Key Points

• CoreWeave announced a $6 billion investment in a new data center in Pennsylvania.

• Nvidia also made a bullish announcement for the semiconductor industry.

• 10 stocks we like better than CoreWeave ›

Shares of CoreWeave (NASDAQ: CRWV), a leader in artificial intelligence (AI) infrastructure, were on the move today after the company announced that it would invest $6 billion to open a new data center in Pennsylvania.

The news shows the company continuing to invest in the rapidly growing market, paving the way for new capacity. Additionally, CoreWeave could be benefiting from news that Nvidia will now be allowed to sell its H20 AI chips in China, which benefits a key ally and investor in the company, and paves the way for other companies to do the same, expanding the semiconductor market.

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The stock closed up 6.2% on the news.

CoreWeave announces a new data center

CoreWeave has been seeing scorching-hot growth since it pivoted its business model to AI infrastructure, providing computing capacity to companies like Microsoft, Nvidia, and OpenAI, and it needs new data centers to fuel that growth.

This morning, CoreWeave said it would commit more than $6 billion for a state-of-the-art data center in Lancaster, Pennsylvania. The announcement will be made at an event with President Trump, with both of its senators and the governor present.

The facility will be one of the first large-scale data centers in that region and will have an initial capacity of 100 megawatts, with the potential to expand to 300 MW.

Including the Lancaster facility, the company will now have 33 AI data centers, including 28 in the U.S.

What's next for CoreWeave?

The AI infrastructure company just wrapped up a quarter where it reported 420% revenue growth, and it's expected to continue to expand at a rapid rate.

While CoreWeave may be a long way from profitability, investing in new data centers makes sense when demand is growing this fast.

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

Before you buy stock in CoreWeave, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $680,559!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,005,670!*

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*Stock Advisor returns as of July 15, 2025

Jeremy Bowman has positions in Nvidia. The Motley Fool has positions in and recommends Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• Shares of the tech giant rose on news that Nvidia would begin selling H20 chips to China again.

• Nvidia is a major customer of TSMC, and the news could signal a broader thawing in U.S.-China relations.

• TSMC is set to report second-quarter earnings on Thursday.

• 10 stocks we like better than Taiwan Semiconductor Manufacturing ›

Shares of Taiwan Semiconductor Manufacturing (NYSE: TSM) were moving higher as the chip manufacturing giant seemed to benefit from a broader tailwind in the semiconductor industry after Nvidia said it regained approval to sell its H20 artificial intelligence (AI) chip in China. The H20 is a less powerful version of the AI chips it sells in the U.S. and to other allies.

Nvidia is one of Taiwan Semi's biggest customers, and the news set off a broad rally in the sector, with Advanced Micro Devices shares jumping as well.

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As of 10:44 a.m. ET, TSMC, as the company is also known, was up 3%.

China is back open

In a blog post last night, Nvidia said that CEO Jensen Huang met with President Trump and other policymakers in Washington and received assurance that the company would be granted a license to sell the H20 again to China.

That is big news for both the semiconductor industry and U.S.-China relations. Nvidia stock plunged in April when it said it would take an estimated $5.5 billion write-down after it lost the license to sell H20s, dragging the rest of the chip sector down with it.

Nvidia is one of TSMC's biggest customers, and a bellwether for the industry, so the reopening of the Chinese market bodes well both for it and the leading chip manufacturer.

What's next for TSMC?

Taiwan Semi is set to report second-quarter earnings on Thursday, which could prove to be another leg up for the stock. The company has already reported monthly revenue, which was up about 38% in New Taiwanese Dollars in the second quarter, and analysts are expecting earnings per share to rise $1.48 to $2.28.

If the company can top that number, the stock, which is already hit an all-time high today, could make another move higher.

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

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*Stock Advisor returns as of July 15, 2025

Jeremy Bowman has positions in Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Key Points

• The giant retailer's challenges have continued thus far in 2025.

• It has contended with a boycott and weakness in discretionary spending.

• To return to growth, the company has announced a multi-year acceleration program.

• 10 stocks we like better than Target ›

Target's (NYSE: TGT) troubles have continued thus far in 2025. The retail giant came into the year reeling from market share losses to Walmart, weakness in discretionary categories, and problems with theft -- and many of those challenges have only gotten worse.

Tariffs have put pressure on both consumer spending and its imports, and the company even faced a boycott earlier this year in response to its decision to end its DEI practices. As a result, its financial performance has continued to lag with falling sales and profits, and its guidance has also disappointed the market.

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According to data from S&P Global Market Intelligence, the stock was down 27% through the first half of the year. You can see from the chart below that Target slumped through much of the first quarter due to the issues above. It then missed out on the market recovery that came later after the 90-day tariff pause was announced.

TGT data by YCharts.

Target stock keeps falling

Target's woes this year seemed to begin around the time it said it would roll back DEI programs, including ending an initiative to carry more products from Black and minority-owned businesses. That move led to boycotts against the company that began in February, and seemed to be having at least a modest effect on the business. The company also acknowledged that its reputation has been damaged by the boycotts.

In its fourth-quarter earnings report, which came out in March, the company reported comparable sales growth of 1.5%. Adjusted earnings per share (EPS) fell from $2.98 to $2.41, which still beat estimates at $2.25. Despite the beat, the stock still dropped on the update, as management warned about higher prices and its guidance called for flat top-line growth this year.

The stock then plunged after the "Liberation Day" tariffs were announced. After a modest recovery, the stock fell on its first-quarter earnings report, as comparable sales dropped 3.8% and adjusted EPS tumbled from $2.03 to $1.30. Target also cut its EPS guidance range for the year to $7.00-$9.00.

What's next for Target

Target announced something of a turnaround plan in its first-quarter earnings report, saying that it was establishing a "multi-year acceleration office" and making several leadership changes to make faster decisions and return the company to long-term profitable growth.

Target still has turnaround potential, but it's clear why the stock has continued to lag.

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*Stock Advisor returns as of July 7, 2025

Jeremy Bowman has positions in Target. The Motley Fool has positions in and recommends Target and Walmart. The Motley Fool has a disclosure policy.

Key Points

• CoreWeave could be the biggest IPO of 2025.

• After a lackluster debut, the stock has soared.

• Revenue is skyrocketing, but the company faces some big risks.

• 10 stocks we like better than CoreWeave ›

Through July, AI infrastructure specialist CoreWeave (NASDAQ: CRWV) has been the biggest initial public offering (IPO) of the year.

