After a strong run for the stock market the past two years, volatility has returned in 2025. But there are pockets of opportunity among top growth stocks. While the S&P 500 (SNPINDEX: ^GSPC) is down 8% at the time of writing, some companies that entered the year with strong momentum are holding up quite well.

Shares of Palantir Technologies (NASDAQ: PLTR) and Uber Technologies (NYSE: UBER) are two of the best performing stocks in the S&P 500 this year. Let's look at what is driving their share prices higher, and whether these top performers are still good investments.

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1. Palantir Technologies

Leading businesses and governments are modernizing with artificial intelligence (AI). Palantir Technologies is one of the top providers of AI-powered data analytics software. The stock has had a phenomenal run, rising 1,500% since 2022. It has continued to perform well in 2025, up 33% as of April 23. But investors have to wonder if the stock has gotten too far ahead of the company's actual performance.

Palantir delivered accelerating revenue growth over the past year. In the fourth quarter, U.S. commercial revenue grew 64% year-over-year. Companies are choosing Palantir to improve efficiency and speed up decision making. For example, a leading telecommunications company recently signed a $40 million deal with Palantir, which will free up capital from using older technology and equipment.

Palantir also is playing a vital role in strengthening the U.S. military with cutting-edge technology. Its U.S. government revenue grew 45% year-over-year in Q4. Palantir developed its Tactical Intelligence Targeting Access Node (TITAN) for the U.S. Army that uses AI to improve strike targeting and accuracy on the battlefield.

These use cases indicate the level of sophistication of Palantir's AI capabilities, and that's why leading companies continue to sign multimillion-dollar deals. It's also benefiting the stock that the company is converting these growing revenues into a healthy profit. The company made $462 million in net profit on $2.9 billion of revenue last year.

The only negative with Palantir stock is the valuation. The shares trade at an astronomical 548 times earnings at the time of writing. At these lofty share prices, the stock could be overshooting the company's worth. While it's impossible to predict the timing, investors have to assume that this nosebleed valuation could lead to a downward correction in the share price. It might be best to wait for the stock to settle at a lower earnings multiple before starting an investment.

2. Uber Technologies

Investors shouldn't overlook the momentum happening in the global ride-hailing market. Uber Technologies has made substantial investments in its technology and service, and it is translating to strong growth. The stock climbed 200% since 2022 and 22% year to date through April 23, but its valuation could leave room for more gains over the next year and beyond.

Uber's growth suggests it is going after a huge opportunity in the transportation market. It offers multiple services tailored for healthcare, freight, and enterprise. It's also expanding into membership that offers special discounts on Uber Eats and rides and has already reached 30 million subscribers so far, up 60% year-over-year in the fourth quarter.

It's also investing in the future. The company has partnered with Google's Waymo self-driving car unit, in addition to China's WeRide. Its autonomous ride service recently launched in Austin, Texas, and is soon launching in Atlanta, Georgia. Overall, Uber currently has multiple partners working on autonomous ride and delivery services.

Uber benefits from a capital-light business model, where drivers maintain their own vehicles, which leaves a lucrative revenue stream coming from fees on every ride and delivery. Last year, Uber's operating profit more than doubled to $2.8 billion, and there seems to be more room for growth as the company improves margins.

Analysts expect Uber's earnings to grow at an annualized rate of 30% in the coming years, yet investors can buy shares for just 23 times 2025 earnings estimates. That's a fair multiple for an average growth stock, so investors should expect Uber shares to deliver satisfactory returns over the long term.

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

Before you buy stock in Palantir Technologies, 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 Palantir Technologies 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 $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Ballard has positions in Uber Technologies. The Motley Fool has positions in and recommends Alphabet, Palantir Technologies, and Uber Technologies. The Motley Fool has a disclosure policy.

A million bucks. It's something many investors want, but it's not so easy to get your hands on it. Yet, with the right stocks and a long-term buy-and-hold strategy, a $1 million portfolio is within reach for many investors. Let's examine two stocks that could help investors reach this elusive goal.

Image source: Getty Images.

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Spotify

Spotify Technology (NYSE: SPOT) has been a safe haven in a tough year for the stock market. While the major indexes are down anywhere from 10% to 18% year to date, Spotify's stock remains green so far in 2025. Shares of the audio streaming giant are up about 25% as of this writing.

And while its outperformance relative to the major indexes is an important part of its appeal, investors shouldn't overlook the company's excellent fundamentals. As of its most recent quarter (for the three months ended on Dec. 31, 2024), Spotify continued to turn in fantastic growth metrics, including:

• 16% year-over-year revenue growth.
• 12% year-over-year growth in overall monthly active users (MAUs).
• 121% year-over-year growth in free cash flow.

