Finance

American Express (AXP 0.70%) is a global payments company with a different model from the card networks most investors know. Unlike Visa and Mastercard, which mainly run transaction networks and avoid lending, American Express issues cards, extends credit, and earns meaningful fee income from premium customers. That difference mattered on Friday, when shares jumped after the company posted strong third-quarter results and lifted its full-year outlook.

Is this move noise or the start of a repricing toward peer-like valuations? I think the latter. With spending and fee income looking good and credit holding steady, it wouldn’t be surprising to see the stock’s valuation multiple expand significantly over time, catching up with the valuation multiples of Visa and Mastercard.

Image source: Getty Images.

Impressive results

It wasn’t surprising to see shares jump following the release of the company’s latest financial results. Third-quarter revenue rose 11% year over year to $18.4 billion, and earnings per share increased 19% to $4.14. Card member spend growth accelerated to 9% (up from 7% growth in Q2). Management also raised full-year guidance, saying it expects 9% to 10% revenue growth and earnings per share of $15.20 to $15.50.

Driving the quarter, the company’s cardmember fee income climbed 18% year over year as more customers adopted its premium cards, which offer travel and lifestyle perks in exchange for annual fees. Additionally, net interest income rose 12%.

Credit metrics look good, too. American Express’s provision for credit losses declined year over year on a lower reserve build. And the company’s net write-off rate held at 1.9%, flat from a year ago and from the prior quarter. For a credit card issuer that keeps credit risk on its own balance sheet, steady write-offs and a lighter reserve build point to disciplined underwriting even as spend grows rapidly.

What makes American Express different

Of course, American Express doesn’t differentiate itself from Visa and Mastercard just by extending credit and charging substantial card fees across its flagship products. The company’s value proposition in the premium space is perhaps the company’s greatest edge. This is fresh on investors’ minds because American Express recently refreshed its U.S. consumer and business Platinum products — and it’s working; new U.S. Platinum account acquisitions in the three weeks following the refresh doubled versus pre-refresh levels, management said in its third-quarter update. Considering that the refresh came with a substantially higher annual fee, that kind of customer response suggests pricing power with the customers who spend the most, use travel benefits, and stay loyal.

Driving home just how premium American Express’s cardmembers are, they spend an average of three times more on their cards than the average spend per card on other networks.

Valuation still trails far behind Visa and Mastercard

Even after the rally, American Express trades at a lower price-to-earnings multiple than the pure networks Visa and Mastercard. The two peers earn higher valuations for their capital-light models, which carry less credit risk and produce steady cash flow. That premium makes sense.

Depending on how you look at it, however, there are also reasons that American Express may deserve a premium. Visa and Mastercard may take on less risk, but American Express participates in more of the profit pool per dollar of spend and has more control over the customer’s overall experience — an advantage that is likely key to helping the company cater to higher spenders.

Ultimately, if American Express can show that its approach is leading to a better customer experience, including higher engagement and greater lifetime customer spend while maintaining good credit metrics, investors may be willing to narrow the gap between American Express’s valuation multiple and its pure network peers.

Of course, being an integrated payments company requires carefully balancing underwriting and incentives to bolster cardmember spending. A surprise rise in delinquencies would pressure earnings. Likewise, a slowdown in the macroeconomic environment could hit discount revenue, customer acquisition trends, and even lending. These factors could keep the valuation discount in place longer than bulls expect.

Still, there’s a lot to like — especially given the stock’s fair price-to-earnings multiple of about 23. This compares to Visa and Mastercard’s price-to-earnings ratios of 34 and 38, respectively. With strong financials in the context of its valuation, American Express stock looks compelling. Revenue is growing at double-digit rates, spend is accelerating, and fee income tied to its premium cards is doing the heavy lifting. Management’s playbook of regularly refreshing its products and deepening engagement while broadening acceptance shows up in the numbers and in guidance.

If American Express’s momentum persists, a narrower valuation gap with Visa and Mastercard makes sense. Friday’s surge looks less like a spike and more like the start of a reset in how investors price this franchise. After years of consistent growth and strong credit metrics, investors might start seeing the company’s integrated payment model as a key competitive advantage worthy of a significantly higher premium.

Have you ever been envious of someone because they have a health savings account (HSA)? If not, it may be because you haven’t heard how an HSA can supercharge your retirement planning.

Here’s how it works, and why more people are investing in their HSAs with an eye toward the future.

Image source: Getty Images.

What is an HSA?

An HSA is a tax-advantaged savings account, available only to those with high-deductible health plans. The account is designed to cover qualified medical expenses; these include prescriptions, copays, mental healthcare, dental and vision services, and some over-the-counter purchases. It can even be used for certain insurance premiums, like those for COBRA or Medicare.

If your high-deductible health plan covers only you, you can contribute $4,300 annually to an HSA. If it covers your family, your contribution limit is $8,550. Plus, if you’re 55 or older, you can add a catch-up contribution of $1,000.

A pretax way of saving

Like most employer-sponsored retirement plans, contributions to an HSA are pretax, meaning you don’t pay taxes on the income. Interest and investment earnings grow tax-free, and withdrawals to cover qualified medical expenses are also tax-free.

Here are a few of the finer details regarding HSAs and taxes:

• Qualified medical expenses: Withdrawals for qualified medical expenses are always tax-free, no matter how old you are.
• Under age 65: If you’re under age 65, withdrawals from your HSA for nonqualified medical expenses are taxed as ordinary income. You may also be subject to a 20% penalty on the amount withdrawn.
• 65 and older: If you’re 65 or older and make a withdrawal for something other than a qualified medical expense, the 20% penalty no longer applies, although you will pay ordinary income tax on the withdrawal.

Again, withdrawals for qualified medical expenses at any age are tax-free.

