Key Points

• First, the good news: Most states these days do not tax Social Security benefits.

• For those states that do, it's often with a light touch, like taxing higher-income retirees.

• Still, Social Security benefits may not be as generous as you expect, so plan ahead.

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

"I'm proud to pay taxes in the United States; the only thing is, I could be just as proud for half the money." -- Arthur Godfrey

No one loves paying taxes, but they do keep our schools and courts and other things running. Still, it's worth learning more about our tax system in order to keep as much of your money in your own pocket. That can be especially important when you're retired and living on a limited income.

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Most retirees are lucky when it comes to the taxation of Social Security benefits, as only nine states currently tax them. Don't get too worried if you happen to live in one of them, though, as many tax with a light touch. Here's a closer look at the issue.

The nine states that tax Social Security benefits

Without further ado, here are the nine states:

• Colorado
• Connecticut
• Minnesota
• Montana
• New Mexico
• Rhode Island
• Utah
• Vermont
• West Virginia

There's probably no need to relocate if you live in one of those states (although relocating for retirement can be a smart move for some folks). That's because each state has a different policy and your Social Security benefits may not be taxed much or at all. Some states, for example, exclude those of a certain age or those with incomes under a certain threshold from being taxed much or at all.

For example, in West Virginia, those with federal adjusted gross income (AGI) of $50,000 or less, or couples filing jointly with AGI of $100,000 or less, will not have their Social Security benefits taxed. And by 2026, it's expected that all Social Security income in West Virginia will not be taxed.

Meanwhile, Colorado residents aged 65 and older are exempt from taxes on their Social Security benefits. And a new law is exempting those aged 55 to 64 if their adjusted gross incomes are below certain levels, beginning with the 2025 tax year.

Unfortunately, there's still Uncle Sam...

While most states now exclude Social Security benefits from taxation, that's not the case with our federal government. Your benefits may end up taxed on a federal level -- up to 85% of them, that is:

Filing As	Combined Income*	Percentage of Benefits Taxable
Single individual	Between $25,000 and $34,000	Up to 50%
Married, filing jointly	Between $32,000 and $44,000	Up to 50%
Single individual	More than $34,000	Up to 85%
Married, filing jointly	More than $44,000	Up to 85%

Data source: Social Security Administration.
*Your "combined income" is your adjusted gross income plus non-taxable interest, plus half of your Social Security benefits.

Do note that the table above does not show a tax rate of 50% or 85%. You won't pay 50% or 85% of your benefits in taxes. Instead, those are the portions of your benefits that might end up taxed, depending on your income.

President Donald Trump's One Beautiful Bill Act offers a new deduction of $6,000 for older Americans that can help offset any taxes paid on Social Security benefits.

Before you get very worked up about any taxation of any benefits, know that for most of us, Social Security benefits, while vital, are not that generous. The average monthly Social Security retirement benefit was $2,005 as of June, amounting to about $24,000 annually.

Most of us need to have a good retirement plan in place, arrived at after we estimate how much income we'll need in retirement and how we'll get it. Most of us should be saving and investing effectively for many years to amass hefty nest eggs. It's also smart to set up multiple income streams in retirement -- perhaps from sources such as dividends, annuities, and interest.

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

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.

View the "Social Security secrets" »

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Key Points

• Revenue growth at The Trade Desk is decelerating.

• At the same time, its CFO is leaving the company.

• CEO Jeff Green still sounds confident in the company's strategy.

• 10 stocks we like better than The Trade Desk ›

Shares of The Trade Desk (NASDAQ: TTD) took a dive last week, plunging 39% on Friday after the ad tech company reported numbers that were in line with expectations, but showed that revenue growth was decelerating.

The Trade Desk's revenue rose 19% year over year in Q2 to $694 million, which was its slowest growth rate in its history aside from a brief dip when the pandemic started. For the third quarter, the company indicated revenue growth would slow further, forecasting at least $717 million in revenue or growth of at least 14%. In an environment where digital advertising spend has been strong, that forecast sparked several downgrades from Wall Street analysts.

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However, there was another item in the earnings report that likely compounded the Friday sell-off. The Trade Desk said that Laura Schenkein was stepping down as CFO to be replaced by Alex Kayyal, who is joining the company after serving as a board member for several years. Kayyal was previously an executive at Salesforce and was a co-founder of Hermes Growth Partners, a venture capital firm that was one of The Trade Desk's earliest investors.

The CFO transition

Laura Schenkein, who will reportedly be stepping down on Aug. 21, was with the company for nearly 12 years, serving in a variety of finance leadership positions before becoming CFO in June 2023. Schenkein, who is in her early 40s, is not close to retirement age. And the news release didn't make clear why she is leaving the company. The only hint she gave in her remarks on the earnings call is that she is transitioning to a "new challenge."

Based on that language, she has likely taken a new role at a different company, but that has not yet been announced. Investors may learn where she is headed once Kayyal replaces her on Aug. 21. Schenkein will stay on as a non-executive officer through the end of the year and will work with Kayyal to seamlessly transition responsibilities.

Is it a red flag for The Trade Desk?

Some investors believe that a CFO departure can be a red flag. After all, the CFO has a better sense of the numbers than anybody else at the company, and could choose to jump ship if the business is heading in the wrong direction, or worse, if there are problems with its financial reporting.

There's no immediate indication that anything unscrupulous is taking place with The Trade Desk. While the slowing growth in the business may have contributed to Schenkein's decision to leave the company, this seems like more of a normal executive transition than any reason to be concerned. Despite their reputation as potential warning signs, most CFO transitions are a normal function of business, and they are as common as other executive transitions.

That Schenkein is staying to assist The Trade Desk in the transitional period shows that she isn't being pushed out and that she's leaving on good terms.

What it means for The Trade Desk

This is the second out of the last three earnings reports that has sent The Trade Desk stock plunging. In February, the last time it happened, CEO Jeff Green acknowledged that the company missed its own guidance for the first time as a publicly traded company due to internal errors.

This time around, Green seemed to push back on any assertion from analysts that the company was losing ground to "walled gardens" like Alphabet, Meta Platforms, and Amazon, insisting that the open internet performs better than walled gardens like those above.

Investors seem skeptical of that, however, as several analysts downgraded the stock on the report.

For now, it remains to be seen if The Trade Desk can reaccelerate its revenue growth, but the skepticism seems warranted, given the company's valuation.

Still, the CFO transition isn't the red flag that some investors are making it out to be. Investors should keep their eyes on the underlying business growth as the leading ad tech stock tries to make a recovery.

Should you invest $1,000 in The Trade Desk right now?

Before you buy stock in The Trade Desk, 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 The Trade Desk 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% 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 August 11, 2025

Jeremy Bowman has positions in The Trade Desk. The Motley Fool has positions in and recommends The Trade Desk. The Motley Fool has a disclosure policy.

Key Points

• Healthcare is an important and growing industry with products that are inherently necessary.

• If you are starting early, you can swing for the fences and hope you hit one out of the park, or buy a collection of companies that routinely hit singles and doubles.

• Most investors will be better off finding healthcare stocks that have proven themselves over time, like this trio of high-yielding industry leaders.

• 10 stocks we like better than Medtronic ›

If you are in your 20's you likely have more than four decades ahead of you to invest before hitting retirement. Some might suggest that now is the time to take an aggressive investment stance, but that could entail more risk than you think. Make a big bet on the wrong stock and you could turn thousands of dollars into pennies.

An alternative path that might make more sense is to find a collection of industry leaders in an inherently growth-oriented industry to invest in. The healthcare industry is a great example, since everyone needs medical care and technological advances drive the sector's growth. And, lucky for you, industry leaders Medtronic (NYSE: MDT), Johnson & Johnson (NYSE: JNJ), and Merck (NYSE: MRK) are all attractively priced right now.

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Here's why younger investors might want to buy all three of these healthcare stocks.

1. Medtronic is taking care of some normal maintenance

Medtronic is one of the largest medical device makers on the planet. It has industry-leading positions in the cardiovascular, neuroscience, medical surgical, and diabetes niches. The company's growth has stalled out. That has left Wall Street downbeat on the shares, which trade down around 30% from their 2021 highs. The dividend yield is near historical highs at around 3%.

Why buy this down-and-out stock? Because Medtronic has a long history of surviving through the hard times that every company eventually has to face. The proof of this is its 48 consecutive years' worth of annual dividend increases. That's an incredible streak that places the company just two years shy of Dividend King status. More important today, however, is that management is taking the steps necessary to improve profitability. That includes cutting costs, investing in new technologies and products, and refocusing its business around its most profitable operations. The next big move is the spin-off of the company's diabetes business, which is set to take place in early 2026.

If you don't mind collecting a lofty yield from a company that knows how to survive hard times, Medtronic is a great pick if you are 20 or 65. But if you are 20, you can benefit from decades of business growth and use a dividend reinvestment plan to further compound your returns.

2. Johnson & Johnson will survive the talcum powder mess

Next up on this list is Johnson & Johnson, which is a giant in both the pharmaceutical and medical device spaces. Like Medtronic, it is out of favor with investors. The stock's dividend yield is 3% and toward the high side of the historical yield range. The average pharmaceutical stock has a yield of around 1.4% while the average healthcare stock's yield is roughly 1.8%.

The stock price, however, isn't quite as downtrodden as that of Medtronic, with J&J's price down from its all-time high by roughly 5% or so. That said, there is a material overhang here in the form of talcum powder lawsuits that have been filed against J&J. There are billions of dollars at stake, and the company can't fully discuss the issue with shareholders because of the legal nature of the problem. The uncertainty has left J&J shares to languish a bit. But this Dividend King has increased its dividend annually for over six consecutive decades, showing clearly that it knows how to survive hard times.