CoreWeave's actual public offering was a disappointment. It was both undersubscribed and priced lower than the company intended. In fact, Nvidia (NASDAQ: NVDA) had to come in and help rescue the offering by buying a large position in the IPO. The opening day performance was also a dud, and the stock opened down from its IPO price of $40 and closed even with it, showing underwhelming interest.

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However, since the late March debut, broad market trends have shifted, and AI stocks are back in vogue as concerns about a trade war and a recession have receded.

As a result, CoreWeave stock surged as high as $188 before a recent pullback, though it's still trading at more than triple its IPO price.

What CoreWeave does

CoreWeave was founded as Atlantic Crypto, an Ethereum miner, but pivoted its business model in the crypto winter of 2018-2019 when crypto mining fell on hard times and it discovered that the idle GPUs it owned could be rented out instead as computing capacity to run AI applications and models.

Today, the company provides generative AI-focused cloud computing infrastructure through its CoreWeave Cloud Platform, which combines proprietary software and cloud services to manage and deliver the AI infrastructure needed to power the leading AI models.

As a cloud platform purpose-built for generative AI, CoreWeave is differentiated from the giant hyperscalers -- Microsoft, Amazon, and Alphabet -- some of which are the company's biggest customers. For example, its platform delivers higher performance and more uptime than alternative offerings, allowing its customers to build their AI models faster.

In part because of its close relationship with Nvidia, CoreWeave is also regularly the first cloud provider to deploy new AI instances (i.e., resources). In recent weeks, it has made two such announcements. For example, it became the first company to make Nvidia RTX PRO 6000 Blackwell Server Edition instances generally available, which achieve 5.6 times faster large language model inference than the previous generation.

CoreWeave has some key partners

Among the risks investors pointed out when CoreWeave went public was its customer concentration. Its prospectus said that Microsoft accounted for 62% of its revenue in 2024.

Due to the nature of its business, CoreWeave has a small number of customers, including start-ups like Mistral, Cohere, and OpenAI, and big tech companies like Microsoft, Meta Platforms, Alphabet, IBM, and Nvidia. Management said in its first-quarter earnings report that no company makes up more than 50% of its backlog.

While customer concentration is a risk, the relationships with these companies are also a source of strength, especially with Nvidia, which owns 24.2 million shares of CoreWeave, currently worth roughly $3 billion. OpenAI also invested $350 million in the company in March, which is likely worth several times more today. That came as part of a deal for OpenAI to pay $11.9 billion to CoreWeave over five years.

Because both companies are investors in CoreWeave, they are more likely to remain customers and support its business, creating a symbiotic relationship.

Why CoreWeave has big potential

Management is reporting blistering growth. In the first quarter, revenue jumped 420% to $981.6 million, showing off the surging demand for its services as well as the speed with which it's expanding its capacity.

Demand for AI computing is expected to grow for years, if not decades, and CoreWeave is poised to be a leader in AI cloud infrastructure. The company is still deeply unprofitable due to the need to acquire GPUs to run its cloud platform, but it makes sense to invest when revenue is growing by triple digits.

While CoreWeave is certainly risky, and valuing the stock is difficult right now, it has considerable upside potential, even after tripling from its IPO price in just a few months.

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

Before you buy stock in CoreWeave, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,010,880!*

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Amazon, Ethereum, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Ethereum, International Business Machines, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• The Schwab U.S. Dividend Equity ETF is a popular choice for retirees.

• The ETF holds a number of Dividend Kings, which have raised their dividends each year for at least half a century.

• The fund is less volatile than the S&P 500.

• 10 stocks we like better than Schwab U.S. Dividend Equity ETF ›

If you're looking for ETFs, a good first stop is typically an S&P 500 index fund.

After all, the benchmark index includes 500 of the largest American companies across every industry, and it has a track record of delivering an annual average return of 9% over its history. However, retirees often need more stability than what the S&P 500 offers, which is why they tend to seek out lower-risk investments such as dividend stocks and bonds.

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One popular choice among dividend investors is the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD). The fund's goal is to track as closely as possible the Dow Jones U.S. Dividend 100 Index, which offers a high yield and quality screen that should be very attractive to retirees.

What's in the Schwab U.S. Dividend Equity ETF?

With net assets of $68 billion, the Schwab U.S. Dividend Equity ETF is one of the larger ETFs available to investors. It has a low expense ratio of just 0.06% and holds 100 stocks as of this writing.

The biggest sector in the ETF is energy, which makes up 21.1%, followed by consumer staples at 19.1% and healthcare at 15.7%. Companies in all three of those sectors are well known for often paying dividends.

Currently, the top three holdings are Texas Instruments, Chevron, and ConocoPhillips. Each stock represents about 4.3% of the fund as of this writing, and they're are solid dividend payers. Texas Instruments offers a 2.6% dividend, while ConocoPhillips and Chevron pay 3.5% and 4.8%, respectively. The Schwab U.S. Dividend Equity ETF itself pays a dividend yield of 4.0%, which is significantly better than the S&P 500's 1.2%.

How has the Schwab U.S. Dividend Equity ETF performed historically?

The Schwab U.S. Dividend Equity ETF has a solid track record of generating positive returns, but it has underperformed the S&P 500 since its inception in 2011, as you can see in the chart below.

Data by YCharts.

However, the chart also shows how the Schwab U.S. Dividend Equity ETF is less volatile than the S&P 500. In 2022, when the S&P 500 suffered through a bear market, the Schwab ETF experienced a more muted pullback because it lacks exposure to the high-profile tech stocks that soared during the pandemic and then crashed in 2022.

This reduced volatility is yet another reason for more conservative investors and retirees to consider the Schwab ETF.

Is SCHD right for you?

For retirees and others looking for a safe dividend ETF, the Schwab U.S. Dividend Equity ETF looks like a good bet.

There are other dividend ETFs available, but SCHD has emerged as one of the most popular choices thanks to its diversification across sectors and a track record of growth balanced with stability. Add to that the high yield and low expense ratio, and it becomes clear why this Schwab ETF is a great starting point for retirees.

Should you invest $1,000 in Schwab U.S. Dividend Equity ETF right now?

Before you buy stock in Schwab U.S. Dividend Equity ETF, consider this:

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*Stock Advisor returns as of July 7, 2025

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron and Texas Instruments. The Motley Fool has a disclosure policy.

Key Points

• Reddit got a boost after introducing its new Community Intelligence product at the Cannes Lions festival.

• One analyst also said Meta Platforms' deal with Scale AI is positive for Reddit stock.

• The company has delivered impressive growth since it went public a year ago.

Shares of Reddit (NYSE: RDDT) were on a tear last month, as the stock benefited from the broader gains in the stock market, the company released a new Community Intelligence product that impressed the market, and other positive news around artificial intelligence (AI) helped lift the stock.

