The technology sector has helped lead the market higher over the past decade, and with new technologies such as artificial intelligence (AI) and autonomous driving continuing to emerge, there is every reason to believe it can do the same over the next decade.

Let's look at three leading tech companies to buy this year.

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

1. Nvidia

Graphics processing units (GPUs) maker Nvidia (NASDAQ: NVDA) has established itself as the leading semiconductor company in the world. The strength of GPUs lies in their parallel processing capabilities, which allow them to perform many calculations at the same time. This capability makes these powerful chips ideal for running AI workloads in the data center.

The real secret to Nvidia's successes, though, is its CUDA software program. Created to expand the market for GPUs beyond their original intent of speeding up graphics rendering in video games, Nvidia aggressively pushed the software platform into universities and research labs in its early days, which helped make it the platform upon which developers learned to program GPUs for various tasks.

In the years since, the company has built a collection of tools and libraries that help improve the performance of its GPU for use in running AI workloads. This has helped give the company a dominant market share in the GPU space of more than 80%.

As the AI infrastructure market continues to grow, Nvidia continues to be the biggest beneficiary. However, that's not its only growth market, and the company also sees a big future opportunity in the automobile and autonomous driving sector. After all, autonomous vehicles need to perform quick calculations, which is the strength of GPUs, so they don't crash.

Since Nvidia doesn't have a recurring revenue stream, any slowdown in its end markets is a risk, but right now these markets still appear to be in the early days of their growth cycles.

2. Alphabet

Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) is certainly not without its risks, as some investors fret over AI disrupting its search business, while at the same time, it faces legal remedies from the U.S. government after losing an antitrust trial. However, the company has a collection of very attractive businesses and investors have largely ignored the advantages in search the company has.

Alphabet is about much more than Google search. Its YouTube business is not only the most-watched streaming platform, but it is also one of the largest digital advertising platforms in the world.

Meanwhile, its cloud computing unit, Google Cloud, is Alphabet's fastest-growing business, as it helps customers build out and run AI models and apps on its platform. Also not to be overlooked is its robotaxi business, Waymo, which has a first-mover advantage in the U.S. and is expanding rapidly.

That said, Google is still Alphabet's bread and butter, but it's not time to write this dominant search engine off just yet. Google has a large distribution and ad network advantage that should not be overlooked. Its distribution advantage comes from its popular Android smartphone operating system and Chrome browser, which use its Google search engine as a default.

Meanwhile, it has a revenue-sharing agreement with Apple and browser companies like Opera to run their search queries, as well. In addition, it has spent decades building one of the largest ad markets on the planet, with an ability to serve not only national advertisers, but also local businesses.

Alphabet also knows how to monetize search better than any company, and as the world moves toward AI search and chatbots, it's focused on profiting from queries that have commercial intent. That's why when it recently launched its new AI search mode, it included several commerce-focused features aimed at enhancing monetization, such as "Shop by AI," which allows users to find products simply by describing them, virtually try on clothes using a photo, and even track prices.

With unmatched distribution, a massive ad network, and a focus on commerce monetization, Alphabet is well situated to be an AI search winner.

3. Salesforce

Salesforce (NYSE: CRM) has long been the leader in customer relationship management software, and now it's setting its sights on becoming a leader in AI agents through its new Agentforce platform.

The company's core value proposition has always been about unifying customer data, and it has expanded this concept into the data center with its Data Cloud offering. Through acquisitions, it's also established a leadership position in employee and customer-facing apps, such as Slack and Tableau. This type of ecosystem is an ideal environment for AI agents to interact with this data and use it to automatically perform tasks.

Agentforce includes pre-built AI agents that can help businesses streamline tasks, as well as low-code and no-code tools that let customers design their own custom AI agents with little technical expertise. It has also established an Agentforce marketplace with more than 200 partners to offer more templates and broaden use cases. Thus far, Agentforce has seen solid momentum, with it already having more than 4,000 paying customers since its October launch and many more in pilots.

Salesforce is looking to lead a digital labor revolution. It plans to accomplish this through its ADAM framework that combines agents, data, apps, and metadata into one platform. It recently introduced a new consumption-based model that better aligns agent costs with business outcomes to help improve customer satisfaction and increase adoption.

Agentic AI is a competitive space, but Salesforce looks like it has the platform to be a winner.

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 $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

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Geoffrey Seiler has positions in Alphabet, Opera, and Salesforce. The Motley Fool has positions in and recommends Alphabet, Apple, Nvidia, and Salesforce. The Motley Fool has a disclosure policy.

Apple (NASDAQ: AAPL) shares are down 18% in 2025 (as of June 6). This makes Apple the worst-performing "Magnificent Seven" constituent this year, besides Tesla. Investors are probably concerned about tariff uncertainty and the company's slow progress with artificial intelligence (AI).

The stock is currently 21% below its peak. So, it has some work to do to get back to its former glory. Legendary investor Warren Buffett and his conglomerate, Berkshire Hathaway, have sold a sizable chunk of their shares in the past several quarters.

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 »

However, should you go against the Oracle of Omaha's moves and buy the dip on Apple stock? I think the answer might surprise you.

It's easy to recognize the positive traits

I mention Buffett because many individual investors like to follow his buy and sell decisions. Clearly, when Berkshire first bought Apple in early 2016, they must've thought the tech giant was a high-quality enterprise. It's not hard to see why.

Apple's brand is arguably the most recognizable in the world. This position wasn't created overnight. It took years and years of introducing truly exceptional products and services, that were well designed and incredibly easy to use, on a global scale. Apple is an icon, to say the least.

That brand has helped drive Apple's pricing power. And this supports the company's unrivaled financial position. Apple remains an unbelievably profitable business. It brought in $24.8 billion in net income in the latest fiscal quarter (Q2 2025 ended March 29).

Apple's products and services are impressive on their own. However, it's the combination of both of these aspects that creates the powerful ecosystem. Consumers are essentially locked in, which creates high barriers for them to switch to competing products. This favorable setup places Apple in an enviable position from a competitive perspective.

Even the best deal with issues

Despite Apple's market cap of nearly $3.1 trillion, which might make some investors believe it's immune to external challenges, this business is dealing with some notable issues recently. There are three that immediately come to mind.

The first problem is that Apple's growth engine seems to be decaying. Net sales were up less than 7% between fiscal 2021 and fiscal 2024. And they're up just over 4% through the first six months of fiscal 2025. According to management, there are likely over 2.4 billion active Apple devices across the globe. That number continues to rise with every passing quarter, but you get an idea of how ubiquitous these products are. Plus, the maturity of the iPhone, now almost two decades into its lifecycle, might lead to limited opportunities to further penetrate markets.

Critics can also call out Apple's slow entrance into the AI race. For example, we won't see an AI update to Siri until next year, a launch that was delayed. At the same time, it seems like other companies are moving rapidly to win the AI race.

Lastly, Apple has been and could continue to be drastically impacted by the tariff situation. China, which has gotten the most attention from President Donald Trump during the ongoing trade tensions, has been a manufacturing powerhouse for Apple. The business is being forced to shift its supply chain around to minimize the impact. Apple CEO Tim Cook said that the situation makes it challenging to forecast near-term results.

There's no margin of safety

Even though this stock trades 21% off its peak, investors aren't really getting a bargain deal here. The price-to-earnings ratio is 32 right now. That's not cheap for a company whose earnings per share are only expected to grow at a compound annual rate of 8.8% between fiscal 2024 and fiscal 2027.

In my view, there's zero margin of safety. If you're an investor who wants to generate market-beating returns over the next five years, I don't think you should buy Apple today.

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

Before you buy stock in Apple, 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 Apple 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

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Tesla. The Motley Fool has a disclosure policy.

At the end of this year, Warren Buffett will be stepping down as Berkshire Hathaway's CEO. Buffett has built an incredible track record of success since taking over the business in 1965 and using it as the foundation for an investment conglomerate that would go on to become one of the world's largest and most successful companies.

Buffett mostly made his name and delivered fantastic returns for shareholders through the principles of value investing, but Berkshire has also come to have a larger exposure to technology trends and growth stocks in recent years. And in the tech space, no trend is bigger or more important than artificial intelligence (AI) right now. With that in mind, read on for a look at two stocks that account for roughly 22% of Berkshire Hathaway's $282 billion stock portfolio.

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

1. Apple

Keith Noonan (Apple): With a market capitalization of $3 trillion, Apple (NASDAQ: AAPL) stands as the world's third-largest company, trailing only Microsoft and Nvidia. Coming in at 21.6% of Berkshire's total stock portfolio, it's also the investment conglomerate's single largest publicly traded company. It retains that distinction even though Buffett's company sold more than 600 million shares of Apple stock last year.

In general, Berkshire Hathaway has been reducing its stock holdings and building up its cash position recently. The move likely reflects concerns that the market at large has become expensive relative to the level of macroeconomic and geopolitical risks that Berkshire's analysts see on the horizon. On the other hand, the move to significantly reduce its Apple holdings likely reflects some specific concerns facing the business.

While Apple's leading position in mobile hardware gives it a strong foundation to build out its artificial intelligence (AI) business, the company also seems to be behind leading players including Microsoft, Alphabet, and Meta Platforms in some key respects. For example, Apple has reportedly had significant trouble getting its next-gen, AI-powered Siri platform up to the performance levels that developers were targeting.

Additionally, Apple is facing some significant challenges in the Chinese market. The rollout of the company's Apple Intelligence platform was delayed last year because Apple had not found a Chinese company to partner with to roll out the software locally. As a result, sales for the iPhone 16 were relatively soft in the market. The mobile hardware giant has now partnered with Alibaba Group Holding to make its AI software available, but Chinese customers are still showing increased preference for domestic technology brands -- and geopolitical dynamics could create continued headwinds.

Berkshire's move to reduce its position in Apple has meant that Buffett's company has also actually reduced its investment exposure to the overall AI trend. On the other hand, Apple has still retained its status as Berkshire's largest stock holding -- and it seems clear that Buffett remains a big fan of the business. Apple has yet to match the AI successes of some other top tech players, but the company's many strengths suggest it still has many opportunities to be a big winner in the space.

2. Amazon

Jennifer Saibil (Amazon): Amazon (NASDAQ: AMZN) makes up a small percentage of the Berkshire Hathaway portfolio, and Buffett didn't even buy it. He said that one of the portfolio's investing managers, Todd Combs or Ted Weschler, pushed the button on Amazon stock, because tech isn't really in his wheelhouse. However, he's also said that he made a mistake by not buying it earlier.

Amazon is so much more than AI, but generative AI is leading it forward today, representing its greatest growth opportunities. Amazon Web Services (AWS) is Amazon's cloud computing business, where much of the generative AI is taking place. It's the largest cloud services business in the world, with 30% of the market, according to Statista.

CEO Andy Jassy believes that very soon all apps will be built with a generative AI component, like databases and storage today. Most of that is going to be built on the cloud, and as the leader, Amazon will account for a vast amount of it. "Before this generation of AI, we thought AWS had the chance to ultimately be a multi-hundred-billion dollar revenue run rate business," Jassy said on a recent earnings call. "We now think it could be even larger."