Much like Netflix did years ago, Spotify is now making the transition from a promising upstart into a lucrative juggernaut. The company has boosted its profit margin by cutting costs and raising prices.

Part of the reason the stock has responded so well this year is that Wall Street understands that Spotify -- like Netflix -- has a dedicated subscriber base that will stick around even with occasional price hikes. So, for investors looking for a potential millionaire-making stock, Spotify is a name to consider.

Palantir Technologies

If I told you that Palantir Technologies (NASDAQ: PLTR) was one of the top-performing stocks in the S&P 500 this year, it might come as a surprise. After all, technology stocks have taken it on the chin so far in 2025. Nevertheless, Palantir -- with its 24% year-to-date gain -- is among the top 10 best-performing stocks in the S&P 500.

And why is that? In a nutshell, Palantir's stock continues to advance thanks to the enormous tidal wave of demand for its AI-powered platform. Its customers run the gamut from travel giants like Delta Air Lines and United Airlines to retail businesses like Lowe's Companies and Walgreens.

And there's a reason these companies want Palantir's technology; it's saving them money and making them more profitable. For example, Luis Mesen, an executive for United, said, "We deployed [Palantir's] Chime late last year...we've already saved almost 300 delays, 20 cancellations...this represents millions of dollars of cost avoidance."

Because of real-world examples like this, Palantir's customer base and revenue are both rising quickly. In the company's most recent quarter (for the three months ended Dec. 31, 2024), it generated $552 million in sales, up 52% from a year ago.

The AI revolution rolls on, with Palantir being one of the top beneficiaries. Investors looking for a stock with millionaire-making potential should take notice.

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

Before you buy stock in Palantir Technologies, 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 Palantir Technologies 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 $566,035!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $629,519!*

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*Stock Advisor returns as of April 21, 2025

Jake Lerch has positions in Spotify Technology. The Motley Fool has positions in and recommends Netflix, Palantir Technologies, and Spotify Technology. The Motley Fool recommends Delta Air Lines and Lowe's Companies. The Motley Fool has a disclosure policy.

Palantir (NASDAQ: PLTR) stock is jumping in Wednesday's trading thanks to a combination of macroeconomic and business-specific catalysts. The company's share price was up 8% as of 1 p.m. ET. Meanwhile, the S&P 500 had risen 1.8%, and the Nasdaq Composite was up 2.6%.

The Trump administration is signaling that it would like to get a trade deal done with China in the near term and bring tariffs between the two countries lower, and the stock market is rallying today in response. In addition to a bullish development on the macroeconomic front, Palantir stock also seems to be getting a boost from news that the company's FedStart platform for governmental compliance and operational scaling is being integrated into Alphabet's Google Cloud infrastructure service. As of this writing, Palantir stock is now up roughly 35% year to date.

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Can investors still win big with Palantir stock?

Palantir looks to be one of the strongest overall players in the artificial intelligence (AI) software space, and fantastic sales momentum among both public and private-sector customers makes it clear that its services are winning in the market. Heavy geographic sales concentration among the U.S. and its allies should also continue to provide some protection against trade war volatility. On the other hand, the stock is trading at roughly 183 times this year's expected earnings and 63 times expected sales -- and that means there's a very high level of investment risk involved.

Despite its incredibly growth-dependent valuation, I think there's a good chance that those who take a long-term, buy-and-hold approach to Palantir stock at today's prices will see strong returns. But investors should move forward with the understanding that macroeconomic and geopolitical conditions will likely continue to be volatile in the near term, and there's still a lot of work to be done and uncertainty connected to the current trade war dynamics. With that in mind, I would recommend that investors interested in building a position in Palantir take a dollar-cost-averaging approach rather than buying all at once in today's rally.

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

Before you buy stock in Palantir Technologies, 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 Palantir Technologies 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 $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $606,106!*

Now, it’s worth noting Stock Advisor’s total average return is 811% — a market-crushing outperformance compared to 153% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

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

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.

1. Quantum computing and AI have significant growth potential

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.

2. An ETF means you don't have to pick winners

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:

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.

3. The Defiance Quantum ETF has outperformed the market

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.

Should you invest $1,000 in ETF Series Solutions - Defiance Quantum ETF right now?

Before you buy stock in ETF Series Solutions - Defiance Quantum ETF, consider this:

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

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $606,106!*

Now, it’s worth noting Stock Advisor’s total average return is 811% — a market-crushing outperformance compared to 153% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

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.