To be fair, there are also headwinds to deal with in the company's core operations. The list includes patent expirations and the need to keep bringing out new drugs and medical devices. But those are just normal business fluctuations, much like what Medtronic is dealing with. Adding the legal issue probably makes J&J more appropriate for aggressive investors or those who can stick around for a long time. Like investors in their 20's.

3. Merck has a patent cliff coming up

Medtronic is focused on medical devices. Johnson & Johnson's specialties are medical devices and drugs. Merck is just drugs. And while it doesn't have as long a history of annual dividend increases, at just 15 years, Merck's dividend has trended generally higher for decades. It doesn't exactly stand toe to toe with Medtronic and J&J on the dividend front, but it is still a reliable business that has proven it can muddle through hard times.

It is facing a hard time right now. First, there's a rather negative view of healthcare companies in the market related to political and social issues involving the current administration. Given the importance of healthcare in general, and drugs in particular, this will likely pass. The second problem for Merck is that its growth is heavily influenced by one oncology drug -- Keytruda. In a few years, however, this drug will lose patent protections and Merck will need to have other drugs lined up to make up for the revenue that generic drugs tend to steal away. Merck's pipeline looks a bit weak, so investors are worried it won't be ready for the approaching patent cliff.

That's not unreasonable, but Merck has world-class R&D teams, and it is large enough to buy smaller competitors with attractive products (if it needs to). It is highly likely that it figures out how to deal with the patent issue, like it has many times before. Still, investors are downbeat at the moment, and the stock is off its 2024 highs by nearly 40% and the dividend yield is a historically high 4% or so. If you have the benefit of time, you can buy now and comfortably wait for better days.

The key to the healthcare story

There are two broad ways to play the healthcare sector. You can swing for the fences and buy small upstarts with novel products, hoping that the companies you pick are the ones that end up winning in the market. Or you can buy industry leaders that have proven time and again that they have the wherewithal to survive and thrive over the long term, often buying up the upstarts to benefit from their novel products.

Most investors will be better off focusing on the industry leaders. And, often, the best time to buy industry leaders is when investors are downbeat on their prospects. Which is exactly the case today with industry giants Medtronic, Johnson & Johnson, and Merck. If you buy in while you are in your 20s and hold until you retire (hopefully reinvesting dividends all along the way), history suggests you will end up a very happy shareholder.

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

Before you buy stock in Medtronic, 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 Medtronic 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% 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 August 11, 2025

Reuben Gregg Brewer has positions in Medtronic. The Motley Fool has positions in and recommends Merck. The Motley Fool recommends Johnson & Johnson and Medtronic and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.

Key Points

• Fastenal sells the fasteners used to hold industrial products together.

• The company makes extensive use of technology to ensure that its customers have the bits and pieces they need in a timely fashion.

• Although Fastenal's business model could be considered "boring", the stock has been a growth machine for decades.

• 10 stocks we like better than Fastenal ›

Over roughly the last 30 years, Fastenal's (NASDAQ: FAST) share price has risen by a massive 7,300%. For comparison, the S&P 500 index (SNPINDEX: ^GSPC) rose "only" 1,300% or so over the same span. What's interesting here is that Fastenal's business is, at its core, not very exciting. And yet this "boring" company has managed to be a huge growth machine. But is it worth buying after its latest stock split?

Some of the best investments can be "boring"

Wall Street loves things that involve technology, healthcare, and anything modern and complex. That's fine, but sometimes "boring" businesses can be even more interesting and Fastenal is a great example. This industrial company makes fasteners and other hardware items that get used by manufacturers to hold their products together. It's a nuts and bolts company, which is both a pun and an apt description of the business.

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So why has Fastenal managed to capture the attention of Wall Street? The answer is consistent and rapid growth on both the top- and bottom-lines of the income statement. The shares have advanced so rapidly that Fastenal has had nine stock splits since 1988. That 1988 date is interesting because the stock only came public in 1987, highlighting that it has been a growth story since day one.

The most recent stock split happened in May of 2025. So the question for investors is whether or not Fastenal is still worth buying after the latest split and while the stock price is near all-time highs.

The keys to Fastenal's success

For starters, Fastenal is a much larger company today than when it first came public. That may seem like an obvious statement, but with a market cap of around $54 billion it requires a lot more to move the needle on the revenue and earnings fronts than it did some 30 years ago. So even if Fastenal remains a fast growing business it probably won't be able to put up the same kind of growth numbers in the future as it has in the past.

That said, a big part of Fastenal's growth has long been bolt-on acquisitions. This isn't likely to change in the future. And while it needs either larger or more deals to support growth today, it has the size to take on larger and more frequent deals. It also has the institutional knowledge accrued over decades to both identify good acquisition candidates and integrate them quickly. So there's no reason to believe that this facet of Fastenal's business approach is going to stop being effective.

The next big part of Fastenal's story is technology. Not so much in the products it supplies to its customers, but in how it supplies them. It has evolved into a logistics powerhouse, making sure that its customers have the parts they need when they need them and how they need them. There's a lot going on with the logistics piece, but being so much larger today gives the company the wherewithal to invest in technology that smaller peers can't. And the technology behind Fastenal's business means that new acquisitions can quickly and easily be brought up to speed once they are in the fold. Again, there's no reason to believe that Fastenal's business approach to technology is going to change.

The one problem that investors have to come to grips with is valuation. The company's price-to-sales and price-to-earnings ratios are both well above their five-year averages. And the stock is near its all-time highs. Clearly, Wall Street is very aware of how attractive a business Fastenal has been. But here's the interesting thing, the stock has a habit of going through material weak patches. Twenty five percent, or higher, drawdowns are fairly common for the stock. If you are patient, you can keep this growth machine on your wish list and wait to buy it during one of the fairly normal share price pullbacks.

Is Fastenal worth buying right now?

With such an impressive and consistent history of growth, it is hard to suggest that buying Fastenal today would be a mistake. However, it is still an expensive stock. You'll need to go in thinking in decades and not days if you buy it at current valuations. Most investors will probably be happier if they wait for a drawdown before buying. But if that's the path you take, make sure you plan ahead to buy this stock because buying during a drawdown will mean stepping in while everyone else is selling. That can be difficult if you don't set your mind to it ahead of time.

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

Before you buy stock in Fastenal, 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 Fastenal 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% 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 August 11, 2025

Reuben Gregg Brewer 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

• Nvidia stays red hot, pushing the S&P 500 and Nasdaq toward all-time highs.

• Going forward, gaining trillions in market cap will be easier on a percentage basis.

• The chipmaker’s sustained success depends on a handful of key customers.

• 10 stocks we like better than Nvidia ›

Nvidia (NASDAQ: NVDA) has continued to soar higher after becoming the first company to surpass $4 trillion in market capitalization on July 9. On Aug. 7, Nvidia hit a new all-time intraday high and reached $4.48 trillion in market cap -- just shy of the $4.5 trillion mark.

Nvidia's meteoric rise isn't just a stock story; it's a market story. Nvidia is so large that it can single-handedly move the Nasdaq Composite or S&P 500 with a big gain. Gaining close to $500 billion in market value is like creating a company the size of Netflix out of thin air -- which is saying something, considering Netflix is the 16th-largest S&P 500 component by market cap. As Nvidia and its megacap peers go, so do broader market gains.

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Here's why I fully expect the growth stock to surpass $5 trillion in market value and why Nvidia has a clearly defined runway for future success.

The power of percentages

Three years ago, Nvidia's market value was under half a trillion. It took a medley of investor optimism, earnings growth, and the dawn of a new age in artificial intelligence (AI) to pole-vault Nvidia over $4 trillion in market cap to become the most valuable company in the world. But Nvidia's road to $5 trillion and beyond will be much easier.

Going from $0.5 trillion to $4 trillion is an eightfold gain, whereas going from $4 trillion to $5 trillion is just a 25% gain. It's an unprecedented amount of value creation, but on a percentage basis it's not asking a lot over a few years. However, if Nvidia's earnings growth rate slows, investors may be less willing to pay such a premium price for the stock.

Nvidia commands a price-to-earnings ratio of 58 -- which is far higher than most of its megacap peers. But Nvidia is growing earnings much faster, so it can back up that valuation. However, if Nvidia were to slow down to levels of a company like Microsoft -- which has achieved 15% revenue growth over the last few years with net profit margins around 36% -- then Nvidia's valuation could compress.

The stock's P/E could come down, its earnings growth rate could slow, and it could still be an excellent investment, continuing to hit market-cap milestones. But the bigger question is, where are the earnings going to come from?

Nvidia's "big four"

Arguably the simplest reason why Nvidia can continue steadily growing over time is that its customers are some of the best companies in the world.

In Nvidia's quarterly 10-Q filings, the company typically has a section titled Concentration of Revenue. In Nvidia's most recent 10-Q from May -- which was the first quarter of its fiscal 2026 -- the company said that sales to one direct customer, Customer A, represented 16% of total revenue for the quarter. Customer B was 14%, sales to another direct customer were 13%, and a fourth customer was 11%.

All four customers' revenue was attributable to Nvidia's compute and networking segment -- which is primarily high-performance graphics processing units (GPUs) for data centers and associated hardware and software to handle AI workloads, like products that connect GPUs together and help the system communicate.

Combined, these customers made up a staggering 54% of total quarterly revenue. While Nvidia doesn't directly disclose who these customers are, it's highly likely they are Amazon, Microsoft, Alphabet, and Meta Platforms -- all of which are using Nvidia chips to power their AI data centers, infrastructure, and services.

Outside of these "big four," there are plenty of companies that are rapidly expanding their cloud and AI aspirations, like Oracle through Oracle Cloud Infrastructure. Tesla is a big Nvidia customer, using its chips for its autonomous driving models. OpenAI is also a major indirect customer of Nvidia through the Microsoft Azure OpenAI service, which is a platform for using and developing OpenAI models.