To make that happen, Amazon offers the largest assortment of generative AI tools and services throughout the three layers of its program. The bottom layer is complete customization for its largest clients to build their own large language models (LLMs), the foundation of generative AI. The middle layer is semi-custom solutions through the Amazon Bedrock program, and Amazon offers several tools in the top layer for small businesses that need ready-made programs. These are tools like the ability to create full product descriptions based on prompts.

AWS already pulls more than its own weight for Amazon. Sales increased 17% year over year in the first quarter, making it the second-fastest-growing segment behind advertising, and it accounted for 63% of operating income.

Will Berkshire Hathaway buy more Amazon stock after Buffett steps down as CEO at the end of the year? It will be interesting to see whether or not the equity positions change without Buffett in the top spot.

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

Before you buy stock in Apple, 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 Apple 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

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jennifer Saibil has positions in Apple. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Alibaba Group 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.

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.

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 »

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.

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 $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

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.

For the last couple of years, it's been easy to group the "Magnificent Seven" together. These massive companies have become the dominant tech players and have taken advantage of artificial intelligence (AI) like no other group of companies in the market.

But once President Donald Trump took office and enacted sweeping tariffs, the group began to diverge based on how tariffs impacted their supply chains and the types of products and services they sold.

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 »

Microsoft (NASDAQ: MSFT) has been one of the strongest, most resilient performers in the group. Is it time to double down on Microsoft stock today?

Riding Azure's momentum

While all the companies in the Magnificent Seven operate in the tech sector, most of them have been able to develop diversified revenue streams. Microsoft has many unique tech businesses, including cloud services, Microsoft Office 365 products, gaming, LinkedIn, search and advertising, and more.

Luckily for Microsoft, many of these businesses are services the company provides and therefore are less impacted by tariffs, which likely explains its strong performance in 2025 (as of June 3).

MSFT data by YCharts.

But a big reason for the company's strong performance is Azure, which falls under the company's cloud services and products category. Azure and other cloud services revenue in the company's third fiscal quarter of 2025 (quarter ended March 31, 2025) grew 35% year over year.

Azure is the foundation of Microsoft's artificial intelligence offerings and business. Launched in 2010, Azure started as a cloud computing network of data centers that companies could run their business on instead of maintaining their own infrastructure.

Since then, Azure has branched out to offer numerous other products, including in artificial intelligence. Through a partnership with OpenAI, Azure provides AI models that developers and businesses can leverage to build their own AI applications. Microsoft has also integrated AI tools from Azure into its own applications, such as Microsoft 365 Copilot, to automate repetitive tasks and improve efficiency.

Many investors questioned Microsoft's significant capital expenditures (capex) on AI over the last two to three years, wondering when they would see a payoff, which has now started to play out. Interestingly, on the company's most recent earnings call, Microsoft CFO Amy Hood pointed out that it's getting harder to separate AI-related revenue from non-AI-related revenue, as the two are starting to feed off of one another.

Evercore analyst Kirk Materne raised his price target on Microsoft from $500 to $515 in late May and maintained a buy rating on the company. Materne said that not only is Microsoft all in on AI, but the more traditional cloud business also still has plenty of runway, considering only around 20% of information technology workloads run in the cloud today -- a number Materne thinks could eventually increase to 80%. And AI tools could be a way to bring more businesses onto the cloud. Materne estimates that Microsoft's AI revenue could reach upwards of $110 billion by fiscal year 2028.

Time to double down?

There are several reasons to double down on Microsoft. For one, it is arguably the company least impacted by tariffs in the Magnificent Seven. As Morningstar points out, the company "has minimal risk exposure to retail, advertising spending, cyclical hardware, or physical supply chains." This should make it more resilient as the trade war continues to play out.

Microsoft's cloud and AI business is also starting to thrive. The company is reaping benefits from all the capex spending and is well-positioned to further grow revenue as the digital transformation of the business world continues to progress. Finally, Microsoft is one of just a few companies in the world to hold the highest possible credit rating from both Moody's and S&P Global. This makes it a source of stability throughout the economic cycle.

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

Before you buy stock in Microsoft, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $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!*

Now, it’s worth noting Stock Advisor’s total average return is 789% — 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 2, 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. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Moody's, Nvidia, S&P Global, 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.

Warren Buffett has proven his ability to deliver market-beating gains, and thanks to this, build wealth over the years. The billionaire investor, at the helm of Berkshire Hathaway, posted a 19.9% compounded annual increase over nearly 60 years -- and that's as the S&P 500 index recorded a 10.4% such gain. All of this helped his portfolio reach $258 billion as of the closing of the most recent quarter.

Though Buffett's biggest holding is Apple, the billionaire generally doesn't invest in technology stocks, so you might not think of turning to this top investor for inspiration when shopping for artificial intelligence (AI) players. But here's some good news: We actually can use some of Buffett's investing principles to identify smart buys in any industry.

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 »

Here, I'll consider two elements that consistently drive Buffett's investment decisions, and these are valuation and competitive advantage. He aims to get in on stocks at a cheap or reasonable level, and he favors stocks that have what it takes to stay ahead of rivals over time. Let's check out two Buffett-style AI stocks that are winning in both of these areas -- and could build long-term wealth.

1. Alphabet

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is a company that you probably have some interaction with on a daily basis. The company owns Google Search, the world's most popular search engine with about 90% market share -- and this business has driven Alphabet's revenue and net income into the billions of dollars. This is the result of advertisers paying to promote their products and services across the Google platform in order to reach us.

This search business has a solid moat, or competitive advantage, thanks to its performance and position as part of our daily routine -- when we don't know something, we don't just search for it, we "Google it." So, as long as Google Search continues to offer us the performance we expect, it's likely to maintain its leadership.

And here's how Alphabet is ensuring that happens: The company has invested heavily in AI, even developing its own large language model (LLM), Gemini, to improve and expand the capabilities of Google Search. This should please users, and as a result, keep advertisers coming back and potentially even spending more.

On top of this, the AI investment is helping Alphabet's Google Cloud business deliver double-digit revenue gains quarter after quarter. Google Cloud sells various AI products and services to customers, and demand is high as the AI boom continues.

Along with this solid competitive advantage, Alphabet offers a valuation that might even please the bargain-hunting Buffett. Alphabet, trading for 18x forward earnings estimates, is the cheapest of the Magnificent Seven tech stocks by this measure.

2. Nvidia

Nvidia (NASDAQ: NVDA) is clearly on every AI investor's radar screen. The company dominates the AI chip market, and this has helped it generate soaring earnings over the past few years -- with revenue and profit reaching record levels. But this stock doesn't look like it's in a bubble ready to burst. The company's solid reputation for excellence, along with its commitment to innovation, represents a moat. Nvidia aims to launch new AI chip updates on an annual basis, offering rivals little room to jump ahead.

And here's something else Buffett would like: the quality of Nvidia's leadership. Jensen Huang founded Nvidia more than 30 years ago and has successfully guided the company ever since. He's known for his resourcefulness, rapidly finding solutions to problems, and commitment to keeping Nvidia ahead of the pack.

Strong management is crucial for a company's long-term success, and Buffett has recognized the importance of this to him. "When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever," he wrote in his 1988 letter to shareholders.

Now, let's look at valuation. Nvidia isn't the cheapest AI stock around, but after recent declines across the sector, valuation has come down -- and today, it's at a very reasonable level considering the company's AI prospects. The stock trades for 31x forward earnings estimates, down from 50x earlier this year.

So, right now, Nvidia's moat, leadership, and reasonable price make it a Buffett-style stock that could help investors build significant wealth over the long term.

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 $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!*

Now, it’s worth noting Stock Advisor’s total average return is 979% — 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

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Berkshire Hathaway, and Nvidia. The Motley Fool has a disclosure policy.

Sunny days and summertime festivities are on the horizon for June. But there's no guarantee the clouds overhanging the broader market will dissipate.

Instead of trying to guess what the stock market will do in the short term, a better approach is to invest in companies with strong underlying investment theses that have the staying power to endure economic cycles.

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 »

Here's why these Fool.com contributors see Apple (NASDAQ: AAPL), Shopify (NASDAQ: SHOP), Cava Group (NYSE: CAVA), ExxonMobil (NYSE: XOM), and Energy Transfer (NYSE: ET) as five top stocks to buy in June.

Apple's pricing power will be put to the test

Daniel Foelber (Apple): There are 30 components in the Dow Jones Industrial Average (DJINDICES: ^DJI), and the worst-performing year to date is health insurance giant UnitedHealth (NYSE: UNH) -- which crashed due to cost pressures, regulatory scrutiny, suspended guidance, and another major leadership change. However, it's the second-worst performing Dow stock that is piquing my interest in June -- Apple.

Apple is down 22% year to date at the time of this writing -- making it the worst-performing "Magnificent Seven" stock. I think the sell-off is an excellent opportunity for long-term investors.

The simplest reason to buy Apple is if you think it can pass along a decent amount of tariff-related cost pressures. The latest update at the time of this writing is a 25% tariff on smartphones made outside the U.S. And since Apple assembles the vast majority of iPhones in China, the tariff could directly impact its bottom line.

Given higher labor costs and manufacturing challenges, moving production to the U.S. isn't a viable option. So, the million-dollar questions are how long tariffs will last and if Apple can pass along some of its higher costs to consumers.

A major catalyst that could drive iPhone demand even if prices go up is the upgrade cycle. Apple releases new iPhones every September. Most consumers aren't upgrading every year, but rather, waiting until they need to upgrade or the features appeal to them.

The upcoming iPhone 17 could have far more artificial intelligence (AI) features than the iPhone 16 -- which could attract buyers even with a higher price tag. Investors will learn more about Apple's technological advancements at its Worldwide Developers Conference from June 9 to 13.

Also, in Apple's favor, its pricing has stayed consistent for years. The base price of a new iPhone hasn't changed since 2017 as the company has preferred to keep prices low to get consumers involved in its ecosystem to support growth in its services segment. Apple's product growth has been weak in recent years, but the services segment has flourished, led by Apple TV+, Apple Music, Apple Pay, iCloud, and more.

Given tariff woes, it's easy to be sour on Apple stock right now. But the glass-half-full outlook on the company is that if tariffs do persist, at least they are coming during a time when Apple is expected to make by far its most innovative iPhone ever.

All told, long-term investors looking for an industry-leading company to buy in June should consider scooping up shares of Apple.

A growing e-commerce platform giant

Demitri Kalogeropoulos (Shopify): Shopify stock returns are roughly flat so far in 2025, but there are brighter days ahead for owners of this e-commerce services giant. The company just wrapped up a stellar Q1 period, as sales growth landed at 27%. Sure, that was a modest slowdown from the prior period's 31% increase, but it still marked the eighth consecutive quarter of growth of at least 25%.

Merchants are finding plenty of value in Shopify's expanding suite of services, even through the latest disruptive tariff-fueled trade disruptions. Merchant solutions revenue jumped 29%, helping lift sales growth above the company's 23% increase in gross sales volumes. "We built Shopify for times like these," company president Harvey Finklestien said in a press release. "We handle the complexity so merchants can focus on their customers."

