Nvidia announced it should be able to resume shipping its H20 chips to China soon.
The move bolstered the stocks of virtually all Chinese AI companies.
Alibaba's latest Qwen models have been shooting up the open-source model ranks.
Shares of Chinese tech giant Alibaba (NYSE: BABA) rallied 8.1% on Tuesday.
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Alibaba is not only a leader in e-commerce and digital payments but also an artificial intelligence (AI) leader in China. Its open-source model Qwen is thought to be among the best open-source models out there, ranking close to or above the latest DeepSeek on independent scoring boards such as Live Bench.
Therefore, Alibaba rose today after AI chip giant Nvidia (NASDAQ: NVDA) suggested it would be able to recommence shipping its H20 AI chips to China once again after an April ban.
Late on Monday, Nvidia wrote on its company blog that "NVIDIA is filing applications to sell the NVIDIA H20 GPU again. The U.S. government has assured NVIDIA that licenses will be granted, and NVIDIA hopes to start deliveries soon."
In April, Nvidia was forced to stop shipments of its H20, which is a modified version of its Hopper AI chips to fit the Chinese market, and to apply for a license. Whether that halt had to do with the administration's negotiations with China over trade policy or not is unclear. After all, those trade negotiations are still ongoing.
Nevetheless, Nvidia's announcement boosted virtually all Chinese AI companies. Alibaba certainly fits that mold, with its Qwen open-source model being one of the best-performing models in China. Last month, Qwen's latest model leapt to the top of the Hugging Face leaderboard as the highest-performing open-source model today.
In addition to Qwen, Alibaba has also invested in an AI start-up named Moonshot. Moonshot just released its Kimi K2 AI model, which Kimi management claims tops the best ChatGPT models from OpenAI and Anthropic's Claude models in the specific task of software coding and at a fraction of the cost.
Image source: Getty Images.
It remains to be seen how China's AI companies will be able to compete against their U.S. counterparts, but that may not matter much in the case of Alibaba's stock, which revolves around its core China e-commerce business. As long as Alibaba has access to top AI chips and talent versus its competitors, it should be able to translate that into revenue and profit growth across its business empire spanning e-commerce, cloud, and digital finance.
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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
In this podcast, Motley Fool host Anand Chokkavelu and contributors Jason Hall and Matt Frankel discuss:
And Dave Schaeffer, founder and CEO of Cogent Communications, talks with Motley Fool analysts Asit Sharma and Sanmeet Deo about how Cogent's deals with customers like Netflix and Meta Platforms work and what keeps him awake at night.
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A full transcript is below.
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*Stock Advisor returns as of July 14, 2025
This podcast was recorded on July 11, 2025.
Anand Chokkavelu: Yes, we're talking all kinds of stocks. This week's Motley Fool Money Radio Show starts now. It's the Motley Fool Money Radio Show. I'm Anand Chokkavelu. Joining me are two of my favorite fools, Jason Hall and Matt Frankel. Today, we'll talk about stock market winners and losers from the Big Beautiful Bill. We'll pit Superman versus the Hulk, and we'll of course debate stocks on our radar. But first, we'll discuss whether there's an AI opportunity in investing in data centers. Upstart data center company, CoreWeave, again made news this week this time for announcing the purchase of Core Scientific for $9 billion. This allows it to add infrastructure to consolidate vertically as it seeks to gain market share among AI and high performance computing customers. CoreWeave is just the tip of the data center iceberg. Matt, what categories of data center opportunities are out there?
Matt Frankel: First, you have hyper scalers. These are companies like AWS, Microsoft, Desha. They are companies that operate the large scale data centers. They offer computing and storage infrastructures to customers. As Anand put it, there's CoreWeave, which is one of the least understood recent IPOs that I know. [laughs] They rent out GPU data center infrastructures to customers. It's not always practical for companies to invest in all of NVIDIA's latest chips on their own, for example. That's really what they do. There's the REITs still, Digital Realty and Equinix are the two big ones. They own the data centers. CoreWeave is actually a big Digital Realty tenant. Then there's power generation. I know Jason's going to talk about this a little bit later in the show, but data centers consume a lot of power, and it's growing at an exponential pace. These chips that NVIDIA produces, they are power drains. Nuclear, especially, could be a big part of the solution, but solar and other renewables are also in there.
Jason Hall: We're definitely in the land grab phase of the infrastructure buildout for accelerated computing. I think accelerated computing is maybe a better description than just AI. We talk about the Cloud REIT large. As we see more of the companies involved start to monetize things like AI agents at scale. I think that's where these investments are going to pay off.
Anand Chokkavelu: Big question. Do any of these categories interest you all for investing?
Matt Frankel: Well, I'm well known as being the real estate guy at the Motley Fool, so it shouldn't be a big surprise, but Digital Realty is my second largest and my second longest running REIT investment in my portfolio. I'm an Amazon shareholder, and I know that's not their only business, but AWS is the primary reason I own it. I don't own CoreWeave yet, and I think the stock is a little bit pricey, to say the least. But the more I read about it, the more I'm intrigued by the company. As I mentioned, they're a big tenant of Digital Realty, so I have some exposure already.
Jason Hall: The things about CoreWeave that concern me is the stock is definitely expensive. But if the opportunity is even close to as large as we think, it could still work out, but they're going to need a lot of money to pay for what they're trying to do and depending on how much of that is from raising debt versus secondary offerings of shares, there's still a lot of questions there. But, Anand, you've given me a chance to talk about Brookfield here. [laughs] How do I not take that opportunity? But I do think that there's a couple of Brookfield entities that are positioned really well here. I want to talk about the providing the energy part of it. Brookfield Renewable is really in the driver seat here as a global provider of renewable energy on multi decade contracts. It is not just accelerated computing, it's the energy transition REIT large. We've already seen it strike big deals with Microsoft and others to provide renewable power on those multi decade contracts. The dividend is really attractive, too. BEP, that's the partnership, yields over 5%. The corporate shares BEPC, it yields about 4.5%. Since mid 2020, that's when Brookfield Renewable rolled the corporation part out and restructured its dividend. The payouts been increased almost 30%. There's a lot to like here. Beyond the yield, I think it's primed to be a total return dynamo over the next decade. If you don't want to own a company that's in the energy part, you want to own the infrastructure, just take a look at sister company Brookfield Infrastructure. The tickers there are BIP and BIPC.
Anand Chokkavelu: Of course, these aren't the only AI stocks out there. Hi, NVIDIA. Do any other areas of AI interest you guys?
Matt Frankel: I love that. You can't talk about AI and data centers without talking about the chipmakers. NVIDIA just hit $4 trillion today as the day we're recording this. NVIDIA is an amazing business, and it has more room to grow than people think just in the data center accelerator space, which is why they're getting so much attention for good reason. The market size is expected to roughly double over the next five years. That's not even to mention the opportunities they have in chips for autonomous vehicles, chips for gaming and more but I prefer AMD, which is often referred to as NVIDIA junior, but I don't think it should be. It's an incredibly well run company that's been a mistake to bet against in the past. As Intel found out the hard way, just having a dominant market share in an area of chip making is not always enough.
Jason Hall: An area of the market that I think could do really well some of the legacy enterprise software giants. I think there may be underappreciated winners from AI. I'll use Salesforce, ticker CRM as an example. It's really starting to get traction with things like it's data cloud and with AI agents. It's starting to sell. We're seeing really rapid uptake of those things and monetization. It has a benefit, an advantage over a lot of these AI start-ups that are just pure AI businesses. It's already a trusted integrated partner with hundreds of thousands of enterprises. It knows their business, it knows their challenges, regulations, opportunities and that credibility, I think, is an edge that we don't give enough credit to. We shouldn't underestimate switching costs, I guess, is what I'm really getting at. You look at Salesforce rates for about 21 times free cash flow and less than seven times sales. That's a really good opportunity. I think it equates to double digit returns if it can just grow revenue around 8-12% a year over the long term, which I think it can.
Anand Chokkavelu: We started to talk a bit about energy and the need for it with all this AI. Let's talk about the energy industry implications of the Big Beautiful Bill, which was signed into law last week. Jason, can you give us the summary of the energy portions?
