Key Points

• Analysts have been downgrading BYD's full-year delivery forecast.

• BYD is currently on pace to fall short of 2025 delivery estimates.

• BYD is facing a challenging Chinese market amid a brutal price war.

• 10 stocks we like better than BYD Company ›

Over the past few years, BYD investors have been spoiled. The Chinese electric vehicle (EV) juggernaut swept through the country's domestic EV market with relative ease and then applied tremendous pricing pressure with a long list of highly affordable and compelling EV vehicle options. While BYD has been a no brainer winner over the past five years with its stock trading nearly 380% higher over that time, it might finally be showing signs of slowing down.

Time to jump off the BYD hype train?

BYD's monthly sales and deliveries have stagnated over the summer months, which are traditionally slower selling months, providing fresh challenges for China's EV giant. Not only is BYD dealing with slowing sales, but it's also being reprimanded vocally by the Chinese government for applying so much pressure on pricing that it's caused a race to the bottom, slowly but surely eating away at industry margins. BYD slashed prices by as much as 34% in May, causing increased government scrutiny on the industry.

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In fact, in what would be a rare miss for the top Chinese EV maker, the company looks like it's going to fall short of its annual sales target for 2025. BYD would need to sell roughly 560,000 units monthly through December to hit its sales target, which would be more vehicles sold in one month than it ever has in its history -- BYD sold just short of 515,000 vehicles last December.

Image source: BYD.

And now analysts are stumbling over themselves to downgrade BYD's annual sales estimates. In fact, Deutsche Bank AG said it now expects BYD to deliver 5 million in wholesales, which is simply deliveries to dealer networks, which breaks down into 4 million domestic deliveries and 1 million overseas as the company continues its global expansion.

Morgan Stanley lowered its delivery projection to 5.3 million last month, noting that a smaller number of new models would be a drag on company deliveries. Perhaps even worse yet, Bloomberg Intelligence's Joanne Chen said BYD will be forced to sacrifice some profits, while maintaining large incentives and discounting, if it wants to stay on track and have a chance at reaching its delivery estimates.

"Regulatory scrutiny will temper direct cuts to vehicle sticker prices but competition isn't going away and retail promotions are still needed to sustain sales momentum," Chen said, according to Automotive News. "New model roll outs and steady tech upgrade are also crucial."

Global expansion

Further, when you back out BYD's global expansion and the estimated deliveries overseas, investors will see that BYD's domestic car deliveries in China are shrinking. In June, domestic deliveries slipped 8%, compared to the prior year. HSBC data shows that Geely was the largest gainer of market share during the first half of 2025, while BYD was one of the biggest losers.

Back to looking at BYD's global expansion, while the company is on pace to reach its forecast of 800,000 overseas deliveries, it still faces challenges in two emerging markets: Saudi Arabia and India. Both markets are potentially huge, but Saudi Arabia has EV market share of just 1% of total sales and faces high costs, charging infrastructure challenges, and extreme temperatures that make EV adoption slower in the region. India, the world's third largest automotive market, has similar problems and substantial tariff headwinds that can increase the cost of imported vehicles by 100% in some cases.

Ultimately, investors should prepare for an inevitable slowdown in BYD's expansion after years of rocketing higher in deliveries and stock price. That said, eventually it's likely that BYD and other Chinese automakers will enter the U.S. market, and that could provide the company's next massive boost in deliveries and financials -- but when that will happen is anyone's guess. Long-term investors should stay the course because even if BYD slows down from its rapid rise it's still in an incredible position to thrive globally in the years ahead.

Should you invest $1,000 in BYD Company right now?

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HSBC Holdings is an advertising partner of Motley Fool Money. Daniel Miller has no position in any of the stocks mentioned. The Motley Fool recommends BYD Company and HSBC Holdings. The Motley Fool has a disclosure policy.

Key Points

• Many companies in the center of the AI revolution have seen their stock prices soar in the last three years.

• These two companies have produced very strong operating results.

• But their stock prices have outpaced their financial growth, leading to sky-high valuations.