Shopify is having no trouble converting those market share gains into rising profits, either. Operating income more than doubled to $203 million, and the company achieved a 15% free cash flow margin, up from 12% a year ago.

Concerns over more trade disruptions have likely kept a lid on the stock price following that positive Q1 earnings report in early May. But the company still expects 2025 growth to be in the mid-20s percentage range year over year. Shopify affirmed its initial aggressive outlook for free cash flow, too, although management sees a slightly slower profit increase (in the low-teens percentage rate) ahead for the year.

Investors can look past that minor profit downgrade and focus on Shopify's broader growth story that involves more merchants signing up for more services and booking more transactions on its platform. Success here should make the stock a great one to add to your portfolio in June, with the aim of holding it for the long term.

A Mediterranean feast for growth investors

Anders Bylund (Cava Group): Shares of Cava Group are down more than 40% in the last six months. That doesn't exactly make it a cheap stock, since Cava trades at 69 times earnings and 9.2 times sales even now.

But the Mediterranean fast-casual restaurant chain is growing quickly while reporting profits, and also widening its profit margins over time. That's a lucrative combo that deserves a premium stock price.

Cava's success hasn't gone unnoticed, despite the plunging stock chart. Two-thirds of analysts who follow this stock have issued a "buy" or "overweight" rating, and Wall Street's average target price is 44% above Thursday's closing price.

The company has a habit of absolutely crushing each quarter's analyst estimates across the board, including a huge surprise in May's first-quarter report. The average analyst expected earnings of just $0.02 per share on revenues in the neighborhood of $281 million. Instead, Cava reported earnings of $0.22 per share and $332 million in top-line sales.

A report like that would normally boost Cava's stock, but the market reaction was negative. Management noted that same-store sales growth could slow down in the second half of 2025, since the unpredictable economy is weighing down consumer spending. Cava's healthy salad bowls and pita wraps are on the pricey side, making the chain a vendor of everyday luxuries. This strategy could make Cava vulnerable to shifts in consumer confidence, especially when paired with the stock's lofty valuation.

So you won't find the stock in Wall Street's bargain basement today, but it did move down from the high-end valuation penthouse it inhabited a few months ago. If you like your investments fresh and flavorful, Cava's combination of healthy growth and expanding profits could be a recipe for long-term portfolio success.

42 dividend raises, with more coming up

Neha Chamaria (ExxonMobil): With renewables on the rise, people often believe the oil and gas industry isn't where to bet on anymore. While the global demand for energy overall is only expected to grow, driven by developing countries, ExxonMobil is in a sweet spot. It is working hard to bring down its break-even oil price significantly to stay relevant in the long run. At the same time, it is developing new low-carbon products and solutions.

It believes these new businesses could have potential addressable markets worth $400 billion by 2030 and over $2.3 trillion by 2050. Biofuels, carbon capture and storage, and low-carbon hydrogen are just some of the new products ExxonMobil is focused on.

Overall, ExxonMobil wants to produce "more profitable barrels and more profitable products" and is also cutting costs aggressively. The oil and gas giant believes a better product mix and its cost-reduction efforts combined could add nearly $20 billion in incremental earnings and $30 billion in operating cash flows by 2030.

In short, ExxonMobil is already charting a growth path to 2030 without compromising on capital discipline. It wants to generate big cash flows and maintain a strong balance sheet even through oil market down cycles, and ensure it can continue to reward shareholders with a sustainable and growing dividend on top of opportunistic share buybacks.

ExxonMobil has already proven its mettle when it comes to shareholder returns. It has increased its dividend each year for the past 42 consecutive years. Even without dividends, the stock has more than doubled shareholder returns in the past five years. With ExxonMobil stock now trading almost 20% off its all-time highs, it is one of the top S&P 500 (SNPINDEX: ^GSPC) stocks to buy now and hold.

Ready to rebound

Keith Speights (Energy Transfer): I'm not worried in the least that Energy Transfer LP's unit price is down year to date. This pullback presents a great opportunity to buy the midstream energy stock in June.

Energy Transfer's business continues to rock along. The limited partnership (LP) set a new record for interstate natural gas transportation volume in the first quarter of 2025. Its crude oil transportation volume jumped 10% year over year in Q1. Natural gas liquid (NGL) transportation volumes rose 4%, with NGL exports increasing 5%.

The LP's growth prospects remain solid. Energy Transfer commissioned the first of eight natural gas-powered electric generation facilities in Texas earlier this year. It plans to partner with MidOcean Energy to build a new LNG facility in Lake Charles, Louisiana. Artificial intelligence (AI) is a new growth driver, with Energy Transfer agreeing to provide natural gas to Cloudburst Data Centers' AI data centers.

The Trump administration's tariffs shouldn't affect Energy Transfer much. All of the company's 130,000-plus miles of pipeline are in the U.S. Energy Transfer has already secured most of the steel to be used in phase 1 of its Hugh Brinson pipeline project. Co-CEO Marshall "Mackie" McCrea said in the Q1 earnings call that management doesn't "expect to see any major challenges, if any challenges at all, selling out our terminal every month, the rest of this year."

Even if Energy Transfer's unit price doesn't move much, investors will still make money thanks to the LP's generous distributions. The midstream leader's forward distribution yield currently tops 7.3%. Energy Transfer plans to increase its distribution by 3% to 5% each year.

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

Before you buy stock in Apple, 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 Apple 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 $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!*

Now, it’s worth noting Stock Advisor’s total average return is 979% — 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

Anders Bylund has positions in UnitedHealth Group. Daniel Foelber has no position in any of the stocks mentioned. Demitri Kalogeropoulos has positions in Apple and Shopify. Keith Speights has positions in Apple, Energy Transfer, and ExxonMobil. Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Shopify. The Motley Fool recommends Cava Group and UnitedHealth Group. The Motley Fool has a disclosure policy.

One of the things that makes Warren Buffett a widely admired investor is his willingness to share how he does it. Buffett has been a student of the market since his first stock purchase more than 80 years ago. He shares mistakes made and lessons learned every year in his letter to Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) shareholders and at the annual shareholder meeting.

Investors also gain insights into his and his team's investments through Securities and Exchange Commission filings disclosing Berkshire's portfolio changes.

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 »

While Buffett has been a net seller of stocks the past few years, he still oversees a portfolio worth $281 billion as of this writing. And nearly half of that is invested in just three exceptional stocks.

1. Apple (22% of portfolio value)

Buffett first bought shares of Apple (NASDAQ: AAPL) in 2016 when it traded at a valuation too low to ignore. Buffett saw the powerful moat created by the iPhone, locking hundreds of millions of consumers into the Apple ecosystem, and Berkshire Hathaway poured tens of billions of dollars into the stock duringthe next couple of years. At one point, Apple accounted for more than half of Berkshire's marketable equity portfolio. After selling a significant chunk in 2024, it now accounts for 22% of the portfolio.

As mentioned, Apple benefits from a wide competitive moat thanks to the success of its iPhone. Apple's iPhone sales topped $200 billion in each of the past three years, and sales are on track to grow in 2025. The iPhone is the center of Apple's growing ecosystem of devices and services, helping the rest of the business grow.

The services segment is a particularly bright spot for Apple, currently boasting a $100 billion annual run rate. Apple's services are significantly higher margin sources of revenue than its devices. As one of the fastest-growing segments of the business, Apple's overall profit margins are expanding as a result. When combined with Apple's huge share repurchase program, Apple is capable of producing meaningful growth in earnings per share.

Apple faces some headwinds, though. First of all, it's in the crosshairs of the tariffs planned by the Trump administration. Its supply chain relies heavily on China and Taiwan. As a result, its costs could increase and it may have to pass those expenses on to consumers. That could dent its device sales.

Additionally, Apple has been slow to develop competitive artificial intelligence services. It risks losing customers looking for more AI integrated capabilities from their phones and services. Apple customers tend to be locked into the ecosystem, which helps minimize that risk.

Apple stock has fallen from its late-2024 all-time high, trading more than 20% below its peak. At its current price, the stock's valuation is about 28 times forward earnings. While Apple isn't the fast grower it once was, it holds a lot of potential to unlock value with AI services in the future while its iPhone and services businesses remain rock solid today. As such, it looks like a fair price to pay for the tech giant.

2. American Express (16%)

American Express (NYSE: AXP) is a longtime holding for Buffett. He put about $1.3 billion into the stock in the 1990s and hasn't touched it since. Today, those shares are worth nearly $45 billion.

Amex separates itself from other credit card companies by operating as both the card issuer and as the payments network. Most issuing banks partner with Visa or Mastercard to remit payments to vendors from customer accounts. Doing both allows Amex to exercise more control over the business and capture more of the economics of card payments. To that end, it's done extremely well, commanding higher interchange fees from businesses by attracting affluent households to its high-fee products.

Amex has successfully raised the fees on its cards during the past few years. It reported an 18% year-over-year increase in net card fees during the first quarter, while its customers spent just 6% more compared to the first quarter of 2024. That said, the fees collected from processing payments is still its biggest source of revenue.

During the past few years, Amex has shifted strategies to offer more credit products to customers. Its charge cards historically required customers to pay their full balance each month, but Amex now lets customers pay over time with interest. Its interest income grew quickly from 2021 through 2024, but slowed to just 11% growth in the first quarter. That's mostly due to the law of large numbers, as interest income now accounts for nearly a quarter of its revenue.

Amex may be a bit more insulated from an economic slowdown compared to other banks and payment processors due to its focus on high-income households and lesser focus on interest income. As such, it's less susceptible to loan defaults. Amex trades for a significant premium relative to its most comparable competitor, Capital One Financial, but it arguably deserves a premium due to the strength of its customer base, its scale, and its ability to boost revenue through fee increases and more interest-bearing services.

3. Coca-Cola (10%)

Coca-Cola (NYSE: KO) is another stock Buffett bought more than 30 years ago and has no plans to sell anytime soon. His original $1.3 billion investment in the company (yes, the same amount he invested in Amex) is now worth about $29 billion. Not to mention, Coke's paid out more and more each year in dividends. Berkshire shareholders will collect roughly $816 million in dividends from Coca-Cola this year.

The appeal of the company is two-fold.

First of all, it has one of the strongest global brands in history. The red Coca-Cola logo is known the world over transliterated into practically every language known to man. Its brand strength extends well beyond its flagship product, though, to include top-selling carbonated drinks, water, juice, and sports drinks. That gives it considerable pricing power, which it has used to help offset inflation in recent years.

The second factor is its huge scale, which has made it cost-effective to create localized supply chains for producing and packaging its products. That's come to the fore in recent months as global trade policies put pressure on other global companies. Coca-Cola has managed to avoid the impact of tariffs more than its competitors, enabling it to keep its costs down. During its first-quarter earnings call, management warned it's not immune to global trade dynamics, but it's better positioned than most businesses.

Both of those advantages helped Coke produce strong first-quarter results while reaffirming its forecast for the full year. Revenue grew 6% and earnings per share grew 1%. Those numbers might not seem impressive, but they look great compared to Coke's biggest rival PepsiCo, which saw revenue and earnings per share shrink in the first quarter.