Jason Hall: Summarizing anything's hard for me, but I'll try. I think the short version is the incentives for renewables, they're getting gutted, really. There's a 30% investment tax credit or ITC for short. The residential solar and battery systems portion of that had been in place to run through 2032 before gradually declining for a few years after that. That now expires. The systems have to be fully installed and commissioned by the end of this year. The commercial ITC for solar and wind projects was on a similar track, but now it expires at the end of 2027, but those projects must begin construction by July 4th of 2026 to qualify for that 30% tax credit. It also terminates the tax credit for new and used EVs, $7,500 for a new EV and up to 4,000 for a used EV. The purchase has to happen before September 30th of this year, so a couple of months. Lastly, it ends the US regulatory credits around vehicle emissions that automakers buy largely from Tesla. This is a significant and profitable revenue stream for EV makers that essentially is going away.
Matt Frankel: Jason, when you say renewables are being gutted, you're essentially referring to solar and wind, if I'm not mistaken. It's not gutting anything for nuclear power, correct?
Jason Hall: That's correct. These things you get are the pure renewables as we think of them.
Anand Chokkavelu: Let's put a fine point on this with specifics. Who are the relative winners and losers, Jason?
Jason Hall: This could be an hour long show, but I'll try to summarize it here. Thinking about the companies that are most directly affected, I think Canadian Solar, which is a large manufacturer of solar panels and energy storage, and they really largely target the utility market, but also residential is definitely a loser here. In the near term Sunrun, its business model is tied to these tax credits as an installer and to some degree, First Solar is also going to be affected. I don't think there's really any winners out of this when it comes to solar. But I think Enphase is probably still in a better position in the market may believe. Maybe First Solar as well. It's been through these battles before, and it has been a winner over the long term. If you look at wind, GE Vernova has been on a huge run. I love that business, but I don't love the stock right now. Tesla, I think maybe one of the bigger losers that investors haven't really considered. Last fiscal year, it earned 2.76 billion in revenue from regulatory credits. That's largely pure profit. Then there's also the loss of those EV tax credits for buyers. That might be offset from some incentives for US made autos that are part of the bill now that were part of the law, but I think this puts Tesla in a tougher spot. The tailwinds are not favorable for fossil fuels before this. This doesn't really change any of that. There's opportunities there, but not because of the law.
Matt Frankel: The reason I asked about nuclear a minute ago is because that's really what I see as the big winner here. I like some of the nuclear focused utility providers. Constellation Energy is one that comes to mind. One of their stated goals is to have the largest carbon free nuclear power fleet in the US by 2040. Jacob Solutions, they provide consulting and design services to the industry. Ticker symbol is J, so it's really easy to remember. They recently had some really big nuclear contract wins. I'm going to push back on Jason's Tesla as a big loser. One, they're American made cars. They qualify for that new auto loan interest deduction, so that could help offset what they're losing from the EV tax credits. They have a big energy storage business, and AI has not only giant power demands, but very variable power demands, and it's going to create a lot of need for large scale energy storage, and Tesla does that. I think they're worth watching.
Jason Hall: That's the one part of Tesla's business that's done extraordinarily well. Over the past few years, as the EV business has weakened, is that the battery business.
Anand Chokkavelu: Now quickly the big question, is solar still investable, Jason?
Jason Hall: I think so. We have a very US centric view, obviously, and the US is a massive important market for solar. But you look around the world and the regulatory environment is still largely favorable. I think if you're willing to write out plenty of volatility, that global opportunity is still really good. Businesses like Enphase, businesses like First Solar that have been through these battles before, and even a Canadian Solar, where it has a ton of projects that it's been funding to build on its books that the math just got changed for them in some big ways. The valuation is so cheap that I think that there's some opportunity there.
Matt Frankel: Taking a step back, the reason you have incentives for solar energy, for EVs, for all this, is because without them, they're not price competitive with the existing technologies. The gap has narrowed significantly, especially in solar over the past say 10 years as to the efficiency of the products themselves and just how much they cost. Eventually, solar is going to be able to stand on its own without incentives. But like Jason said, you have to be able to write out some volatility because that could be five years, that could be 10 years, that could be 20 years so eventually, it won't matter.
Anand Chokkavelu: After the break, we'll move from solar to something else that gets its power from the yellow sun. Stay right here. This is Motley Fool Money.
Welcome back to Motley Fool Money. I'm Anand Chokkavelu, here with Jason Hall and Matt Frankel. One of our Brothers Discovery's much anticipated latest reboot of Superman hits theaters on Friday. Hoping the Justice League can one day catch Disney's Marvel cinematic universe and hot on the heels of last week's Jurassic World Rebirth from Comcast. In honor of Summer movies, we're going to rank those three companies based on the value of their intellectual property. We'll throw in Netflix for good measure. Its headline this week was stating that half of its global audience now watches anime. Chokkavelu household certainly does with one piece. My kids have gotten me into it. For those unfamiliar, they have more episodes than the Simpsons. Matt, once again, your four choices are Warner Brothers Discovery. That includes the DC Universe, Superman, Wonder Woman, Green Lantern, Harry Potter, the Matrix, Looney Tunes, all our favorite HBO shows. You got Comcast with Shrek, Minions, Kung Fu Panda. You got Disney with Marvel, Star Wars, Pixar and Mickey Mouse. Finally, you got Netflix with things like Stranger Things, Bridgerton, Squid Game, newer Adam Sandler movies, and tons of niche content. Mentioned anime, you could argue whether that's niche content or not at this point. Whose intellectual property do you most value, Matt?
Matt Frankel: See, I said Disney. All four of these have excellent intellectual property, and I'll give you a more elaborate description there. In my household, you mentioned your household, how you have all these streaming things. We have a streaming service from all four of these. We have the Peacock service, which is a comcast product. We have HBO Max, which is a Warner Brothers discovery product. We have Disney Plus, and we have Netflix. Disney Plus also has Hulu attached to it. I ask myself, which is the least dispensable? I could cancel all the other ones before I'd be allowed to cancel Disney Plus for the other members of my household. Their film franchises are beyond compare. They have a much longer history of building intellectual property than all of these, especially in terms of valuables. Mickey Mouse is so old, it's not even intellectual property anymore. It's over 100-years-old, so I think it's actually in the public domain now. I have to say Disney, although it's a lot closer than I would have thought a few years ago.
Jason Hall: Yeah, if you had have asked me a few years ago, I absolutely would have said Disney, but I'm going to give the advantage to Netflix here. Let me contextualize that. I think the total value of Disney's IP is probably higher, but Netflix's ability to monetize it more effectively all over the world, I think, is even better than Disney's. I don't think any of these businesses in their studios have done a better job of making content that's relevant in more markets around the world than Netflix does. Let's be honest, I was able to watch Happy Gilmore with my eight year old son this weekend and I watched that on Netflix, that's bridging generations right there.
Anand Chokkavelu: Three things. One, Chokkavelu household is very excited for Happy Gilmore, too. Even my wife is in on it. Two, the Steamboat Willie era, Mickey Mouse is free to the world. The other ones aren't. I'm glad I'm not the only one with way too many streaming services, Matt. Let's talk about Last Place. Who are you cutting first, Matt?
Matt Frankel: Well, all those streaming services are still less than I was paying for direct TV a few years ago, so I think I'm doing all right. For me, the last place, it was between Comcast and Warner Brothers Discovery, both of which have amazing intellectual property, just to show you what a tight race this is. Comcast has universal. I was just in Orlando, and the universal theme parks are massive down there. But I have to put Comcast in last place. Just because Warner Brothers, I think the HBO Max acquisition was such a big advantage for them. They have some of the most valuable television assets of all time. More people watch the sopranos now than they did when it was originally on TV. It's a very valuable valuable asset, Game of Thrones. All these HBO shows that are among the highest rated shows of all time are part of their library. In addition to their film studio and all the other assets that we can't name because it's not that long of a show. I'd have to give Comcast last place, although, like I said, there's a good argument to be made for most of these to be in the top one or two.
Jason Hall: Yeah, I think that's fair. I agree with Matt that Comcast is the Number 4 here. But I don't think that's a flaw. It's just the nature of its business. About two thirds of its business comes from its cable subscriptions and high speed Internet. It's built differently than these other companies. I think it's fine that it's a little bit smaller.