Use it now or use it later

HSAs are nothing if not flexible. Owning an HSA means determining how you want to manage the funds. You can use it solely to cover current medical expenses, or you can save it for later.

Unlike funds in a flexible spending account (FSA), the money left in your HSA can be rolled over from year to year. Imagine you begin contributing to an HSA this year and spend the next 20 years contributing $5,000 annually. At the end of those 20 years, there will be $100,000 in the account.

However, there’s a way to make the account worth far more than $100,000. Like other HSA owners, you could invest the money. Most HSA providers allow you to invest your HSA funds just as you would a 401(k) or IRA, giving your account the potential to grow dramatically.

Let it grow

Let’s say your high-deductible healthcare plan covers your family, and you contribute $8,550 to an HSA each year. You spend the first $3,550 on medical expenses and pay for any additional expenses out of pocket.

You invest the remaining $5,000, earning an average annual return of 7%. Instead of being worth $100,000 after 20 years, your account could be worth almost $205,000, more than twice as much.

Cover retirement-related expenses

Although you can’t contribute any more money to your HSA after you’ve enrolled in Medicare, you can spend your retirement years using funds from the account to cover essential medical expenses. Here are some examples:

• Medicare Part A premiums (though most people get Part A for free)
• Medicare Part B premiums
• Medicare Advantage premiums
• Premiums for Medicare Part D prescription coverage
• Long-term care insurance premiums
• Deductibles and copayments for medical products and services

Alternatively, you have the option of spending HSA money after reaching age 65 on nonmedical expenses with no penalty. You’ll pay taxes at your ordinary tax rate for any such withdrawals (just as with most retirement plans), but you get some extra flexibility to decide where the money will be most helpful.

It’s tough to find much about HSAs to dislike. In fact, they may be attractive enough to tempt you to enroll in a high-deductible health plan.

A stable income stream is the cornerstone of a worry-free retirement. By receiving reliable payments, retirees can focus on enjoying life rather than stressing over expenses. The right investments are crucial in making this possible.

Investing in high-quality dividend stocks can be a great source of reliable retirement income. Realty Income (O 1.12%) and Oneok (OKE 0.63%) have each demonstrated the durability of their dividend payments over many decades. This proven reliability makes them strong options for those seeking consistent income in retirement.

Image source: Getty Images.

Executing the mission

Realty Income has a clear mission. This real estate investment trust (REIT) aims to provide dependable monthly dividends that grow over time. The company has paid 664 consecutive monthly dividends throughout its history. It has raised its payment 132 times since its public market listing in 1994, including for the past 112 quarters in a row (and for more than 30 consecutive years). It stands out for its consistency among income stocks in the real estate sector.

The REIT offers investors an attractive dividend that currently yields 5.5%. That’s well above average (the S&P 500‘s dividend yield is around 1.2%). As a result, investors can generate more income from every dollar they invest in the company.

Realty Income backs its reliable dividend with very durable cash flows. It owns a diversified real estate portfolio (retail, industrial, gaming, and other properties), net leased to many of the world’s leading companies. Net leases provide it with very predictable cash flow because tenants cover all property operating expenses, including routine maintenance, real estate taxes, and building insurance. Meanwhile, the company owns properties leased to tenants in resilient industries. Over 90% of its rent comes from tenants in sectors resilient to economic downturns and isolated from the pressures of e-commerce, such as grocery stores, distribution facilities, and data centers.

The REIT pays out a conservative percentage of its stable rental income in dividends (about 75% of its adjusted funds from operations). That gives it a comfy cushion while enabling it to retain lots of cash to make additional income-generating real estate investments. Realty Income also has one of the strongest balance sheets in the sector, further enhancing its ability to make new investments. It should have no shortage of investment opportunities in the coming years, given the $14 trillion total estimated market value of real estate suitable for net leases across the U.S. and Europe. The company’s growing portfolio enables it to steadily increase its dividend.

A pillar of stability

Oneok has been one of the most reliable dividend stocks in the pipeline sector. The energy infrastructure company has delivered more than a quarter-century of dividend stability and growth. While Oneok hasn’t increased its payout every single year, it has grown it at a peer-leading rate over the past 10 years by nearly doubling its payment. The company currently offers a 6% dividend yield.

The energy company operates a balanced portfolio of premier energy infrastructure assets, backed predominantly by long-term, fee-based contracts. Those agreements provide it with very stable cash flow to cover its dividend. Oneok also has a strong investment-grade balance sheet backed by a low leverage ratio. This rock-solid financial position gives the company the flexibility to invest in organic expansion projects and make accretive acquisitions to grow its platform.

Oneok currently has several high-return organic expansion projects in the backlog, which it expects to complete through mid-2028. This gives it lots of visibility into its future growth. The company has also made several acquisitions over the past few years, which will continue to boost its bottom line in the coming years as it captures additional synergies. It has ample financial flexibility to approve new expansion projects and make additional acquisitions. With demand for energy expected to continue growing, especially for natural gas, the company should have no shortage of investment opportunities. This fuels Oneok’s view that it can grow its dividend by a 3% to 4% annual rate.

Reliable income stocks

For retirees seeking dependable, growing income, Realty Income and Oneok stand out as proven dividend payers. Their stable cash flow and prudent financial management provide confidence that these companies can continue delivering reliable income for years. Those features make them ideal dividend stocks for retirement portfolios.

Nvidia (NVDA -0.31%) stock has been a fantastic performer over the short and long terms. Shares of the artificial intelligence (AI) chip and infrastructure leader have returned 1,440% and 26,960% over the last three years and decade, respectively, as of Friday, Oct. 17. These performances have transformed a $1,000 investment into $15,400 and $270,600, respectively. By comparison, one grand invested in the S&P 500 index has turned into $1,894 in three years and $3,910 in 10 years.

With Nvidia stock’s eye-popping gains, it’s easy to wonder if you missed your chance at buying shares. The answer is no, in my view, as Nvidia stock has many years of great performance left.