Normally, revenue concentration is a red flag because it means one or two customers can tank results if they pull back on spending. But in the case of Nvidia, it's arguably a strength because its top customers have exceptional balance sheets, growing earnings, and ample free cash flow. In other words, they have the resources and innovation pathways to steadily grow their spending over time, and in turn, contribute to Nvidia's earnings growth.

Nvidia needs AI spending to pay off

Nvidia's road to $5 trillion in market cap will be easier on a percentage basis now that it is hovering around the $4.5 trillion mark. However, for Nvidia to continue being a winning stock, its top customers have to get a worthwhile return on their investments. In other words, the AI market must continue to grow, and Nvidia must lead it from a compute and networking standpoint.

Therefore, Nvidia investors may want to consider connecting the dots by following what its top customers are saying in their investor presentations and quarterly results. If they remain enthusiastic about AI and continue boosting their budgets for it, then Nvidia stands to benefit. However, Nvidia's earnings and stock price could take a big hit if the spending cycle goes from expansion to a slowdown.

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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% 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 August 11, 2025

Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Netflix, Nvidia, Oracle, 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

• Establishing a health savings account can be a great way to tuck away tax-free dollars for retirement.

• Counting on your home to fund a portion of your retirement? Then it's best to learn how much it's worth.

• Making fear-based decisions when the market gets bumpy could mean losing out on gains later on.

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

As you invest for retirement, you're probably aware of errors like waiting too long to invest, cashing out your investment accounts before retirement, and paying high investment fees. They're all rookie mistakes, and anyone can make them. This article covers less obvious mistakes and decisions that could cut into your efforts.

1. Failing to capitalize on health savings accounts

If you're insured by a high-deductible health plan, you may have access to a health savings account (HSA). HSAs are helpful when you have a co-pay or other medical expense to cover, but they're also an excellent, underutilized means of saving for retirement. Here's why:

• Contributions to HSAs are tax-deductible, reducing your total taxable income.
• Withdrawals for qualified medical expenses are tax-free.
• Investment gains grow tax-deferred.
• An HSA is owned by you, meaning you decide how to use it and get to keep it, even if you change jobs or retire.
• Unlike a flexible spending account (FSA), the money in your HSA rolls over yearly, allowing you to save for future medical expenses.
• Many HSAs offer investment options, allowing you to grow your savings.
• After age 65, you can use your HSA for nonmedical expenses without penalty (although you'll still pay taxes on the funds).

By capitalizing on an HSA, you have a fund that not only helps cover medical expenses (leaving you more to invest) but can also grow over time, leaving you with more money in retirement.

2. Failing to find out how much your home is worth

Your home is one of the most significant investments you'll make in life, and you may be counting on your property to provide you with a boost of cash when you need it in retirement. While housing prices remain hotter than ever in many parts of the country, it's dangerous to believe you know how much your home will be worth by the time you decide to downsize or take out a reverse mortgage to pay long-term healthcare expenses.

Even though your home may be worth a lot more than it was before the pandemic, that doesn't mean home values will never cool down or even take a dramatic dip. If you're counting on the proceeds from your home to fund a portion of your retirement, make sure you have a clear picture of how much it's worth. You can start by having it properly assessed by a professional home appraiser.

3. Refusing to minimize risks to your portfolio

If, like many people approaching retirement, you still feel like a 17-year-old, it can be tough to begin slowing down -- in any way. And for some investors, taking on less investment risk feels a lot like slowing down. Generally, financial advisors suggest adopting a more conservative investment strategy as you near retirement. That may mean replacing some of the stocks in your portfolio with "safer" assets such as certificates of deposit (CDs) and bonds.

However, this is not a one-size-fits-all suggestion. If you're as healthy as a horse and come from a long line of people who live well into old age, your financial or retirement advisor can help you create a balanced plan that respects your desire for risk while helping ensure your money lasts through retirement.

4. Making (totally human) knee-jerk decisions

If you've been investing for more than a few years, you know that bear markets are part of the economic cycle. They come and they go. However, when rumors of a bear market begin to swirl, people tend to want to protect what's theirs. Frequently, they attempt to do that by panic-selling assets.

Feel free to rebalance your portfolio during this time, but remember: History shows that financial markets have routinely rebounded from bear markets, posting impressive long-term gains. Investors who sold out during the crisis missed out on the rebound and the impact it could have had on their portfolios.

Financially speaking, there are few things more important than investing for retirement. The goal isn't to be perfect. It's to look back one day and thank yourself for making such well-considered, unemotional decisions.

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

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Key Points

• PubMatic reported solid results, but lower ad spending from a single DSP will hit revenue in the third quarter.

• The company is working on diversifying its DSP mix and investing in high-growth areas like connected TV.

• With a strong balance sheet, PubMatic can ride out the storm.

• 10 stocks we like better than PubMatic ›

Shares of adtech company PubMatic (NASDAQ: PUBM) took a beating on Tuesday following a second-quarter report that was mostly positive, save for one piece of bad news. The stock was down more than 20% in morning trading.

Is this rout an opportunity to pick up shares of PubMatic at a knocked-down price? Or should investors steer clear?

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Plenty of good news

PubMatic, which operates a supply side platform that helps publishers and app developers monetize their content, grew revenue by 6% in the second quarter to $71.1 million. Net dollar-based retention was 102% for the trailing-12-month period, down year over year but still in expansion territory.

Connected TV was a major growth driver, with revenue up more than 50% year over year. The company now works with 26 of the top 30 global streaming companies after adding a major U.S. streamer during the second quarter. Omnichannel video, a broader category that includes CTV, grew revenue by 34% and accounted for 41% of PubMatic's total revenue.

PubMatic's Activate solution, which allows ad buyers to more efficiently buy video ad inventory, is gaining traction. Buying activity on Activate more than doubled from the first quarter, and the company noted that PayPal was a major customer taking advantage of the solution.

While PubMatic's profits declined in the second quarter, free cash flow remained healthy. PubMatic generated $9.3 million in free cash flow in the second quarter, up from $6.9 million during the prior-year period. The company's strategy of owning and operating its own infrastructure allows it to tune capital spending to reflect demand and continually unlock efficiencies. The company's platform processed 78 trillion impressions in the second quarter, up 28% year over year, and the cost per million impressions processed has dropped by 20% over the past year.

Why the stock is tumbling

PubMatic's outlook for the third quarter was lackluster, to say the least. The company expects to generate revenue between $61 million and $66 million, down about 12% year over year at the midpoint.

The main reason for the poor outlook is the expectation of a reduction in ad spending from one of PubMatic's top demand-side platform buyers. PubMatic didn't name the platform, but one Wall Street analyst pointed to The Trade Desk as a likely culprit. It's unclear whether this reduction in spending is a short-term issue, or if it will act as a headwind for multiple quarters.

PubMatic did attempt to assuage investor concerns by detailing its efforts to diversify its DSP partner mix. Ad spending from performance marketers and mid-tier DSPs rose by more than 20% in the second quarter. Going forward, the plan is to continue to diversify the DSP mix and reduce the reliance on a few large DSPs.

Is PubMatic a buy?

While PubMatic's guidance is certainly concerning, the issues with a single DSP likely represent a temporary setback. As PubMatic diversifies its DSP mix and continues to invest in high-growth areas like connected TV, its revenue growth should become less volatile in the future.

One thing to note is that PubMatic has a rock-solid balance sheet. Cash and marketable securities totaled $118 million at the end of the second quarter, and there was no debt to speak of. That cash, plus PubMatic's free cash flow generation, gives the company plenty of breathing room as it works through the disruption caused by a single DSP.

With Tuesday's collapse, PubMatic stock is trading right around its 52-week low with a market capitalization of just $400 million. The bar is extremely low, especially considering PubMatic's cash position, and the company could scale up share repurchases to take advantage of its slumping stock price. PubMatic bought back 3.5 million shares in the second quarter alone, or about 7% of its total share count, and it could repeat that feat in the third quarter and still have no shortage of cash on the balance sheet.

While the market may be spooked by PubMatic's guidance, a strong balance sheet, owned infrastructure that's becoming more efficient with each passing quarter, and the likelihood of the company's current issues being temporary all point to PubMatic stock being a strong buy.

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

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*Stock Advisor returns as of August 11, 2025

Timothy Green has positions in PubMatic. The Motley Fool has positions in and recommends PayPal, PubMatic, and The Trade Desk. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short September 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.

Key Points

• Chip fabricators use ASML's machines.

• Management sees strong growth through 2030.

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

A handful of companies have technological monopolies on some of the world's most important devices. Investing in these companies is a genius move, as they are vital.

One of them, in the artificial intelligence (AI) realm, is ASML (NASDAQ: ASML). ASML makes extreme ultraviolet (EUV) lithography machines used in the chip manufacturing process. Without ASML, the advanced chip technology used today wouldn't be possible. As a result, it's one of the most important companies in the world.

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However, ASML's stock is flat year to date and down around 35% from its all-time high. With other tech giants constantly hitting new all-time highs in the current market, is ASML well positioned to do the same?

ASML's machines are used by foundries worldwide

ASML's technology is vital for cutting-edge chip fabricators. The chip foundry industry has only three major players: Taiwan Semiconductor, Intel, and Samsung. Taiwan Semiconductor has been the biggest winner by far and is constructing new fabrication facilities worldwide to meet rising chip demand, driven by AI, including a $165 billion investment in the U.S. alone. Demand for ASML machines is mainly coming from Taiwan Semi, because the other two have been losing business.

It's no secret that Intel's foundry business has struggled. It's currently losing money, and Intel's CEO has indicated that it isn't willing to invest heavily in the business in an attempt to revitalize it. It will invest in capacity only if it can find a customer first.

Considering Intel's poor track record in the foundry business recently, this is a terrible idea, as Intel needs to showcase its prowess before it can take such an approach. Intel's business will likely continue to deteriorate, which causes a headwind for ASML amid less demand for its cutting-edge machines.