Coke's relative strength hasn't gone unnoticed. The stock price has climbed 15% year to date as of this writing, and the shares trade at 24 times forward earnings. That's higher than its historic average, but not outrageously so. With its strong position in the current economic environment, it might be worth paying a premium for Coca-Cola stock. You'll also collect a nice 2.8% dividend yield at the current price.

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

Before you buy stock in Berkshire Hathaway, 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 Berkshire Hathaway 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 $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!*

Now, it’s worth noting Stock Advisor’s total average return is 979% — 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

American Express is an advertising partner of Motley Fool Money. Adam Levy has positions in Apple, Mastercard, and Visa. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Mastercard, and Visa. The Motley Fool recommends Capital One Financial. The Motley Fool has a disclosure policy.

The Dow Jones Industrial Average (DJINDICES: ^DJI) index, which includes the 30 most prominent companies in the U.S., is used by some as a benchmark of the American economy. Over the past 10 years, the Dow advanced about 135%, even as the COVID-19 pandemic, inflation, rising interest rates, and other macro headwinds rattled the markets.

Also, over that decade, some well-known companies, including General Electric, ExxonMobil, Pfizer, and Intel, were removed from the index and replaced by higher-growth companies, including Amazon, Salesforce, and Nvidia.

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 »

But despite those occasional changes, the Dow remains a good starting point for seeking out some promising long-term investments. Today, I'll look at two of those stocks -- Apple (NASDAQ: AAPL) and Cisco Systems (NASDAQ: CSCO) -- and explain why they're set to soar in 2025 and beyond.

Apple

Apple's stock has slumped about 20% since the beginning of the year. The bulls shunned the tech titan for four main reasons. First, the Trump administration's unpredictable tariffs, especially against China, could cause its production costs to soar. Second, Apple's AI efforts failed to impress investors as much as OpenAI's ChatGPT and other generative AI platforms. Third, its closely watched mixed reality efforts fizzled out after it halted its production of the Vision Pro.

Lastly, Fortnite publisher Epic Games won a major legal victory against Apple after a U.S. court ruled that the company could bypass its App Store fees with other payment methods. That victory could allow other developers to bypass Apple's 30% fees with a similar payment measure. All of those challenges -- along with Warren Buffett's decision to trim Berkshire Hathaway's big stake in Apple over the past year -- weighed down its stock.

Yet investors are overlooking some of Apple's long-term strengths. It ended its latest quarter with $133 billion in cash and marketable securities, which gives it ample room for fresh investments and acquisitions. It has an installed device base of over 2.2 billion, and it's already locked in over a billion paid subscriptions across all of its services. It could leverage that massive audience to justify its App Store fees as it appeals the Epic Games ruling.

Apple's brand appeal, the stickiness of its ecosystem, and its high switching costs should continue to drive its future sales of iPhones, Macs, iPads, and other devices. Its rollout of new custom chips, its integration of new AI features, and a more affordable version of the Vision Pro -- which might arrive in 2026 or 2027 -- could keep it ahead of its Android-based rivals. As for the tariffs, it could mitigate those impacts by shifting its supply chains to lower-tariff countries like India or Vietnam.

From fiscal 2024, which ended last September, to fiscal 2027, analysts expect Apple's earnings per share (EPS) to grow at a compound annual growth rate (CAGR) of 12%. Its stock still looks reasonably valued at 26 times next year's earnings, and it should head higher once it resolves its near-term issues.

Cisco Systems

Cisco's stock has risen about 6% this year. Investors warmed up to the world's top networking hardware and software company as its growth stabilized and fresh catalysts appeared on the horizon. It struggled in fiscal 2024, which ended last July, as its customers placed too many hardware orders after its previous supply constraints eased in fiscal 2023. A challenging macro environment then drove those customers to deploy those devices at a slower-than-expected rate -- so Cisco's shipments abruptly dried up.

But over the past year, Cisco's hardware sales stabilized as the market's demand finally caught up with its inventories again. It also expanded its observability segment by acquiring Splunk last March, and it's been expanding its cybersecurity business with new AI-powered services such as Hypershield and AI Defense. Moreover, its AI-related infrastructure business continued to expand and generated $1.35 billion in revenue in the first nine months of fiscal 2025. That accounted for 3% of its revenue during those three quarters and easily surpassed its prior goal for generating $1 billion in AI infrastructure revenue for the full fiscal year.

Cisco will probably never become a hypergrowth AI play like Nvidia, yet it provides the essential building blocks for the growing data center, cloud, and AI markets. With $15.6 billion in cash and marketable securities at the end of its latest quarter, it still has plenty of room to expand its higher-growth businesses and maintain its buybacks, which cancelled out over a fifth of its shares over the past decade, for years to come. From fiscal 2024 to fiscal 2027, analysts expect Cisco's EPS to grow at a CAGR of 9% -- and its stock still isn't expensive at 22 times next year's earnings. Simply put, it could head a lot higher over the next few years as its core markets expand.

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

Before you buy stock in Apple, 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 Apple 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 $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!*

Now, it’s worth noting Stock Advisor’s total average return is 979% — 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

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Leo Sun has positions in Amazon, Apple, Berkshire Hathaway, and Pfizer. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, Cisco Systems, Intel, Nvidia, Pfizer, and Salesforce. The Motley Fool recommends GE Aerospace and recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.

Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) are two of the best-known companies in the world.

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 »

*Stock prices used were the afternoon prices of May 24, 2025. The video was published on May 26, 2025.

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

Before you buy stock in Apple, 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 Apple 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 $653,389!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $830,492!*

Now, it’s worth noting Stock Advisor’s total average return is 982% — 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 May 19, 2025

Parkev Tatevosian, CFA has positions in Apple. The Motley Fool has positions in and recommends Apple and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

The stock market has staged an impressive rebound following a turbulent last few months. The S&P 500 index, which had neared bear market territory when it was down 19% from its highs in April, has quickly recouped most of those losses and is now up 1% year to date as of this writing.

News of efforts by the Trump administration to negotiate bilateral trade deals has eased some fears that the worst-case scenario around various trade wars and economic disruptions may not come to pass. Robust corporate earnings by several companies have further bolstered investor optimism, particularly around the transformative potential of artificial intelligence (AI) as a key driver of economic 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. Learn More »

Here are three AI stocks that could be a great buy for your portfolio this month.

1. Apple: A China trade truce winner

The U.S. and China are suspending retaliatory tariffs for 90 days (while keeping some tariffs) as they pursue a more comprehensive trade deal, and that has lessened the uncertainty around Apple (NASDAQ: AAPL).

The company relies heavily on China as a key market, accounting for nearly 17% of its global sales, and as a pivotal part of its supply chain, where over 80% of iPhones are manufactured. The pause on retaliatory tariffs, coupled with exemptions for electronics, allows Apple to focus on accelerating its AI-driven transformation.

The company is leveraging proprietary machine-learning models into a suite of new AI tools and capabilities through its Apple Intelligence initiative across its ecosystem. In its fiscal second-quarter report (for the period ended March 29), revenue climbed 5% year over year, with continued momentum in high-margin services driving an 8% increase in earnings per share (EPS) to $1.65.

These trends are expected to continue. Anticipation is building for the next-generation iOS 19 and iPhone 17, which are likely to be released after this year. The devices will integrate more AI-optimized features that could boost sales as users upgrade.

With shares of Apple still trading down about 18.5% from their 52-week high, the stock appears to be a compelling buy-the-dip opportunity for investors seeking exposure to the AI revolution.

2. AppLovin: A leader in AI-powered adtech

Share prices of AppLovin (NASDAQ: APP) have soared by 339% over the past year, amid accelerating growth and earnings. The advertising technology (adtech) innovator is capitalizing on the strong demand for its suite of mobile advertising solutions, now powered by artificial intelligence. Its Axon AI engine uses machine learning and advanced algorithms to boost ad engagement and conversions.

In the first quarter (for the period ended March 31), advertising revenue surged by 71% year over year, with management crediting its AI enhancements. Even more impressive was the 149% increase in EPS to $1.67.

AppLovin is expanding into the e-commerce sector, leveraging its Axon platform for hyper-targeted advertising for online retailers, which will use real-time data analytics and generative AI as a new growth driver. The company also intends to enter the video streaming market, a diversification beyond mobile gaming ads.

The stock trades at a forward price-to-earnings ratio (P/E) of 33, a reasonable level given the company's trajectory. These tailwinds, backed by overall solid fundamentals, should keep shares of AppLovin climbing higher.

3. Super Micro Computer: AI infrastructure tailwinds

Super Micro Computer (NASDAQ: SMCI) is a pivotal player in AI infrastructure, supplying rack-scale server systems that integrate power, storage, cooling, and software to support graphics processing unit AI chips from Nvidia.

Despite significant growth in recent years, Supermicro (as it is also known) faced several challenges in 2024, including a probe by the U.S. Department of Justice related to accounting concerns. This was reflected in the stock sell-off, with shares currently down about 62% from their all-time high. However, an independent special committee found no evidence of fraud or misconduct, and the company has since filed its audited 2024 annual report. By this measure, Supermicro is emerging as a comeback story.

The company excels in direct liquid cooling technology, which enhances energy efficiency for data-intensive AI workloads. Supermicro projects that over 30% of new data centers globally will adopt liquid-cooled infrastructure in 2025, signaling a major growth opportunity.

With Wall Street estimates for 2025 annual revenue growth of 48% and the stock trading at a forward P/E of just 22, Supermicro offers a compelling mix of high growth and value, making it well-positioned to reward shareholders over the long run.

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

Before you buy stock in Apple, 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 Apple 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 $635,275!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,385!*

Now, it’s worth noting Stock Advisor’s total average return is 967% — 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 May 12, 2025

Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AppLovin, Apple, and Nvidia. The Motley Fool has a disclosure policy.

The interesting thing about this list is that the two buys, Apple (NASDAQ: AAPL) and Pool Corp. (NASDAQ: POOL), have markedly higher valuations than the sell, Kraft Heinz (NASDAQ: KHC). The rationale behind the investment case for the first two lies in their long-term growth prospects -- something not shared by Kraft Heinz. Here's why.

Kraft Heinz is a challenged business

The consumer staples company generates 44% of its sales from condiments, sauces, dressings, and spreads, with 18% coming from easy-to-prepare meals. None of its other food categories (snacks, desserts, hydration products, coffee, cheese, and meats) contributes more than 10% of its sales.

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 »

It's a fast-changing industry subject to changes in consumer preferences, with substantial competition from retailers with their own branded or private-label products. This increasing competition has pressured Kraft's ability to generate revenue growth or margin expansion over the last decade.

As such, the company's return on capital employed (ROCE) lags that of its peer group. ROCE measures how much profit the company generates from its debt and equity. A consistently low ROCE implies that the company can do little to improve profitability by raising equity or issuing debt.

In short, based on current trends, it's a mature low-growth company facing ROCE challenges with a management hamstrung to initiate substantive changes by paying 61% of expected earnings in dividends.