There are two reasons for my optimism. First, the AI revolution is still in its early stages. Second, Nvidia’s graphics processing units (GPUs) are the gold standard for processing AI workloads, and there is no indication that they’re in danger of losing that status, at least not for some time.

Below are my prediction ranges (a best case and a base case) for Nvidia stock’s price in about five years, or by the end of 2030. My estimates are built upon data provided by Nvidia’s CEO and CFO on the company’s most recent quarterly earnings call. (Nvidia’s earnings calls are chock-full of valuable data — and listening to them is worth the time.)

Image source: Getty Images.

Nvidia CFO: “We see $3 [trillion] to $4 trillion in AI infrastructure spend by the end of the decade.”

From CFO Colette Kress’ remarks on Nvidia’s fiscal second-quarter earnings call in late August:

We are at the beginning of an industrial revolution that will transform every industry. We see $3 [trillion] to $4 trillion in AI infrastructure spend by the end of the decade. The scale and scope of these [AI infrastructure] buildouts present significant long-term growth opportunities for Nvidia Corporation. [Emphasis mine.]

Numbers from CEO: 58% to 70% of an AI faciility’s cost goes to Nvidia

From CEO Jensen Huang’s remarks on the fiscal Q2 earnings call:

And so our contribution … is a large part of the AI infrastructure. Out of a gigawatt AI factory, which can go [cost] anywhere from … $50 to $60 billion, we represent about $35 [billion] plus or minus of that.

Huang is saying that a typical 1-gigawatt AI data center or other AI facility costs about $50 billion to $60 billion to build, and that about $35 billion of that cost is for Nvidia’s AI technology.

So, about 58% ($35 billion divided by $60 billion) to 70% ($35 billion divided by $50 billion) of the total cost of an AI facility is the cost of buying Nvidia’s tech.

Putting together the data provided by Nvidia’s CFO and CEO

Kress said the company expects total global AI infrastructure spending to be $3 trillion to $4 trillion annually by the end of the decade. (It’s not clear whether she meant by 2029 or 2030, but I’m using 2030 to be conservative. Moreover, Nvidia just published a presentation that uses the $3 trillion to $4 trillion projection by 2030.)

Of that $3 trillion to $4 trillion, Nvidia stands to take in 58% to 70% of it, according to Huang. This assumes that percentage range remains about the same. This will be part of my “best-case estimate,” but I am also going to calculate a “base-case estimate” that assumes Nvidia’s percentage of total AI infrastructure spend declines moderately, by 20%. This will account for the potential for increased competition by chipmaker Advanced Micro Devices (AMD) and others.

Revenue from AI infrastructure spend that Nvidia should generate in about five years:

• Best-case estimate: 58% to 70% of $3 trillion to $4 trillion = $1.74 trillion to $2.8 trillion.
• Base-case estimate: 46% to 56% (I chopped 20% off the percentages in the best-case range) of $3 trillion to $4 trillion = $1.38 trillion to $2.24 trillion.

Calculating my Nvidia stock price target ranges for 2030

Now, I’ll use the numbers calculated above to come up with price target ranges for Nvidia stock in about five years. Two additional data points needed:

• Nvidia stock’s closing price on Oct. 17: $183.22.
• Nvidia’s AI-driven data center revenue was $41.1 billion (of its total revenue of $46.7 billion) in its most recently reported quarter (fiscal Q2, ended July 27). This equates to an annual run rate of $164.4 billion ($41.4 billion X 4).

Nvidia stock best-case price target in five years: $1,942 to $3,115.

1. Nvidia’s projected AI infrastructure revenue in five years: $1.74 trillion to $2.8 trillion.
2. Nvidia’s AI infrastructure revenue currently: annual revenue run rate of $164.4 billion.
3. Step 1 numbers divided by Step 2 number: 10.6 to 17.0. This means Nvidia’s annual data center revenue should increase by 10.6 to 17.0 times in 5 years.
4. Nvidia stock price at market close on Oct. 17: $183.22.
5. Valuation assumption: I am assuming that Nvidia stock’s earnings-based valuation will remain the same in five years. That’s because its valuation is reasonable now given its growth and projected growth dynamics, in my view. (Trailing and forward price-to-earnings (P/E) ratios are 51.5 and 28.7, respectively.)
6. The above assumption means the conversion from revenue growth (Step 3 numbers) to stock price growth will be straightforward.
7. $183.22 X 10.6 to 17.0.
8. Stock price target in five years: $1,942 to $3,115.

Nvidia stock base-case price target in five years: $1,300 to $2,125.

1. Nvidia’s projected AI infrastructure revenue in five years: $1.38 trillion to $2.24 trillion.
2. Nvidia’s AI infrastructure revenue currently: annual run rate of $164.4 billion.
3. Step 1 numbers divided by Step 2 number: 8.4 to 13.6. So, Nvidia’s annual data center revenue should increase by 8.4 to 13.6 times in five years.
4. Nvidia stock price at market close on Oct. 17: $183.22.
5. Valuation assumption: I am assuming that Nvidia stock’s earnings-based valuation remains the same in five years.
6. The above assumption means the conversion from revenue growth (Step 3 numbers) to stock price growth would be straightforward.
7. BUT, I’m going to assume that the data center platform’s profitability declines modestly due to the possibility of increased competition. I can adjust the factors in Step 3 down by 15% to account for this since I had been assuming a straightforward relationship between revenue, earnings, and price target growth.
8. [8.4 to 13.6] x [85%] = 7.1 to 11.6.
9. $183.22 X 7.1 to 11.6.
10. Stock price target in five years: $1,300 to $2,125.

Why there is upside to both these target ranges

I only considered Nvidia’s data center market platform growth when calculating my price targets. That’s because this AI-driven platform accounts for the vast majority of the company’s revenue and earnings — and stock price gains are usually driven by earnings growth.