Samsung isn't seeing as much success as TSMC, but it's also not struggling like Intel. Samsung has invested in new plants and recently partnered with Tesla to produce its AI6 chips. This partnership could cause increased demand, leading to more ASML machines being purchased.

With some of ASML's major customers not needing the capacity and TSMC, which is known for pushing ASML's machines to their technological limits, sometimes reluctant to upgrade them, the future isn't as bright for ASML as one might expect.

This pessimism showed up in ASML's financial results. Before Q2 earnings, management was adamant that 2026 would be a growth year, just as it had expected 2025 to be. Now management is taking this stance: "While we are still preparing for growth in 2026, we cannot confirm it at this stage."

That's concerning for investors, which is why ASML's stock has done so poorly. However, the outlook beyond 2026 is still bright, and long-term investors (those willing to hold for at least five years) should still be excited about the stock.

ASML's long-term outlook is still intact

One of the reasons ASML gave that 2026 might not be a growth year was uncertainty about tariffs. ASML is based in the Netherlands, so it is a potential target of U.S. tariffs. Management's commentary regarding 2026 was given before the U.S. and European Union reached a trade deal, so this outlook may shift now that a trade deal framework has been reached.

Regardless, management's long-term outlook of revenue between 44 billion euros and 60 billion euros by 2030 hasn't shifted, so whether the growth comes in 2026 or beyond is irrelevant as long as you're patient.

Over the past 12 months, ASML's revenue totaled 32.2 billion euros, so ASML's revenue could come in at the high end of the projection over the next five years. If it does, there's no doubt that ASML will be a market-crushing stock.

If ASML's revenue comes in on the lower end of that guidance, though, ASML's returns could lag the market's, making it a poor stock pick. Time will tell which of these paths ASML's stock takes, but considering the sheer demand for chips and the stabilization of trade relations, I think it's likely that ASML will come in on the high end of that range, making it an excellent stock to buy today.

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Keithen Drury has positions in ASML, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool has positions in and recommends ASML, Intel, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.

Key Points

• Investment in energy-intensive AI data centers is driving private sector investment in nuclear energy.

• Governments are warming to the option of keeping and growing nuclear power as part of the energy mix.

• 10 stocks we like better than Cameco ›

Cameco's (NYSE: CCJ) management styles the company as a "pure-play investment in the growing demand for nuclear energy," and with good reason. Its mix of uranium mining, nuclear fuel services, and 49% interest in atomic reactor and nuclear plant services company Westinghouse makes it the best stock to buy to play the revival of nuclear power right now. That's a good thing because all the evidence points to momentum building in investment in nuclear power.

Nuclear power investment

After a period when policymakers were committed to the clean energy transition and all things renewable, there's a growing understanding that, while the transition is still taking place, it will take place at a slower pace than many previously thought. That means that energy sources such as gas are going to be a key part of the mix for many years to come.

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The intermittency of renewable energy and its cost also mean that nuclear is becoming an increasingly popular option as a source of carbon-free energy.

It's well understood that power-hungry data center hyperscalers like Microsoft, Alphabet's Google, and Amazon.com are investing in nuclear power to solve their long-term power needs.

Government investment

At the same time, governments across the globe are investing in or reassessing the phasing out of nuclear energy, and that's a green flag I see. Cameco stock recently surged on news of investment in nuclear power plants in the Czech Republic; Belgium voted to pull back on phasing out nuclear energy; and Turkey is building nuclear power plants.

These are just a few examples, and as the momentum grows, investors and analysts may need to start penciling in more optimistic assumptions for Cameco's addressable market. As long as that momentum builds, investors are likely to get behind the stock.

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

Before you buy stock in Cameco, consider this:

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*Stock Advisor returns as of August 11, 2025

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool recommends Cameco 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

• Shares of UnitedHealth Group and Dow Inc. have been beaten down so far that they offer unusually high dividend yields right now.

• Dow Inc.'s reduced dividend payout puts the company in a good position to overcome several challenges facing its industry.

• UnitedHealth Group mispriced premiums going into 2025, but this isn't a mistake it's likely to make in 2026.

• 10 stocks we like better than UnitedHealth Group ›

Investors looking for unusually high-yielding dividend stocks have a couple of interesting options these days. Shares of at least two well-established businesses have been beaten down by more than half from their previous peaks.

Lowered stock prices have raised the average dividend yield investors could receive from Dow Inc. (NYSE: DOW) and UnitedHealth Group (NYSE: UNH) to 5.1% at recent prices. Here's why buying them now and holding over the long run could boost your passive income stream during retirement.

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1. Dow Inc.

Responding to a years-long industry downturn, Dow Inc. lowered its quarterly dividend payout by 50% to $0.35 per share last month. As is often the case, the dividend slash upset the market.

From the closing bell on July 23 through August 11, shares of Dow Inc. lost about 31% of their value. At its beaten-down price, the stock offers a tempting 6.7% yield.

The commodity chemicals that Dow Inc. makes, such as polyethylene, are used to produce consumer goods and their packaging. Generally, a strong economy results in increased demand for its products, and vice versa. Unfortunately, interest rates that rose sharply a few years ago weakened global demand for plastic.

Interest rates aren't the only challenge Dow is facing right now. China has long been a major source of demand for polyethylene and other chemicals that Dow produces. Unfortunately for Dow, China's been ramping up its own supply in recent years.

This year, the threat of new tariffs that change day by day is causing manufacturers all over the world to dial down their activity. Considering the combination of issues affecting Dow Inc. and its peers, slashing the dividend payout was the right move.

Keeping up with its new quarterly payment shouldn't be too difficult. Reducing the payment will give Dow Inc. an extra $992 million annually to help make ends meet.

Last month, Dow announced that it would shut down three facilities in Europe to reduce expenses. In addition to lowering operating costs by shuttering facilities, Dow recently reduced its capital expenditure outlay for 2025 by $1 billion. With lowered expenses, Dow should have little trouble holding dividend payments steady until the basic materials space heats up again.

2. UnitedHealth Group

If there's one thing you can count on, it's increasing demand for healthcare. As America's largest health benefits management business, UnitedHealth Group has been a reliable dividend grower for over a decade.

UnitedHealth Group began paying a quarterly dividend in 2010, and it's been growing rapidly ever since. The company's raised its payout by 342% over the past 10 years.

Fast dividend growers generally offer ultra-low yields, but UnitedHealth Group stock is down by about 50% this year. At its beaten-down price, it offers an unusually high 3.5% yield.

In 2025, UnitedHealth Group took on heaps of new Medicare Advantage patients who visited a lot more healthcare providers than was expected. The company suspended its forward outlook in May, then issued new guidance in July.

This year, UnitedHealth Group expects to earn an adjusted $16 per share. This is heaps more than it needs to meet a dividend payment set at an annualized $8.84 per share.

UnitedHealth Group's new and existing members are racking up higher healthcare expenses than expected, but this is only a temporary problem for the benefits management business. Increasing costs from healthcare providers and increasing costs due to rising usage from members are always passed on to health plan sponsors and patients in the form of higher premiums. Adding some shares of this stock to your portfolio looks like a nearly certain way to boost your passive income stream down the road.

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

Before you buy stock in UnitedHealth Group, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% 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 August 11, 2025

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

Key Points

• SoundHound AI’s second quarter earnings crushed analysts’ expectations.

• The company raised its revenue guidance for the full year.

• But it’s unprofitable, its gross margins are slipping, and its valuations look frothy.

• 10 stocks we like better than SoundHound AI ›

SoundHound AI (NASDAQ: SOUN), a developer of AI-powered audio recognition services, posted its second-quarter earnings report on Aug. 7. Its revenue surged 217% year over year to $42.7 million and exceeded analysts' expectations by $9.8 million. On the bottom line, it narrowed its adjusted net loss from $14.9 million to $11.9 million, or $0.03 per share, which also cleared the consensus forecast by two cents.

For the full year, the company expects its revenue to rise 89%-110%, compared to its previous guidance for 85%-109% growth and analysts' expectations for 97% growth. Those impressive numbers sparked a post-earnings rally, but the stock remains more than 40% below its all-time high from last December.

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Let's see if this volatile AI growth stock is still worth buying.

Why is SoundHound growing so rapidly?

SoundHound's namesake app helps people identify songs with just a few seconds of audio or a few hummed bars. But it generates most of its revenue from Houndify, a developer-oriented platform which enables companies to customize their own voice recognition services.

It's a popular option for businesses which don't want to share their voice data with a tech giant like Microsoft or Alphabet's Google. Its growing list of customers includes automakers like Stellantis, quick-serve restaurants like Chipotle, and tech giants like Tencent. Here's how its revenue, adjusted gross margins, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) have changed since its public debut in 2022.

Metric	2023	2024	1H 2025
Revenue	$31.1 million	$45.9 million	$71.8 million
Revenue Growth (YOY)	47%	85%	187%
Adjusted Gross Margin	76.2%	58.5%	55.3%
Adjusted EBITDA	($35.9 million)	($61.9 million)	($36.5 million)

Data source: SoundHound AI. YOY = Year-over-year.

SoundHound's revenues are soaring, but its acceleration was mainly driven by its acquisitions of the AI restaurant services provider SYNQ3, the online food ordering platform Allset, and the conversational AI company Amelia throughout 2023 and 2024. Without those acquisitions, its core business would have grown at a much slower rate.

As SoundHound expanded, its growing dependence on lower-margin restaurant service revenue, rising cloud infrastructure costs, and high onboarding and customization expenses for its new customers compressed its gross margins. That pressure could worsen if the company relies on more acquisitions to drive its top line growth.

However, SoundHound believes its gross margins will stabilize and improve over the long term as economies of scale kick in and it expands its higher-margin software licensing and royalties segment, which integrates Houndify into cars and other connected devices.

But is SoundHound getting overvalued at these levels?