KHC Return on Capital Employed data by YCharts.

Pool Corp., maintaining swimming pools

Continuing the theme of looking at operational metrics like profit margins, revenue growth, and ROCE, a cursory look at the medium-term trends for Pool Corp., a distributor of swimming pool supplies and equipment, suggests problems similar to those of Kraft Heinz.

That said, context counts for a lot, and investors need to recall that companies like Pool Corp. enjoyed an artificial boom during the pandemic lockdown.

The lockdowns encouraged spending on stay-at-home activities and drove investment in new swimming pools. For example, around 96,000 new pools were built in the U.S. in 2020, jumping to about 120,000 in 2021, and then 98,000 in 2022. By 2024, that figure was down to 60,000, and management expects a similar figure this year.

But no matter the amount, every one of those new pools will help add to the installed base that the company can sell into. Considering that it generates almost two-thirds of its sales from the maintenance and minor repair of swimming pools, this creates a significant long-term growth opportunity once the natural correction from the pandemic boom is over.

POOL Operating Margin (TTM) data by YCharts; TTM = trailing 12 months.

Apple and service growth

Apple is on a growth trajectory, focusing on increasing sales of its high-margin services. Like Pool Corp., investors can think of Apple's various devices -- including iPhones, iPads, Macs, wearables, and myriad other devices -- as an installed base for it to sell services into.

It's a growth opportunity in revenue, margins, and cash flow. As you can see below, strong services growth has increased its share of overall revenue. And given services' higher margin profile (currently above 75% compared to almost 36% for products), it's pulling up Apple's overall profit margin.

That increase in profitability is likely to continue improving as services growth continues at a double-digit pace. In fact, Apple now has over a billion paid subscriptions. This will generate ongoing recurring revenue, which will drop down into improved cash flow generation.

Moreover, if you are wondering, here's what Apple's ROCE looks like.

AAPL Return on Capital Employed data by YCharts

Wall Street analysts expect Apple's free cash flow (FCF) to grow from $109 billion in 2025 to $126 billion in 2026 and $139 billion in 2039, implying double-digit increases. Trading at 27 times estimated FCF in 2025, it is not a conventionally cheap stock, and many investors may want to wait for a better entry point. Still, its long-term prospects remain excellent, and it's likely to grow into its valuation in the coming years.

Stocks to buy and sell

The key point is that Pool Corp. and Apple have a pathway to growth via expansion of the installed base of swimming pools and Apple devices, while Kraft Heinz does not have such prospects. The difference shows up in their operating metrics and long-term growth prospects.

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

Before you buy stock in Apple, 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 Apple 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 $635,275!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,385!*

Now, it’s worth noting Stock Advisor’s total average return is 967% — 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 May 12, 2025

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends Campbell's and Kraft Heinz. The Motley Fool has a disclosure policy.

The "Magnificent Seven" is a group of seven American companies with leadership positions in various segments of the technology industry. They got the nickname in 2023 because of their incredible size and their ability to consistently outperform the rest of the stock market.

The Magnificent Seven companies have a combined value of $16.7 trillion, which represents 31.6% of the entire value of the S&P 500 (SNPINDEX: ^GSPC), so they have an enormous influence over the performance of the index.

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 »

Market Cap data by YCharts.

When Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), Meta Platforms (NASDAQ: META), and Tesla (NASDAQ: TSLA) are moving higher as a group, investors who don't own them will generally underperform the S&P 500.

I'm going to introduce you to an exchange-traded fund (ETF) that has more than half of the entire value of its portfolio invested in the Magnificent Seven stocks. It's the Vanguard Mega Cap Growth ETF (NYSEMKT: MGK), and it has consistently beaten the S&P 500 every year since it was established in 2007. Here's why investors might want to buy it for the long term.

A concentrated ETF filled with America's highest-quality companies

Some ETFs hold hundreds or even thousands of different stocks. But the Vanguard Mega Cap Growth ETF holds just 69, and the Magnificent Seven account for 54.9% of the total value of its portfolio:

Stock	Vanguard ETF Portfolio Weighting
1. Apple	13.37%
2. Microsoft	12.24%
3. Nvidia	10.48%
4. Amazon	7.20%
5. Alphabet	4.19%
6. Meta Platforms	4.02%
7. Tesla	3.42%

Data source: Vanguard. Portfolio weightings are accurate as of April 30, 2025, and are subject to change.

Artificial intelligence (AI) could fuel the next phase of growth for each of the Magnificent Seven companies, but in very different ways. Apple, for example, designed a series of chips for its latest iPhones, iPads, and Mac computers to run its new Apple Intelligence software. It provides a suite of AI features, including writing tools and a more powerful version of the Siri voice assistant, which transform the user experience for people with Apple devices.

Tesla is another consumer "hardware" company that has turned its attention to AI. The electric vehicle (EV) giant continues to improve its AI-powered full self-driving software, which could be active on public roads as soon as this year.

Nvidia supplies the world's best data center chips for developing AI models. Apple Intelligence wouldn't be possible without it, nor would Tesla's self-driving software. Microsoft, Amazon, and Alphabet are also some of Nvidia's top customers -- they fill their cloud data centers with AI chips and rent the computing power to developers for a profit.

Their cloud platforms also offer access to the latest ready-made large language models (LLMs) to help accelerate their customers' AI software ambitions.

Then there is Meta Platforms, which uses AI in its recommendation algorithm to show users more of the content they enjoy seeing on its Facebook and Instagram. It also launched an AI assistant last year called Meta AI, which already has nearly a billion users. The company's Llama family of LLMs that power Meta AI have become the most popular open-source models in the world.

Although the Magnificent Seven stocks dominate the Vanguard ETF, it does offer some diversification. Large-cap non-technology stocks like Eli Lilly, Visa, Costco Wholesale, and McDonald's are also among the ETF's top 20 positions.

This Vanguard ETF can help investors beat the S&P 500

The Vanguard Mega Cap Growth ETF delivered a compound annual return of 12.5% since its inception in 2007, comfortably beating the average annual gain of 9.6% in the S&P 500 over the same period.

But the ETF has a highly concentrated portfolio, which can be a recipe for volatility. For example, the S&P 500 fell by as much as 18.9% from its all-time high earlier this year as economic and political uncertainty surged due to President Donald Trump's "Liberation Day" tariffs. However, the ETF was down by 22.3% at the same time, because it has much larger positions in the high-flying Magnificent Seven stocks, which pulled back more sharply than the rest of the market amid the chaos.

As a result, investors shouldn't put all of their eggs in one basket. Instead, they should buy the ETF as part of a balanced portfolio, where it has the potential to boost overall returns.

For example, using the returns cited earlier, a $10,000 investment in the S&P 500 would be worth $15,814 in five years. But if you invest $5,000 in the S&P and $5,000 in the Vanguard ETF, your $10,000 could be worth $16,917 instead.

One thing is for certain: Investors will want exposure to the Magnificent Seven, not only because of their excellent long-term track record, but also because they are leading the way when it comes to new technologies like AI.

Should you invest $1,000 in Vanguard World Fund - Vanguard Mega Cap Growth ETF right now?

Before you buy stock in Vanguard World Fund - Vanguard Mega Cap Growth 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 Vanguard World Fund - Vanguard Mega Cap Growth 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 $635,275!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,385!*

Now, it’s worth noting Stock Advisor’s total average return is 967% — 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 May 12, 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. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Nvidia, Tesla, and Visa. 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.

Apple (NASDAQ: AAPL) stock has been a blockbuster winner for long-term investors. However, the company is now hitting a rough patch. The stock is barely up over the past year, with revenue only slightly up from 2022. This has caused the stock to be dethroned as the largest company in the world by market cap by Nvidia and Microsoft, which are growing much faster than the iPhone maker.

By the end of this year, I believe another big tech stock will surpass Apple in market capitalization. Amazon (NASDAQ: AMZN) looks poised to leapfrog Apple due to its margin expansion, growth of artificial intelligence (AI), and Apple's looming lawsuits. Here's why I predict Amazon stock will finish 2025 ahead of Apple in market capitalization.

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 »

Data by YCharts.

Amazon is recording faster revenue growth

One notch in Amazon's belt compared to Apple is revenue growth. The company has grown its revenue by 102% in the last five years, compared to 46% for Apple, which mostly came during the post-pandemic surge. Amazon is growing faster than Apple at a larger revenue base, too, generating $650 billion in revenue over the last 12 months vs. $400 billion at Apple.

How is Amazon's revenue growing so quickly at such a large scale? It plays in two huge addressable markets: e-commerce and cloud computing. Online shopping is still (slowly) overtaking traditional retail in consumer wallet share, which will drive even further growth for Amazon in 2025. AI has become a boon for Amazon's cloud computing division in Amazon Web Services (AWS), which accelerated revenue growth to 17% year over year last quarter. This segment has sky-high profit margins.

Apple does not have this tailwind at its back, while Amazon will keep benefiting throughout the rest of the year.

More profit margin expansion, government lawsuits

Moving down the income statement, Amazon should have an easier time than Apple expanding its profit margin over the rest of this year and beyond. The stock market is forward-looking and will place a continued premium on Amazon's operating leverage potential. Apple's profit margins may move in the other direction if it gets hurt by tariff costs on imports to the United States from China. Its supply chain is already optimized to the gills, posting 32% operating margins over the last 12 months compared to 11% at Amazon.

Another factor that could hurt Apple's profitability is the looming lawsuits coming for its default search engine payment and App Store fees. A remedy in Google Search's monopoly lawsuit could be to prevent its $20 billion (or more) annual payment to Apple for making Google Search the default engine on the Safari browser. This is a huge percentage of Apple's $127 billion in annual operating income that could evaporate overnight.

A judge already ruled that Apple will need to let developers offer other payment methods within their applications, letting them bypass Apple's 30% fee on in-app purchases. If applications sidestep these payments, another huge cash cow for Apple will disappear.

Data by YCharts.

Amazon has a cheaper holistic valuation

Apple stock looks slightly cheaper than Amazon when defined by trailing earnings, with a price-to-earnings ratio (P/E) of 33 compared to 34 for Amazon. However, when we factor in Amazon's growth potential and the risks facing Apple's business, the future looks much brighter for Amazon's stock.

By the end of this year, it should be clear that Amazon's operating margin will keep expanding along with its durable revenue growth. Apple's business is at risk of losing two huge cash cows that will dampen its overall profitability.

Today, Apple's operating income of $127 billion greatly surpasses Amazon's $72 billion over the past 12 months. This gap today is why Amazon stock has a market cap of $2.18 trillion vs. Apple's $3.15 trillion. Through the rest of 2025, I expect this earnings gap to keep closing, which will cause investors to value Amazon more than Apple, and is why it will finish the year ahead in market capitalization.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $349,648!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $40,142!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $635,275!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.

See the 3 stocks »

*Stock Advisor returns as of May 12, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Brett Schafer has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, 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.

On the back of encouraging pronouncements about its ever-deepening involvement with artificial intelligence (AI), Alphabet's (NASDAQ: GOOG)(NASDAQ: GOOGL) two listed stocks both gained ground on Friday. The pair each rose in excess of 1% following CEO Sundar Pichai's remarks on where the company stands with AI.