In the first half of the current fiscal year, the data center platform accounted for 88% of Nvidia’s total revenue. And it accounted for an even higher percentage of total earnings. That percentage is unknown because management does not break out earnings or other profitability metric by platform. But management has said that its data center platform is more profitable than its overall business. So, the data center platform probably accounts for in the mid-90% of total earnings.

If one or more of the company’s other market platforms (gaming, professional visualization, and auto) grows revenue and earnings tremendously over the next five years, that should be upside for my price targets. The auto platform has the potential to be a big winner over the next five years due to driverless vehicles steadily progressing toward legality. Nvidia’s end-to-end AI-powered driverless tech platform is widely adopted.

Caveat about the economy and overall stock market performance

My estimates assume the U.S. economy remains in at least a minimal growth mode and the stock market remains in a bull market for much of the next five years.

I don’t think a mild and relatively brief recession would derail my Nvidia stock price targets, at least not by much, but a deep or long-lasting recession and long-lasting bear market would almost surely derail them.

My wrap-up

Nvidia stock best-case price target in five years: $1,942 to $3,115. (Of course, the stock would most likely split before it reached these levels, but the underlying growth remains the same.) This equates to Nvidia’s stock price increasing by 10.6 to 17.0 times. It also equates to a compound annual growth rate (CAGR) of 60% to 76%.

Nvidia stock base-case price target in five years: $1,300 to $2,125. This equates to Nvidia’s stock price increasing by 7.1 to 11.6 times. It also equates to a CAGR of 48% to 63%.

Taken together, the Nvidia stock price target range in five years is $1,300 to $3,115.

Social Security will soon be making a big announcement. On Oct. 24, 2025, the Social Security Administration will finally let seniors know what their 2026 Cost of Living Adjustment (COLA) is going to look like.

COLAs happen in most years to help retirees maintain their buying power. Because COLAs increase the retirement benefits seniors collect, the news about how big the raise will be is always much-anticipated.

Unfortunately, although retirees are most likely going to get a bigger benefits increase than last year, many seniors are inevitably going to end up disappointed with the increase to their checks in 2026.

Here’s the surprising reason why that’s the case.

The COLA is going to be bigger– but there’s a problem

Although the official announcement on the Social Security COLA has not been made yet, the Senior Citizens League is projecting that benefits are going to increase by 2.7% next year. This estimate is based on year-to-date changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

CPI-W is used to determine how much Social Security benefits should increase because it helps to measure inflation, and the purpose of the COLAs is to make sure that Social Security benefits do not lose buying power. While the formula isn’t a perfect one since the spending habits of urban wage earners and clerical workers aren’t exactly aligned with senior spending, the formula does give an idea of how much prices are rising — and retirees get a benefits increase equal to the average year-over-year change to CPI-W in the third quarter of the year.

Since we have a lot of this data available, the Senior Citizens League estimate is probably fairly close to accurate, and barring any major surprises when the September inflation data is released in October, the raise should come in at around that projected 2.7%. And, if it does, that will be a little bit bigger than the benefits increase retirees received in 2025.

A bigger raise should make seniors pretty happy since they’ll get more money to help maintain buying power — but there’s a surprising reason why that’s not necessarily going to be the case. The problem is that a good portion of the additional funds coming to retirees will disappear to cover rising Medicare premiums.

COLAs will take a huge hit due to rising Medicare premiums

For any retiree who is on Medicare, the COLA is probably going to be a huge disappointment because of how little of it will be left after Medicare premiums are accounted for.

See, Medicare premiums come out of most people’s Social Security checks. And Medicare Part B premiums are going up by a huge amount next year. The Medicare Trustees’ report projects that premiums are going to increase by $21.50 per month, jumping all the way up from $185 in 2025 to $206.50 in 2026. This is one of the biggest year-over-year increases in the history of the Medicare program.

If a typical retiree is collecting the average benefit of $2,008.31 in 2025, a 2.7% COLA would result in their benefits increasing by around $54. If $21.50 of that disappears, then the typical retired Social Security recipient will end up seeing their monthly payments go up by only $32.50.

By contrast, if someone had started with that same $2,008.31 check in 2025 and received a 2.5% COLA, they’d have seen their benefit go up by around $50.00 — but, since Medicare premiums only rose by $10.30 per month between 2024 and 2025, retirees would have seen benefits go up by around $40.

Retirees need to be aware that so much of their benefit increase is going to disappear to rising Medicare premiums this year, and take that into account during their retirement planning process for the upcoming year. Seniors need to maintain a safe withdrawal rate from their 401(k) and other retirement accounts, and with a Social Security raise that ends up pretty small after Medicare costs take a bite out of it, this may require some careful budgeting.

Planet Labs (PL 3.58%) stock had a good start to the trading week on Monday. That’ll happen when an analyst increases their price target by more than 30%, which is what occurred before the market opened that morning. Planet Labs enjoyed an over 3% lift to its share price as a result, which outpaced the 1.1% rise of the bellwether S&P 500 (^GSPC 1.07%).

A 33% boost

The pundit responsible for the raise was Needham’s Ryan Koontz, who now feels Planet Labs is worth $16 per share; he previously placed a $12 price target on the stock. In making the change, Koontz maintained his buy recommendation on the shares.

Image source: Getty Images.

According to reports, the analyst made his change on the basis of presentations made during the company’s investor day. He wrote that management emphasized its strategic focus on satellite services arrangements. The company is also encouraged by what it expects to be rising defense budgets from governments around the world.

Given all that, Koontz raised his estimates modestly for Planet Labs’ fiscal 2027, which begins early in calendar year 2026.

Growth in the ether

Planet Labs’ main activity is the provision of detailed geographic data on Earth from a network of satellites. It’s still consistently loss-making, however, despite some impressive revenue growth. It’s therefore a risky investment, and should only be considered by investors comfortable with such plays.