According to data from S&P Global Market Intelligence, the stock finished the month up 34%.

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As you can see from the chart, most of the stock's gains came in the middle of the month, though it also benefited from a late surge in the broad market as tensions in the Middle East cooled.

RDDT data by YCharts

Reddit rides the AI wave

The big news around Reddit last month was its introduction of Reddit Community Intelligence, which it unveiled at the Cannes Lions Festival. The new platform, which the company described as the "collective knowledge from the billions of human conversations across Reddit," has two main features.

The first is Reddit Insights, a tool that gives marketers real-time insights based on Reddit's 20 years of conversations to help them plan campaigns and make better decisions. The second is Conversation Summary Add-ons, an ad feature that integrates positive content from Reddit users directly below an advertiser's post.

Both products are only in alpha, meaning they're being tested by a small group of customers right now, but the initiative shows Reddit doing more to tap into its trove of user-generated content, which can fuel both AI and the company's own advertising engine. The stock jumped 19.4% over a three-day period during the Cannes festival.

Elsewhere, the company received some bullish analyst commentary around Meta's acquisition of Scale AI, which could raise the premium for the kind of data-licensing business that Reddit is trying to build with its "corpus," or body of content.

What's next for Reddit?

Reddit stock has exploded since its IPO last March, as the company has both delivered strong growth and turned profitable. Reddit had previously been operating at a loss for much of the 20 years prior to going public, and a combination of factors seem to be driving the business, including its utility in the AI era, interest in an alternate social media advertising platform, and attention around the company following its IPO.

The excitement around the new Community Intelligence tool shows that investors seem to believe in the company's potential with AI and advertising. It's unclear if that will move the bottom line anytime soon, but Reddit is a unique asset in its industry. The stock is risky, but it has considerable upside potential.

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*Stock Advisor returns as of June 30, 2025

Jeremy Bowman 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

• Meta Platforms pushed further into artificial intelligence (AI) last month with a deal to take a 49% stake in Scale AI.

• The company also benefited from lower tensions around the trade war.

Shares of Meta Platforms (NASDAQ: META) were moving higher again in June as the social media giant benefited from the broader uptrend in the stock market, and investors reacted to Meta's deal to take a 49% stake in Scale AI, a data-labeling start-up, for $14 billion.

By the end of the month, Meta stock had finished up 14%, according to data from S&P Global Market Intelligence.

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As you can see from the chart, the stock gained in two separate stages, in the beginning and end of the month.

META data by YCharts

Meta pushes deeper into AI

Meta's ambitions in AI became clearer last month as the company made a splash with the Scale AI deal. The move gives the company near-50% ownership of a promising AI start-up, and also brings Scale AI founder Alexandr Wang into the Meta fold. Wang will head up a new research lab working on superintelligence.

Additionally, other news reports emerged about Meta's poaching AI talent from OpenAI, and it also reportedly tried to buy Perplexity, the AI search-focused start-up now valued at $14 billion, as well as Safe Superintelligence, another AI start-up. Finally, the company is considering raising $29 billion to fund its data center expansion push as part of its AI ambitions.

Early in the month, Meta also signed a 20-year power purchase agreement with Constellation Energy, showing its commitment to securing an adequate source of energy as AI needs grow.

On the device front, the company also introduced Oakley Meta glasses, which it called a new category of Performance AI glasses, featuring a built-in camera, open-ear speakers, and water resistance.

Meanwhile, the stock also benefited from cooling tensions around the trade war, as well as solid economic data showing the job market continuing to expand and inflation remaining in check.

Since nearly all the company's revenue comes from digital advertising, the business is sensitive to the broader economy, so signs of continued growth are good for Meta.

What's next for Meta?

Meta's price-to-earnings ratio has risen to 28 following last month's gains, but that still looks like a fair price to pay for a stock that dominates the social media sector, has a huge competitive advantage in digital advertising, and is investing heavily into its strong AI division.

We'll hear from Meta at the end of the month when it reports second-quarter earnings. Analysts are expecting another strong quarter, with revenue increasing 14% to $44.55 billion and earnings per share rising from $5.16 to $5.84. If Meta can maintain that kind of growth, the stock should continue to move higher.

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Shares of Shopify (NASDAQ: SHOP) were moving higher today in line with a number of growth stocks in a day with broad gains across the market.

The e-commerce software company seemed to benefit from favorable comments from Fed Chair Jerome Powell about lowering interest rates. Additionally, stocks rose on news of a ceasefire between Iran and Israel, though that seemed to have less of a direct effect on Shopify.

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As of 3:21 p.m. ET, the stock was up 4.6%. At the same time, the Nasdaq Composite was up 1.6%.

Shopify gets a boost

There was no company-specific news out on Shopify, but as an e-commerce software company with a high valuation, Shopify is sensitive to the macroeconomic cycle, including interest rates.

On Tuesday, Fed Chair Jerome Powell said in remarks before Congress that rate cuts could come "sooner rather than later," though he stressed that the central bank could wait to see how tariffs play out.

In its "dot plot" forecast last week, the Fed maintained its prediction that it would cut the Fed funds rate by 50 basis points over the remainder of the year, the same forecast it made earlier this year, meaning investors should expect two 25 basis-point cuts in the remaining four meetings.

That's good news for Shopify as rate cuts should lower the discount rate in the discounted cash-flow valuation investors use to value stocks like Shopify. Lowering the discount rate increases Shopify's valuation.

What's next for Shopify

With its legions of small-business sellers, Shopify is at risk from higher tariffs, but the company offered strong guidance in its first-quarter earnings report, calling for mid-20s revenue growth rate and a free-cash-flow margin in the mid-teens.

If it can maintain those numbers, the stock should continue to rise over the long term.

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

Shares of Innodata (NASDAQ: INOD), a fast-growing AI stock, were moving higher this week, seemingly on speculation that the company could benefit from Meta Platforms' deal with Scale AI, a competitor to Innodata.

Some of Scale AI's customers are reconsidering working with it now that Meta is acquiring a 49% stake in the company, which could open up an opportunity for Innodata, a rival data labeling company, meaning it helps categorize and prepare data for AI models.

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In a week when a number of AI stocks were moving higher, Innodata was also a winner, as the stock was up 18.2% for the week, according to S&P Global Market Intelligence.

Innodata gets some attention

Trading volume has risen for Innodata since earlier this month when Wedbush analyst Dan Ives included the stock in his new Dan Ives AI Revolution ETF.