From 2024 to 2027, analysts expect SoundHound's revenue to grow at a compound annual growth rate of 47% as its adjusted EBITDA turns positive by the final year. But with an enterprise value of $4.14 billion, it already trades at 25 times this year's sales. The company has also more than doubled its number of shares since its public debut, and that dilution should continue for the foreseeable future.

SoundHound's declining margins, steep losses, high valuation, and persistent dilution should limit its upside potential, even as its revenue keeps rising. That might be why Nvidia sold its entire stake in SoundHound earlier this year, and why its insiders sold nearly seven times as many shares as they bought over the past 12 months.

So while SoundHound might be a promising play on the expansion of the "agentic AI" market, investors shouldn't pay the wrong price for the right stock. It could be worth nibbling on at these levels, but I wouldn't accumulate a bigger position unless the company proves that it can grow its business organically and stabilize its gross margins.

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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% 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 August 11, 2025

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Chipotle Mexican Grill, Microsoft, Nvidia, and Tencent. The Motley Fool recommends Stellantis and recommends the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

Key Points

• Datadog offers a growing portfolio of tools to help businesses track the cost and performance of their artificial intelligence (AI) models.

• The proportion of Datadog's revenue attributable to AI customers nearly tripled year over year during the second quarter of 2025.

• Datadog stock remains 32% below its 2021 high, but Wall Street is very bullish on its potential.

• 10 stocks we like better than Datadog ›

Datadog (NASDAQ: DDOG) is a leader in cloud observability. Its platform monitors digital infrastructure around the clock, and immediately alerts businesses to technical glitches so they can be fixed before impacting customers. Whether a business operates in retail, entertainment, or even financial services, this is a critical tool in the digital age because the competition is always one click away.

Last year, Datadog applied its expertise in cloud observability to launch a series of new tools for businesses using artificial intelligence (AI) applications. Based on the company's operating results for the second quarter of 2025, these new products are generating rapid growth.

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 »

Datadog stock peaked in 2021, when a frenzy in the tech sector drove it to an unsustainable valuation. It's trading 32% below its record high as I write this, but the overwhelming majority of analysts tracked by The Wall Street Journal are extremely bullish on its prospects from here. Thirty-one of 46 rate it a buy.

Datadog's new AI products are experiencing rapid adoption

Datadog had around 31,400 customers at the end of the second quarter of 2025, which was a modest 8% increase from the year-ago period. However, 4,500 of those customers were using at least one of its AI products, a count that soared by a whopping 80%.

One of those products is called LLM Observability, and it helps developers track costs, identify technical issues, and even evaluate the quality of the outputs from their large language models (LLMs). These models are at the foundation of consumer-facing AI software applications, and as they grow more complex, observability tools are becoming a necessity rather than an option.

Datadog also offers a monitoring product for businesses using third-party LLMs from OpenAI, which is one of the industry's leading AI developers. It helps them track usage, costs, and error rates across their organization, giving them full visibility when deploying the GPT family of LLMs. Building a model from scratch requires significant financial resources and technical expertise, so more businesses are turning to third-party developers like OpenAI, which will create significant demand for this product over time.

Datadog's revenue growth accelerated in the second quarter

Datadog generated $827 million in total revenue during the second quarter of 2025, obliterating the high-end of management's guidance by $36 million. It represented a 28% increase year over year, which was an acceleration from the 25% growth the company delivered in the first quarter. AI-native customers accounted for 11% of Datadog's Q2 revenue, almost tripling from 4% in the year-ago period, which was a key reason for the solid performance.

The Q2 result prompted management to increase its 2025 revenue forecast by $92 million, to $3.317 billion at the midpoint of its guidance range.

Datadog also had another good quarter on the bottom line, with its adjusted (non-GAAP) net income growing by 7% year over year to $163.8 million. The company's operating costs surged by 36% during Q2, led by a sharp increase in research and development spending, which is why its adjusted profit grew at a much slower pace compared to its revenue.

Datadog will have to spend aggressively if it wants to continue releasing new AI products, which could impact its bottom line for the foreseeable future. This won't be a problem if it leads to accelerating revenue growth over the long term, because it would create an opportunity to generate even higher profits.

Wall Street is bullish on Datadog stock

The Wall Street Journal tracks 46 analysts who cover Datadog stock, and 31 have given it a buy rating. Eight others are in the overweight (bullish) camp, while six recommend holding as I write this. Only one analyst recommends selling.

The analysts have an average price target of $163.66, which implies a potential upside of 25% over the next 12 to 18 months. The Street-high target of $230 points to an even greater potential return of 75%, and while that seems ambitious in the short term, it's certainly on the table in the long run.

Datadog stock is down 32% from its 2021 high, when a frenzy in the tech market -- fueled by pandemic-related stimulus -- drove its price-to-sales (P/S) ratio to an unsustainable level over 60. But the decline in the stock since then, combined with the company's rapid revenue growth, has pushed its P/S ratio down to 15.6. That's a 10% discount to its three-year average of 17.4 (which excludes the exuberant levels from 2021).

DDOG PS Ratio data by YCharts

Datadog looks like an attractive investment right now in August on that basis, and if the momentum in the company's AI revenue persists, the stock might even surpass $230 over the next few years.

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

Before you buy stock in Datadog, 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 Datadog 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% 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 August 11, 2025

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Datadog. The Motley Fool has a disclosure policy.

Key Points

• The exercise equipment maker is coming off four years of declining revenue due to sluggish demand.

• On a more positive note, Peloton is now turning a profit thanks to a series of drastic cost cuts.

• Peloton stock is down 95% from its 2021 peak, but that doesn't necessarily mean it's cheap.

• 10 stocks we like better than Peloton Interactive ›

Peloton Interactive (NASDAQ: PTON) went public in 2019 at $29 per share, and by December 2020 it had more than quintupled to a peak of around $163. Consumers were lining up to buy the company's at-home exercise equipment at the height of the pandemic so they could stay fit while lockdowns and social restrictions were in effect.

But Peloton experienced a collapse in demand when society returned to normal, which led to plummeting revenue and surging losses at the bottom line. The company was even fighting for survival at one point, until management made a series of changes to slow the bleeding.

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Peloton isn't totally out of the woods just yet, but its recent financial results suggest the company will live to fight another day. With the stock down 95% from its all-time high, could this be a good time for investors to buy?

Let's start with the bad news

Peloton has two sources of revenue. First, it sells exercise equipment such as stationary bikes, treadmills, and rowing machines. Second, it sells subscription products that offer virtual classes and other benefits to help fitness enthusiasts extract the most value out of that equipment.

Peloton generated $2.5 billion in total revenue during its fiscal year 2025 (ended on June 30), marking the fourth-straight year that revenue declined after peaking at $4 billion in fiscal 2021. Management's guidance suggests a fifth annual decline could be in the cards, with revenue expected to come in as low as $2.4 billion during fiscal 2026.

Weak equipment sales have been the main source of Peloton's issues. They came in at $3.1 billion in fiscal 2021, but were down to just $817 million in fiscal 2025. Management tried to revive sales by introducing payment plans to create a cheaper entry point for consumers, and by tapping into third-party retailers like Dick's Sporting Goods and Amazon, but these strategic moves haven't offset the raw decline in demand.

Subscription revenue, on the other hand, doubled between fiscal 2021 and 2025 to over $1.6 billion, but the dollar increase wasn't enough to offset the sharp decline in equipment revenue. Plus, Peloton's connected fitness subscriber base (which includes customers who own Peloton's equipment and pay to access virtual classes) is steadily shrinking.

There were 2.8 million members at the end of fiscal 2025, down 6% from the year-ago period. Management is forecasting further declines to start fiscal 2026. Shrinking businesses can't create value for shareholders over the long term, so investors typically avoid them, which is the main reason Peloton stock is down 95% from its all-time high.

Now, here's the good news

In fiscal 2022, Peloton was spending money as if its business would continue to grow. When its revenue actually declined that year instead, it resulted in a staggering $2.8 billion net loss on a GAAP (generally accepted accounting principles) basis. With a dwindling cash balance, the company was on the fast track to bankruptcy at that point, unless it could return to growth or dramatically slash costs.

Since we know Peloton's revenue never returned to growth, cost cuts were the only way to secure survival. Its operating costs totaled $1.3 billion in fiscal 2025, representing a 62% reduction from fiscal 2022, led by cuts to everything from marketing to research and development.

Peloton still lost $118 million on a GAAP basis in fiscal 2025, but the company was actually profitable after stripping out one-off and non-cash expenses like stock-based compensation, generating adjusted (non-GAAP) EBITDA of $403 million for the year.

This is great news because it means Peloton is no longer at risk of going out of business. However, management will eventually run out of costs to cut, so the company's profitability won't be sustainable over the long run unless its revenue starts growing again (or at least stops shrinking).

Is Peloton stock a buy?

Peloton recently laid out a fresh growth plan that includes opening new microstores (small retail locations, usually inside malls) and expanding its pre-owned equipment business to more cities, which helps customers join Peloton at a lower price point. Given the company's track record over the last few years, I would adopt a wait-and-see approach to these changes because there is no guarantee they will yield results.

Until Peloton proves it can deliver sustainable sales growth, it remains a shrinking business, and that will keep a lid on its stock price. Plus, the company's new growth plan also involves cutting operating costs by another $100 million in fiscal 2026, which could actually hurt its ability to grow from here, especially if money is sucked out of areas like marketing.

Therefore, Peloton stock isn't necessarily cheap just because it's down 95% from its all-time high. Investors might want to sit on the sidelines until the company proves it can deliver sustainable growth.

Should you invest $1,000 in Peloton Interactive right now?

Before you buy stock in Peloton Interactive, 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 Peloton Interactive 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

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See the 10 stocks »

*Stock Advisor returns as of August 11, 2025

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Peloton Interactive. The Motley Fool has a disclosure policy.