Bank holding company HBT Financial (HBT 4.15%) published its latest set of quarterly figures Monday morning, and investors were clearly impressed by the results. They pushed up the company’s stock price by a bit over 4% in the trading session, a rate that was several times the 1.1% gain of the benchmark S&P 500 index.

Growth where it counts

For HBT’s third quarter, the company earned $59.8 million in total revenue, which was up from the $56.4 million in the same period of 2024. Non-GAAP (adjusted) net income also saw a rise, advancing by 6% year over year to just under $20.5 million, or $0.65 per share.

Image source: Getty Images.

On average, analysts tracking HBT’s stock were modeling $0.62 per share for profitability. It wasn’t clear what they were estimating for revenue.

In the earnings release, HBT pointed to its asset quality as being a key factor in its growth during the period. The company’s ratio of non-performing assets to total assets was less than 0.2% for the period.

A boost in borrowing

The growth of loans also helped drive those fundamentals higher. On an annualized basis HBT’s loans rose by more than 6%, which the company attributed to what it describes as “higher loan pipelines.”

HBT showed discipline during the quarter, and that loan growth figure indicates it knows how to advance that crucial part of its business. The bullish investor response to its performance seems justified.

Among the leading megacap cryptocurrencies in the market, Chainlink (LINK 8.05%) has been one of the more volatile digital assets of late. The project’s native LINK token has surged 14.4% since 4 p.m. ET yesterday, as of 2:30 p.m. Monday. This move is notable in the crypto sector during this trading session, and indicates a significant amount of interest in Chainlink from investors of all types.

Let’s dive into the investment case around Chainlink, and specifically what’s driving today’s move in the top token.

Catalysts galore

Image source: Getty Images.

Chanlink is a crypto project I keep pretty close tabs on. But from time to time, it’s possible to overlook certain catalysts for a given project. And Chainlink has seen a flurry of updates and integrations the market has clearly caught on to faster than me.

One of the more notable catalysts comes from the institutional investing world, with Nasdaq-listed real estate company Caliber Corporation announcing this past week it was buying another $2 million worth of LINK tokens. This brings the company’s holdings to roughly $10 million, signaling that there are other tokens in the market companies are interested in buying outside of Bitcoin.

Also last week came a joint announcement from S&P Global Ratings and Chainlink around a partnership to allow financial institutions to have more visibility into the stability and holdings supporting various stablecoins. Chainlink’s core oracle capabilities, in allowing off-chain data to be ported onto the blockchain, has allowed for these sorts of partnerships. And right now, the market appears to be banking on additional partnerships coming down the line.

But perhaps the most notable recent news driving Chainlink higher today comes via so-called whales, or large crypto investors, who have continued to add to their holdings in LINK. In other words, it’s not just companies like Caliber Corporation stepping up to the plate. Big-time crypto investors are buying heavily, with recent reports indicating that $116 million of Chainlink’s native token has been purchased since its recent dip.

Bottom line

Overall, Chainlink’s status as a core oracle network sets it apart from the competition and provides a solid long-term investing thesis. However, these recent catalysts do suggest that the dips we’ve seen in Chainlink may continue to be bought.

Currently, Chainlink remains among the top tokens on my watch list, and I’d encourage investors to keep an eye on this token before its next catalyst materializes.

What happened

According to a Securities and Exchange Commission (SEC) filing dated October 15, 2025, Harbor Capital Advisors reduced its position in F5, Inc. (FFIV -0.88%) by 51,177 shares in Q3 2025. The estimated trade value was $16.02 million in Q3 2025. After the sale, Harbor Capital Advisors reported holding 17,112 shares, valued at $5.53 million as of September 30, 2025.

What else to know

This was a sell; the post-trade stake is 0.43% of Harbor Capital Advisors’ 13F reportable AUM in Q3 2025

Top five holdings after the filing:

IVV: $49,147,000 (3.8% of AUM on September 30, 2025)

EEM: $38,429,000 (3.0% of AUM on September 30, 2025)

EFA: $28.28 million (2.2% of AUM on September 30, 2025)

NVDA: $27,224,000 (2.1% of AUM on September 30, 2025)

GOOGL: $26,539,000 (2.1% of AUM on September 30, 2025)

On October 14, 2025, F5 shares were priced at $343.17, up 56.39% year-over-year on October 14, 2025, outperforming the S&P 500 by 39.89 percentage points over the one-year period ending October 14, 2025.

The fund reported 1,339 total positions and $1.29 billion in U.S. equity AUM in Q3 2025.

Company overview

Company snapshot

Provides multi-cloud application security and delivery products, including BIG-IP appliances, NGINX software, DDoS protection, and fraud prevention solutions.

Generates revenue from sales of software, hardware, and related services.

Serves large enterprises, public sector institutions, governments, and service providers globally through direct sales and channel partners.

F5 is a leading provider of application security and delivery solutions, enabling organizations to secure, optimize, and manage applications across on-premises and cloud environments. The company leverages a diverse portfolio of hardware and software offerings to address complex security and performance requirements for mission-critical applications. With a global customer base and partnerships with major cloud providers, F5 delivers application security and delivery solutions.

Foolish take

Before Harbor Capital Advisors sold most of its F5 stake during the third quarter, it was the firm’s ninth largest holding and worth about 0.8% of the total portfolio. From the end of the second quarter through the end of the third quarter this year, Harbor Capital’s portfolio shrank from $2.4 billion down to $1.3 billion.

Harbor Capital Advisors’ sale of F5 stock in the third quarter seems prescient. Shares of the cybersecurity business that aims to secure every application and its corresponding application programming interface (API) recently tanked.

On Oct. 15, F5, Inc. admitted in an SEC filing that unidentified threat actors broke into its systems and stole some important files. According to the company, the attackers are believed to have been in its network for at least 12 months. The stock is down by about 13% since Oct. 14.