• 10 stocks we like better than Palantir Technologies ›

Artificial intelligence (AI) has become one of the biggest talking points for businesses over the last few years. The number of S&P 500 companies mentioning "AI" on their earnings call climbed from less than 75 in 2022 to 241 during the first quarter, according to FactSet Insight.

A handful of companies have built big businesses around demand for artificial intelligence, or integrated AI to rapidly expand their addressable markets. Many of those companies have seen their stock prices soar over the last few years.

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But not every high-flying AI stock is worth buying after a massive run up in its price. Wall Street analysts have soured on two of the strongest performers over the last few years. Some analysts now see tremendous downsides ahead.

Here are two AI stocks that could plummet over the next year, according to select Wall Street analysts.

Image source: Getty Images.

1. Palantir Technologies (74% potential downside)

Palantir Technologies (NASDAQ: PLTR) has been one of the best-performing stocks over the last few years. Since the start of 2023, the stock price has climbed an eye-popping 2,290%, and it now trades with a market cap exceeding $350 billion, as of this writing.

But multiple analysts think the stock has climbed too far, too fast. Just seven analysts covering the stock rate it a buy or the equivalent. Seventeen say to hold it, and Palantir has four sell ratings. The lowest price target on the Street is RBC's Rishi Jaluria, who has a $40 price target on the stock, a 74% drop from its current price.

The reason for the low price target isn't lack of financial results. Palantir has seen its revenue grow substantially over the last few years, as it expands its addressable market through its Artificial Intelligence Platform, or AIP. The new platform makes it easier for users to interact with the big data software and find useful business insights and help make decisions. That's expanded the use cases for Palantir's software, especially as businesses generate more and more data. As a result, Palantir's U.S. commercial revenue has climbed quickly, including a 71% increase in the first quarter.

Moreover, Palantir has exhibited tremendous operating leverage. Instead of focusing on marketing and sales, CEO Alex Karp has put most of Palantir's manpower into building a better product. The idea is a better product will do the selling for itself. As a result, adjusted operating margin climbed to 44% in the first quarter, up from 36% in the first quarter last year.

Indeed, Palantir is firing on all cylinders. But Jaluria and many others on Wall Street think the valuation of the stock has climbed too high. "We cannot rationalize why Palantir is the most expensive name in software. Absent a substantial beat-and-raise quarter elevating the near-term growth trajectory, valuation seems unsustainable," he said.

Shares of Palantir currently trade for 228 times forward earnings and 78 times revenue expectations over the next 12 months. To put that in perspective, only a handful of S&P 500 stocks trade for more than 100 times earnings, and no others trade for more than 26 times sales expectations. Meanwhile, there are other companies growing sales even faster than Palantir, so it's a very hard multiple to justify.

2. CrowdStrike (26% potential downside)

CrowdStrike (NASDAQ: CRWD) has seen its share price climb 352% since the start of 2023 on the strength of its Falcon security platform. Despite a massive outage that shut down numerous IT systems around the world last July, the company has bounced back quickly. The stock has more than doubled since its lows last summer, reaching a market cap of nearly $120 billion.

But analysts are starting to look at CrowdStrike's stock with an increasingly critical eye. The stock received three downgrades this month from buy to hold, and one analyst initiated coverage with a hold as well. Over the last three months its buy ratings on Wall Street dropped from 41 to 31. And the lowest price target among them is $350, implying a 26% drop from the price as of this writing.

Again, valuation appears to be the biggest concern for the stock. Operationally, CrowdStrike has managed to grow its customer base as more enterprises look to consolidate their cybersecurity needs and opt to use CrowdStrike's broad portfolio of services. Forty-eight percent of its customers now use at least six of its modules, as of the end of the first quarter. That's up from 40% two years ago.

CrowdStrike is leveraging AI on its platform with agentic AI capabilities through its new Charlotte platform, which helps take action upon detecting a security threat to button up the vulnerability. That's on top of its machine learning capabilities, which help it detect those threats in the first place. And with a growing customer base, it has more data to ingest into its AI algorithms, giving it a significant advantage over smaller competitors.

CrowdStrike has managed very strong growth over the last few years. Its annually recurring revenue climbed 20% in the first quarter, exceeding its guidance, and management expects that number to accelerate through the rest of the year as more businesses adopt its Falcon Flex platform.