Those modest price bumps were sufficient to beat the S&P 500 index, which advanced by 0.7% on the day.

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 »

Aiming for wider AI deployment

Pichai was a guest on All-In, a popular podcast in which business, technology, and political leaders are interviewed at length. Co-host David Friedberg asked the Alphabet leader whether his company was getting disrupted by aggressive peers that are competing in the AI space.

"The dilemma only exists if you treat it as a dilemma," he answered, shrugging off concerns that Alphabet might be losing ground. Many companies in various segments of the tech industry have not only developed AI functionalities, they have deployed them to enhance their offerings. Among the many examples is Microsoft, which is heavily invested in high-profile AI developer OpenAI.

That question could have been inspired by news from another rival, Apple. Last week that company's senior vice president of services, Eddie Cue, said it is pushing for more AI-driven search functionality in its native Safari browser.

Pichai pointed out that Alphabet's Gemini AI platform is embedded in the company's Google search engine, producing results in an AI Overviews box. It's going further with plans for an "AI mode" that will provide users with a fuller and more interactive experience with the technology.

A highly visible proponent of the tech

Alphabet's AI isn't perfect -- much like its traditional search results -- but based on personal experience, I'd say its results are useful most of the time. This indicates to me that the company is indeed dedicated to advancing AI, and as the perennial search king, this should keep it an effective and highly visible user of the technology. Investors were right to be cheered by Pichai's remarks, in my opinion.

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

Before you buy stock in Alphabet, consider this:

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

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

Now, it’s worth noting Stock Advisor’s total average return is 967% — 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 May 12, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Eric Volkman has positions in Apple. The Motley Fool has positions in and recommends Alphabet, Apple, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The past few months have not been kind to most tech stocks. The tech-heavy Nasdaq Composite is down 8% year to date as investors worry that President Trump's tariffs will impede technology companies' growth.

Apple (NASDAQ: AAPL) has not been immune to the volatility with the stock tumbling 22% this year. More importantly, the company is expecting challenges ahead despite solid results from its most recent quarter. Here's where Apple could be one year from now.

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

The good and bad of Apple's second quarter

Investors were wondering how tariffs would play into Apple's latest results and outlook, but they didn't have much of an impact on the fiscal 2025 second quarter (ended Mar. 29). CEO Tim Cook said on the earnings call, "For the March quarter, we had a limited impact from tariffs as we were able to optimize our supply chain and inventory."

Cook noted that Apple is now sourcing many of the iPhones slated for sale in the U.S. from India, and most of its other products headed for the U.S. are now coming from Vietnam. Apple reshuffled its production after President Trump slapped a cumulative 145% tariff on many imports from China.

Beyond that challenge, Apple reported some positive results. Sales climbed 5% year over year to $95.4 billion, beating Wall Street's consensus estimate of $94.6 billion. The tech giant's earnings of $1.65 per share also outpaced the average analyst estimate of $1.63 per share. Meanwhile, the company's important services segment grew nearly 12% to $26.6 billion, though that fell short of the analyst consensus estimate of 14% growth.

Despite the company's solid sales and earnings growth in the quarter, there are still dark clouds on the horizon for Apple stemming from the new tariffs.

Where will Apple be over the next year?

Tariffs have made it especially difficult for companies and investors to know where a company is headed, especially in the near term. Many management teams have pulled their guidance for the year, and some have even issued two sets of guidance based on whether or not the tariffs stay in place.

Apple is struggling to forecast its results as well with Cook saying on the call, "I don't want to predict the future because I'm not sure what will happen with the tariffs [...] it's very difficult to predict beyond June."

But he did shed some light on how tariffs will dent the company in the current quarter: They will add $900 million to Apple's costs. And that's likely just the beginning.

Cook said investors shouldn't take the $900 million estimate from the current quarter and use it to make projections for future quarters "as there are certain unique factors that benefit the June quarter."

In short, things could get worse

To make matters worse, tariffs are likely to change. The broad 10% tariff on imported goods from nearly all countries remains, while higher reciprocal tariffs are on pause. Meanwhile, China faces 145% tariffs on most of its exports to the U.S., but the administration says it's talking with China to lower the temperature on the trade war. Even more confusing is that President Trump has walked back some tariffs for specific industries and sectors.

All this adds up to a situation where companies like Apple are trying to navigate a complicated regulatory environment where the rules are less than clear.

Another indicator that the next year could be less than stellar for Apple is the fact the company cut its stock buyback authorization for the year by $10 billion, down to $100 billion total. Companies sometimes reduce their repurchase programs when they're uncertain about the future.

The volatile nature of this administration's trade policies means that having a near- to medium-term outlook for many companies is nearly impossible. Tariffs could eventually force Apple to raise prices on its products or absorb some of the costs and weigh down its earnings. To what degree this happens is still unknown, but Apple investors should brace for difficult times ahead if U.S. trade negotiations fall apart.

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

Before you buy stock in Apple, 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 Apple 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 $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $714,958!*

Now, it’s worth noting Stock Advisor’s total average return is 907% — a market-crushing outperformance compared to 163% 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 May 5, 2025

Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.

In this podcast, Motley Fool analyst Jim Gillies and host Dylan Lewis discuss:

• Warren Buffett's plan to step down as CEO of Berkshire Hathaway.
• The parallels between Berkshire's succession planning and Apple's transition from Steve Jobs to Tim Cook.
• The available cash, opportunities, and challenges ahead for Greg Abel and team.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

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 »

A full transcript is below.

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

Before you buy stock in Berkshire Hathaway, 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 Berkshire Hathaway 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 $623,103!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $717,471!*

Now, it’s worth noting Stock Advisor’s total average return is 909% — a market-crushing outperformance compared to 162% 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 May 5, 2025

This video was recorded on Mai 05, 2025

Dylan Lewis: After 60 years, Buffett passes the torch. Motley Fool Money starts now. I'm Dylan Lewis. I'm joining for the airwaves by Motley Fool candidate analyst Jim Gillies. Jim, thanks for joining me on this momentous Monday.

Jim Gillies: Indeed. Thanks, Dylan.

Dylan Lewis: We talk about the news very often. We don't always get something this good when something happens over the weekend. To quote the great Warren Buffett himself, the Time Has Arrived. After 60 years as CEO of Berkshire Hathaway, Warren Buffett announced he'll be stepping down at the end of 2025 for a well deserved semi retirement. He announced this Jim, closing out the annual meeting in Omaha over the weekend, which was news to basically everybody except his kids.

Jim Gillies: Correct. Yes, I had I had a number of friends on the floor, and one of them texted me with literally as he was speaking going, holy insert golf word here. Buffett just announced his retirement and I'm like, OK, I have to take a moment to process this.

Dylan Lewis: Yeah, in typical Buffett fashion, it wasn't I'm leaving the CEO seat. It was him handing over the reins, but it was in an overview of board meetings and votes, and recommendations. I think if it weren't for the standing ovation, if you had tuned out for a second, you actually might have missed it because it was right at the end of the meeting and discussion.

Jim Gillies: Yeah. Look, I'm a Berkshire shareholder for almost three decades. The entire way, Dylan, I've been told, aren't you worried? He's so old. He's going to die soon. Thankfully, a key lesson from Buffett reiterated many times over the years, including in this most recent annual meeting is like, you know what? Take your time, think through, things things are not that imperative in the moment. I'm very glad I've ignored all of the people saying, Oh, boy, he's really old. I similarly think about it a little bit today. It's like, Buffett has been prepping people for this for quite honestly nearly two decades. I remember after his first wife passed away, Susie, it was always the intent of the Buffett to give away the vast wealth that he's created. Susie was supposed to be the one because she was expected to outlive Warren. She was going to be the one handling the dispensation of that money. Susie's been gone for almost two decades now, Dylan.

We've seen him, I remember back might be 15 or so years ago now where they were first started talking about having the names of multiple people who could take over for him, step in whenever. The names in the envelope that could step in for him have changed. But a number of years ago, Charlie, who, of course, left us just over a year ago, Charlie let slip at one meeting that the only real name in the envelope that could take over for Buffett was Greg Abel, longtime CEO of Berkshire Hathaway Energy, MidAmerican Energy beforehand, and that he just confirmed what everybody largely knew. I don't think much is going to change. First off, in a completely unsurprising development, the board did, in fact, vote unanimously along with Warren's suggestion hands up, who thought that wouldn't happen.

Dylan Lewis: Yeah, zero surprise here.

Jim Gillies: Exactly. Well, also two board members are Warren's kids who, as you said, knew about this. They have, in fact, voted unanimously to pass the CEO's title to Greg Abel. This is the start of 2026. You've got another almost eight months with Uncle Warren at the helm, at which point he will remain as non-executive chairman. He did allude to the idea that should markets behave in a certain way, and he didn't say it, but I will plunge precipitously, they would be interested in deploying some of the massive cash hoard they've got now, which I think is playing with $350 billion. That he would be useful, perhaps reputation wise to help deploy some of that capital should circumstances require it. Again, he was too polite to say, if the markets blow up and people freak out. But that's what we're talking about here. Go back to 2008.

Dylan Lewis: If you find my advice helpful during any time, just let me know, essentially, the.

Jim Gillies: Yeah, exactly. But I don't think a lot's going to change, and part of that is because they've been gradually transitioning the day to day operating business into the hands of Greg Abel. They've long transitioned the decision making at GEICO or I say GEICO, just in the insurance arms, all of the insurance arms into the hands of Ajit Jain. They have long been adding to the responsibilities of Ted and Todd, the investing lieutenants. Buffett has long espoused that a ham sandwich should be able to run this business. In fact, I saw someone was quipping. Another Fool was quipping with us this morning. I hope Greg had a T shirt at that board meeting that said ham sandwich on it. I see the stock fell as much as 6 or 7% today. I wish it fell more. I hope it falls more in the next week or so, because obviously, I'm talking about it now, so I'm locked out. I would be a happy buyer of shares today without a thing and without a concern, frankly.

Dylan Lewis: Yeah, I was going to say this is the first time we've ever seen the market have to weigh what they think of a Berkshire without Buffett, maybe a 4% or 5% discount on shares today. I don't think anyone could find that unexpected. It's a surprise, no matter when it happens. It's a surprise no matter how well they lay out the succession planning. We've known Greg Abel since 2021 formally, would be taking over this seat. I think you're right. I think they've done such a nice job telegraphing what's coming and also telegraphing. There are core Berkshire principles to the way that we approach things, and that probably isn't going to change very much. I remember looking back on some of the content from the morning meetings and the Q&As, and stuff like that over the weekend. Someone had the foresight not knowing what was coming to ask, hi, Greg, what is something you've learned from Warren Buffett over the years? Incredibly pressing question, it turns out.

He talked about how when they were first meeting talking through MidAmerican Energy Holdings and that acquisition, the first thing that Buffett did was zoom in on the balance sheet. The first thing he did was zoom in on the derivative holdings for the company and start asking all these questions about risk exposure, what was actually there. Abel and Buffett both talked quite a bit at the annual meeting about the importance of being balance sheet oriented, looking at the fundamentals of these businesses. If you're a Berkshire shareholder, none of that stuff is going to change. That is going to continue to be the guide for how this management team is making decisions.