Anand Chokkavelu: I will say, just to defend Comcast a little. I was thinking about my parents live in Florida, and it's high time we bring my two boys to Disney World or something like that. Honestly, the Universal theme park, the new one with Nintendo, Mario and the Harry Potter realm, it's close. We might we might prefer that one, but just to give a little love to Comcast and Universal. Jason Hall and Matt Frankel, we'll see you a little bit later in the show, but up next, we'll talk to the founder of one of the top five networks in the world, so stick around. This is Motley Fool Money. [MUSIC].
Welcome back to Motley Fool Money. I'm Anand Chokkavelu. Dave Schaeffer is the founder and CEO of Internet Service Provider Cogent Communications. Believe it or not, Cogent's the seventh successful company Dave Schaeffer has founded. Shaffer joined Fool analysts Asit Sharma and Sanmeet Deo to discuss how it deals with customers like Netflix and Meta platforms work and what keeps him up at night.
Asit Sharma: Well, hello, fools. I am Asit Sharma and I'm joined by fellow analyst Sanmeet Deo today, and our guest is Dave Schaeffer. Dave is CEO of Cogent Communications. He's also the founder of this company founded in 1999. Dave has grown Cogent Communications into a global tier one Internet service provider. It's ranked as one of the top five networks in the world. Dave is also a serial entrepreneur. He's founded six successful businesses prior to Cogent, and foolishly, he's also one of the longest serving founder CEOs in the public markets. We're delighted to have him with us today. Dave Schaeffer, welcome.
Dave Schaeffer: Hey, well, thanks for that great introduction.
Asit Sharma: To get started, let's jump in. Dave, for our members who might be unfamiliar with the ISP or Internet service provider industry, can you just explain what Cogent does and how it makes money?
Dave Schaeffer: Yeah, sure. Cogent provides Internet access to customers and to other service providers. I think virtually everyone uses the Internet, but rarely understands how it operates. Cogent has a network of approximately 99,000 route miles of intercity fiber that circumnavigates the globe and serves six continents. We then have an additional 34,000 route miles of fiber in 292 markets in 57 countries around the world. That network is solely built for the purpose of delivering Internet connectivity. When a customer buys Internet access, what they are really buying are interfaced routed bit miles connected to other networks. If you tried to sell a customer that they would have no idea what you're talking about. The average bit on the public Internet travels about 2,800 miles. It goes through eight and a half unique routers and 2.4 networks between origin and destination. Coaching carries approximately 25% of the world's Internet traffic on its network and has more other networks connected directly to it than any other network.
Asit Sharma: Yours is a primary network. Oftentimes, we hear of middlemen carriers in between ourselves sending that bit. Let's say I'm chatting with Sanmeet over Slack, sending him some bits as we have been exchanging through the day and him receiving that. But you are, I think we can think of Cogent as being the primary fiber that is the backbone of this information communication network, is that correct?
Dave Schaeffer: That is correct. We operate two very different customer segments, roughly 95% of our traffic, but only 37% of our revenue comes from selling to other service providers. We provide Internet connectivity to 8,200 access networks around the world and about 7,000 content generating businesses. Whether it be Bell Canada, British Telecom, China Telecom, Comcast or Cox. They could be customers of Cogent on the access side, where they aggregate literally billions of end users. Then on the other side, we sell connectivity to large content generating companies like Google, Amazon, Microsoft, and Meta, where they use us as their Internet provider. The second portion of Cogent's business is selling directly to end users. That represents about 63% of our revenues, but only approximately 5% of our total traffic. Cogent is an ISP, primarily in North America, where we connect to a billion square feet of office space, where we sell directly to end users. Then globally, we sell to multinational companies, oftentimes using last mile connections from third parties.
Asit Sharma: I always like to understand how exactly the companies I'm looking at make money. For example, for Netflix or Meta, or you pick a content provider, whoever it might be, when they work with you, explain that to me how they buy? Do they buy bandwidth in a package? Do they have a contract? How does that work? When they look to you to say, hey, we want to buy some bandwidth?
Dave Schaeffer: Yeah, so typically, we will provide them connections in multiple markets around the world. They will then have a minimum commitment level, and then above that, they pay on a metered basis. The way in which we bill is megabits per second at peak load over the course of the month. We bill at the 95th percentile, which means if you have a very spiky event that lasts less than 18 hours in a month, you don't pay for that incremental bandwidth but everything below that peak utilization, you pay a bill on a per megabit basis.
Dave Schaeffer: That is the way in which any service provider, whether it be an access network like Telkom South Africa, or a cable company like Rogers in Canada would buy from us. But for our corporate customers, the billing model is very different. For corporate customers, they typically buy in end user locations, not in data centers, and they are paying us a flat monthly fee for a fixed connection that is unmetered. I think of it as an all you can eat model.
Sanmeet Deo: There is a monthly recurring revenue that you get. It's just that with your network or your content customers, it could vary based on their usage. They could dial it up, dial it down, based on, like, this week, actually, they're dropping Squid Game, so they can anticipate they're going to need a lot of bandwidth versus maybe next month, their content late is a little lower, so they won't use up as much versus the corporate customers are paying more of a recurring, not based on volume. Is that accurate?
Dave Schaeffer: Is correct, Sanmeet. Virtually all of our revenue is predictable, even for those variable usage customers, there is oftentimes a very consistent pattern to their usage, and their bills do not vary by more than a couple percent month over month.
Sanmeet Deo: Dave, let's go on to looking at a review of recent performance. 2024 was a great year for Cogent. It crossed $1 billion in annual revenue. Can you just walk us through the highlights of your key business segments, wholesale, enterprise, net-centric? What drove the performance? Also did anything about the year surprise you as you went through it?
Dave Schaeffer: Two things. First of all our Internet based business represents 88% of our revenues across all three segments. We do derive about 12% of revenues from selling some adjacent services. Those being co location in our data center footprint. Optical transport or wavelength services and the leasing out of IPV4 addresses. We did generate about $1 billion in revenue in 2024 and 2024 was a year of significant transition for Cogent. Cogent had organically grown between 2005 and 2020 as a public company with no M&A at a compounded growth rate of 10.2% per year average over that period. We also were able to experience significant margin expansion during that period, where our EBITDA margins expanded at roughly 220 basis points per year over that same 15 year measurement period. When COVID hit, our corporate segment slowed materially because people were not going to offices, and as a result, Cogent's total growth rate had decreased to about 5% and our rate of margin expansion slowed to about 100 basis points. In May of '23, we acquired the former Sprint Long Distance Network, a Sprint Global Markets Group business from T-Mobile. That business was actually in decline and burning cash. In 2024, we significantly reduced that cash burn, and we were able to begin to repurpose some of the flow Sprint assets. In order to facilitate this transaction, T-Mobile paid us in cash over a 54 month period beginning in May of '23, $700 million. In 2024, a significant milestone for Cogent was our ability to take out much of that burn from that business and to actually accelerate the decline in that acquired business, as many of the products that were being sold or gross margin negative services.
Anand Chokkavelu: As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against. Don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. See our full advertising disclosure. Please check out our show notes. Up next, we've got stocks on our radar. Stay right here. You're listening to Motley Fool Money.
I'm Anand Chokkavelu, joined again by Jason Hall and Matt Frankel. This week's been Prime Day week invented out of thin air in 2015 to boost sales. It's almost literally become Christmas in July for Amazon, and to a lesser extent, all the imitating retailers. Got me wondering. Is this the greatest feat of something from nothing marketing we've seen? If not, what's competing with it, Jason?
Jason Hall: I think it's not even something from nothing. I think they stole this idea. Christmas in July has been around literally since the 1900. I think they're getting maybe a little bit too much credit for just being a really big retailer, smart enough to say, hey, we're doing a sale when there was nothing else going on, and people were like, oh, it's a big sale. Well, people kept coming, so it just gets bigger every single year.