Still, the stock now trades at a price-to-sales ratio of 22 times revenue expectations over the next 12 months. And while that might not seem so expensive compared to Palantir, it makes it the third-highest priced stock in the S&P 500 by that valuation metric. And if you prefer to look at its earnings, it's one of the handful of stocks in the index trading above 100 times estimates, 135 times, to be exact.

While it's possible CrowdStrike or Palantir continue to climb higher from here, it's probably worth taking money off the table at this point and finding better values in the market.

Should you invest $1,000 in Palantir Technologies right now?

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Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike and Palantir Technologies. The Motley Fool has a disclosure policy.

Key Points

• Management's raised guidance for the entirety of 2025 didn't hurt, either.

• It increased its forecasts for both sales and headline net income.

• 10 stocks we like better than Garrett Motion ›

The stop lights were green for automotive technology company Garrett Motion (NASDAQ: GTX) on Thursday at least as far as its stock was concerned. Investors bid Garrett up by more than 3% that day, due mainly to its encouraging set of quarterly earnings figures. That rise was notably higher than that of the S&P 500 index, which crawled less than 0.1% higher.

An accelerating bottom line

Garrett's second-quarter results, published Thursday morning, featured rises in key metrics. The company's net sales didn't exactly boom, but they did increase almost 3% year over year to $913 million. Generally accepted accounting principles (GAAP) net income rose more strongly, advancing by nearly 36% to $87 million. On a non-GAAP (adjusted), per-share basis, the bottom line grew by 48% to $0.43.

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Image source: Getty Images.

Although the consensus analyst estimate was $918 million, Garrett crushed the adjusted bottom-line pundit forecast of $0.42.

In the earnings release, Garrett attributed its improvements to broad gains in a number of cutting-edge product segments.

It quoted CEO Olivier Rabiller as saying the company "reinforced our leadership in turbocharging, by securing awards for more than $1 billion in light vehicle program extensions while continuing to advance our zero-emission technologies, achieving new milestones in our e-powertrain, e-cooling, and fuel cell programs."

Turbocharged guidance

Garrett clearly believes the positive momentum will continue, as it raised both its top-line and profitability guidance for the entirety of 2025. The company is now projecting that net sales will come in at $3.4 billion to $3.6 billion (previous guidance: $3.3 billion to $3.5 billion). GAAP net income should be $233 million to $278 million, up from the former estimate of $209 million to $254 million.

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*Stock Advisor returns as of July 21, 2025

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Garrett Motion. The Motley Fool has a disclosure policy.

Key Points

• Investors are pessimistic about Google Search's odds of survival.

• Taiwan Semiconductor's management projects monster growth over the next five years.

• 10 stocks we like better than Alphabet ›

Artificial intelligence (AI) stocks and "cheap" aren't often placed in the same sentence, but I think that's true of two stocks in particular. Both Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Taiwan Semiconductor Manufacturing (NYSE: TSM) appear to be cheap, but for two separate reasons.

In a market that's growing increasingly expensive, I think taking a hard look at these two stocks is worthwhile, as the value they provide investors is near the best available.

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Image source: Getty Images.

1. Alphabet

Alphabet is the parent company of Google, YouTube, Waymo, and the Android operating system. However, Alphabet derives the majority of its revenue from one source: advertisements.

This is also the major concern from the market, as Alphabet's primary revenue source, the Google Search engine, is under attack from generative AI. Google Search accounted for 56% of revenue in the first quarter. While we don't have an individualized breakdown of Google Search's operating margin, the Google Services division generated an operating margin of 42%, accounting for over 100% of Alphabet's total operating profits.

That's because this division funds various Alphabet investments that don't generate any profits, so this segment needs to continue performing well for Alphabet to remain attractive to investors.

However, there are some signs of Google's dominance slipping, as its market share has fallen below 90% for the first time since 2015. Furthermore, many Wall Street analysts and other tech-savvy people have replaced Google Search with generative AI. As a result, many are forecasting the downfall of Google, which is why the stock trades at a huge discount to the market.

GOOG PE Ratio (Forward) data by YCharts. PE Ratio = price-to-earnings ratio.