Last week, the stock moved lower in response to Meta's deal with Scale AI, as investors seemed to bet that the deal would give its competitor, Scale AI, an edge. However, that thinking seemed to reverse itself this week in response to talk that Alphabet, Scale AI's biggest customer, could be looking for a new data labeling provider.

Scale AI is much bigger than Innodata, meaning any customers that leave it could present a big opportunity for Innodata if it can grab that market share.

An under-the-radar AI opportunity

The AI boom has been dominated by large-cap stocks like the "Magnificent Seven," but Innodata shows that there are small-cap stocks capitalizing on the opportunity as well.

Innodata is growing quickly with 120% organic revenue growth in the first quarter, and the stock trades at a reasonable valuation. For investors looking for lesser-known AI stock, Innodata is worth a closer look.

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

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

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

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Meta Platforms. The Motley Fool has positions in and recommends Alphabet and Meta Platforms. The Motley Fool has a disclosure policy.

We're nearly at the midway point of the year, and the S&P 500 is essentially flat through June 17, up just 1.7%.

The broad market index nearly entered a bear market in April, following the announcement of the "Liberation Day' tariffs, but has rallied back since then to recoup those losses.

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However, not every stock on the index has been a winner. In fact, one popular footwear stock is down nearly 50% for the year through June 17.

That's Deckers Outdoor (NYSE: DECK), the maker of Hoka running shoes and Ugg boots, which is down 49.5% year-to-date. Over a long time frame, Deckers is one of the best-performing stocks on the market -- it had returned more than 10,000% at one point.

After delivering strong growth in recent years, Deckers stock hit a wall in January when its guidance was worse than expected. When the company provided its following update in May, its growth was clearly slowing, and it faced a new challenge with President Donald Trump's tariffs putting pressure on the apparel and footwear industries.

Deckers' current challenges

In its fiscal fourth quarter, ended March 31, Deckers' revenue rose just 6.5%, which compared to nearly 20% growth in the first three quarters of the year.

Growth at Hoka slowed from nearly 30% in the first three quarters of the year to just 10% in the fourth quarter, potentially a sign that a resurgent Nike is grabbing back market share in running. Ugg, which remains Deckers' largest brand, grew just 3.6% in the quarter compared to 13% for the full year.

What really threw investors off was the company's guidance, as management did not give full-year guidance due to macroeconomic uncertainty related to tariffs. For the first quarter, the company expects revenue of $890 million to $910 million, representing 9% growth at the midpoint. However, it expects earnings per share to fall from $0.75 to between $0.62 and $0.67.

It sees its gross margin falling 250 basis points due to higher freight costs from tariffs, increased promotional activity, and channel mix headwinds with wholesale outgrowing DTC, and it faces difficult comparisons with a year ago.

For its two core brands, Deckers expects Hoka to grow by at least low double digits while Ugg sales should increase by at least mid-single digits.

Why this could be a great buying opportunity for Deckers

A 50% sell-off in less than six months often indicates a broken business, but that isn't the case with Deckers. The company seems to face a mostly temporary setback due to pressure related to tariffs and a cooling off in the growth rate at Hoka.

With its share price cut in half, Deckers now trades at an attractive price-to-earnings valuation of just 16, meaning it trades at a substantial discount to the S&P 500. Management is also taking advantage of that by buying back stock, increasing its share repurchase authorization to $2.5 billion, which represents 16% of its market cap.

In fiscal 2025, the company repurchased $567 million worth of its stock, and bought back $85 million in the first quarter through May 9.

Deckers is well-positioned to buy back its stock as it has no debt, $1.9 billion in cash, and a reasonable assets-to-liabilities ratio of 3.5.

Over the long term, Deckers looks well-positioned to recover as its two core brands, Hoka and Ugg, have differentiated themselves, and have long track records of growth. Ugg also overcame an earlier slowdown amid concerns that its brand was a fad.

At the current valuation, even modest profit growth will be enough to make the stock a winner. The tariff-related headwinds will eventually fade, and Deckers' growth should return at that point.

Should you invest $1,000 in Deckers Outdoor right now?

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $659,171!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $891,722!*

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

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Jeremy Bowman has positions in Nike. The Motley Fool has positions in and recommends Deckers Outdoor and Nike. The Motley Fool has a disclosure policy.

Stocks have rallied in the last month on signs that the economy has thus far been resilient to tariffs and on hopes that the U.S. and China can negotiate a trade agreement. However, not every stock has been a winner.

Let's take a look at two of the worst-performing stocks on the S&P 500 (SNPINDEX: ^GSPC) over the last month to see if either of them is worth buying.

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1. Enphase Energy

Enphase Energy (NASDAQ: ENPH), a leading maker of microinverters used with solar panels, took a dive on Tuesday, as the Senate kept cuts to wind and solar energy incentives that were in the House version of the tax and budget bill.

Enphase was one of several solar stocks that tumbled on the news, falling 24%, and as of June 17, it's down 30.7% over the last month.

That performance continues a weak run for the stock, which is down over the last five years, as solar stocks have struggled due to competition from China, a volatile regulatory environment, and falling prices.

Enphase reported first-quarter earnings in April, with solid top-line growth of 35% to $356.1 million and a profit of $29.3 million. Nonetheless, an end of regulatory credits could put significant pressure on its business.

2. Brown-Forman

Brown-Forman (NYSE: BF.B), maker of Jack Daniel's and other spirits, has also struggled due to regulatory challenges. In Brown-Forman's case, it's due to tariffs imposed on American whiskey exports, impacting its top brands, which also include Woodford Reserve. As of June 17, the stock was down 28.5% over the last month.

In its first-quarter earnings report, the company said that revenue fell 7%, or 3% on an organic basis.

Brown-Forman also said it named new distributors in 13 markets across the U.S., part of an effort to deliver a boost to domestic sales.

Still, with geopolitical pressure on American spirit brands, and broader weakness in the category, Brown-Forman seems likely to continue to struggle.

Should you invest $1,000 in Brown-Forman right now?

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $658,297!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $883,386!*

Now, it’s worth noting Stock Advisor’s total average return is 992% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Enphase Energy. The Motley Fool has a disclosure policy.

Artificial intelligence (AI) stocks might be the big thing on Wall Street, with rising valuations and trending tickers. But that doesn't mean there aren't good values to be found. While there are some fears that a bubble will form in AI, many of the big tech stocks leading the charge look downright undervalued. In fact, some of them even fall into the classic Warren Buffett model of value investing.

Buffett is known for avoiding tech stocks for most of his career, but there are some AI-related tech stocks that even a value investor like him could get behind. Keep reading for details about two of them.