Matt Frankel: Before e-commerce, Jason's right, remember the Sunday paper that had all the flyers from all the stores. They'd have their semi annual sales. The President's Day weekend sales were the ones I remember that were the biggest deals ever that really were just meant to invigorate sales in a historically slow time of year. But really, this concept has been applied over and over. Think of how many tourist destinations create random festivals in the worst months to go, like, weather wise. I used to live in Key West, Florida, and the biggest party of the year is called Fantasy Fest. It was created to invigorate tourism during hurricane season. It's a concept that's worked over and over, and this is a big one.
Anand Chokkavelu: Dan.
Dan Boyd: I just wanted to jump in here and mention Father's Day and Mother's Day. Surprised that you guys didn't mention those. We're all fathers here on the podcast, so I know that we enjoy Father's Day, but, like, come on. They're nothing. They were just created to sell stuff.
Anand Chokkavelu: You're not going to mention Valentine's Day, Mr. Grinch.
Dan Boyd: Valentine's Day has somewhat historical significance with all the St. Valentine's stuff. I didn't want to go too far into it in my grumpiness Anand, but I guess we can throw that one on the fire.
Anand Chokkavelu: Speaking of Singles Day in China. The Alibaba took that cemented in the '90s. I think less commercy, but then it became more commercy. Two other things, Sears' catalog. Let's not forget. A lot of times Sears really is the Amazon before Amazon we forget about it because we see it at its late phases. It wasn't the first catalog, Tiffany, Montgomery Ward, they beat it to the punch. But when it was going, it was called the Consumer Bible. Then on a smaller scale, I'll give one more. Just shout out to Spotify rapped. They do a wonderful job inventing a thing to get us more engaged. Let's get to the stocks on our radar. Our man behind the glass, who we just recently, Dan Boyd, is going to hit you with a question. We're more likely, historically, an amusing comment. Jason, you're up first. What are you looking at this week?
Jason Hall: How about Church and Dwight? Ticker C-H-D. I don't know if we give some of these legacy consumer brands companies enough talk. What's Church and Dwight? You've probably heard of Arm & Hammer baking soda. But they also own a lot of other retail brands. You might be familiar with Orajel, if you've ever had a sore tooth or you have a baby that kind of thing comes up. They own Trojan, which is another brand that people might be familiar with. But here's my personal. Right now, I have a cold. I'm living and functioning off of Zicam. That's a Church and Dwight product that's really getting me through. Over the long term, it's been a great investment. Over the past 10 years, the stocks returned about 10.5% in total returns. That's underperformed the market, but it's better than the market's long term average. I think there might be something there.
Anand Chokkavelu: Dan, a question about Church and Dwight?
Dan Boyd: Not really a question, Anand, but more of a comment. Jason, you forgot to mention OxiClean in the Church and Dwight product catalog here as a parent of a three-year-old and a nine month old laundry is a very important thing on our house, and I don't think we could survive without that OxiClean.
Jason Hall: I will raise your three-year-old and nine month old with an eight and a half year old who plays soccer. My house runs on that stuff. I'm with you there.
Anand Chokkavelu: Matt, what's on your radar?
Matt Frankel: Well, now what's on my radar is the OxiClean that I have in the closet right there. But as far as the stock, I'd have to say SoFi. Ticker symbol S-O-F-I. Fantastic momentum. They've done a great job of creating capital white revenue streams in recent years. The growth is actually accelerating. They recently announced they're bringing crypto back to their platform now that the banks are allowed to do so. That's going to be a big driver. Not only crypto, they're going a step further. They're going to start bringing blockchain facilitated money transfers across border for free. They have lots of big plans. They recently started doing private equity investing for everybody. Guys like you and me can invest in companies like SpaceX and OpenAI that are pre IPO through SoFi's platform through venture funds. There's a lot going on in this business, and it's still a relatively small bank, and they aim to be a Top 10 bank within the next decade.
Anand Chokkavelu: Dan, question about SoFi.
Dan Boyd: Well, absolute F to name. SoFi, just terrible. I feel like smart people like them could have come up with something better, but private equity investing is very interesting, Matt, though a little scared to me without the reporting regulations that public companies have to do.
Matt Frankel: I do think it was a natural thing, though, now that all these companies are waiting longer than ever to go public. SpaceX is a massive business. OpenAI has a, $100 billion plus valuation. There's a lot to like there and a lot of potential.
Anand Chokkavelu: Dan, which company you're putting on your watch list, OxiClean or private equity stuff.
Dan Boyd: I'm going to go with Church and Dwight for some of that beautiful OxiClean.
Anand Chokkavelu: That's all for this week. See you next time.
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. Anand Chokkavelu, CFA has positions in Alphabet, Amazon, First Solar, Microsoft, Netflix, Salesforce, SoFi Technologies, Walt Disney, and Warner Bros. Discovery. Asit Sharma has positions in Amazon, Digital Realty Trust, Microsoft, Nvidia, Salesforce, Upstart, and Walt Disney. Dan Boyd has positions in Amazon and Walt Disney. Jason Hall has positions in Brookfield Asset Management, Brookfield Infrastructure, Brookfield Renewable, Enphase Energy, First Solar, Nvidia, SoFi Technologies, Upstart, and Walt Disney and has the following options: short January 2026 $27 calls on SoFi Technologies, short January 2027 $32.50 puts on Upstart, and short January 2027 $40 puts on Enphase Energy. Matt Frankel has positions in Amazon, Brookfield Asset Management, Digital Realty Trust, SoFi Technologies, Upstart, and Walt Disney and has the following options: short December 2025 $95 calls on Upstart. Sanmeet Deo has positions in Alphabet, Amazon, Netflix, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Brookfield Asset Management, Constellation Energy, Digital Realty Trust, Equinix, First Solar, Meta Platforms, Microsoft, Netflix, Nvidia, Salesforce, Tesla, Upstart, Walt Disney, and Warner Bros. Discovery. The Motley Fool recommends Alibaba Group, Brookfield Renewable, Comcast, Enphase Energy, Ge Vernova, and T-Mobile US 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.
Are you looking for some new growth stocks now that many of the market's usual favorites -- like Apple and Alphabet -- aren't as compelling as they once were? Don't panic. Great stocks are out there. You just have to dig a bit deeper to find the best ones.
With that as the backdrop, here's a rundown of three brilliant growth stock prospects worth stepping into and sticking with for the long haul. Each one has a business that's built to last indefinitely.
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 »
Image source: Getty Images.
There's the Alibaba Group (NYSE: BABA) you know. That's the Alibaba that owns and operates China's popular e-commerce platforms Tmall and Taobao, and its foreign-facing AliExpress that helps Chinese manufacturers sell to overseas customers. Within its home country, the company enjoys a commanding 40% of the online shopping market, according to wealth management outfit DBS Treasures.
Then there's the Alibaba you don't know. This company also offers cloud computing services, operates a digital entertainment arm, and manages its own logistics/delivery business. It's even working on its own artificial intelligence models meant for consumer and corporate use. Remember the Qwen2.5 model unveiled in January that reportedly performed better than DeepSeek (which had only been revealed a few days earlier as a threat to platforms like OpenAI's ChatGPT)? Alibaba is the developer of Qwen.
All of these business lines are going to be marketable in the near and distant future, even if not explosively so. Alibaba's first-quarter revenue improved to the tune of 7% year over year, more or less matching its long-term top-line growth rate that's likely to remain in place for the indefinite future.
But the tariff standoff between China and the United States that's creating a ripple effect outside of both countries? That's just it. Alibaba isn't particularly vulnerable.
Don't misread the message. Anything that slows China's manufacturing exports ultimately threatens the nation's internal consumerism.
It's not a dire threat, though. More than 80% of this company's revenue is generated domestically. And it's largely understood that Chinese companies are expected to use goods and services offered by other Chinese companies whenever there's a choice. Ditto for their foreign business partners. For instance, although Apple prefers OpenAI's ChatGPT everywhere else, in China, its newest AI-capable iPhones sold in that market will utilize Alibaba's Qwen model.
In other words, Alibaba largely operates in a regional silo. As long as the economy within that silo is growing, Alibaba's dominance of its market means it's growing, too. To this end, the International Monetary Fund believes China's GDP will grow on the order of 4% this year, with comparable growth in the cards beyond that once the tariff dust is almost sure to be settled.