At 19 times forward earnings, Alphabet's stock is far cheaper than the broader market, as measured by the S&P 500. The S&P 500 trades for 23.7 times forward earnings, so there is a tangible difference in valuation between these two securities.

However, I think this bearish sentiment is unwarranted. In Q1, Google Search's revenue increased 10% year over year -- not a sign of a company that's failing. Additionally, I think the majority of the population could do without the capabilities of a generative AI web browser or search capabilities and are perfectly fine with the AI Overview Google offers at the top of every search result.

We'll receive more information from Alphabet on July 23 when it reports its Q2 results, but I expect Google Search revenue to remain healthy, which could lead to the stock rising.

2. Taiwan Semiconductor

Taiwan Semiconductor (TSMC) is the world's leading chip foundry, producing chips for giants such as Apple and Nvidia. TSMC has beaten out other chip foundries for multiple reasons, but chief among them is that it doesn't market any chips directly to consumers. Taiwan Semiconductor is a chip fab facility only, so its clients don't have to worry about it stealing their technology to produce a product that rivals their own.

Additionally, Taiwan Semiconductor is always at the forefront of new chip technology. This remains true, as they are launching their 2-nanometer (nm) chip node later this year and a 1.6 nm offering in 2026.

This dominance has enabled it to establish itself firmly at the forefront of the chip fabrication industry, and its services are in high demand. As a result, clients often place chip orders years in advance, which gives TSMC unparalleled insight into the direction the market is heading. Over the next five years, management projects a 45% compound annual growth rate (CAGR) in AI-related revenue and a nearly 20% CAGR in total revenue.

That's market-crushing growth, and if it pans out, Taiwan Semiconductor stock will be a must-own. Despite management's strong track record and the obvious tailwinds in the chip industry, TSMC's stock trades at only 24.9 times forward earnings.

TSM PE Ratio (Forward) data by YCharts. PE Ratio = price-to-earnings ratio.

While this is technically more expensive than the broader market, the difference is only slight. Furthermore, with the market's long-term growth rate hovering at around 10%, TSMC's projected 20% growth rate significantly outpaces it.

As a result, TSMC appears undervalued for its growth and should be acquired before the stock rises further.

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

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*Stock Advisor returns as of July 15, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Image source: Getty Images

Somehow I blinked, and it's July?! That means we're halfway through 2025.

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If your finances haven't exactly been front and center lately (relatable), now's the perfect time to check in. You probably don't need an overhaul -- just a few smart tweaks to set yourself up for a stronger second half of the year.

Here are three slip-ups I see all the time, and a few ways I've personally turned them into upgrades.

1. Letting your savings sit in a low-interest account

I used to keep most of my savings in a big-name bank that barely paid any interest. My balance sat there earning less than a dollar a month.

Eventually, I switched to a high-yield savings account, and the difference was immediate. My money started earning meaningful interest, and I didn't have to change anything else.

2. Overpaying for car insurance

Car insurance rates are up this year, but that doesn't mean you're stuck paying more. I recently helped a friend compare quotes, and she ended up saving over $400 annually -- with the same level of coverage -- just by switching providers.

When it comes to your insurance company, loyalty rarely pays off. It's worth shopping around even if you think you're getting a good deal.

It takes five minutes and could put a chunk of change back into your budget for road trips, concerts, or literally anything more fun than auto insurance. Take a look at what other providers are offering -- you might be surprised.

3. Earning nothing (or paying too much) on your credit card

If your credit card isn't doing anything for you, you're probably missing out.

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Small moves, big payoff

These aren't major money moves -- just low-effort upgrades that can add up fast. And the sooner you make them, the more time they have to work in your favor.

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Key Points

• Realty Income weathered some tough headwinds over the past five years.

• But it continued to raise its dividend as its AFFO increased.

• It might not consistently beat the market, but it’s still a great long-term buy.

Realty Income (NYSE: O), one of the world's largest real estate investment trusts (REITs), is often considered a dependable income investment. It sports a forward yield of 5.6%, it pays its dividends monthly, and it's raised its payout 131 times since its IPO in 1994.