Key Points

• Twilio’s stock price has dropped nearly 80% from its all-time high.

• The bulls retreated as the company's growth cooled off and it racked up more losses.

• Twilio's growth is finally stabilizing, and its stock looks reasonably valued again.

• 10 stocks we like better than Twilio ›

Twilio's (NYSE: TWLO) stock closed at a record high of $443.49 on Feb. 18, 2021. That was a 2,857% gain from the cloud-based software's company's IPO price of $15 on June 23, 2016, and it would have turned a $34,000 investment into just over $1 million.

But today, Twilio stock trades at around $95. That $34,000 IPO investment would still be worth over $215,000, but it surrendered its millionaire-making gains as the company's growth cooled off, it racked up steep losses, and it dealt with macro and competitive challenges. Could it bounce back and churn a fresh $30,000 investment into $1 million again over the next few years?

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 »

What happened to Twilio over the past few years?

Twilio's cloud-based platform processes integrated text messages, calls, videos, and other communications features for mobile apps. Instead of building those features from scratch -- which can be buggy, time-consuming, and difficult to scale as an app grows -- developers can outsource them to Twilio's platform with just a few lines of code.

Twilio's platform supports some of the world's most popular apps from behind the scenes. If you've ever used Lyft's app to contact your driver or Airbnb's app to message your host, then you've used Twilio's platform. Its platform is also often used to send verification codes through text messages or phone calls.

Twilio initially grew like a weed after its public debut, and it acquired several of its industry peers -- including SendGrid, Segment, and Zipwhip -- to expand its reach and boost its revenue. But over the past three years, its revenue growth decelerated in both organic and reported terms.

Metric	2021	2022	2023	2024
Organic Revenue Growth	42%	30%	10%	9%
Reported Revenue Growth	61%	35%	9%	7%

Data source: Twilio.

That slowdown was caused by the macro headwinds, which drove many companies to rein in their cloud spending; challenging comparisons to the app market's pandemic-era growth, and tough competition from similar cloud-based communications platforms like MessageBird, Bandwidth, and Ericsson's Vonage.

Segment, the subscription-based customer data platform that Twilio acquired in 2020, also grew at a slower clip than its core business, which charges usage-based fees. Twilio's usage-based fees might help it reach a broader range of customers, but they arguably limit its pricing power and give it less room to cross-sell additional services.

On the bright side, Twilio's dollar-based net expansion rate (DBNER), which gauges its year-over-year revenue growth per existing customer, rose by a percentage point to 104% in 2024. That expansion indicates that Twilio's existing customers are still accessing its platform more frequently as their apps host more users -- even if they aren't locked into subscriptions. That figure rose to 107% in the first quarter of 2025 and 108% in the second quarter.

Twilio's growth cooled off, but it narrowed its net loss from $950 million in 2020 to $109 million in 2024 by laying off thousands of employees, reining in its spending, and pausing its acquisitions. Yet it was still besieged by activist investors as it lost its momentum, and its founder and CEO Jeff Lawson stepped down last January.

What will happen to Twilio over the next few years?

Lawson's successor, Khozema Shipchandler, focused on generating slower but steadier growth through Twilio's core communications (voice, messaging, and video) features instead of aggressively expanding its cloud-based ecosystem into adjacent markets. It will also continue to expand its smaller subscription-based Segment and Flex (contact center) services, but it probably won't make any more billion-dollar acquisitions over the next few years.

For 2025, Twilio expects its organic revenue to grow 9%-10%, its reported revenue to rise 10%-11%, and its adjusted operating income to increase 19%-22%. Analysts expect its reported revenue to rise 11% as its adjusted EPS grows 24%. For 2026, they expect its revenue and adjusted EPS to grow 8% and 15%, respectively.

Those growth rates are stable, and its stock still looks reasonably valued at 22 times its forward adjusted earnings. Analysts also expect to turn profitable on a generally accepted accounting principles (GAAP) basis in 2026 as it reins in its stock-based compensation expenses.

Could Twilio generate millionaire-making gains?

Assuming Twilio stabilizes its top-line growth, grows its adjusted EPS at a CAGR of 15% from 2024 to 2030, and still trades at 22 times earnings, its stock price would nearly double to about $187 per share. That rally could turn a $30,000 investment into $60,000 by the end of the decade -- but it wouldn't come close to replicating its millionaire-making gains from 2016 to 2021. So while Twilio might not mint any new millionaires, it could finally bottom out and climb higher again.

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

Before you buy stock in Twilio, 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 Twilio 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% 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 August 11, 2025

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Airbnb and Twilio. The Motley Fool recommends Bandwidth and Lyft. The Motley Fool has a disclosure policy.

Key Points

• Taiwan Semiconductor's growth seems unstoppable as demand for AI chips surges.

• Upstart has beaten the market despite a huge selloff after the Q2 report.

• Meta's hard pivot into AI has drawn considerable investor interest.

• 10 stocks we like better than Taiwan Semiconductor Manufacturing ›

Although many artificial intelligence (AI) stocks have performed well since "Liberation Day" on April 2, the rough start to the year has weighed on many of them. So severe was the drop in some stocks that many continue to lag the performance of the S&P 500 in 2025 despite dramatic recoveries.

Fortunately, a few have managed to outperform the index. Moreover, some even remain solid buys. Investors looking for AI stocks that can continue to perform should consider these names.

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Taiwan Semiconductor

In a sense, the performance of Taiwan Semiconductor (NYSE: TSM) may not come as a surprise. The company dominates advanced semiconductor manufacturing, as competitors such as Samsung and Intel failed to match its technical prowess.

Consequently, top chip design companies such as Nvidia and Apple outsource most manufacturing to TSMC, which holds a 68% market share in the third-party foundry market. Since such companies cannot run AI workloads without its chips, TSMC is one of the most essential companies in the AI industry.

So, it is little wonder that Grand View Research forecasts a compound annual growth rate (CAGR) for the AI chip industry of 29% through 2030. This means that doubts about the economy are much less likely to affect TSMC.

Indeed, one can find little that is sluggish about TSMC's performance. In the first half of 2025, it generated nearly $56 billion in revenue, a 40% increase from year-ago levels. Over the same period, costs and expenses rose 24%. Thus, its net income of almost $24 billion was 60% higher than in the first two quarters of 2024.

It sells at a P/E ratio of 28. That valuation is unlikely to deter investors, considering its rapid growth, and should translate into gains for TSMC stock over time.

Upstart Holdings

The fact that Upstart Holdings (NASDAQ: UPST) is a market beater so far in 2025 may come as a surprise. Its stock lost 19% of its value following Q2 earnings. Additionally, it had posted net losses for years before the current quarter. At one point in the 2022 bear market, it had even lost 97% of its value.

Nonetheless, Upstart is worth following, especially considering its ability to transform the credit scoring market. Fair Isaac's FICO score, the industry standard, has not had a major update since 1989.

In contrast, Upstart's model leverages AI to consider attributes overlooked by FICO. It trained its model on over 90 million data points and is working to increase its advantage in AI during the year. Such efforts have helped it uncover loan opportunities overlooked by FICO without adding to lender default risks.

Moreover, amid a sluggish economy, the Fed appears poised to lower interest rates, which should encourage more consumers to take out loans. So far, it mainly scores personal loans, but expanding into auto and home equity loans should significantly broaden its addressable market.

Due to a modest profit in Q2, Upstart has earned only $3.1 million this year. Still, revenue of $426 million in the first half of the year is up 59% yearly.

Also, recent losses temporarily left it without a price-to-earnings ratio. Still, considering its revenue growth, investors are likely to perceive its forward P/E ratio of 39 as reasonable, making it feasible for interested investors to cash in on this potentially lucrative opportunity.

Meta Platforms

Another company banking heavily on AI is social media giant Meta Platforms (NASDAQ: META). Over 42% of the world's population uses at least one of its social media sites daily.

Amid such saturation, its user base growth slowed to 6%. Thus, to maintain rapid revenue growth over the long term, it leveraged its treasure trove of personal data to help clients train AI models.

In 2025 alone, it pledged between $66 billion and $72 billion in capital expenditure (capex) to compete in this space, investing heavily in technical improvements and data center capacity to maintain its leadership.

Additionally, digital advertising continues to drive growth for now. In the first two quarters of 2025, Meta generated $90 billion in revenue, 19% more than the same period last year. In comparison, costs and expenses grew 10% over the same time, allowing its $35 billion in profit for the first half of the year to rise by 36%.

Despite those increases, Meta's stock sells for around 28 times earnings. Considering its rapid growth and growing role in AI, that valuation should make Meta stock attractive to prospective shareholders.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, 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 Taiwan Semiconductor Manufacturing 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% 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 August 11, 2025

Will Healy has positions in Intel and Upstart. The Motley Fool has positions in and recommends Apple, Intel, Meta Platforms, Nvidia, Taiwan Semiconductor Manufacturing, and Upstart. The Motley Fool recommends Fair Isaac and recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.

Key Points

• Shares of American Eagle have been rallying due to a new ad campaign featuring actress and producer Sydney Sweeney.

• Critics decry a lack of diversity in the campaign.

• The added attention could boost sales.

• 10 stocks we like better than American Eagle Outfitters ›

When retail investors get excited about a stock, that can send its shares soaring quickly. And sometimes it's an unexpected catalyst that sends a stock off to the races.

One stock that I'm watching closely right now because I believe it has the potential to skyrocket is American Eagle Outfitters (NYSE: AEO). As of the end of last week, the stock was down more than 25% since January. But with a popular ad campaign raising eyebrows and gaining the attention of the public, the stock has begun to rally, and there could potentially be much more upside in the future.