Shares of ride-hailing company Uber Technologies (NYSE: UBER) have taken investors on a bumpy ride since early last year. Although the stock's made net-bullish progress since then, it's also been up-ended several times during this stretch thanks to sales or earnings shortfalls, or disappointing guidance.
Now take a step back and look at the bigger picture. Uber is plugged into a major secular trend that's not apt to end anytime soon, if ever. That's the growing disinterest in driving -- or even automobile ownership -- and a growing willingness to pay for a ride with someone else in their vehicle.
A recent survey performed by Deloitte indicates that 44% of U.S. residents under the age of 34 would be willing to not own a car and instead rely on alternative transportation now that it's readily available, underscoring a much bigger age-driven shift.
Straits Research believes the global ride-hailing and taxi market is set to grow at a healthy annualized pace of 11.3% through 2033, in fact, largely thanks to this ongoing shift.
Uber Technologies is positioned to capture a significant share of this growth, by virtue of its market leadership here and strong presence in several key markets abroad.
Then there's the other reason Uber stock is a long-term buy sooner than later: robotaxis.
Although the underlying technology isn't quite ready for commercial deployment, as CEO Dara Khosrowshahi recently commented, autonomous/self-driving vehicles are "the single greatest opportunity ahead for Uber."
Although it could take 10 to 20 years for self-driving automobiles to fully displace human drivers, once they do it will remove one of Uber's biggest operating expenses. This will in turn lower prices for riders, making its ride-hailing service even more marketable. In this vein, Straits Research believes the worldwide robotaxi market itself is set to swell at an average annualized pace of nearly 68% through 2031.
Finally, add Arista Networks (NYSE: ANET) to your list of brilliant growth stocks to buy now and hold indefinitely.
If you're familiar with the company, then you already know it competes with the much bigger networking powerhouse Cisco. And to be clear, Cisco keeps Arista in check. Arista Networks is evidence, however, that bigger doesn't always mean better within the world of technology. When it comes to technology, better is better.
The key is Arista's EOS, or extensible operating system. That's just a fancy word for the software that makes its networking hardware function. Like most other software, EOS can be rewritten, modified, and updated as needed to meet the specific and ever-changing needs of its customers. It also means its hardware can remain relevant for longer, ultimately saving its customers money by delaying the need for newer tech.
And yes, its ethernet switches are in use in artificial intelligence data centers all over the world, although it also serves more mundane markets like campus WANs (wide area networks), cybersecurity, and simple data storage, just to name a few. As long as the world continues to be digitized and create more and more digital information to handle, there will be demand for tightly focused solutions providers like Arista.
The company's results say as much. Last year's revenue growth of 15% extends an established trend that's expected to persist for at least the next few years, although it's likely to last well into the distant future.
ANET Revenue (Quarterly) data by YCharts
This doesn't mean the stock has always performed well. Indeed, shares have been subpar performers this year, seemingly on worries that broad economic headwinds would undermine this growth.
Don't sweat this weakness too much, though. Rather, capitalize on it.
This might help. Despite the stock's lackluster performance of late, the analyst community is still on board. The vast majority of them rate this ticker as a strong buy, with a consensus price target of $109 that's roughly 15% above the stock's present price. That's not a bad tailwind to start out a new trade with.
Before you buy stock in Alibaba Group, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alibaba Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $658,297!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $883,386!*
Now, it’s worth noting Stock Advisor’s total average return is 992% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of June 9, 2025
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Apple, Arista Networks, Cisco Systems, and Uber Technologies. The Motley Fool recommends Alibaba Group. 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.
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 »
Image source: Getty Images.
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.
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.
Image source: Getty images.
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 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.
Data source: Apple. Chart by author.
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.
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.
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.
*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.
In this podcast, Motley Fool analyst Jason Moser and host Dylan Lewis discuss:
GoDaddy is known for its commercials, less known for its capital allocation strategy. GoDaddy CFO Mark McCaffrey walks Motley Fool host Ricky Mulvey through the company's philosophy on share buybacks.
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 »
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.
A full transcript is below.
Before you buy stock in GoDaddy, 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 GoDaddy 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.
*Stock Advisor returns as of May 12, 2025
This podcast was recorded on May 11, 2025
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Dylan Lewis: Set the time machine for a few weeks back. Motley Fool Money starts now. I'm Dylan Lewis and I'm joined over the airwaves by Motley Fool analyst Jason Moser. Jason, thanks for joining me.
Jason Moser: Happy to be here, Dylan. Thanks for having me.
Dylan Lewis: On this bright and sunny day for the market. S&P 500 up a little over 2%, Nasdaq up, the Dow Jones up, everybody up on reports of the US-China trade deal. I've seen this called tariff cuts, Jason. I've also seen it called temporary trade truce. The market's excited about it. What are you calling it?
Jason Moser: I definitely understand the excitement. Yes, bright and sunny day in the market. It's bright and sunny day here in Northern Virginia, and hey, happy belated Mother's Day to all of the mothers out there. What a tremendous Sunday. We had a great time here, and I hope everyone else did too.
We woke up to a great headline, of course, the market responding obviously very positively to it. I think that goes back to what we have been talking about for the last couple of months, is just day by day, you just don't know really what is going to happen. This is a very headline-driven market, and for as bad as things may seem one day, you just don't know the next day they could turn on a dime, and it seems like today we hit that turn on dime status. I think it's worth remembering, this is a temporary solution. This is not something that is locked in in a full-on deal, but it does seem at least like there is some progress in diplomacy and talks. Perhaps the UK deal that was announced late last week, is a bit of a catalyst here. Maybe that's a sign of good things to come. We will have to wait and see.
But I think a lot of what we've been discussing in regard to tariffs and trade talks, most of this is really centered around ultimately China. China is the pot of gold at the end of the rainbow, as they would say. This is where we really need to figure this deal out because when you talk about trade deficits, and there are positives and negatives that come with all of that. But in regard to China, specifically, we've become very dependent on China through the years. When you think about the relationship we've had with China through the years, going all the way back to the 1970s when we really started diplomatically working together, over time, we've seen this trade deficit, where we're importing more than we're exporting. This trade deficit has just continued to grow.
You look at the 2000s. Around 2000, that trade deficit had reached around $85 billion. From there, it just continued to grow. It hit a peak of close to $420 billion in 2018. Today, it's closer to around $300 billion. But the goal, I think, here, is to try to balance that relationship out. Hopefully, this is a sign of good things to come. Again, it's one headline. We don't know a lot. There are not a lot of specifics, but it does seem like progress is at least being made.
Dylan Lewis: If you're like me, you've probably had a hard time following where we are relative to where we've started with a lot of these escalations. From the reading and from some of the reporting out there, it seems like this essentially resets to where we were with the US and China relations in late March. Initial tariffs announced by the Trump administration, retaliations on both sides. You were on the show last week with our colleague Ricky Mulvey, talking about how the S&P 500 had essentially retraced the Liberation Day losses. In terms of macro mentality, are we basically looking at 90-day amnesia here, where we lost some time, but we wound up back in the same place?
Jason Moser: When we look at the numbers, it's just been such a boring year. The market is essentially flat. Ho-hum, who cares? This has just been a really bumpy ride, going back to, you remember how this all started? This was what? The late February, early March, where the conversation really centered around Canada and China in certain trade negotiations there, but also fentanyl stuff and border stuff. Then it expanded very quickly to it seemed like virtually every country on the face of the planet, which is, I know, something like 180, 190 countries. It does feel like we are back to where we started. It's nice to see at least some progress being made. Go back to that UK trade deal. Hopefully, that is a sign of things to come.
We know that countries are coming to the table and want to negotiate. But again, given our relationship with China, and to an extent, our reliance on China, I think China is really seen as the most important of all of these deals. Again, time will tell there. Again, this is not a permanent solution. This is just something that it's extending the timeline. It's indicating that, hey, conversations are being had, because if you think about it, this tit for tat just doesn't work. Hey, I say 175% tariffs. Well, hey, I'll say 185%. Well, I'm going to go 195. It can just go up and up and up and nobody ends up benefiting. We certainly know that China's economy is suffering from this. But we also know that our economy will suffer from this as well. Particularly as we get closer to the holiday season, if you start seeing supply dwindle and consumers aren't able to get what they want, there are going to be real problems. There will be political ramifications that come from that, as well. It's good to see progress being made. I certainly would not look at this as a solution, but it seems like at least a step in the right direction.