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1. Alphabet

OpenAI may be the most buzzworthy AI company, but there's no question that Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is a leader in AI. The company has been at the forefront of artificial intelligence for at least a decade, acquiring the AI research lab DeepMind in 2014, and launching Google Brain, which merged with DeepMind in 2023, before that.

The company has made AI a stated priority for at least eight years, and it's kept pace with advances in generative AI with Google Gemini, its AI model, and its AI assistant that is readily available on Google Search.

In addition to the company's prowess in AI technology, the stock's valuation is also attractive at a price-to-earnings ratio of just 20, meaning it trades at more than a 20% discount to the S&P 500.

Investors seem to be wary of the stock because of pressure on the regulatory front and concerns that generative AI chatbots pose a threat to the dominance of Google Search.

The regulatory concerns might seem valid after the company was found in court to have a monopoly in both search and ad tech, and the company is now awaiting a decision on "remedies" for the search business, while its remedies trial for ad tech is set for September. Alphabet could receive a fine or be forced to divest part of its business, but at the current valuation, any risk looks sufficiently priced in.

It's true that AI chatbots like ChatGPT and Perplexity pose a threat to Google Search, but thus far, Google has held its own, continuing to grow.

In fact, growth in the business has been steady, and Google Cloud has also turned profitable. Overall, its competitive advantages remain intact, and its valuation is attractive. It looks like a classic Buffett stock set to deliver growth over the long term.

2. TSMC

Another wide-moat AI stock worth taking a look at is Taiwan Semiconductor Manufacturing (NYSE: TSM), or TSMC for short.

TSMC is the world's largest manufacturer of semiconductors. It's a contract chip maker and handles production for companies including Apple, Nvidia, AMD, and Broadcom. It handles more than half of the third-party chip production in the world and roughly 90% of advanced chip production, making it a key player in AI, as cutting-edge chip designers like Nvidia rely on TSMC's infrastructure and expertise to make its chips. Given the company's market share, there's no close second in third-party chip manufacturing, and leading integrated device manufacturers such as Samsung and Intel have struggled of late.

TSMC has also been a major beneficiary of the AI boom, as both revenue and profit have soared lately. In the first quarter, TSMC's revenue jumped 35.3% year over year to $25.5 billion, and net income rose 60% to $10.9 billion. TSMC's operating margin was 48.5% in the quarter, a clear sign of its pricing power and competitive advantage.

Even with that growth rate, its profitability, and its competitive advantages, TSMC stock trades at a price-to-earnings ratio of just 25.6, in line with the S&P 500.

Some consider TSMC risky because it's headquartered in Taiwan, a disputed territory, and some investors are wary of a Chinese invasion. While anything is possible in geopolitics, there are no imminent signs of an invasion, and TSMC has diversified away from Taiwan, opening plants in the U.S., Europe, and Japan, meaning those fears may be overblown.

Based on its technological strength, growth rate, attractive valuation, and the tailwinds from AI, TSMC looks well-positioned for long-term growth.

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 $658,297!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $883,386!*

Now, it’s worth noting Stock Advisor’s total average return is 992% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Advanced Micro Devices, Broadcom, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.

Not too many Wall Street analysts have name recognition, but Wedbush's Dan Ives is one of the best-known commentators and AI cheerleaders.

Ives is a frequent guest on CNBC and other financial news outlets, as well as social media, typically wearing a bright-colored jacket and a loud shirt. He's known for his bullish commentary on stocks like Nvidia and Palantir. In fact, Ives recently said that Palantir would hit a market cap of $1 trillion within three years.

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Now, the Wedbush analyst has taken the next logical step, creating an exchange-traded fund (ETF). On Wednesday, Wedbush Fund Advisers launched the Dan Ives Wedbush AI Revolution (NYSEMKT: IVES), which trades on the New York Stock Exchange and is based on his picks and research in the artificial intelligence (AI) sector.

The ETF holds 30 stocks, ranging from semiconductors to hyperscalers to cybersecurity, robotics, and other industries. Ives says he is more focused on themes and disruptive impact, rather than valuation, and the ETF features many of the best-known names in AI.

What's in the IVES ETF?

The top 10 holdings in the IVES ETF are as follows:

Company	Percent of Fund
Microsoft	5.67%
Nvidia	5.37%
Broadcom	5.25%
Tesla	4.65%
Taiwan Semiconductor Manufacturing	4.63%
Meta Platforms	4.61%
Amazon	4.41%
Palantir	4.33%
Alphabet	4.31%
Apple	4.24%

That list shouldn't come as a big surprise. It includes the "Magnificent Seven" and three other well-known AI stocks, Broadcom, Taiwan Semiconductor, and Palantir. Combined, those stocks make up nearly half of the fund.

Of the remaining stocks, there are several cloud software and cybersecurity names like ServiceNow, Palo Alto Networks, Salesforce, Adobe, Snowflake, and Zscaler.

Among the lesser-followed stocks it owns are Innodata, Elastic, and Pegasystems, which are all relatively small positions in the fund. Each stock is at least 1% of the fund.

As of June 4, the fund had net assets of $26.4 million, and its expense ratio is 0.75%, meaning investors will pay $0.75 out of every $100 invested in the fund to Wedbush to manage it.

Why it matters for investors

The launch of the IVES ETF matters to investors for a few reasons. First, if the fund serves as a big draw, bringing billions into the fund, it will funnel that money to the stocks it holds, helping them rise further.

The fund is also contributing to a greater proliferation of AI ETFs, potentially making it easier to invest in AI stocks.

We're about 2.5 years into the AI boom, which kicked off with the launch of ChatGPT in 2022, and some AI ETFs have been created. However, the formation of AI ETFs has generally lagged in the sector, and many of the funds that purport to track AI stocks don't invest in the household names that investors might expect an AI ETF to hold.

For instance, the Global X Robotics & Artificial Intelligence ETF holds little-known stocks like ABB, Keyence, and Fanuc, which are focused on robotics and automation, among its top five holdings.

The IVES ETF gives investors exposure to the more traditional AI stocks that have become associated with the AI boom.

Is the IVES ETF a buy?

If you backtested the IVES ETF over the last year or two, it would have outperformed the S&P 500. The ETF doesn't get credit for that, but the top holdings are many of the stocks that Ives has been publicly bullish on during that time.

If the AI boom continues, the IVES ETF is likely to be a winner as it offers exposure to a range of stocks driving the "AI revolution."

With an expense ratio of 0.75%, the IVES ETF is more expensive than most ETFs, but on par with actively managed funds. For investors looking for easy exposure to a range of AI stocks, investing a bit of money into the IVES ETF is a good way to do it.