As a REIT, Realty Income must distribute at least 90% of its pre-tax income to its investors as dividends to maintain a favorable tax rate. It leases its 15,621 properties to 1,565 different clients in over 89 industries in the U.S., U.K., and Europe, and its occupancy rate has never dipped below 96%. It's also a capital-light triple net lease REIT -- which means its tenants need to cover their own property taxes, insurance premiums, and maintenance fees.

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Image source: Getty Images.

Over the past five years, Realty Income's stock price fell about 3%. Like many other REITs, it struggled in 2022 and 2023 as rising rates made it more expensive to purchase new properties, stirred up macro headwinds for its tenants, and drove some of its income investors toward risk-free CDs and T-bills. But if we include its reinvested dividends, it still delivered a total return of 25%. So will Realty Income's stock rally over the next five years as interest rates decline, or does it face other unpredictable challenges?

What happened to Realty Income over the past few years?

Realty Income merged with VEREIT in 2021 and Spirit Realty in 2024. Those mergers more than doubled its number of properties from 2020 to 2024, but it still maintained a high occupancy rate as it grew its adjusted funds from operations (AFFO) and dividends per share.

Data source: Realty Income.

Some of Realty's top tenants -- including Walgreens, 7-Eleven, and Dollar Tree -- struggled with store closures over the past few years. However, stronger tenants like Dollar General, Walmart, and Home Depot consistently offset that pressure by opening new stores.

Realty Income still doesn't generate more than 3.4% of its annualized rent from a single tenant, and it locks its tenants into long-term leases with an average term of nearly 10 years. That diversification and stickiness insulates it from economic downturns.

What will happen to Realty Income over the next five years?

Over the next five years, Realty Income will likely expand in Europe to curb its dependence on the U.S. market. Unlike its leases in the U.S., most of its European leases are tethered to the consumer price index, which allows it to raise its rent to keep pace with inflation. It will likely ramp up its investments in data centers to profit from the secular growth of the cloud and AI markets, and scoop up more properties at favorable prices in sale-leaseback deals (in which businesses sell their own real estate and lease it back to cut costs). It could also expand into more experiential markets -- like gyms, resorts, and restaurants -- to further diversify its portfolio.

Realty still generates most of its rental income from the retail sector, but those tenants should face fewer headwinds as inflation subsides and interest rates decline. Lower interest rates should also make CDs and T-bills less attractive and drive more investors back toward REITs.

From 2019 to 2024, Realty Income grew its AFFO at a CAGR of nearly 5%. If it continues to grow its AFFO at a CAGR of 5% from 2024 to 2030 -- and still trades at 14 times its trailing AFFO -- its stock price could rise 33% to about $77 within the next five years. It should continue to raise its dividends and stay within its historical yield of 4%-6%.

So while Realty Income might not consistently beat the S&P 500 -- which has delivered an average annual return of 10% since its inception -- it should remain a stable investment for investors who need a reliable stream of monthly income. That's why I personally own shares of Realty Income, and why I think it's a solid long-term play.

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Leo Sun has positions in Realty Income. The Motley Fool has positions in and recommends Home Depot, Realty Income, and Walmart. The Motley Fool has a disclosure policy.

There's still time for a Hollywood ending for AMC Entertainment (NYSE: AMC). The multiplex operator may be trading more than 99% below the split-adjusted high it reached four summers ago, but momentum is on its side these days. AMC stock has risen 28% since bottoming out two months ago.

The bullish turn might not seem apparent at first. Revenue declined last year, and it has now clocked in negative in four of the last five quarters. Trailing revenue is 17% below its 2019 peak. AMC hasn't delivered an annual profit since 2018. One can argue that AMC is simply rallying alongside the overall market, but there are some potential catalysts fueling the lift. Eyes on the screen. The movie could be just getting started.

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Coming attractions

This year got off to a slow start at the local multiplex, and it translated into a rough first quarter for AMC. Year-over-year revenue declined 9%. Its net loss and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) deficit widened. Thankfully traffic picked up on the heels of some tentpole releases during the current quarter.

Domestic ticket sales are currently 25% higher than they were at this point last year. This year's three highest-grossing theatrical releases -- A Minecraft Movie, Lilo & Stitch, and Sinners -- all came out in the current quarter. Analysts see AMC bouncing back with a 26% jump in revenue for the second quarter, its strongest showing in nearly two years.