Dylan Lewis: Your dogs seem to agree there, Jason.
Jason Moser: They do. They're big fans of diplomacy, Dylan.
Dylan Lewis: As we noted, good day for the market. Even better day for companies that are in the business of buying and selling, and really, anybody in retail, anybody with international supply chains. As you noted, this is a reset, but a reprieve as well. Not a full solution. Any wise words for investors seeing some major moves with their stocks today?
Jason Moser: I think it's great. We always love to see our portfolios in the green or the black, however you want to put it. But it's always nice to see positive as opposed to negative. I think it's really interesting to see the companies that are reacting most strongly to these results. Look at some of these companies that stand out, Wayfair, for example, have better than 20%, totally understandable. They really depend on the supply chain centered around China. Shopify, again, we've talked about that before, plenty of small and medium-sized businesses that do not fare well during these heavy tariff times, all the way down the line there. Amazon doing well, Nike doing well. I think it's nice to see those companies at least starting to recover a little bit from these lows. Again, I think this reiterates why we invest the way we do here. It is so if you tried to time your way in and out of this stuff, I can't imagine that many people would have been very successful. Continuing to invest regularly, staying invested, that is something we just need to reiterate to people because that is really, truly, that's the solution to long-term wealth creation.
Dylan Lewis: We may get some more commentary on the big picture here when we see Walmart and some of the Chinese companies like Alibaba report later in the week, fairly big earnings week, and Fox got started. They're out with earnings this week, and they also had an announcement that their upcoming streaming service, Fox One, will be launching before the upcoming football season, which I can't imagine is an accident. I imagine that's quite intentional. This is something we've been looking forward to for a while, Jason. There's a history of legacy media companies getting streaming services right. There's a history of legacy media companies getting streaming services wrong. I think CNN+ lasted for about a month. What are you thinking about as you see Fox stepping up to the competition here?
Jason Moser: I think it's noteworthy to acknowledge that Fox is looking at this streaming service as something where they want to attract the cord cutter. There's two sides of the coin here, in that we've got folks who are still very happy cable subscribers, and we were looking at it countrywide. There's still plenty of cable subscribers out there. Now, we know the trend is toward cord-cutting, but Fox wants to make sure to offer something for everyone. If, for example, you are a cable subscriber and you get your Fox channels, well, then it sounds like you're going to get access to this Fox One streaming service as well. If you're a cord cutter and you don't really want to participate in the cable network, well, then you have the opportunity to go ahead and subscribe to this Fox streaming service. It's important to note, I think this Fox streaming service is going to be all of the properties. It's not just Fox News. It's the stand-alone Fox channel. It's all of the Fox Sports channel. It's everything that comes within that Fox portfolio.
Let's be clear. It's a very popular portfolio. It garners a lot of viewers, and I think that really matters. You referred back to that NFL relationship there, and that is obviously a very big driver come August when we start talking about preseason and getting into September with the regular season games. NFL is just big business. We know that, and Fox benefits greatly from that. I think we don't really know exactly what pricing is going to look like for this service yet, but it does sound like at least they are not looking for some type of discount or low cost price point, something like, think about Disney when they introduced Disney Plus, for example, and I think they started that out at 599 or 699 per month. I don't think that's what this is going to be. It's going to be something that's a little bit more reflective of the value that they feel like they're returning to all of their viewers. But all things considered, I think this makes sense. It's going to be something that I think helps expand their viewership and gives everybody a chance to participate in that Fox portfolio, how they want, whether they're cable subscribers or whether they are cord cutters that really just want to find access to the best content.
Dylan Lewis: One thing that might bolster some market confidence here in what Fox is able to do, this is not their first horse in the streaming race. They already own Tubi, which is a free ad-supported streaming service. A sleeper in the streaming space in a lot of ways, but at a critical mass. I think with what they saw for Super Bowl editions, they are probably over 100 million monthly active users at this point. It's not a profitable operation for them yet, but they've done over a billion dollars in trailing 12-month revenue. There is some track record of success here, and I think crucially, Jason, there's success in connecting with advertisers and working that ad-supported model. That really seems to be the future of where a lot of this industry is going.
Jason Moser: Well, we've talked about this a lot in regard to ad-supported video-on-demand. This is a massive market opportunity worldwide. I think when you get outside of the US and you get to economies that are a little bit more cost-sensitive, it makes even more sense. But when you look at revenue in the advertising video-on-demand supported market right there, worldwide, it's projected to reach around $55 billion in 2025. That's only going to continue to grow. For me, it makes a lot of sense that they continue to pursue this. It's just interesting that, I don't know about you, it's not top of mind for me. I'm not the biggest Tubi user. I know we have the app on our TV, and I guess we use it every once in a while if we're searching for content. But again, you mentioned this massive base of user, closing in on 100 million monthly active users. They saw in the quarter, their total revenue is up 27%. Fox's total revenue is up 27% for the quarter. Advertising revenue increased 65%, and that primarily was due to the impact of Tubi. They saw tremendous benefit there from the Super Bowl. I think that's something that is slated to continue. For me, it makes sense that they continue to invest in this business because not only do they benefit from this portfolio of central Fox offerings that they have, but then they've got these other little ancillary properties that they just continue to invest in and they fly under the radar.
But obviously, it's working out very well for the company. I think it's worth noting, you look at Amazon, for example, Amazon making a lot of investments in their Freevee offering, which is something essentially, you're going to get Amazon Freevee if you just have Amazon at all, if you're a Prime member. However your relationship is with Amazon, you're going to have access to Freevee. Amazon clearly sees an opportunity there as well. Again, I think, going back to those growth numbers in the AVOD market there, it's nice to see that Fox continues to invest in this business because it's obviously working out for them.
Dylan Lewis: Fox is not a name that we talk about all that often and to our detriment. Shares up almost 60% over the last 12 months. I was glad that we had the opportunity to check in on it because it's one that not a lot of folks have been paying attention to. Stock basically set new all time highs earlier this year, not too far off those levels now. It seems like advertising is a big part of the recent run. If this is getting onto people's radar at all, anything else you pay attention to?
Jason Moser: I think just continue to pay attention to the overall advertising revenue. The ratings that Fox brings in, I think we all know. Fox does pretty well with all of its properties. I think they really benefited tremendously from this most recent election cycle. They noted in the call from last call that on election night, they saw over 13-and-half million viewers tuning in, and then I think they said Fox News Channel had grown. It become the most watched cable network in total day and prime time in that space, growing total day audience by nearly 40%, and then their prime time audience by 45% year over year. It's not just Fox News. We go back to the NFL relationship in all of the different ways they can really win. It's not just Fox News. It's Fox Sports. It's Fox News. It's the stand-alone Fox offering there. They do have a lot of different ways they can win with their media properties. At the end of the day, it does boil down to ratings and as it stands right now, Fox continues to bring in strong ratings across all of its properties. That would be a very encouraging thing for investors looking to maybe get some exposure to the entertainment space.
Dylan Lewis: Jason Moser, thanks for joining me today.
Jason Moser: Thank you.
Dylan Lewis: Hey, Fools, we're taking a quick break for a word from our sponsor for today's episode.
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Listeners, coming up on the show, you may know GoDaddy for its commercials, but you probably don't know its capital allocation story. One that's made the stock a market beater. My colleague Ricky Mulvey caught up with GoDaddy's CFO, Mark McCaffrey, for an interview about the company's growth engine and philosophy on share buybacks.
Ricky Mulvey: A lot of our listeners may know GoDaddy as a domain registration business. They may not know GoDaddy as a long-term market outperformer, which I want to get into. We'll focus on the quarterly results, though, because right now, the growth engine and about a third of your revenue is coming from this applications in commerce business. This is not just registering websites. That's where you're getting 17% sales growth. For our listeners who just know GoDaddy is a spot where you're buying websites, what should they understand about the applications in commerce business?