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

American Eagle's Sydney Sweeney ad campaign has made the brand a hot topic

An ad campaign featuring a popular actress wearing a company's jeans may not seem controversial. But in 2025, it is. In recent years, companies have opted for more inclusive and diversified ad campaigns but American Eagle's new ad campaign featuring Sydney Sweeney this year is seemingly taking a different approach and going back to a more conventional strategy, featuring an attractive young white woman in its jeans.

The campaign says "Sydney Sweeney has great (American Eagle) jeans." People are seeing it as both a way to say the brand's jeans are great, and also that Sweeney -- who's been called a "blonde bombshell" -- has great genes. A social media post by President Donald Trump fanned the flames as it said partly that "Sydney Sweeney, a registered Republican, has the 'HOTTEST' ad out there. It's for American Eagle, and the jeans are 'flying off the shelves.' Go get 'em Sydney!"

The company itself said the campaign has "cheeky energy," and it's certainly created a debate around the direction the business is going in, and whether American Eagle may alienate existing customers. But at the same time, people are talking about the company like never before. It's attracting attention, and that may lead to an uptick in sales, which could be crucial in retail, at a time when consumers are struggling and cutting back on discretionary purchases.

A sales boost won't be evident for a while

American Eagle arguably needs to take a chance, as the company's sales have been lackluster. In its first-quarter results, for the period ending May 3, its net revenue came in just under $1.1 billion, which was a decline of around 5% from the prior-year period. And in its most recent fiscal year, which ended on Feb. 1, sales totaled $5.3 billion and were up just 1% year over year.

The Sydney Sweeney ad campaign began weeks ago, so the effects of that won't be factored into the company's recent results. Even when American Eagle reports its upcoming earnings numbers, which should come out within the next month or so, they won't have the effects of a full quarter of the ad campaign impacting sales just yet. And that means it may not be until later in the year when investors see how the campaign is paying off. But given its growing popularity, I'm optimistic it could prove to be a positive catalyst for the business.

Should you buy American Eagle stock today?

American Eagle stock closed Tuesday at $12.54 per share, higher than the less than $10 it was trading at just a few weeks earlier. The stock has been picking up steam of late, but it hasn't been scorching hot by any means. If, however, it delivers strong sales numbers due to the Sydney Sweeney campaign -- or any other reason -- this apparel stock may have a lot more upside. It's trading at 13 times its trailing earnings and is down 45% from its 52-week high of $22.83.

This is a compelling stock to watch. I see a lot of potential for it to rise higher. The company's business is profitable, it has a popular brand, and with a possible catalyst to drive its sales, the stock could soon become a much hotter buy. At a time when the market is seemingly flooded with overpriced stocks, American Eagle Outfitters is one that still looks cheap, and it may be an underrated buy right now.

Should you invest $1,000 in American Eagle Outfitters right now?

Before you buy stock in American Eagle Outfitters, 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 American Eagle Outfitters 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% 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 August 11, 2025

David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends American Eagle Outfitters. The Motley Fool has a disclosure policy.

Key Points

• Palo Alto Networks is the world's largest cybersecurity vendor, but it has to innovate to keep the top spot.

• The company is weaving AI into its products to automate threat detection and incident response.

• Palo Alto reports earnings on Aug. 18, which will give investors a valuable update on its progress.

• 10 stocks we like better than Palo Alto Networks ›

Palo Alto Networks (NASDAQ: PANW) is the world's largest cybersecurity vendor, but with competitors like CrowdStrike (NASDAQ: CRWD) nipping at its heels, the company is investing heavily in innovations like artificial intelligence (AI) to deliver the best possible protection for its 70,000 enterprise customers and maintain its position at the top.

This strategy led to an acceleration in Palo Alto's revenue growth during its fiscal 2025 third quarter. The company is scheduled to release its operating results for its more recent fiscal 2025 fourth quarter (which ended on July 31) on Aug. 18, which will give investors a valuable update on its expanding portfolio of AI products. Is it a good idea to buy Palo Alto stock ahead of the report? Read on to find out.

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Palo Alto offers an expanding portfolio of AI products

Palo Alto operates three cybersecurity platforms covering cloud security, network security, and security operations. Each one includes a growing number of individual products, and the company is weaving AI into as many of them as possible to automate everything from threat detection to incident response.

Palo Alto believes human-led cybersecurity processes are too slow and inefficient to deal with modern-day threats, which results in more critical incidents. Cortex XSIAM is one example of how Palo Alto is using AI to solve this problem. It's a security operations platform that relies on AI and machine learning to autonomously identify, investigate, and eliminate threats, shifting critical workloads away from human cybersecurity managers.

One customer -- a healthcare provider -- now resolves 90% of incidents with automation, compared to just 10% before adopting XSIAM. Palo Alto said the platform's annual recurring revenue (ARR) tripled year over year during the fiscal 2025 third quarter. Moreover, it had already accumulated over $1 billion in bookings despite launching just three years ago.

XSIAM is one of Palo Alto's fastest-growing products, so investors should look for an update on its progress on Aug. 18.

Palo Alto is seeing accelerating revenue growth

Palo Alto generated $2.3 billion in total revenue during the third quarter. It was a year-over-year increase of 15%, which marked an acceleration from the 14% growth it delivered during the second quarter three months earlier.

AI played a major role in the strong result. The company's ARR from its next-generation security (NGS) segment -- which is where it accounts for sales of its AI products -- soared by 34% to $5.1 billion. This is one of the key numbers investors will watch on Aug. 18.

A trend called "platformization" also contributed to the solid Q3 result. The cybersecurity industry is quite fragmented, meaning businesses typically use multiple vendors to build a complete security stack. Palo Alto is becoming a one-stop shop that protects the entire enterprise, so it's encouraging customers to consolidate their spending and ditch other vendors, and it's offering them fee-free periods to make the transition affordable.

Palo Alto believes this strategy will make each customer far more valuable over the long term. Around 1,250 of its top 5,000 customers were platformed at the end of Q3, which rose by a whopping 39% year over year. This is another important number for investors to watch on Aug. 18, because a high growth rate is a sure sign that Palo Alto's strategy is working.

Should you buy Palo Alto stock before Aug. 18?

Despite Palo Alto's leadership position in the cybersecurity industry, its stock is actually much cheaper than that of its main rival, CrowdStrike. It's trading at a price-to-sales (P/S) ratio of 13.3, compared to CrowdStrike's 25.4:

Data by YCharts.

CrowdStrike's revenue grew by 20% during its recent quarter, so its business is expanding at a faster overall pace than Palo Alto's business, which means it would normally deserve a premium valuation. However, Palo Alto's NGS ARR of $5.1 billion amounts to more than CrowdStrike's total ARR, and it grew by 34% during the recent quarter. Therefore, I think Palo Alto stock might be too cheap relative to its main competitor.

One quarter is unlikely to change Palo Alto's positive long-term trajectory, so there probably isn't an urgent need to buy its stock ahead of Aug. 18. However, it's trading 20% below its record high right now, so this might be a great opportunity to scoop it up at a discount. As long as investors maintain a long-term view of five years or more, they could do well from here.

Should you invest $1,000 in Palo Alto Networks right now?

Before you buy stock in Palo Alto Networks, 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 Palo Alto Networks 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% 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 August 11, 2025

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.

Key Points

• The coronavirus pandemic wasn't a major blow to this company's business, but that didn't matter to investors.

• When interest rates started to rise following the pandemic, it was realistic to question the company's growth potential.

• A high yield and slow and steady growth is still the name of the game here, but investors don't seem to care since the shares remain 25% below their pre-pandemic highs.

• 10 stocks we like better than Realty Income ›

The S&P 500 (SNPINDEX: ^GSPC) nosedived in March 2020 as the coronavirus pandemic spooked investors, creating major uncertainty about the economy. But as the world learned to live with COVID-19, the index eventually recovered and went on to hit numerous new highs in the following years. But not all S&P 500 stocks fully recovered. Realty Income (NYSE: O), for example, still trades down around 25% from its pre-pandemic highs. That suggests an opportunity for income investors who buy stocks with a target holding period of forever.

What does Realty Income do?

Realty Income is a net lease real estate investment trust (REIT) with a heavy focus on single-tenant retail properties. A net lease requires the tenant to pay most of the property-level expenses for the asset they occupy. While any single property is high risk, given there's only one tenant, that risk falls if the net-lease REIT has a large portfolio to spread it across. Realty Income's portfolio includes more than 15,600 properties. It is the largest competitor in its space.

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 »

Moreover, while Realty Income's focus is on retail assets (around 75% of rents), it also invests in industrial properties and a collection of "other" assets such as vineyards and casinos. So there is diversification in the mix, with a business that spans across North America and Europe.

Given the heavy exposure to retail, it is understandable that investors were worried about Realty Income during the pandemic. Social distancing and the government shutdown of non-essential businesses were scary and could have been devastating to Realty Income's tenants. Luckily, the uncertainty didn't last, and the REIT's occupancy levels didn't fall below 97.9% in 2020. That's a great number anytime, but occupancy has since improved from there. And investors don't seem to care because the stock remains well off its pre-pandemic highs.

The big problem is interest rates

The reason that investors are so downbeat on Realty Income's stock is likely interest rates. The Federal Reserve increased interest rates coming out of the pandemic to tamp down on a burst of inflation. The problem with this is that REITs grow by making acquisitions. Because REITs have to pay out 90% of their taxable earnings as dividends to remain REITs, they have little internal capital to use for growth. Therefore, they need to tap the capital markets for cash. Higher interest rates make that more difficult.

It isn't an unreasonable fear to think that Realty Income's growth will be slow. But Realty Income is so large that slow and steady growth is actually the norm here, anyway. Moreover, its size and financial strength (it has an investment-grade rated balance sheet) actually give it advantageous access to capital markets. So, compared to competitors, it still has attractive access to growth capital. In other words, the fears are legit, but likely overblown.

But the big story is actually the dividend, which has been increased annually for 30 years. Simply put, the company has lived through different rate environments before and survived just fine. There's no reason to believe it won't muddle through today's higher rates (though historically speaking, the rates aren't outlandishly high) without skipping a beat on the dividend.