Jim Gillies: Yes. I don't think it was a surprise to anyone who's been a long term Buffett slash Berkshire follower. If you were not aware that Uncle Warren likes his balance sheets. If you ask Greg, what's one thing you learned? I thought you were going to say how to keep a secret because it did that a little bit.

Dylan Lewis: I'm guessing Greg maybe had a little heart palpitation there on stage, learning alongside all the Berkshire shareholders that this was happening.

Jim Gillies: What a vote of confidence, though to have that even though he knows the job is going to be his? Again, look, Uncle Warren is 94. He'll be 95 at the end of the summer. If you don't expect someone approaching that anniversary of their existence to be maybe wanting to slow down a little bit, plan for retiring. It had to have been the subject. Well, as I said, I have heard variants of the, are you sure you want to be here for as long as I've held shares, and my own personal shares, at least my earliest ones, I can legally rent a car in the US.

Dylan Lewis: Yes, they've matured.

Jim Gillies: Exactly.

Dylan Lewis: Way to put it.

Jim Gillies: They should hit the gym more. They're starting to have that middle age precursor happening there. Continue anyway.

Dylan Lewis: As you noted, this is a business now sitting on an incredible amount of cash, 347 billion, I think, as of most recent report and the updates over the weekend. I have to imagine that that was also some of the intentionality with this planning was Buffett unwinding some of the large positions that existed with Bank of America with Apple over the years and really putting Abel and the management team in a position to make decisions that they were excited about that they were interested in that followed Berkshire playbook and probably to be opportunistic as there's possibly some clouds out there on the horizon.

Jim Gillies: Yeah, he downplayed some of the people saying, Oh, you're just trying to set up things for Greg Abel. It's like, no, I'm not so charitable to make life easy for him. If an opportunity was here for me, I'd take it paraphrased. Apple is unquestionably the best a stock investment that Buffett has made. You could argue others have done better percentage wise or over a longer term. But in terms of the sheer amount of money, Buffett himself said, Tim Cook, Apple's CEO. Tim Cook has made more money for Berkshire shareholders than I have.

Dylan Lewis: Point taken.

Jim Gillies: Well, point taken. I will push back a little bit on Buffett and say, yeah, but you were the one that went into it. Again, ignoring what other people were saying, which 2016 ish was that it's the biggest company in the world. How much growth is there left turned out to do OK. I think it's going to be prescient for Berkshire because, of course, Apple itself went through its own, shall we say, high profile succession plan back in 2010-2011, because founder Steve Jobs, of course, famously, unfortunately, and I say this with all respect, drew the short straw in life. Had a health issue that tremendously shortened his life, and that was tragic. But before he went, of course, and Tim Cook had stepped in for a lot of the day to day stuff with Apple before that. But officially, I think a few weeks before, it's now it's back in 2011. It's a few weeks before Steve's ultimate departure. Tim Cook was made the official CEO. On that day, the stock didn't have a great day. I've said for a number of years now on various Foolish forms from a value creation perspective. Tim Cook has been a far better CEO for Apple than Steve Jobs was. Now, Tim Cook doesn't get this opportunity without Steve Jobs and without the vision and the idea.

I always say, Tim Cook is an execution guy. Steve Jobs is an idea guy or was an idea guy. The execution guy doesn't get to work as magic without the idea guy to start, and so you need both. But the sheer value that's been created at Apple in the Tim Cook era greatly outstrips what was created during the Steve Jobs era. But you got to give Job some credit for what he planted the seeds so that Tim Cook could have the harvest. I think that's what's probably going to unfold with Berkshire Buffett, Greg able is that Buffett has put all seeds in play and has put the culture in play, and has been, as we said before, slowly farming out bits and pieces of the business to the key players at Berkshire. He himself has said, literally at this meeting that he thinks the Greg Abel era going forward will probably make more money for Berkshire shareholders than he would.

Dylan Lewis: Yeah, I think he said, I will remain a shareholder, and that is a financial decision.

Jim Gillies: Exactly.

Dylan Lewis: I trust the management team here. I'm glad you brought up the Apple example because Buffett gave a nod to that, too. He hit a quote, "Nobody but Steve could have created Apple. Nobody but Tim could have developed it like he has." I think you could swap out the names there, and he's essentially talking about his own business.

Jim Gillies: He is. Now, will Greg Abel overseeing Ted and Todd? Will they be able to create some of the magic that we've seen in stock picking? I think actually, that'll be a tough sell. But I also think it's a tough sell under Buffett because of the size of the company. Again, Apple has been the last real big home run. There's been a bunch of little things that haven't worked out, and that's fine, or IBM didn't work out, or the airlines didn't work out. Now, I'm of the opinion that Buffett got out of the airlines during COVID. Because when the facts change, I changed my mind. What do you do, sir? The world changed. A worldwide pandemic that shuts down air traffic for a not insignificant period of time makes those airlines worth it changes the calculus about how you calculate the fair value of those airlines. He knew they were going to need government assistance, and he also knew that the optics of having Warren Buffett one of the richest people on Earth through Berkshire Hathaway, it wasn't Warren Buffett owning them, but it was Berkshire.

The fact that Berkshire Hathaway being the largest shareholder of all of these airlines that now all of a sudden need a bailout, the optics of that are going to be pretty bad. He also knew he didn't want to be the guy bailing out the airlines. I'm going to sell my shares. That takes him off the board and takes Berkshire off the board. That way, they can qualify reasonably well for government funding and whatever you think about airlines and their perpetual need to go hand in hand with the government at every crisis. I leave that as an exercise for the listener. I think it will be an interesting play from here. I don't think, and I say this again. I know I've said I'm trying to remain respectful and giving Warren Buffett and Berkshire Hathaway have been very good to me personally. As I've mentioned, it is my largest shareholding. It is my longest held shareholding. But let us be honest. The stock picking over the past decade or so has not been spectacular aside from Apple. I would argue that is not because Warren Buffett has faded in abilities or anything. That is because this is a $1.15 trillion company with a bazillion different irons in the fires, and there's not a lot. They mentioned there was a $10 billion acquisition, as well that they passed on. My response to that, all I could think of when I heard about that over the weekend was, who cares $10 billion? A $10 billion acquisition for a company with 348 or 350 billion in dry powder. It's 3% of your cash.

Dylan Lewis: It's not material.

Jim Gillies: It's irrelevant. I don't want to hear about $10 billion acquisitions prospectively. I want to hear about minimum $100 billion prospective acquisitions. Bigger is better. How many of those companies are out there that will be available at a price that Berkshire and Buffett, and Greg Abel, and Ted and Todd would think compelling? I submit to you there ain't many, which is one reason why I think Buffett is, Oh, you know, I'll go play. He's going to go day trade.

Dylan Lewis: It's a good time for him to step away. The house is relatively tidy. He's been able to put things in pretty good shape.

What is amazing to me, taking a step back on Berkshire is sitting on record levels of cash, and we know what cash is earning right now. It's year to date up more than 10%. The market is in the opposite direction, down about 4% year to date. Investors haven't seemed to mind giving them a little bit of time to put that money to work, and they've been rewarded for their patients so far. I don't think that will change. I think anyone who's expecting anything really large is going to be waiting quite a while. I think we're going to see a capital allocation and deployment strategy that is very much like what we've seen in the past, and that might mean we're looking at three figure billion dollar of cash on the balance sheet for a long period of time.

Jim Gillies: Yeah, I think you can probably assume because they've said this. Expect that cash balance to never again drop below 50 billion. Now, when you have 350 billion.

Dylan Lewis: There's room to go down.

Jim Gillies: Oh, we can just hold that, and it's fine. I'm genuinely curious to see, and I don't think you're going to see it anytime soon. I think Buffett probably needs to ultimately exit the board fully before you'll ever see anything here. But I'm curious to see because it took about a minute and a half after the announcement before various denizens of Twitter started saying, Oh, break up Berkshire Hathaway now. It needs to be broken up, or when are they gonna pay a dividend? Calm down, folks. I think really truly, nothing is going to change. Nothing is going to change as long as Buffett is consuming oxygen. I think nothing changes. When he ultimately leaves the scene, I think nothing's going to change really for a little while longer. I think they will continue in reinvesting in their existing businesses. It wouldn't shock me to see them deploying incremental capital in some of their already existent areas. More energy. They famously talked over the past, I'll say 15-20 years about how they like businesses where they deploy significant capital at good expected returns, but that would be the railroad, and that would be a few of their other businesses where again, have the utilities. I would be shocked outside of a market dislocating event. I would be shocked to see them make any meaningful draw down of that cash hoard. I don't think they're going out and buying Disney tomorrow. I don't think they're going out, or to go out take out Hershey, or try to acquire MARs privately. They might but these are the types of businesses that would be fun to see them make a run at Coca Cola. I will say that would tickle me a little bit.

Dylan Lewis: It would fit the profile, and it would certainly fit Buffett's tastes. Yeah, I think you're right. The market may give them that dislocating moment. We've talked at length on the show about how there is a bit of a precarious situation going on.

Jim Gillies: I don't know what you're talking about.

Dylan Lewis: Buffett has provided some commentary on that, and I can't think of a better position to be in to have $350 billion in cash if you expect there may be a lot of headwinds away and there may be some discounts available to the business. You mentioned railroads. You talked about energy a little bit. Any other sectors you think might fit the profile for a Berkshire acquisition if we start seeing some things on sale.

Jim Gillies: Coca Cola would be funny, but it's also possible. I don't know how far they'd get. No, I think you want to look in a space where they already have an interest. It will not be technology motivated. It's always going to be, well, where we like to invest in places where we think we know. There's the famous story about what was the best selling candy bar in the 80s? Well, it was Snickers.

Dylan Lewis: Snickers.

Jim Gillies: What was it in the 90s? Well it was Snickers. I don't know who's going to have the dominant operating system in 20 years. You probably make a good guess.

Dylan Lewis: But people are going to still be eating Snickers.

Jim Gillies: But you're probably going to be buying Snickers, and the pricing power of a Snickers or the pricing power of a can of Coke is probably going to or a bottle of ketchup he's famously got the Kraft Heinz Association is probably going to be there. I would like to see them. It's going to be a low technology possibility. The obvious things are more insurance, more energy consumer products with a significant brand mode. A Coca Cola, I joke a little bit, even at Disney, but even Disney's there are problems if Disney were to ever be something like that. I think it's going to be interesting to see where it goes. I'm signing up for the ride. I've been signed up for the ride for a while. At the very least, I'd like to not vacate my shares while I'm still drawing a regular paycheck because I don't particularly want to hand the government a large check. As you say, it's a great place to be. It has been a great place to be in the cornerstone of my philosophy.