Mark McCaffrey: Absolutely. It's a great question. We've become so much more than just being a domain company over the years. We just hit our 10-year anniversary of being a public company. We've been around 28 years. We've become a one-stop shop for micro businesses that provide them the IT services for them to be effective, them to be efficient, them to compete on a much broader scale. We're talking the mom and pop shops. I always refer to them the underdogs. They are doing what they love. They are passionate about what they do. They want to do it broader. They want to connect to more customers. They may not be IT savvy. We provide them, I sometimes refer to it as the operating systems for the micro businesses. That's what our application and commerce segment represents. Our core platform was the traditional domain part of our business, but this is the software that gets attached.
It's more often than not a website or an email or commerce capabilities. But it represents a second and third and fourth product attached that makes our customers successful. Because it's proprietary software and some third-party software, but proprietary software, it comes at a much higher profit margin for us and therefore has been our growth engine. It has become a bigger and bigger part of the business.
Ricky Mulvey: We've been talking on the show about how very large companies are using artificial intelligence, Microsoft building up with OpenAI. Palantir getting inserted into every government and any company they can find. You're at a micro level with very small businesses in helping them use AI to build and grow their businesses. At a very broad level, how do you see AI impacting small business creation in the US right now?
Mark McCaffrey: When you think about it, and again, when we say micro businesses, we're probably smaller than the small businesses others refer to. They don't think about AI as to, oh, my God, I want to use AI, but they want to have help. They don't want to hire necessarily more employees. But yet, for example, they have to respond across multiple different social media platforms to inbounds, and our tools do that automatically. They write in their voice. They allow them to be in multiple places at multiple times. I was just meeting with, I call them the pizza guys, but they're two guys who run a mobile pizza oven, and between putting a pizza in for 90 seconds, they're on our conversations tool just clicking Send to make sure that they're setting up their next gig. That's the type of customer we want. They don't sit there and think about, oh, my God, I'm using AI. They're sitting there going, oh, my God, this just works better. That is the customer we want. That's what our product does, Airo, A-I-R-O, just for the record. It allows our customers using AI to respond more effectively and more efficiently within their customer base to grow. It works because we have so much data around it.
Ricky Mulvey: This is a zone where Shopify also plays. We talk about Shopify a lot on the show. What's the differentiation of Airo? If I'm a micro business, if I'm starting my own pizza business with my brother, why would I do it on GoDaddy's platform instead of Shopify?
Mark McCaffrey: Number 1, it's a seamless experience for us. You come to one place and you're able to get all the functionality. Number 2, the cost effectiveness of it. We do it at such a good price point for the value our customers are getting. It allows them to start up, be more successful, and quite frankly, manage across one application. When you think about it, we're the only company in the world that has the technology stack all the way from the domain to the transaction. Because we can combine that into one seamless experience with them, they don't have to manage eight apps. They manage one app, and when they need help, they go to our care organization, and our care organization is designed to work with this customer base, work with the micro business. This is what they do best and why they're so effective. Between the technology itself and our ability to guide them through all of this, I always say, you can be up and running with a business in 15 minutes. I get corrected by my internal people to say, no, actually, we can do it in three minutes. Can you stop saying it takes so long. But you can get everything you need almost instantaneously bundled together as a great price, be up and running with website, transactions, professional email, and a domain, and you can be getting all your traffic across multiple social media platforms. That's what we offer. It's simple. It's easy. It's easy to use, and it's easy to maintain.
Ricky Mulvey: One of the reasons I'm happy to have you on the show is that GoDaddy has a very interesting capital allocation story. There's a long-term outperformance for your stock since GoDaddy IPOed. But 2023 is when a lot of that performance came, and that's in line with when you started a stock repurchase authorization program. Since 2022, GoDaddy bought back four billion dollars worth of stock. I don't want to dismiss the growth in the actual business, but there's a capital allocation story here that's important for shareholders. As CFO, you've really focused on share buybacks. You've got another three billion dollar authorization plan moving forward for the next few years. But just conceptually you've got a lot of options at your disposal. You can buy back stock. You can pay a regular dividend. You can pay a special dividend. Why stick with the buyback so much?
Mark McCaffrey: I'll start with the underlying premise that we think investing in our own stock is one of the most attractive returns we have out there. We've shown that we've been able to execute on this buyback strategy very effectively. Thank you for pointing out. We've done it over four years, four billion dollars. Not many companies have reduced their fully diluted share account by 25% over a period of time such as this. We're very proud of that, and we're very proud to not only share the success we've had, obviously, we generate a lot of free cash flow that allows us to have these options, but also return that value back to our shareholders and do it in a manner that we continue to, I would say, create this great model. I'll even take it a step further, how many companies out there today are growing 6-8%, have expanded their normalized EBITDA margins by 900 basis points in five years, and then bought back 25% of their fully diluted shares over a similar period of time and still are able to compound to free cash flow per share on a CAGR of 20%. That whole model works together for us fantastically. It's durable. It's resilient, and we continue to put it forward because it works, and our investors keep giving us the feedback. They really like the program. They really like how we do this, and they want us to continue doing this.
Ricky Mulvey: Since GoDaddy's IPO 10 years ago, I mentioned this at the top, it's been a quiet market beater, and a lot of that performance has come within the past few years, so I don't want to dismiss that. But when you look at the overall results, the S&P 500 compound annual growth rate of about 12%, the Nasdaq about 16%, and GoDaddy at 25%, smashing the return of the S&P 500. When you look back on 10 years as a public company, any reflections on the outperformance or maybe what's been the recipe for that at GoDaddy?
Mark McCaffrey: The recipe is focusing on what we call our North Star and making sure that everything we do is in honor of that North Star. We call our North Star free cash flow per share. We generate free cash flow, whether it's growth, whether it's profitability. We're always looking to do that in a way to maximize that equation, understanding that our model is durable, it's predictable, and we can use the levers to make sure we continue to compound into that equation and drive that value. As we've done that, as we've grown as a company, as we've hit this milestone, because we are a very large tech company, we know that hey, 90% of our revenue starts with our existing customer base. We know we have great products and innovation that bring people into our funnel. We know this model compounds on itself year after year as our customer retention rates get stronger. That compounding free cash flow is what creates the value within the business itself, and that's the same value we can use to return to our shareholders.
I would say the model works. Our execution of our strategy works. Our model works behind it, and it's about the compounding effect of layering on every year just to be a little bit better and to grow based on these metrics that just continue to generate cash flow. I would also say, three years ago, we took an effort to really simplify our infrastructure so that our operating leverage just supported this going forward. We're growing revenue at over two times. We're growing our operating expenses right now. That allows us to be so efficient in how we do things. When we're efficient, we can do what we do best, which is focus on our customers. Again, it all holds together, but it all compounds on each other. The balance sheet gets stronger. We're able to generate free cash flow. We're able to look at the options for capital allocation, and it puts us in a great spot going forward.
Ricky Mulvey: Good place, send it. Mark McCaffrey. That is the chief financial officer of GoDaddy. Appreciate your time and your insight. Thanks for joining us on Motley Fool Money.
Mark McCaffrey: Thanks, Ricky. Thanks for having me.
Dylan Lewis: As always, people in the program may have interests in the stocks they talk about, and Motley Fool may have formal recommendations for or against, so don't buy sell anything based solely on what you hear. All personal finance content follows Motley Fool editorial standards. It's not approved by advertisers. Advertisements are sponsored content provided for informational purposes only. To see our full advertising disclosure. Please check out our show notes. For the Motley Fool Money team, I'm Dylan Lewis. We'll be back tomorrow.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Dylan Lewis has positions in Shopify. Jason Moser has positions in Amazon, Shopify, and Wayfair. Ricky Mulvey has positions in Shopify. The Motley Fool has positions in and recommends Amazon, Microsoft, Palantir Technologies, Shopify, and Walmart. The Motley Fool recommends Alibaba Group, GoDaddy, and Wayfair 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.
Few stocks have sizzled as much as Palantir Technologies (NASDAQ: PLTR) over the last 12 months. Shares of the data analytics software provider more than quadrupled during the period. Palantir stock is up more than 40% year to date.
However, Palantir isn't anywhere near the top of the list of stocks I think will be the biggest winners for investors over the long run. And some of those stocks could outperform through the rest of this decade, too. I predict three stocks will be worth more than Palantir five years from now.