Buy now to collect an attractive yield

Sure, dividend growth is likely to slow somewhat in the near term, as Realty Income's interest costs rise. But eventually, property markets will adjust to make acquisitions more profitable, or rates will fall. And then Realty Income's financial performance will improve. In the meantime, investors can collect a fat 5.6% dividend yield backed by a still-growing dividend. In other words, for income lovers, Realty Income's laggard stock price is an S&P 500 index investment opportunity.

Should you invest $1,000 in Realty Income right now?

Before you buy stock in Realty Income, 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 Realty Income 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 $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% 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 August 11, 2025

Reuben Gregg Brewer has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.

Key Points

• Warren Buffett has authorized $77.8 billion worth of stock buybacks since 2018, double the amount he has ever invested in any other stock.

• While Berkshire's buyback program remains active, Buffett hasn't pulled the trigger in any of the past four quarters.

• A combination of Berkshire's current valuation and pending leadership change could be among the reasons Buffett is sitting on his hands.

• 10 stocks we like better than Berkshire Hathaway ›

Warren Buffett has been the chief executive officer of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) since 1965. He oversees a variety of wholly owned subsidiaries like Dairy Queen, Duracell, and GEICO Insurance, in addition to a $293 billion portfolio of publicly traded stocks and securities.

Berkshire is also sitting on $344 billion in cash. Buffett and his team would normally deploy this money into new opportunities when they come up, or return some of it to shareholders through stock buybacks.

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He authorized $77.8 billion worth of buybacks between 2018 and mid-2024, which is more than double what he has ever invested in any other stock.

However, he hasn't authorized any buybacks for the past four consecutive quarters, which might be concerning for investors who follow the Oracle of Omaha's every move. Does he think a stock market crash is on the way, or is he no longer bullish on Berkshire's prospects? Below, I'll highlight two plausible reasons for the pause.

Warren Buffett turned Berkshire into a cash-generating machine

Before diving into the two possible reasons for Buffett's recent inaction on buybacks, let's examine why Berkshire is sitting on so much cash.

First, the conglomerate has been a net seller of stocks for 11 straight quarters on the back of historically expensive valuations, which has freed up a mountain of cash. It even sold more than half of its stake in Apple last year; after investing about $38 billion in the iPhone maker between 2016 and 2023, the position was worth more than $170 billion in early 2024, so it was probably wise to cash in some of those gains.

Second, Berkshire is a cash-generating machine. It owns numerous insurance, utilities, and logistics companies that deliver steady income and earns a truckload of dividends each year from its stock portfolio. The conglomerate is on track to receive $2.1 billion in dividends during 2025 from just three stocks alone: American Express, Chevron, and Coca-Cola.

With so much money coming in, why is Buffett hesitating to repurchase Berkshire stock?

The first possible reason: Berkshire's valuation

Buybacks reduce the number of shares in circulation, which organically increases the price per share by a proportionate amount and gives each shareholder a larger stake in the company. In other words, they are great for investors.

Berkshire stock has generated a compound annual return of 19.9% since Buffett took the helm, crushing the average annual gain of 10.4% in the benchmark S&P 500 index during the same period. Therefore, chances are Berkshire will outperform almost any other stock Buffett could invest in, which minimizes the opportunity cost of performing buybacks.

However, Buffett has a keen eye for value and he never wants to overpay for a stock -- not even his own. Berkshire is currently trading at a price-to-sales ratio (P/S) of 2.5, which is a huge 25% premium to its 10-year average of 2.

BRK.A PS Ratio data by YCharts.

Berkshire stock last traded in line with its average P/S in early 2024. Interestingly, the buybacks stopped after the second quarter of that year, which could be a sign Buffett thinks the stock is simply too expensive at these levels.

The second possible reason: Succession

Berkshire can repurchase its own stock at management's discretion as long as the balance of its cash and equivalents is more than $30 billion. Since it is sitting on $344 billion in dry powder right now, that certainly isn't an issue.

However, at Berkshire's annual shareholder meeting on May 3, Buffett announced he will step down from his role as CEO at the end of 2025. He will continue to serve as chairman so his brand of long-term value investing will probably endure, but he will hand the majority of his day-to-day responsibilities over to his chosen successor, Greg Abel.

Buffett is leaving Berkshire in an incredibly strong position, so it's possible he wants to avoid making any major decisions in his remaining time as CEO, especially those that would deplete the company's cash balance. He likely wants to leave Abel with plenty of resources to carry the conglomerate into the future, because it will give him the best chance to succeed.

After all, maybe buybacks won't be on Abel's agenda at all. He might prefer to use Berkshire's $344 billion cash pile to make a series of bold acquisitions, or expand the conglomerate's stock portfolio. It's difficult to know what the future holds, but the impending leadership change is certainly a plausible reason for Berkshire's buyback hiatus during the past four quarters.

Should you invest $1,000 in Berkshire Hathaway right now?

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American Express is an advertising partner of Motley Fool Money. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Chevron. The Motley Fool has a disclosure policy.

Key Points

• Pfizer's free cash flow should improve.

• The drugmaker's lower leverage ratio target gives it greater financial flexibility.

• New products should cushion the blow from Pfizer's looming patent cliff.

• 10 stocks we like better than Pfizer ›

Many income investors probably have mixed emotions about stocks with ultra-high dividend yields. On one hand, they love the tremendous income these stocks provide. On the other hand, they might worry more often than not about a potential dividend cut.

Pfizer (NYSE: PFE) is a case in point, with its forward dividend yield of 7%. Although the stock is a favorite for many income investors, questions about the sustainability of the dividend persist.

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But there's good news for income investors following Pfizer's second-quarter update on Aug. 5. Here are three reasons Pfizer's juicy dividend is getting safer.

1. Free cash flow should improve

The most important number for income investors to watch relating to a company's dividend sustainability is its free cash flow. At first glance, Pfizer's free cash flow might seem to be an area of concern. The company paid out $4.9 billion in dividends during the first half of 2025 but generated free cash flow of only $571 million.

However, Pfizer's financial situation is better than it looks. For one thing, the big drugmaker had to fork over $2.1 billion in tax payment repatriation and a payment to BioNTech for its gross profit split. CFO David Denton said in Pfizer's Q2 earnings call that the company expects improved cash flows in the second half of 2025.

What's more, Pfizer expects to achieve savings in the ballpark of $7.7 billion by the end of 2027 with its cost-cutting initiatives. Denton noted in the Q2 call that around $500 million of these savings will be reinvested in pipeline development. However, the rest could flow down to the bottom line and significantly boost free cash flow.

2. More financial flexibility with a lower leverage target

Pfizer continues to have three priorities in its capital allocation strategy. Income investors will like hearing that the first priority is still maintaining and growing the dividend "over time." The other two priorities are reinvesting in the business and stock buybacks.

However, Pfizer also has a debt load of around $61.7 billion to service. Cash used to pay down this debt reduces the amount available to direct toward the company's capital allocation priorities, including funding the dividend program.

The good news for income investors is that Pfizer has lowered its gross leverage ratio to roughly 2.7. The company's previous target leverage ratio was 3.25. Since Pfizer has already gone below that level, it has set a new target at the current level of 2.7.

Denton told analysts on the Q2 earnings call that the company was able to improve its cash generation faster than anticipated following the Seagen acquisition. While he added that Pfizer will "continue to deliver over time," the company should now have more financial flexibility to achieve its top capital allocation priority of maintaining and growing the dividend.

3. New products will cushion the blow from the patent cliff

What is the single biggest risk to Pfizer's attractive dividend? I'd put the looming patent cliff at the top of the list. The company faces the loss of exclusivity (LOE) for several of its best-selling drugs over the next few years.

Kidney cancer drug Inlyta loses patent exclusivity later this year. Autoimmune disease drug Xeljanz and anticoagulant Eliquis follow in 2026. Breast cancer drug Ibrance and prostate cancer drug Xtandi have LOEs in 2027. Melanoma and lung cancer therapy Mektovi could join them, pending a patent term extension. Pfizer's lucrative Vyndaqel/Vyndamax/Vynmac franchise is set to lose its key U.S. patent in 2028, pending another patent term extension.

The big pharmaceutical company is looking at billions of dollars in lost revenue as generics and biosimilars take market share away from these drugs. That's money that won't be available to go toward dividend payments.

Now for the good news. Pfizer stated in its Q2 update that the upcoming LOEs should "be largely offset by strong revenue growth from recent launches and acquired products." CEO Albert Bourla highlighted a few of them in his Q2 earnings call comments.

Bourla praised Elrexfio, in particular. He believes the drug could become a standard of care in treating multiple myeloma, a market that's projected to reach around $44 billion by 2027. Sales for Elrexfio nearly quadrupled year over year in Q2.

Sigvotatug vedotin (SV) is another highly promising candidate in Pfizer's pipeline. Bourla said that the experimental antibody-drug conjugate (ADC) could be a key growth driver before the end of the decade. SV targets non-small-cell lung cancer, a market that is likely to top $60 billion by 2030.

He also pointed to Pfizer's recent in-licensing agreement with Chinese drugmaker 3SBio for bispecific antibody SSGJ-707. Bourla stated in the Q2 call that this therapy "has the potential to deliver breakthroughs for patients in the next way in PD-1 immunotherapy, which is an established $55 billion market."

Strong floor, no ceiling

How confident is Pfizer's management team about the business going forward? Bourla put it this way: "I will describe Pfizer right now as a company with a very strong floor and no ceiling." That's a description of a stock with a 7% dividend yield that income investors should like to hear.

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

Before you buy stock in Pfizer, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,119,863!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 182% 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 August 11, 2025

Keith Speights has positions in Pfizer. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends BioNTech Se. The Motley Fool has a disclosure policy.