My investing philosophy has to have the ballast holdings in my portfolio, of which Berkshire is absolutely one. It's the largest one, as I've said. Those ballast holdings that, for me, Brookfield is another one. Some people really like Fairfax Financial. Have your ballast holdings so you can go out and do some more riskier plays. I'm not talking day trading or penny stocks, or stuff like that. But still, things that may or may not work out for you, but you've always got the ballast and just to keep you calm. Then in days when you see those market dislocations, I would really encourage people to go back and look at what Buffett was doing during the global financial crisis, the 2008 crisis. He wasn't panicking. Stock got hit along with everything else. That's fine.

Buffett has said even this weekend. We don't care about that stuff. Berkshire's fallen, I don't know how many times by 50%. Doesn't bother us in the slightest. Focus on the business, all that wonderful stuff. But remember what he did back then. Goldman Sachs came hat in hand. The vampire squid came hat in hand. Buffett said, sure, I'll help you. Here's your 15% anchor. Harley Davidson came hat in hand. Sure, we'll help you. Here's your 15% anchor. Bank of America. I think gave penny warrants or dollar warrants as part of the investment. Don't call it a bailout, as part of the investment that Buffett made in Bank of America, and there's others. That's one thing I think I want people to remember about. Buffett's got this kindly Midwestern old dude cut of persona. When it comes to allocating capital, dude's killer. You want my money, it's gonna be 15%. My end is 15 precious, and that's how we're starting, and we'll take a little bit of equity comp, as well. I hope that Greg Abel and Ted and Todd can be similarly value extractive, shall we call it, during future market dislocations, which as Buffett again, said this weekend, are coming. We don't know when they are. They will come. Probably be a Tuesday. He seems to think that the business is in good hands with Greg running it. Again, if we have trusted Buffett's process on the building of Berkshire, I would suggest to you we should be similarly trusting of his transition planning for the business that he's booking.

Dylan Lewis: Jim, it sounds like even though he won't be calling the shots for your largest holding, his tenets, his investing style, remain the pillars of your portfolio and how you expect the Berkshire will continue to be rough.

Jim Gillies: Sounds about right to me, yes.

Dylan Lewis: Jim, thanks for talking through it to me.

Jim Gillies: Thank you, Dylan.

Dylan Lewis: As always, people on the program may have interests in the stocks they talk about and Motley Fool make formal recommendations for or against. So far it's I think based on what you hear. All personal finance content follow Motley fool editorial standards is not approved by advertisers. Advertisements are sponsored content, provided for informational purposes only. See our full advertising disclosure. Check out our show notes for the Motley Fool Money team. I'm Dylan Lewis. We'll be back tomorrow.

Bank of America is an advertising partner of Motley Fool Money. Dylan Lewis has no position in any of the stocks mentioned. Jim Gillies has positions in Apple, Berkshire Hathaway, and Brookfield Asset Management. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, Brookfield Asset Management, Fairfax Financial, Goldman Sachs Group, Hershey, International Business Machines, and Walt Disney. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.

With the second quarter of 2025 now over a month old, many investment funds will soon begin disclosing what stocks they held at the end of the first quarter, essentially providing investors a glimpse of what they bought and sold. It's a particularly interesting time to see how large institutional funds invested early in the year, given all of the volatility.

First-quarter filings won't show what the market did in April, following President Donald Trump's "Liberation Day" announcement on April 2. But they offer an important glimpse of how investors were approaching tariffs, as well as high valuations in the broader market, particularly for the artificial intelligence (AI) giants.

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 »

Another thing happened in the first quarter with a major institutional shareholder. The Teacher Retirement System of Texas (TRS) -- the sixth-largest pension fund for teachers in the U.S. -- cut its stake in Nvidia (NASDAQ: NVDA), Tesla (NASDAQ: TSLA), and Apple (NASDAQ: AAPL). But it piled into a popular pharmaceutical stock that's up 419% over the last five years.

Selling big tech and AI

While we don't know when the TRS fund sold during the quarter, we do know that the fund cut its stake in several of its largest holdings, some of the most popular stocks in the market:

• Its stake in Apple: cut by 12%
• Its stake in Nvidia: cut by 9%
• Its stake in Tesla: cut by 8%

It's not clear whether the portfolio managers were cutting the fund's tech exposure across the board, or specifically targeting these names. But they seemed to have made a timely call, given what happened to these three stocks in the first quarter of the year:

TSLA data by YCharts.

Nvidia and many other AI stocks ran into trouble earlier this year when the Chinese tech company DeepSeek managed to build a chatbot rivaling OpenAI's ChatGPT, reportedly using less advanced chips and spending much less than OpenAI. There's still much debate over the level of resources that went into DeepSeek's model, but investors nevertheless began to question overall AI demand as well as massive capital expenditure plans by the hyperscalers driving AI.

Tesla faltered as CEO Elon Musk got more involved in politics, specifically with his work on the initiative known as the Department of Government Efficiency (DOGE). Reports of falling demand for Tesla vehicles globally made analysts question whether Musk's outspokenness had hurt the brand. Furthermore, given Tesla's high valuation, the company needs to execute on future initiatives, including autonomous driving and robotics.

Apple shares fell the least among these three in the first quarter, but perhaps investors should have been more concerned, given how much manufacturing the consumer tech giant does in China and Vietnam. Shares fell hard after April 2 but rebounded following Trump's 90-day pause on higher tariff rates. The Trump administration has temporarily exempted consumer electronics made in China from tariffs, although any renewal of those would not work in Apple's favor.

Piling into this classic pharma play

While TRS cut a number of its top positions, it also increased its stake in the pharmaceutical giant Eli Lilly (NYSE: LLY) by 11% in the quarter. Lilly, which first went public in 1951, has risen 395% (as of May 6) over the last five years, rivaling the strong performances of many tech and AI stocks.

Well-known as the first company to commercialize insulin, Eli Lilly has performed well in recent years. This is largely due to the performance of its GLP-1 drugs, which help people looking to manage diabetes type 2 and to lose weight. One of Eli Lilly's premier drugs, Mounjaro, which helps people with type 2 diabetes manage their blood sugar, had its revenue rocket 113% higher year over year in the first quarter of 2025. Zepbound, a drug that helps people manage their appetites and ultimately eat less, increased its sales 347% year over year.

The company also continues to make progress in new drug development. CEO David Ricks noted in an earnings statement that Lilly received regulatory approval for several oncology and immunology drugs, and continues to see success in later-stage studies for its drugs related to diabetes and obesity. It's investing further in development and planning to construct four new manufacturing facilities. Management also reaffirmed its full-year revenue guidance of $58 billion to $61 billion of revenue, and expects a performance margin in the range of 40.5% to 42.5%.

While tech has dominated the investing landscape for several years, it's always a good idea for investors to buy stocks in a variety of sectors to add diversity to their portfolios. Eli Lilly is a rare large-cap and stable pharmaceutical stock, whose returns have rivaled those of even some of the most headline-grabbing AI innovators.

Should you invest $1,000 in Eli Lilly right now?

Before you buy stock in Eli Lilly, 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 Eli Lilly 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 $623,103!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $717,471!*

Now, it’s worth noting Stock Advisor’s total average return is 909% — a market-crushing outperformance compared to 162% 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 May 5, 2025

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Nvidia, and Tesla. The Motley Fool has a disclosure policy.

Semiconductors are in everything from cars to computers, and many devices have far more than just one. President Trump recently said that tariffs on semiconductors are coming "in the very near future." That threat has sent tech companies scurrying to find solutions that will lessen the potential blow to their businesses.

New research from The Motley Fool shows that the U.S. is vastly intertwined with countries including China, Taiwan, Singapore, and many others in global semiconductor supply chains, which complicates any future chip tariffs. Here are two companies you should keep an eye on if semiconductor tariffs come to pass.

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

1. Taiwan Semiconductor

Semiconductor-specific tariffs could deal a significant blow to Taiwan Semiconductor (NYSE: TSM), also known as TSMC. The company is the largest manufacturer of processors in the world -- making processors for Apple (NASDAQ: AAPL), Nvidia, and Qualcomm -- and makes an estimated 90% of the world's most advanced processors.

If the Trump administration were to enact tariffs on processors, it would likely increase the cost of production for TSMC and cause the company to raise prices for its customers, which in turn would cause prices to increase for the many products TSMC's chips are in.

In response to questions about tariffs on the company's first-quarter earnings call in mid-April, Taiwan Semiconductor CEO C.C. Wei said, "We understand there are uncertainties and risks from the potential impact of tariff policies. However, we have not seen any change in our customers' behavior so far. Therefore, we continue to expect our full year 2025 revenue to increase by close to mid-20s percent in U.S. dollar terms."

For now, TSMC has committed to investing $165 billion in the U.S. to increase chip production for customers. The company said on the call that the investment comes as demand for U.S. customers increases, but the result of having a new plant could also help offset potential tariff costs in the future.

Still, the company has acknowledged that the threat of new semiconductor tariffs could bring "uncertainties and risks," and that TSMC will have a clearer picture of any impact in the second quarter.

2. Apple

Apple is already feeling the effects of tariffs, with $900 million in additional costs in the most recent quarter because of current tariffs, and said that higher costs could be on the way. Some analysts think tariffs could eventually cost Apple more than double what it already has in each quarter.

And that's before any semiconductor tariffs. If those come soon, then the pain will likely be ratcheted up as Apple receives chips from Taiwan, South Korea, Japan, and Singapore. Those chips then go into the company's phones, computers, tablets, smartwatches, and AirPods.

Tariffs on processors could cause the price of an iPhone to go up so that Apple can maintain the high margins it typically receives from its products. It might also take on some of the cost itself to offset the impact on consumers.

While there's still plenty of uncertainty around tariffs, Apple appears to be planning for any potential impact from chip tariffs by sourcing more semiconductors from U.S. plants. CEO Tim Cook said on Apple's recent earnings call, "During calendar year 2025, we expect to source more than 19 billion chips from a dozen states, including tens of millions of advanced chips being made in Arizona this year."

Apple also committed to spending $500 billion in the U.S. over the next four years, part of which will go to expanding TSMC's semiconductor manufacturing in Arizona.

But don't get your hopes up just yet for Apple. Cook also said on the earnings call, "I don't want to predict the future because I'm not sure what will happen with tariffs." He added that he's having a difficult time seeing beyond June.

A lot of uncertainty right now

Both of these companies are tech leaders in their respective markets, but each faces a lot of tariff uncertainty right now. Keep that in mind if you're considering buying Taiwan Semiconductor or Apple.

The tariff situation doesn't mean investors should avoid these stocks entirely, but it might be a good idea to take a wait-and-see approach with both if you're considering buying right now.

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 $623,103!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $717,471!*

Now, it’s worth noting Stock Advisor’s total average return is 909% — a market-crushing outperformance compared to 162% 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 May 5, 2025

Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Apple, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

In today's video, I discuss Nvidia (NASDAQ: NVDA) and its revenue recognition. To learn more, check out the short video, consider subscribing, and click the special offer link below.

*Stock prices used were the after-market prices of April 25, 2025. The video was published on April 27, 2025.

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 »

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $287,877!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $39,678!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $594,046!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon.

See the 3 stocks »

*Stock Advisor returns as of April 28, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jose Najarro has positions in Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Amazon, Apple, 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. Jose Najarro is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.