F5 expects to report its fiscal fourth quarter results on Oct. 27, 2025, after the market closes.

Glossary

13F reportable AUM: Assets under management that must be reported quarterly to the SEC by institutional investment managers on Form 13F.
AUM (Assets Under Management): The total market value of investments managed on behalf of clients by a fund or institution.
Post-trade position: The number of shares or value of a holding remaining after a trade has been executed.
Stake: The proportion or amount of ownership an investor or fund holds in a particular company.
Top five holdings: The five largest investments in a fund’s portfolio, ranked by market value.
Outperforming: Achieving a higher return or growth rate compared to a benchmark or index over a specific period.
Channel partners: Third-party companies or organizations that help a business sell its products or services.
Multi-cloud: Using multiple cloud computing services from different providers within a single architecture or organization.
Direct sales: Sales made directly from the company to the customer, without intermediaries.
Mission-critical applications: Software or systems essential to the core function and operation of an organization.
DDoS protection: Security solutions designed to prevent or mitigate distributed denial-of-service attacks that disrupt online services.
TTM: The 12-month period ending with the most recent quarterly report.

The scary thing about retirement is that it’s hard to know exactly how much money you’ll need to cover your costs until that period of life begins. Sure, you can estimate a budget based on certain assumptions, like where you’ll live and how you’ll spend your days. But nailing down an exact budget is pretty difficult.

Meanwhile, one of the most tricky retirement expenses to estimate is none other than healthcare. That’s because the cost there will hinge on factors like:

• How long you live
• What health issues you end up experiencing
• What Medicare plan you choose

Image source: Getty Images.

Still, it’s important to have a basic handle on what healthcare might cost you down the line. And recent data reveals that a good chunk of Americans are clueless in that regard.

Do you know what you might spend on healthcare in retirement?

In a recent report, Fidelity found that the typical 65-year-old today can expect to spend $172,500 on healthcare costs during retirement. But it also found that 20% of Americans have never thought about what healthcare might cost them down the line.

There are two reasons it’s important to plan for healthcare costs in retirement. First, it’s one expense that’s non-negotiable.

You can downsize your home if the costs of maintaining it are too high. And you can move to a state that’s cheaper if it helps you stretch your income and Social Security benefits. But you can’t not pay for healthcare. If you need a certain medication to function, you may not have a choice about taking it.

Secondly, healthcare has, for many years, outpaced broad inflation. When Fidelity first started estimating healthcare costs for retirement back in 2002, it found that the typical senior would spend $80,000 throughout their senior years. In the past two decades and change, that projection has more than doubled. And chances are, it’ll continue to climb.

Have a plan for tackling healthcare expenses

There are steps you can take to make healthcare in retirement more affordable, like going to your scheduled physicals and screening appointments to get ahead of potential issues and choosing the right Medicare plan. But there may be only so much you can do to keep your costs down.

That’s why it’s so important to save well for healthcare specifically. And while you could always boost your IRA or 401(k) plan contributions, you may want to allocate funds in a separate account specifically for healthcare.

In that regard, a health savings account, or HSA, is a great option to look at. The nice thing about HSAs is that they’re triple tax-advantaged, which means:

• Contributions go in tax-free
• Investment gains are tax-free
• Withdrawals are tax-free when used to cover qualifying healthcare expenses

Plus, HSAs are extremely flexible. You can withdraw your money at any time, and your money will never expire.

Also, if you end up in the enviable position of having lower healthcare costs in retirement than expected, your HSA won’t go to waste. When you’re under age 65, HSA withdrawals for non-medical expenses incur a steep penalty. But that penalty is waived once you turn 65, at which point an HSA can function like a traditional IRA or 401(k) plan.

Between Medicare premiums, deductibles, copays, and other expenses, you may find that healthcare in retirement costs more than expected. Read up on healthcare costs so you’re not caught off guard once your career comes to an end. Better yet, make sure you’re saving for your future healthcare needs so you never have to be in a position where you have to skimp on care because of the price tag attached to it.

It seems as if all eyes are on Oklo (OKLO 1.39%) right now. Shares have surged in value by more than 700% since April. But when you look closer, Oklo’s entire industry is skyrocketing. Nuscale Power, another company focused on small modular nuclear reactors, has seen its valuation nearly quadruple since April.

Why are stocks like Oklo and Nuscale rising exponentially? There’s one primary factor to be aware of now for investors to consider.

Small-scale nuclear power may soon be a reality

For decades, small modular nuclear reactors have been relegated only to science fiction. In theory, the technology makes a lot of sense. Small modular reactors, commonly referred to as SMRs, can be deployed anywhere in the world, even in remote locations without any road access. Once built, they can produce fairly affordable power with minimal carbon emissions. And they don’t have as many issues with generation intermittency as other renewable energy sources like wind or solar.

Companies like Oklo and Nuscale, however, claim that they are just a handful of years away from constructing the world’s first commercial SMRs. Nuscale is already certified by the Nuclear Regulatory Council in the U.S. Oklo is currently in the application process. If successful, this industry could upend the global energy paradigm, delivering low-cost, low-carbon fuel at any scale, anywhere in the world.

Image source: Getty Images.

Here’s the problem: We still don’t know if what these companies are promising is even possible. Neither Oklo nor Nuscale has any existing orders from customers. And analysts are ready to point out the industry’s consistent failures over the years.

Many of these failures weren’t technological, but simply a matter of cost, with huge cost overruns the norm throughout history. “The technical and extreme cost challenges of SMRs has been known and widely reported on for years, raising the question of why the hype continues to grow,” observes Jim Green, a member of the Nuclear Consulting Group.

