models, and frameworks that streamline AI application development across use cases that range from recommender systems to generative AI tools.

Additionally, Nvidia supplements its GPUs with adjacent data center hardware like central processing units (CPUs), chip interconnects, and networking equipment. In fact, Nvidia is the market leader in InfiniBand networking, the most popular connectivity solution for AI. That vertical integration lets Nvidia design data center systems with a superior total cost of ownership, according to CEO Jensen Huang.

Headwinds related to DeepSeek and export restrictions are under control

Nvidia has been battling two material headwinds in recent months, but neither should derail the company in the long run. First, when Chinese start-up DeepSeek trained sophisticated large language models with much less computing power than U.S. companies, the market assumed Nvidia's sales would suffer as investments in AI infrastructure slowed. But that has not happened.

Instead, many analysts think more cost-efficient training techniques will increase the demand for Nvidia GPUs by making AI affordable for more companies. Additionally, the emergence of robotics and reasoning models (large language models for complex reasoning) means AI will require 100 times more computing power than anticipated only a year ago, according to CEO Jensen Huang.

The second headwind Nvidia is battling is the chip export restrictions imposed by the U.S. government. But investors recently got some good news on that front. While Nvidia cannot sell its most powerful GPUs in China, the Trump administration has reportedly chosen not to ban the less powerful H20 processors despite the burgeoning trade war, according to NPR.

Image source: Getty Images.

Nvidia should be a major winner as the physical AI revolution unfolds

Generative AI is only the most recent chapter in a longer book. In his keynote speech at the Computex 2024 event, Jensen Huang said, "The next wave of AI is here. Robotics powered by physical AI will revolutionize industries." Through hardware and software innovation, Nvidia is positioning itself to be a big winner as autonomous machines become more prevalent.

Nvidia Isaac is a robotics development platform that lets engineers build applications for industrial manipulation arms, autonomous mobile robots, and humanoid robots. Additionally, Nvidia recently introduced Isaac GR00T, a customizable model for humanoid reasoning and skills. GR00T will accelerate the design of autonomous humanoids, a market Citigroup says may be worth $1 trillion by 2040.

Looking ahead, Grand View Research estimates that spending across AI hardware, software, and services will increase by 35% annually through 2030. Meanwhile, Wall Street expects Nvidia's earnings to increase by 38% annually through fiscal 2027, which ends in January. That makes the current valuation of 37 times earnings look cheap. Patient investors willing to hold the stock for at least three years should feel comfortable buying a position today.

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 $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Citigroup is an advertising partner of Motley Fool Money. 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. Trevor Jennewine has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, 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.

The S&P 500 (SNPINDEX: ^GSPC) peaked in February 2025, then reversed course when the Trump administration began imposing tariffs on foreign goods. Particularly shocking were the reciprocal tariffs President Donald Trump announced on April 2, which would collectively raise the average tax on U.S. imports to its highest level since the early 1900s.

The S&P 500 has since fallen 13% from its record high as Wall Street reacted to the abrupt shift in U.S. trade policy. But on April 9, President Trump paused the reciprocal tariffs for 90 days to allow time for negotiations with individual countries. The only exception was China. The U.S. now charges a 145% import tax on Chinese goods.

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Should investors buy stocks during the 90-day pause? Wall Street expects substantial volatility in the near term, but most analysts think the S&P 500 is headed much higher in the remaining months of 2025. Here are the important details.

The 90-day pause on reciprocal tariffs means 90 more days of stock market volatility driven by uncertainty

Several prominent business leaders have expressed concerns about the tariff schedule that President Trump outlined on April 2. Billionaire hedge fund manager Bill Ackman actually called for a 90-day pause. "I strongly believe launching tariffs on April 9th against the entire world -- massively in excess of what we are being charged -- is a mistake," he wrote.

BlackRock CEO Larry Fink said the U.S. economy is headed toward recession, if not there already, and warned that tariffs could have a more severe impact on inflation than most people anticipate. Fink also speculated that uncertainty created by the 90-day pause has forced companies to pause capital expenditures. Buying property, plants, or equipment is simply not sensible without more clarity on U.S. trade policy.

That uncertainty means many companies will withhold guidance when they report financial results throughout April and May. In turn, the stock market will probably be range-bound yet volatile while investors await more details concerning which goods will be subject to tariffs and to what extent. Case in point, the S&P 500 added over 9% on April 9 when President Trump delayed the tariffs, but it dropped nearly 4% the next day.

However, in a recent CNBC interview, Larry Fink still expressed confidence that companies would continue to allocate capital to data centers, artificial intelligence, and infrastructure, meaning those stock market themes are still viable investment ideas for anyone with a long time horizon. "Long term, I'm less worried about some of these issues. But short-term, I'm petrified by some of these issues," he said.

Image source: Getty Images.

Wall Street has become increasingly pessimistic, but most analysts still see significant upside in the stock market

Wall Street was rife with enthusiasm when the year started. Analysts expected the Trump administration to focus on deregulation and tax cuts to supercharge the economy. Instead, the administration has fixated on trade policy and tariffs to the point where many business leaders and economists now anticipate a U.S. recession.

What makes that particularly remarkable is that President Trump inherited an economy that was "the envy of the world with 2.8% growth last year," according to The Wall Street Journal. However, he seems to have squandered that momentum by not only outlining the most aggressive tariff hikes in U.S. history but also sending mixed messages by whipsawing on policy decisions.

Consequently, Wall Street has become increasingly pessimistic. The consensus full-year earnings estimate for S&P 500 companies has dropped from 14.3% in December to 9.8% in April, according to LSEG. Also, among the 17 investment banks and research firms listed in the chart below, the median year-end forecast for the S&P 500 has been cut from 6,600 to 6,100 during the same period.

Source: Yahoo Finance and Reuters.

Among the 17 investment banks and research firms listed in the chart above, the median year-end target for the S&P 500 is 6,100. That forecast implies 14% upside from its current level of 5,363.

As mentioned, many of the institutions above have downwardly revised their forecasts to account for slower economic growth and higher inflation caused by changes in U.S. trade policy. Expect more downward revisions if the Trump administration reinstates the same tariff schedule following the 90-day pause. However, the stock market could soar if the U.S. can negotiate more favorable terms while duties are delayed.

As things currently stand, many Wall Street analysts think the stock market will generate significant returns in the remaining months of 2025. Indeed, the median target price implies the S&P 500 will approach its previous record high of 6,144 by year end.

Investors should not take those gains for granted -- no one knows what President Trump will decide during the 90-day pause -- and the situation could get much worse if the reciprocal tariffs outlined by Trump take effect once the postponement expires. However, putting money into high-conviction stocks at a measured pace is a sensible decision in the current environment. But that only applies to investors who plan to leave their money in the market for at least three to five years.

Should you invest $1,000 in S&P 500 Index right now?

Before you buy stock in S&P 500 Index, 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 S&P 500 Index 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 $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. HSBC Holdings is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, Goldman Sachs Group, and JPMorgan Chase. The Motley Fool recommends Barclays Plc and HSBC Holdings. The Motley Fool has a disclosure policy.