Palantir Technologies (NASDAQ: PLTR) went public in September 2020, and shares of the software platforms and data analytics provider have jumped an impressive 714% since then as of this writing, though it is worth noting that almost all of the stock's gains have arrived in the past couple of years following the launch of its artificial intelligence (AI) software platform in April 2023.

However, Palantir stock has dropped considerably in the past month or so. The stock shot up remarkably when 2025 began, but it has dropped 38% from the 52-week high it hit on Feb. 18. Palantir's recent slide is because of factors outside of the company's control. The broader stock market negativity triggered by the tariff-induced global trade war has led investors to press the panic button.

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The tech-laden Nasdaq Composite index has dropped more than 20% in 2025 (as of this writing). Fears of an economic slowdown and a potential recession have led investors to book profits in stocks that delivered outstanding gains in the past couple of years, and Palantir is one of them.

However, the software specialist's sharp pullback of late could entice growth-oriented investors into buying the stock, considering the potential upside it could deliver over the next decade. Let's take a closer look at the catalysts that should act as tailwinds for Palantir over the next 10 years.

Booming demand for AI software can help Palantir zoom higher

Palantir's growth trajectory has started improving since the launch of its Artificial Intelligence Platform (AIP) a couple of years ago. The company launched AIP for both commercial and government customers with the aim of helping them build and deploy AI applications tailored to their operations. This platform has gained immense traction thanks to the productivity gains that AIP customers have been achieving, leading to outstanding growth in Palantir's customer base, as well as spending by existing customers.

Specifically, Palantir registered a 43% year-over-year increase in its customer count in the fourth quarter of 2024. Even better, it witnessed an increase in the number of customers signing bigger deals with the company. For example, the number of deals worth $1 million or more signed by Palantir last quarter increased by 25% from the year-ago period. Meanwhile, the increase in the number of $5 million-plus deals was bigger at 57% on a year-over-year basis.

These numbers make it clear that Palantir is winning big from the rapid adoption of AI software, a market that's expected to grow at an incredible pace over the next decade. Market research provider Roots Analysis expects the AI software market to generate a whopping $5.2 trillion in annual revenue in 2035, suggesting that Palantir is scratching the surface of a massive end-market opportunity that could help it sustain terrific growth levels over the next decade.

It is worth noting that Palantir has been ranked as the top vendor of AI software platforms by multiple third-party market research agencies such as IDC, Forrester, and others. This explains why customers have been flocking to Palantir's AIP, as the platform has been able to deliver cost and efficiency gains. The company reported a solid year-over-year increase of 56% in its total contract value in Q4 2024 to $1.8 billion.

This led to a big jump in Palantir's revenue pipeline. The company posted a 40% year-over-year increase in its remaining deal value (RDV) in Q4 to an impressive $5.4 billion. The metric refers to the total remaining value of contracts that Palantir has to fulfill at the end of a period. The growth in Palantir's RDV was higher than the 36% revenue growth the company clocked during the quarter.

So, Palantir is setting itself up for much stronger growth in the future. The company should benefit from the addition of more customers, as well as the increased spending by existing customers on its offerings. These factors are contributing toward positive unit economics for Palantir, allowing the company to record much faster growth in earnings as compared to revenue.

Unit economics is a measure of a company's profitability, helping us understand how much money it is making from each customer. Given that Palantir has been able to sign expanded deals with existing customers, a trend that could continue in the future thanks to the proliferation of AI, its margin profile could continue improving.

The following chart clearly indicates that Palantir's margins have improved considerably in the past couple of years, and there is still more room for growth on this front.

PLTR Operating Margin (TTM) data by YCharts

Should valuation be a concern right now?

Palantir's expensive valuation is a key reason why investors have been booking profits in this stock. After all, stocks trading at a premium valuation are at a higher risk during sell-offs since they are deemed riskier when compared to value stocks. The bad news is that Palantir is still trading at 66 times sales and 145 times forward earnings despite pulling back significantly of late.

So, it won't be surprising to see this AI stock pulling back further thanks to the negative sentiment that's affecting global stock markets right now. However, if Palantir stock continues to slide further and becomes available at a much cheaper valuation, it would be worth buying, considering the huge addressable opportunity available in the AI software market over the next 10 years.

What's worth noting is that Palantir has started growing at a faster pace than the rate at which the global AI software market is expected to grow over the next decade. Roots Analysis is forecasting a compound annual growth rate of almost 31% for the generative AI software market through 2035. Palantir's revenue growth of 36% was much faster than that, while the improvement in its RPO was even better.