As one of the leading semiconductor companies, Broadcom (AVGO -1.24%) has handily outperformed the market recently. It’s up 51% year to date (as of Oct. 17), while the S&P 500 index has risen 13%.

Following such a rally, this might not seem like the ideal time to invest in Broadcom — the stock is trading near its all-time high. Given the tech giant’s growth, however, its stock can continue to climb. Here’s one reason why.

Image source: Getty Images.

A growing list of high-value partnerships

On Oct. 13, Broadcom and OpenAI, the developer of ChatGPT, announced a partnership on 10 gigawatts of custom artificial intelligence (AI) accelerators. Broadcom will be helping OpenAI design its own custom chips, and this is just the latest of several AI companies that are working with Broadcom for that purpose.

Broadcom makes custom AI chips for three major hyperscalers, believed to be Alphabet, Meta Platforms, and ByteDance, the parent company of TikTok. It’s seeing increasing chip demand from these companies, and CEO Hock Tan has also mentioned a fourth major customer that has placed $10 billion worth of orders. While there was speculation this mystery customer was OpenAI, Broadcom has now said that’s not the case.

Broadcom’s share price has been soaring, but it’s not fueled by hype. Revenue is on the rise, particularly its AI revenue, which increased 63% year over year to $5.2 billion in Q3 2025. Tech companies are increasingly turning to Broadcom for custom chips that better fit their needs and to avoid being overly reliant on graphics processing units (GPUs) from Nvidia.

During Broadcom’s last earning call, Tan mentioned that the company has an order backlog of over $110 billion, an indicator that its excellent revenue growth should continue. Don’t let the valuation deter you — Broadcom’s crucial role in AI development makes it one of the stronger tech companies to invest in.

Certificates of deposit (CDs) might seem like a good place to keep your money, especially with interest rates on the decline. But the truth is that in most cases, your cash is better off elsewhere.

If you’re looking for flexibility and long-term growth — or if you’re carrying high-interest debt — there are much better uses for your money. Here’s what to know.

1. High-yield savings accounts are more flexible, with similar returns

Right now, our favorite high-yield savings accounts (HYSAs) are paying APYs that rival top CDs — and you don’t need to lock up your money to earn them.

Just like traditional savings accounts, HYSAs let you access your money anytime, and they’re FDIC-insured up to $250,000. The best banks also don’t charge monthly fees or have account minimums.

Add it all up, and it’s pretty clear: HYSAs are the perfect place to store your emergency fund and short-term savings.

Want to earn a high APY while keeping access to your cash? See our full list of the best high-yield savings accounts available now.

2. Stocks offer more long-term growth

For money you plan on investing for the long haul, a CD isn’t the best option, either.

Consider this: Over the last 30 years, the average return of the U.S. stock market was 9% per year, as measured by the S&P 500 Index — more than double the rate of the best CDs.

CDs might sound appealing because they have a guaranteed return — but still, that return is limited. Over the course of years and decades, something like an S&P 500 index fund will almost definitely earn more.

Ready to get started? See our list of the best online brokerages today.

3. Paying off debt is a better use of your cash

Finally, if you have high-interest credit card debt, even the best CDs can’t help you put a dent in it.

That’s because the average credit card APR is around 21%, according to the Federal Reserve. Saving with a CD while carrying high-interest debt is always a losing bet.

Make sure to pay off any and all debt before you think about a CD. If you owe credit card debt with a 21% APR, you could think of it as getting a guaranteed 21% return for paying it off.

Once your high-interest debt is gone and your emergency fund is in place, then you can start looking into CDs or other savings tools.

Want an easier way to pay off debt? Check out our picks for the best balance transfer cards available now.

CDs can be smart — sometimes

CDs can still be a solid way to save in the medium term. But only if you:

• Have no high-interest debt
• Have three to six months of expenses in a savings account
• Are already investing in stocks long-term

Does that sound like you? Compare the best CD rates now to start saving today.

Earnings season is upon us, and it’s possible that some stocks could make some large movements following their quarterly announcements. One that I’ve got my eye on that has significant momentum is Alphabet (GOOG 0.86%) (GOOGL 0.82%). Since reporting Q2 earnings on July 23, Alphabet has received several positive developments, including a judge’s decision not to seek a breakup of Alphabet’s core business.

The good news sent shares soaring, with the stock up over 30% since reporting Q2 earnings. That’s a monstrous move for a large company like Alphabet (it’s currently the fourth-largest company in the world and recently crossed the $3 trillion valuation mark for the first time), but can it continue?

I think management’s Q3 outlook could be another catalyst for the stock to go higher, and buying it before it reports earnings on Oct. 29 is a smart move.

1. Persistent advertising growth

Throughout most of 2025, the consensus is that Alphabet’s primary property, the Google Search engine, was in trouble. Everyone was worried about how it would fare against generative AI competition, but it turns out it will be just fine. Google’s revenue growth has been resilient even in the face of rising competition from generative AI models, with its revenue growing at a 12% pace in Q2.

Part of the reason for this growth is that Google has incorporated AI search overviews into every Google search. This results in a hybrid search experience, combining traditional search with a generative AI-powered one. Management also commented that the AI search overview has about the same monetization as a standard search, so it’s not losing any money on this switch either.

If Alphabet reports growing Google Search revenue during this quarter, it will confirm that Google is continuing to excel even when everyone assumed that it couldn’t. With Alphabet’s core business doing well, I think it makes the stock a great buy.

2. Rising cloud computing demand

Another exciting area for Alphabet is its cloud computing division, Google Cloud. Cloud computing is one of the fastest-growing industries around, and is benefiting from a general migration to the cloud alongside rising AI demand. Google Cloud has become a great partner in this realm and has won business from OpenAI (the makers of ChatGPT) and Meta Platforms (META 0.82%).