Wall Street pros see a return to top-line growth for all of 2025, and the current estimate calling for a 7% increase could prove conservative. As strong as the studio slate has been since April, the rest of the year could be a murderers' row of releases. Avatar: Fire and Ash, Jurassic World: Rebirth, Wicked: For Good, and Zootopia 2 should all pull huge audiences. Fresh installments in in the Superman and Fantastic Four franchises should bring out fans of superhero action movies.

The crowds are coming. Revenue growth will follow. Investors are coming. The upticks should follow if AMC can turn its bottom line around.

Image source: Getty Images.

Sticking to the script

Like any good superhero origin story, AMC has had to claw back from a dark place. The exhibitor has seen its share count explode on this end of the pandemic, well beyond the 1-for-10 reverse stock split two summers ago. The bloated share count is a good reason why AMC has been one of the market's worst performers over the last four years.

It's time to flip the script. This isn't a bad time for all movie theater stocks. Smaller rival Cinemark has been profitable since 2023, and things are going so well that it resumed paying a quarterly dividend this year. There's a shocking contrast, and an even more shocking similarity here.

Cinemark has moved higher in the same four-year stretch that AMC has surrendered 99% of its value. Wow? And there's this: AMC and Cinemark are somehow trading at the same enterprise-value-to-trailing-revenue multiple of 2.1.

AMC should have returned to profitability by now. Long-term debt is actually contracting for the fifth year in a row, and it's rolling out premium in-theater offerings to boost revenue per guest. Per-share profitability will be a problem with the outsize share count, but sentiment will improve once AMC is out of the red and fading to black. Analysts may not see that happening for a couple of years, but movie studios are giving multiplex operators the lifeline they need with the pipeline they feed.

The turnaround has to start somewhere. Thankfully for AMC investors, it's starting to take shape this quarter. It can't fumble the popcorn bucket again.

Should you invest $1,000 in AMC Entertainment right now?

Before you buy stock in AMC Entertainment, consider this:

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Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $655,255!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $888,780!*

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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Here's our initial take on MongoDB's (NASDAQ: MDB) fiscal 2026 first-quarter financial report.

Key Metrics

Winning more customers

MongoDB added 2,600 net new customers in the first quarter of fiscal 2026, bringing its total customer count for the platform-agnostic, document-oriented database, software provider to approximately 57,100. That's the largest quarterly customer gain in six years. Most of those new customers are using Atlas, the company's managed database offering, while the rest opted for MongoDB Enterprise. Atlas revenue grew by 26% year over year in Q1 and accounted for 72% of overall Q1 revenue.

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Image source: Getty Images.

MongoDB's profitability improved substantially in Q1. While the company still posted a net loss according to generally accepted accounting principles (GAAP), that loss was more than cut in half from the prior-year period. Non-GAAP earnings per share nearly doubled, and free cash flow soared by 74%. MongoDB kept its sales and marketing spending roughly flat year over year and cut its general and administrative spending, which partially offset a rise in R&D spending and led to a small overall increase in operating expenses.

Along with its Q1 report, MongoDB announced an additional $800 million has been authorized for share repurchases. This brings the total authorization to $1 billion. Looking ahead to Q2, MongoDB expects revenue between $548 million and $553 million, and adjusted earnings per share (EPS) between $0.62 and $0.66.

Immediate market reaction

Share prices of MongoDB shot up 12% in after-hours trading Wednesday as investors digested the company's Q1 report. MongoDB beat analyst expectations across the board, and the major profitability improvements combined with solid Atlas growth gave investors plenty to like. MongoDB stock was down about 14% year to date going into the report, so if this rally holds, the stock should regain much of that lost ground on Thursday.

What to watch

MongoDB sees a big opportunity to ride the artificial intelligence (AI) wave and position its platform as an easy choice for companies looking to modernize applications. The company acquired Voyage AI, an AI model developer, earlier this year, a move aimed at helping customers build AI-powered applications. MongoDB also recently launched a public preview of its Model Context Protocol Server, enabling developers to interact with databases using natural language. With no end in sight to the AI boom, MongoDB is set to benefit from soaring AI demand.