Should you invest $1,000 in Wedbush Series Trust - Dan Ives Wedbush Ai Revolution ETF right now?

Before you buy stock in Wedbush Series Trust - Dan Ives Wedbush Ai Revolution ETF, 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 Wedbush Series Trust - Dan Ives Wedbush Ai Revolution ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 9, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Amazon, Broadcom, Meta Platforms, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Abb, Adobe, Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, Salesforce, ServiceNow, Snowflake, Taiwan Semiconductor Manufacturing, Tesla, and Zscaler. The Motley Fool recommends Broadcom, Elastic, Fanuc, Palo Alto Networks, and Pegasystems 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.

Lululemon athletica (NASDAQ: LULU) might not have the profile of a traditional market-crushing stock, but it's been one of the best-performing consumer-facing stocks of the last 20 years.

More than any other company, Lululemon is responsible for making athleisure a massive apparel category, and it's made it one of the most valuable apparel companies in the world.

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Going back to its 2006 IPO, the stock is up roughly 1,800%, and even over the last decade, the stock has gained more than 300% as it's continued to deliver strong growth.

However, more recently the stock has struggled. After peaking in late 2023, shares have fallen on concerns about its valuation, slowing growth, and now the trade war and the broader threat to the global economy. The stock is now down 48% from its peak.

Lululemon tumbled in its first-quarter earnings report as comparable sales growth slowed to just 1% with comps down 2% in the Americas. Revenue in the quarter rose 7% to $2.37 billion as the company continues to open new stores, which matched estimates.

Further down the income statement, gross margin improved from 57.7% to 58.3%, but operating income rose just 1% to $438.6 million as operating margin fell 110 basis points to 18.5% due to an increase in selling, general, and administrative expenses.

On the bottom line, earnings per share increased from $2.54 to $2.60, which edged out the consensus of $2.59.

What's ailing Lululemon

What really pressured the stock was the company's guidance, due in part to the impact of tariffs as management said price hikes to absorb tariffs would be targeted and limited.

For the full year, Lululemon maintained revenue guidance of $11.15 billion to $11.3 billion, or 6% revenue growth at the midpoint. However, it cut its full-year earnings-per-share guidance from $14.95-$15.15 to $14.58-$14.78.

Second-quarter guidance also missed the mark.

Lululemon's decision to maintain revenue guidance with a growth rate that's steady from the first quarter shows that it doesn't anticipate a significant impact on demand. Rather, the challenges the company is facing are on the cost side, primarily due to tariffs.

The company now expects operating margin to fall 160 basis points, weighing on earnings per share.

The China opportunity

While Lululemon's growth has slowed in its core North American market, the company continues to see a long runway in China, which represents its biggest market for new store growth.

In the first quarter, revenue in China increased 21% on 7% comparable sales growth, and China made up 13% of total revenue last year.

Like other American consumer brands that have done well in China like Apple, Starbucks, and Nike, Lululemon seems to be benefiting from the same upscale brand reputation that those companies have as well as a culture of conspicuous consumption. Additionally, Lululemon has managed to deliver solid growth in China even as the consumer economy has been weak there.

The retailer currently has 154 stores in China, 20% of its total, and it had an initial goal of opening 200 stores, though it now expects to top that. CFO Meghan Frank said, "We still feel we're early in our journey" in China on the earnings call.

Is Lululemon a buy?

Lululemon's challenges with tariffs seem to be similar to what we've heard from other retailers in apparel and related sectors, so it shouldn't be a cause for alarm from investors. Meanwhile, the tariff situation is fluid enough that rates could easily change, and it's unclear if the tariffs will still be relevant a few years from now.

After cutting its guidance for the year and Friday's sell-off, Lululemon now trades at a forward P/E of 18. For a company with its brand strength, historical growth rate, and a runway to expand in China, that looks like a great price.

While investors may have to be patient as the trade war plays out, at the current price, Lululemon looks like a clear buy.

Should you invest $1,000 in Lululemon Athletica Inc. right now?

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Jeremy Bowman has positions in Nike and Starbucks. The Motley Fool has positions in and recommends Apple, Lululemon Athletica Inc., Nike, and Starbucks. The Motley Fool has a disclosure policy.

Sweetgreen (NYSE: SG) is one of the more disruptive companies in the retail/restaurant industry today.

The company has brought a new concept to the fast-casual format as the largest fast-casual salad chain in the U.S. That menu seems to be resonating with customers. Sweetgreen is rapidly adding new locations, and its average restaurant brings in $2.9 million in revenue, a number on par with fast-casual leader Chipotle.

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However, an even greater point of disruption from Sweetgreen may be its Infinite Kitchen, a robotic system to help expedite orders, saving money on labor and improving throughput. Of the 40 restaurants it plans to open this year, 20 will have an Infinite Kitchen. The company has also teased the idea of licensing the new technology, which could open up a new revenue stream.

Despite that potential, Sweetgreen has had a forgettable year. Its stock is down 54% year to date through June 4. It has faced several challenges, including the wildfires in Los Angeles, one of its biggest markets and where the company is headquartered, and broader headwinds in the restaurant industry due to concerns about tariffs and other signs of a weakening economy.

In its first-quarter earnings report, the company reported a same-store sales decline of 3.1%. It said quarter-to-date comps were down mid-single digits in the second quarter as concerns around tariffs picked up in April, weighing on demand.

A fresh opportunity

A 54% sell-off is disappointing for existing shareholders of the stock, but it creates an opportunity to scoop up this promising growth stock on the cheap.

In fact, two billionaires did just that in the first quarter. Israel Englander's Millennium Management purchased 2.17 million shares of the restaurant stock, adding to a stake it started building in Q1 2023. Similarly, Ken Griffin's Citadel Advisors, which is often considered to be the best-performing hedge fund, added 1.27 million shares of Sweetgreen. Citadel first bought the stock when it went public in the fourth quarter of 2021.

Buying the dip on Sweetgreen is risky, especially with an uncertain economy, and declining comparable sales are never a good sign for a restaurant chain. However, management's guidance calls for an improvement in same-store sales over the rest of the year, forecasting flat growth for the year. More importantly, the company's long-term growth opportunities are still significant.

Will Sweetgreen be a ten-bagger?

After the reset in the stock price, Sweetgreen's market cap has fallen to just $1.8 billion. That means the stock could turn $10,000 to $100,000 if its market cap reached $18 billion, a reasonable goal for a restaurant chain.

Despite the weak same-store sales, Sweetgreen continues to aggressively open new stores. It plans to add 40 locations this year, growing the store base by 16%.