There is a good chance that Palantir will be able to sustain healthy growth levels over the next decade in light of the productivity gains that AIP is delivering to customers. So, savvy investors would do well to keep an eye on Palantir stock and consider accumulating it if it falls further since it could turn out to be a solid investment over the next decade.

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

Before you buy stock in Palantir Technologies, 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 Palantir Technologies 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 $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

Now, it’s worth noting Stock Advisor’s total average return is 796% — a market-crushing outperformance compared to 155% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

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

With the S&P 500 (SNPINDEX: ^GSPC) ending last week down more than 10% in two days, the stock market experienced its first crash since March 2020, when the COVID-19 pandemic began to escalate. The culprit this time was the U.S. enacting punitive tariffs against much of the rest of the world and an ensuing trade war. These tariffs were even applied to two islands uninhabited by humans, with the Trump administration saying the duties were added so that other countries could not evade tariffs by shipping goods through the ports of these islands.

With the market in turmoil and a lot of volatility likely ahead, let's look at four ways investors can navigate the current market crash.

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1. Have liquidity

In a bear market or an impending bear market, one of the most important things investors can have is liquidity, or cash on the sidelines. By having available cash, investors can then take advantage of market dips.

If you're fully invested, consider selling some of your least favorite positions to raise some cash that can later be used to buy ideas you have more conviction in. If these are in a non-retirement account, you'd also get the potential benefit of a tax loss when you next file.

To be clear, you don't want to start panicking and just sell stocks. Instead, you want to look at this as an opportunity to high-grade (improve the quality of) your portfolio.

2. Create a list of high-quality stocks to buy

Another important thing you can do is create a list of high-quality stocks and the prices at which you'd start buying them. Undoubtedly, there have been stocks you've liked in the past, but their valuations were too high.

This could be highfliers like Palantir Technologies (NASDAQ: PLTR) or Cava Group (NYSE: CAVA) whose businesses are doing great but whose stock valuations just skyrocketed over the past year or two. Perhaps it could be stocks in industries that have always tended to have high multiplies, such as cybersecurity companies like CrowdStrike (NASDAQ: CRWD) and Palo Alto Networks (NASDAQ: PANW). There could also be blue chip tech names like Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) or Amazon (NASDAQ: AMZN) whose stocks have just gotten cheaper, given their collection of businesses and future prospects.

The key, though, is to gather a list of high-quality stocks you'd be comfortable owning over the long run. And then, when they reach your price target, be ready to start building positions in them. Just do the research beforehand so you're ready to pounce.

Image source: Getty Images.

3. Consider writing puts

A more advanced strategy to use in a down market is to write (sell) put options. By writing a put option, you collect a cash premium up front, but you are then obligated to buy that stock if the buyer exercises his option to sell it to you. As such, you want to do this only with stocks and at prices where you would want to buy them.

For example, if Amazon was on your list of stocks to buy at $150, you could write a put on Amazon stock with a strike price of $150 and a May 9 expiration and collect around $3.70 in premium. If the stock falls below $150 and the option is exercised, you'd own the stock at $150. Note that each option represents 100 shares. If Amazon doesn't fall to that price, you just collect the premium, which would be worth around $370 for each option.

This strategy's intention is twofold. One is to let you buy into a stock you want to own at a lower price. However, if the stock never reaches that price, you still earn some return.

The downside to this strategy is that it does tie up some capital, which you could potentially use elsewhere. That is why I prefer to keep the expiration dates short, at about a month.

In addition, if the stock blows past your price target on the downside, you are still obligated to buy at the strike price. This is most likely to occur if a major event happened when the market was closed, and it opened way down. However, the assumption we are using is that you'd be a buyer of the stock at the strike price regardless. The other disadvantage is that if the market does make a quick reversal, you would lose out compared to if you had jumped in right away and bought the stock.

However, this is a nice strategy to supplement your investments, allowing you to earn some extra cash as you wait for stocks to hit your buy prices.

4. Dollar-cost average with ETFs

Another strategy investors should consider is dollar-cost averaging. In this strategy, you make investments at set times and dollar amounts regardless of their prices.

This strategy works particularly well with exchange-traded funds (ETFs) such as the Vanguard S&P 500 ETF (NYSEMKT: VOO) or the Invesco QQQ ETF (NASDAQ: QQQ). These two ETFs track major market indexes that have proven to be long-term winners. The Vanguard ETF tracks the S&P 500, which comprises the 500 largest stocks traded in the U.S., while the QQQ ETF tracks the Nasdaq-100, which is more tech- and growth-oriented.