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Intuitive Surgical's (NASDAQ: ISRG) market cap is roughly $70 billion smaller than Palantir's right now. But I suspect the tables could be turned in the not-too-distant future.
Granted, Palantir is growing more rapidly. However, Intuitive Surgical continues to deliver impressive growth, too. The robotic systems pioneer's revenue jumped 19% year over year in the first quarter of 2025. Procedure volume for Intuitive's da Vinci robotic systems should increase by 15% to 17% this year.
Importantly, Intuitive Surgical looks like a bargain compared to Palantir. Sure, Intuitive's shares trade at a sky-high forward price-to-earnings ratio of 68. That seems almost cheap, though, when stacked up against Palantir's nosebleed forward earnings multiple of 196.
What I like most about Intuitive Surgical is the high probability of strong future growth. Around 2.7 million procedures were performed using da Vinci last year. Intuitive estimates roughly 8 million procedures are done annually for which it already has products and clearances. The company is targeting approximately 22 million soft-tissue procedures with products and clearances under development.
Image source: Intuitive Surgical.
Alibaba Group (NYSE: BABA) is already somewhat larger than Palantir. Based on the two companies' recent revenue growth, though, some might think this dynamic could change relatively soon. I predict, though, that Alibaba will widen its market cap gap over Palantir over the next five years.
Valuation plays a big factor in my projection. We've already seen how mind-blowingly high Palantir's forward earnings multiple is. Meanwhile, Alibaba's shares trade at only 12.5 times forward earnings. The company's growth prospects make its valuation look even more attractive: Alibaba's price-to-earnings-to-growth (PEG) ratio based on analysts' five-year earnings projections is a low 0.71.
Artificial intelligence (AI) demand could serve as a bigger tailwind for Alibaba than it will for Palantir. Alibaba's AI-related product revenue has grown by triple-digit percentages for six consecutive quarters. Its cloud business is also directly benefiting from AI.
Could my prediction about Alibaba be wrong? Maybe. If it is, the most likely culprit that limits the company's growth could be the Chinese government. However, assuming Alibaba is allowed to meet customers' needs relatively unfettered, it should remain bigger than Palantir by the end of the decade.
You might wonder why Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is on the list. After all, the tech giant is over 7x bigger than Palantir right now. It seems to be a no-brainer that Alphabet will still be larger in five years.
However, I included Alphabet because there's rampant pessimism about the company. Some have proclaimed that generative AI presents an "existential threat" to Google Search. Google has lost two major antitrust lawsuits. One potential outcome is that the business could be broken up.
I don't buy into the gloom and doom surrounding Alphabet, though. I'm confident that it will continue to thrive despite these challenges.
AI, including generative AI, is helping Google a lot more than it's hurting. Google Cloud's business is booming as customers develop generative AI apps in the cloud. AI Overviews in Google Search have increased search usage and customer satisfaction. I expect Alphabet's revenue will grow as it rolls out more agentic AI capabilities.
What about the antitrust rulings? Admittedly, they could present problems for Alphabet. However, it will almost certainly take years for a final resolution. Alphabet could ultimately prevail. Even if not, the remedies the company is forced to make might not be too terribly bad.
Regardless, I'd rather own shares of Alphabet over the next five years than I would Palantir.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet and Intuitive Surgical. The Motley Fool has positions in and recommends Alphabet, Intuitive Surgical, and Palantir Technologies. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
Natee Meepian/Getty Images
It's tough to break into high-paying companies.
Google is notorious for having a demanding interview process. Aside from putting job candidates through assessments, preliminary phone calls, and asking them to complete projects, the company also screens candidates through multiple rounds of interviews.
Typical interview questions range from open-ended behavioral ones like "tell me about a time that you went against the status quo" or "what does being 'Googley' mean to you?" to more technical ones.
At Nvidia, the chipmaking darling of the AI boom, candidates must also pass through rigorous rounds of assessments and interviews. "How would you describe __ technology to a non-technical person?" was a question a candidate interviewing for a job as a senior solutions architect shared on the career site Glassdoor last month. The candidate noted that they didn't receive an offer.
Tech giants top Glassdoor's list of the hardest companies to interview with. But tough questions show up across industries — from luxury carmakers like Rolls-Royce, where a candidate said they were asked to define "a single crystal," to Bacardi, where a market manager who cited a difficult interview, and no offer, recalled being asked, "If you were a cocktail what would you be and why?"
The digital PR agency Reboot Online analyzed Glassdoor data to determine which companies have the most challenging job interviews. They focused on "reputable companies" listed in the top 100 of Forbes' World's Best Employers list and examined 313,000 employee reviews on Glassdoor. For each company, they looked at the average interview difficulty rating as reported on Glassdoor.
Here's a list of the top 90 companies that put candidates through the ringer for a job, according to self-reported reviews on Glassdoor.
Investors have spent the past couple of years acquainting themselves with artificial intelligence (AI) and quantum computing. These emerging technologies could represent the most significant leaps forward for humankind since the internet decades ago.
Of course, such groundbreaking technologies can be lucrative investment opportunities. The Defiance Quantum ETF (NASDAQ: QTUM) could be a smart way to add exposure to artificial intelligence and quantum computing to your portfolio.
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The exchange-traded fund has plunged nearly 20% from its high amid the market's recent volatility, one of its steepest declines since it began trading in 2018.
Here are three reasons to buy this AI quantum computing stock on the dip.
It's impossible to predict what AI and quantum computers could make possible over the coming decades. You might see things you only thought were possible in science fiction. Humanoid robotics is already on the way, which reminds me of a famous action movie from the 1980s featuring a particular cyborg sent from the future.
Plus, AI and quantum computing could eventually be worth trillions of dollars. Research from McKinsey estimates AI could generate $23 trillion in annual economic value by 2040. Meanwhile, quantum computing could start slowly. Technology experts have speculated that practical quantum computers could still be several years away.
However, they could be a game changer once they get here. Boston Consulting Group's report on quantum computing forecasts that quantum computers will create $5 billion to $10 billion in annual economic value by 2030, but projects this to increase to $450 billion to $850 billion by 2040. Time will tell how accurate such estimates and timelines are, but the financial and real-world potential is exciting, to put it mildly.
AI and quantum computing present quite a challenge for investors. Most individuals, let alone professional investors, aren't experts in these complex fields.
Therefore, picking individual winners could prove extremely challenging. That's a great reason to invest in a diversified instrument such as the Defiance Quantum ETF. It represents a global basket of 70 companies involved with AI and quantum computing -- someone else did the hard work of picking high-quality stocks in these advanced technology industries.
The fund's top holdings include:
| Company | ETF Weight |
|---|---|
| D-wave Quantum | 3.31% |
| Orange | 2.37% |
| NEC Corp | 2.17% |
| Palantir Technologies | 2.15% |
| Koninklijke Kpn | 2.05% |
| Alibaba Group | 2.03% |
| Nokia | 1.93% |
| Northrop Grumman | 1.89% |
| Rigetti Computing | 1.87% |
| RTX Corp | 1.83% |
Data source: Defiance ETFs.
Since AI and quantum computing have immense potential but are still so unpredictable, casting a wide net is a wise strategy. It could be a case of the 80-20 rule, where a select few companies produce a majority of the value in AI and quantum computing.
The ETF's construction spans various companies, industries, and countries, reducing risk by limiting the top holding to just 3.31% of the fund's total assets. Additionally, the expense ratio (0.4%) appears reasonable, considering the simplicity and diversification you gain in return.
Many quantum computing stocks have been highly volatile, and investors who bought at the wrong time have endured steep losses.
The Defiance Quantum ETF has been around since 2018, and has outperformed the Nasdaq Composite, a prominent technology-leaning U.S. stock market index, since about 2021:
QTUM Total Return Level data by YCharts
Past performance does not guarantee future results, but it demonstrates the effectiveness of a diverse approach to speculative industries like AI and quantum computing. I don't see why the Defiance Quantum ETF can't continue to perform well as these technologies mature.
Before you buy stock in ETF Series Solutions - Defiance Quantum ETF, consider this:
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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool recommends Alibaba Group and RTX. The Motley Fool has a disclosure policy.
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