Over the longer term, CEO Jonathan Neman sees the company growing to at least 1,000 stores, if not several thousand. This should drive the stock higher over the longer term, assuming Sweetgreen can pull off that expansion.

In the meantime, the company is delivering strong average unit volumes of $2.9 billion, and its restaurant-level operating margin of 19% is good enough to drive profitability, especially as that margin is likely to increase over time. Investments in the Infinite Kitchen system seemed to have weighed on the bottom line but should spread out over time.

Finally, Infinite Kitchen should give the company a competitive advantage in areas like labor and throughput, and the effect of the technology should eventually show in the financial results.

Overall, Sweetgreen is the leader in a growing fast-casual category, its restaurants are generating strong traffic, and it has a potential technological advantage in Infinite Kitchen.

The stock is risky, but the upside potential is there, especially once the economy improves. The company should return to same-store sales growth when that happens.

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

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $868,615!*

Now, it’s worth noting Stock Advisor’s total average return is 792% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Jeremy Bowman has positions in Chipotle Mexican Grill and Sweetgreen. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends Sweetgreen and recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

Though Apple has been Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) top holding for several years, Warren Buffett has historically avoided tech stocks.

The renowned value investor has said that he can't forecast earnings for tech companies as they are less predictable, due in part to the changeable nature of technology, than other sectors. Buffett has historically preferred to invest in sectors like insurance, banking, utilities, energy, and consumer staples that have predictable cash flows, and whose industries don't change much over time.

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Based on that philosophy, it's not a surprise that Buffett has mostly avoided artificial intelligence (AI) stocks. However, there are some that fit in well with his approach to investing -- buying companies with sustainable competitive advantages at attractive valuations.

Keep reading to see two stocks that fit the bill.

1. Alphabet

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) has one of the strongest economic moats in business history.

Google has had more than 90% market share in the web search industry for the last two decades. The brand is synonymous with search, and underpins Alphabet's larger, highly profitable tech empire that includes products like YouTube, Google Cloud, the Chrome web browser, and "moonshots" like the Waymo autonomous vehicle program.

Google Search has now reached a revenue run rate of $200 billion, and Google Services, of which search makes up most of its business, has an operating margin of more than 40%.

Alphabet is also still delivering steady growth with revenue up 12% in the first quarter.

You might think that a company like Alphabet with evident competitive advantages, solid growth, and massive profits would trade at a premium valuation, but that's not the case. Alphabet currently trades at a price-to-earnings ratio of just 18.6, a substantial discount to the S&P 500.

There are two primary reasons for the discount in valuation.

First, investors are fearful that the company could get broken up or face a substantial fine or a related punishment as it's been found to have a monopoly in both search and adtech. Separately, Alphabet also seems to be trading at a discount because of the risk that its search empire could be disrupted by an AI chatbot like ChatGPT or Perplexity.

While those are risks for Alphabet, shares have long traded at a modest valuation, meaning investors have historically underestimated the stock. Given that, investors may want to borrow from Buffett's mentality and buy Alphabet stock.

2. Taiwan Semiconductor Manufacturing

Berkshire Hathaway invested in Taiwan Semiconductor Manufacturing (NYSE: TSM) in 2022, buying $4.1 billion of the stock, but it sold out of that position completely just two quarters later. It wasn't clear why. It could have been because of the risk of an invasion by China into Taiwan.

Like Alphabet, Taiwan Semiconductor (also known as TSMC) has one of the strongest economic moats in the business world.

The company is the leading third-party semiconductor manufacturer with a market share of more than 50% in contract chips and more than 90% of advanced chips that are crucial for AI.

TSMC is the company that Apple, Nvidia, AMD, Broadcom, and other top semiconductor and tech companies turn to to manufacture their chips. In the first quarter, advanced chip technologies accounted for 73% of its total wafer revenue.

Its technological lead in a highly technical industry with high capital expenditures, and its customer relationships, give the company a significant competitive advantage. TSMC is also growing quickly, with revenue up 35% in the first quarter to $25.5 billion, and its operating margin improved to 48.5%, showing the company has significant pricing power.

Like Alphabet, TSMC is also cheaper than you'd expect for a company that's so dominant. The stock currently trades at a price-to-earnings ratio of 24, which is an excellent valuation for a business growing as fast as TSMC, and one that is a linchpin in the artificial intelligence boom.

It may never be clear why Berkshire Hathaway sold TSMC, but it's not surprising that Buffett's conglomerate bought it. In many ways, it looks like a classic Buffett stock.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Advanced Micro Devices, Broadcom, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Berkshire Hathaway, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

Shares of Five Below (NASDAQ: FIVE) were moving higher this week in response to a better-than-expected first-quarter earnings report. In addition, commentary from Dollar General, which is also reported earnings this week, led investors to believe that discount stores were well-positioned in the current economic environment.

As of 2:59 p.m. on Thursday, the retail stock was up 8.5%, according to data from S&P Global Market Intelligence.

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Five Below keeps growing

Five Below, which primarily sells items for $5 or less like toys, games, accessories, and snacks, said that comparable sales in the quarter rose 7.1%, driving overall revenue up 19.5% to $970.5 million, which edged out estimates at $966.5 million.

The growth in the quarter reflects new store openings, as the company added 55 locations in the period to bring its grand total to 1,826.

Comparable sales growth was also fueled by "trend-right product, extreme value, and a fun store experience," according to CEO Winnie Park. The tariff-related pressures in the macro environment may have helped too.

Adjusted operating income surged from $38.1 million to $59.6 million, and adjusted earnings per share jumped from $0.60 to $0.86, ahead of the consensus at $0.83.

The company also said CFO Kristy Chapman is stepping down, and it would begin a search for her replacement.

Can Five Below keep gaining?

Looking ahead, Five Below expects its momentum to continue into the second quarter, calling for comparable-sales growth of 7%-9% and revenue of $975 million-$995 million, with 30 new stores. On the bottom line, it sees adjusted earnings per share of $0.50-$0.62. That forecast compares to estimates of $958.3 million in revenue and EPS of $0.58.

Five Below expects slower top-line growth in the second half of the year. Still, the comparable-sales results are impressive in the current environment. The stock trades at a premium, but it's easy to see why after the latest report.

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The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Five Below 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 $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $869,841!*

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Five Below. The Motley Fool has a disclosure policy.

Shares of Costco Wholesale (NASDAQ: COST) fell after the warehouse retailer posted comparable sales for May that were slightly below estimates.

For a stock that's priced to perfection like Costco, that was enough to send the stock down 3.9% as of 2:01 p.m. ET.