With ETFs, you don't have to worry about individual stock research. You can buy an ETF that immediately gives you a portfolio of leading stocks. Consistently dollar-cost averaging into index ETFs is a great way to build long-term wealth, and a down market is a great place to start implementing this strategy.

Should you invest $1,000 in S&P 500 Index right now?

Before you buy stock in S&P 500 Index, 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 S&P 500 Index wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $590,231!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Geoffrey Seiler has positions in Alphabet, Invesco QQQ Trust, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, CrowdStrike, Palantir Technologies, and Vanguard S&P 500 ETF. The Motley Fool recommends Cava Group and Palo Alto Networks. The Motley Fool has a disclosure policy.

Nvidia (NASDAQ: NVDA) held its GPU Technology Conference (GTC) 2025 last month in San Jose, California. The artificial intelligence (AI) chip leader's annual happening is widely considered the world's leading AI event.

I watched CEO Jensen Huang's two-hour keynote address in real time, caught a couple of his interviews, and viewed several panel discussions about AI and humanoid robots. Great information was shared during all these events, particularly Huang's keynote. It was chock-full of promising new product launches and partnerships, reinforcing my bullish view of Nvidia stock as a long-term investment.

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But there was one incredibly bullish thing he said during GTC week that most investors probably aren't aware of. It wasn't uttered during his keynote or an interview, but at the GTC Financial Analyst Q&A on March 19.

Is Nvidia's AI business better than "just" recession-resistant?

A Wall Street analyst asked this question at the Q&A event: "If there's a recession, what does that do to your business? To AI demand?"

Huang's answer: "If there's a recession, I think that the companies that are working on AI are going to shift even more investment toward AI because it's the fastest growing [area/space]. Every CEO will know to shift toward what is growing."

I think a reasonable interpretation of his answer is that he's suggesting a recession should increase, or at least not decrease, demand for the company's AI-enabling products. Those products, collectively, garnered at least 87% of the company's total revenue in its most recent quarter, which ended in late January. (The data center segment's products are essentially all AI-enabling, and this segment took in about 87% of the company's revenue in the most recent quarter.)

Huang's answer might seem counterintuitive, but it makes sense upon reflection. CEOs, especially in certain industries, realize that AI investments are now so critical that they are a necessity. Innovations in AI are occuring so rapidly that companies that cut back on AI investments even for a relatively brief time will likely fall behind their competitors in AI capabilities. This could lead to an existential crisis from which they might not ever recover.

Let's say that Apple decided to cut back on its AI investments during the next economic downturn or full-fledged recession. It could risk potentially permanently losing some of its iPhone customers to competitors, namely makers of cellphones that use Alphabet's Android operating system. That would be a risky move, since the iPhone is its bread-and-butter product.

As Palantir CEO Alex Karp bluntly put it in the AI-powered data analytics company's third-quarter 2024 earnings release, "The world will be divided between AI haves and have-nots." Indeed, it seems probable that the AI haves, which could be companies or countries, will be winners, and the AI have-nots will be losers.

Nvidia is built to weather tough times

Data by YCharts. Data as of each company's most recently reported quarter. Free cash flow numbers are for the trailing-12-month period.

What if Huang's statement proves inaccurate and demand for AI-enabling products and services -- including Nvidia's -- decreases during the next economic downturn or recession?

Investors should fear not, as Nvidia's balance sheet is hardy. The company is in a better position than most of its peers and competitors to weather a downturn in demand leading to lower revenue, earnings, and cash flows.

As the chart shows, Nvidia's cash position and long-term debt are roughly equal at about $8.5 billion to $8.6 billion. Chipmaker Advanced Micro Devices (AMD) has more cash than long-term debt, so it's also in good shape in this respect. But chipmakers Broadcom and Intel have much more long-term debt than they have cash, so they're using a lot of cash to service their debt. This is an OK situation for Broadcom because it has strong cash flows, at least currently, but Intel is bleeding cash. Over the last year, Intel's free cash flow (FCF) was negative-$15.7 billion, almost double its cash on hand.

Nvidia is an FCF machine. Over the past year, it churned out $60.9 billion in FCF. It could easily use its cash flow to pay down, or even fully pay off, its long-term debt. But it makes sense that it doesn't do so. The company's big cash position coupled with its massive FCF provides it with many options for investing in long-term growth initiatives.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Intel, Nvidia, and Palantir Technologies. The Motley Fool recommends Broadcom and recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.