Helpful resources

• Full earnings report
• Investor relations page

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

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

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MongoDB. The Motley Fool has a disclosure policy.

MongoDB (NASDAQ: MDB) stock, provider of cloud-based database services, soared 15.8% through 11:15 a.m. ET Thursday after announcing tremendous earnings last night.

Heading into its fiscal Q1 2026 report, analysts forecast MongoDB would earn $0.66 per share on sales of $527.5 million. Instead, MongoDB reported sales of $549 million -- and EPS $1 on the nose.

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Image source: Getty Images.

MongoDB's Q1 earnings

Not all the news was good. Sales surged 22% year over year at MongoDB, but the gross profit margin the company earned on those sales contracted, from 73% to just 71%. Moreover, the $1 "profit" MongoDB reported was only an adjusted, non-GAAP number. Actual earnings as calculated according to generally accepted accounting principles (GAAP) remained negative, with MongoDB reporting a $0.46 GAAP loss for the quarter.

Still, that was less than half last year's Q1 GAAP loss of $1.10 per share. Even better, MongoDB grew its free cash flow 74% year over year, to $105.9 million in the quarter.

Is MongoDB stock a buy?

Thus, while still GAAP-unprofitable (MongoDB has never reported a GAAP profit) and lacking a P/E ratio, MongoDB has now generated nearly $166 million in free cash flow over the last 12 reported months, a new record. Granted, this still gives MongoDB stock a very expensive-looking price-to-free cash flow ratio of 114 -- but at least it's a positive number.

And MongoDB is still growing. Management says sales will probably exceed analyst estimates at $548 million to $553 million next quarter, and more than $2.25 billion for the year. Non-GAAP earnings forecasts also came in ahead of expectations.

Now, if only someone could convince MongoDB to give guidance in the form of free cash flow, maybe we could figure out if this stock is a buy!

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

Before you buy stock in MongoDB, 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 MongoDB 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 »

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MongoDB. The Motley Fool has a disclosure policy.

Shares of the Chinese autonomous-driving company Pony AI (NASDAQ: PONY) were falling this morning. The decline came after reports that TuSimple, a maker of self-driving trucks, sent sensitive autonomous-vehicle data to China even as it promised the U.S. government not to disclose information based on national security concerns, according to The Wall Street Journal.

Pony AI isn't part of the controversy, but the U.S. and China aren't exactly on the best of terms right now amid tariff concerns and geopolitical positioning. The reports about TuSimple are likely worrying some investors that the U.S. could take a more restrictive approach on how autonomous-vehicle data is collected by Chinese companies.

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Pony AI's stock was down by 13.8% as of 11:16 a.m. ET Wednesday.

A Pony AI self-driving vehicle. Image source: Pony AI.

Tensions are high between the U.S. and China

The U.S. is increasingly focused on protecting data and technology created here from being exported to Chinese companies and the Chinese government. That's led to restrictions on what types of semiconductors can be sold to China and protections against American social media data being exported to China.

That's why the Journal's report that TuSimple shared self-driving trade secrets with China could be affecting Pony AI's stock today.

Pony AI has permits to operate its autonomous vehicles in several states, and investors may be worried that TuSimple's supposed actions may reflect poorly on the company and potentially lead to increased government scrutiny.

Another factor that could be affecting the company's stock price today is that Chinese electric-vehicle (EV) companies are slashing prices. For example, BYD is one of the leading EV companies in China, and it just cut its vehicle prices by up to 34% for some models. Pony AI works with several Chinese EV companies, and investors may be concerned that a slowdown in the EV industry there could hurt its business.

Potentially more volatility ahead

With Chinese EVs facing headwinds, tariff uncertainty between the U.S. and China, and now concerns over autonomous-vehicle data, there are plenty of variables that could cause Pony AI's stock to remain volatile right now.

That doesn't mean it isn't a good long-term buy, but investors should be aware that the global automotive industry is facing significant pressures right now, and that's spilling over to companies connected to the industry, including those in self-driving tech.

Should you invest $1,000 in Pony Ai right now?

Before you buy stock in Pony Ai, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $653,389!* 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!*

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.