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Costco's growth slows

Costco is one of the few retailers left that reports monthly comparable sales, as others have backed away from the practice, in part because they think it adds volatility to the stock. Investors sometimes overreact to the numbers. That may be what's happening here.

In May, Costco's comparable sales rose 4.3%, or 6% after adjustment for fuel prices and foreign exchange. That was below its growth rate of 5.8%, or 7.9% after adjustments for the first 39 weeks of the fiscal year. Costco also said that overall revenue rose 6.8% for the four-week period ending June 1.

Those are hardly concerning numbers, but Wells Fargo said in a note this morning that those results were just below expectations of 6.2% adjusted comparable-sales growth.

Though the bank said the retailer continued to perform well, it noted its high valuation and reiterated an equal weight, or neutral rating, with a price target of $1,000.

What's next for Costco?

Investors shouldn't change their thesis on Costco stock based on one month of comparable sales, but today's pullback is a good reminder of why valuation matters.

Costco now trades at a price-to-earnings ratio of 57, meaning high expectations are baked into the stock. While the business is strong, the valuation assumes that its superior growth rate will continue. However, even a moderation to mid-single-digit comps is enough to send jitters through investors, as we saw today. If Costco's numbers disappoint again, the stock could fall further.

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $869,841!*

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Wells Fargo is an advertising partner of Motley Fool Money. Jeremy Bowman has positions in Wells Fargo. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

Shares of PVH (NYSE: PVH), the diversified apparel company and parent of brands like Calvin Klein and Tommy Hilfiger, were falling today after it reported solid results in its first-quarter earnings report, but cut its outlook for the full year.

As of 12:37 p.m., the stock was down 17.7%.

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What's ailing PVH?

With uncertainty around tariffs and the broader economy, apparel companies have faced a challenging environment, and PVH is no different.

Revenue rose 2% to $1.98 billion, ahead of its guidance calling for sales to be flat to down 2%, which topped estimates at $1.93 billion.

Revenue grew 5% in the EMEA (Europe, Middle East, and Africa) region and 7% in the Americas, but fell 13% in Asia-Pacific due to a challenging consumer environment in China.

Gross margin declined from 61.4% to 58.6% due to a shift from direct-to-consumer to wholesale and an increased promotional environment.

On the bottom line, adjusted earnings per share fell from $2.45 to $2.30, which beat the company's guidance at $2.10-$2.25 and the consensus at $2.25.

In the quarter, PVH took a $480 million goodwill impairment charge, which it said was due to a significant increase in discount rates. Additionally, its inventory rose 19%, which the company said was due to investment in core product inventory to improve overall availability, to support projected sales growth in the second quarter, and to get summer product in earlier.

CEO Stefan Larsson said, "In Q1, we continued to tap into the global consumer love for Calvin Klein and Tommy Hilfiger, delivering revenue growth versus last year and ahead of guidance."

What's next for PVH?

Despite the solid first-quarter results, management acknowledged that macro uncertainty is creating headwinds, and its second-quarter guidance missed the mark.

For the current period, management expects revenue up in the low single digits, but adjusted EPS down to $1.85-$2.00 from $3.01 in the quarter a year ago.

Management said that it currently estimated tariffs would have a $65 million negative impact on operating profit, or $1.05 per share.

While PVH still offers attractive value at a price-to-earnings ratio of less than 7, it's understandable why the stock is down on the news.

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Before you buy stock in PVH, 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 PVH 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 $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $869,841!*

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Jeremy Bowman 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.

When investors think of AI stocks, Upstart (NASDAQ: UPST) may not be the first that comes to mind. However, the company has a strong claim to the title. It's harnessed the power of machine learning and data science for a new credit platform that has been more accurate at assessing creditworthiness than conventional FICO scores, according to Upstart.

As a stock, Upstart has been one of the more volatile names in the market as the business has considerable potential, but it has also struggled to turn a profit in recent years. Plus, any credit business is inherently risky, since loans could go bad if the economy sours, or Upstart's credit partners could stop buying its loans, eliminating the funding it needs to operate.

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Upstart's latest earnings report offered more reasons to be optimistic. Its transaction volume jumped 102% in the first quarter to 240,706 with originations up 89% to $2.1 billion. Meanwhile, its conversion rate improved from 14% to 19.1% because of an update in its AI model that makes as many as 1 million predictions per applicant to determine whether to lend to the applicant and what interest rate to charge.

Overall, revenue jumped 67% to $213 million, and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved from a loss of $20.3 million to a profit of $42.6 million.

Now, several Wall Street analysts have turned bullish on Wall Street, and some see considerable upside to the stock.

What Wall Street thinks about Upstart

According to Tipranks, of the 11 analysts that have rated Upstart in the last three months, four analysts rate it a buy and seven call it a hold. However, the average price target for the stock is $65.33, or a 39% upside on average.

Among the analysts that are most bullish on Upstart are Peter Christiansen of Citi, who rates the stock a buy and gives it a price target of $83; Dan Dolev of Mizuho, who gives it a buy rating and a price target of $83; and Kyle Peterson of Needham, who gives it a buy rating and a price target of $70.

Christiansen has noted Upstart's increasing interest from private credit managers and improving partner network. Dan Dolev recently reiterated a buy rating after double upgrading the stock last year in response to the company's improved profitability, and it's capturing the benefits from AI in its updated model. Kyle Peterson of Needham also sees an improving funding backdrop and balance sheet at Upstart driving the stock higher.

Is Upstart a buy?

Wall Street forecasts on their own aren't a good reason to buy the stock, but they can alert you to good buys. Upstart has its share of naysayers as well. Nearly 25% of the stock is sold short, and Goldman Sachs gave it a sell rating in February with a price target of $15.

However, Upstart's business is improving in multiple ways. In addition to the preceding numbers, the company is increasingly tapping into the auto and home loan markets, which represent the biggest addressable markets in front of it. In the first quarter, auto originations grew five times over the last year to $61 million, while home loans grew six times to $41 million. That still represents a small fraction of the company's business, but there is potential for it to get much larger.

Upstart's business model is also scalable. The tech platform fully automates more than 90% of loan applications and can therefore scale up to make more loans at a relatively low marginal cost. Operating expenses grew by just 11% in the first quarter even as fee-based revenue was up 34%.

Overall, Upstart's technology appears to give it a competitive advantage, and it's seeing momentum in customer demand and funding partnerships. If its momentum continues, its profit should rapidly improve.

With a long runway of growth, Upstart looks like a good buy.

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

Before you buy stock in Upstart, consider this:

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

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