While Google Cloud isn’t as large as some of its competitors, it’s growing at a healthy rate, with revenue rising 32% year over year in Q2. It’s also dramatically improving its operating margin, increasing from 11% last year to 21% this year. Investors are going to want to see this trend continue, and if it does, the stock could respond positively as a result.

3. Alphabet has a reasonable valuation

Lastly, Alphabet is still valued at a discount to its peers. Despite having an impressive run over the past few months, Alphabet still trades at a discount to all of its big tech peers from a forward price-to-earnings (P/E) standpoint.

AMZN PE Ratio (Forward) data by YCharts

However, after its monstrous run, it’s extremely close to swapping places with Meta Platforms. Still, Alphabet is trading at a discount to others like Microsoft (MSFT 0.50%) and Apple (AAPL 2.04%). If all companies had an equal valuation, Alphabet would actually be the world’s largest because it generates the most net income out of all of them.

AMZN Net Income (TTM) data by YCharts

However, that’s not the way the stock market works, but it does give Alphabet an edge in future investments, as it has significant cash flows that it can buy back stock with, invest in AI, or potentially acquire a business.

Regardless, Alphabet is a highly profitable business with a reasonable valuation that’s growing at a healthy pace. I still think there’s plenty of room for the stock to run, and another catalyst could arrive when it reports earnings on Oct. 29. By buying now, investors can ensure that they get in on a potential pop following the earnings announcement.

Quantum computing pure-play stocks have been on an unbelievable run over the past few weeks. One year ago, Rigetti Computing (RGTI -3.01%) was essentially a penny stock, trading for less than $1 per share. Now, it’s worth nearly $50 per share. A huge chunk of that growth has come recently, as Rigetti Computing traded for about $15 at the start of September.

There have been numerous headlines that have driven Rigetti Computing’s stock higher over the past few weeks, and after these unbelievable returns, some may be wondering if it’s time to take some profits and move on. However, should Rigetti Computing continue going higher, investors will miss out on some lucrative returns.

So, which course of action is the best?

Image source: Getty Images.

Rigetti Computing has soared on a few pieces of news recently

Rigetti Computing is a quantum computing pure play and has no backup business. For Rigetti, it’s quantum computing supremacy or bust. This is no easy feat, as the quantum computing space is filled with other strong competition like Alphabet and International Business Machines (IBM). Both have nearly unlimited resources compared to Rigetti, which makes this uphill climb even more challenging.

However, there are signs that Rigetti will be just fine. Just recently, it announced that it has sold quantum computing systems to two customers for about $5.7 million. One was to an Asian manufacturing company, while the other was a California physics and AI start-up. This shows Rigetti Computing already has a competitive offering for clients, as these two likely shopped around for other options before settling on Rigetti’s Novera quantum computer.

Another headline that caused Rigetti’s stock to pop was JPMorgan‘s announcement that it was investing up to $10 billion in four areas, one of which is quantum computing. This caused shares across the sector to pop, which has me worried that the quantum computing sector may be getting too hot.

In addition to quantum computing, JPMorgan was also planning on investing in supply chains and advanced manufacturing, defense and aerospace, and energy. There are a lot of mouths to feed in those investment sectors, and it’s not like JPMorgan is going to dump all $10 billion into quantum computing stocks. Furthermore, there was no specific announcement that JPMorgan would invest in Rigetti Computing; it was just that it was interested in investing in the sector.

After the pop, Rigetti is a $15 billion company, so even if it received a $1 billion investment from JPMorgan (which is extremely unlikely for JPMorgan to spend 10% of its funds on one company), it would only amount to a small stake in the business.

I think this displays how overheated the quantum computing investment market is getting, as we’re still a ways away from quantum computing being adopted at a widespread scale.

Rigetti Computing thinks we’re still years away from a large quantum computing market

Most quantum computing competitors point toward 2030 as the year when quantum computing will start to become a viable technology. Before 2030, Rigetti estimates that the annual value for quantum computing providers is about $1 billion to $2 billion, mostly fueled by government labs and other research institutions. From 2030 to 2040, the market heats up quite a bit, with Rigetti Computing estimating $15 billion to $30 billion.

If we estimate that the market will reach $30 billion in annual value by 2035, Rigetti captures a 90% market share (similar to what Nvidia has done in the AI world), and it can deliver a 50% profit margin (what Nvidia has accomplished), that would give Rigetti $6.75 billion in annual profits. If we apply a 40 times earnings multiple on that, it would indicate Rigetti would be valued as a $270 billion company. That’s more than a 10-bagger from today’s levels, so if Rigetti wins the quantum computing arms race and takes significant market share, there is still plenty of upside left in the stock.

However, there’s likely to be a large market drawdown sometime between now and 2035, and I’ll likely stay patient with investing in quantum computing stocks until then. I wouldn’t be surprised to see this upward trend continue for the stocks, but that means a bubble could be forming. I don’t think it’s a bad idea to trim some of your quantum computing stocks to take a quick win, as it is a good combination of letting your winners run while also being prudent about the rapid rise of these stocks that are still years away from profitability and viability.

Shares of SoFi Technologies (SOFI -0.24%) have been on an unbelievable run. During the past year, they have soared 166% (as of Oct. 17). The tech heavy Nasdaq Composite is up 24% during the same period.

SoFi has been putting up strong financial results. And the market has noticed, viewing the business in a much more optimistic light.

This fintech stock is now trading not far from record territory, so investors might think it’s too late to put some money to work. But that’s a flawed perspective. Here’s one reason now is a great time to buy SoFi.

SoFi should benefit as rates start to come down

Last month, the Federal Reserve lowered its benchmark fed funds rate. This was the first reduction since December 2024.

Market watchers have been waiting for such a move, as the central bank aims to boost the labor market. Investors expect the Fed will lower the rate two more times before the year is over.

Generally speaking, lower interest rates are good for the economy. They can drive consumer spending and business investment since it becomes cheaper to borrow capital. Consequently, a bank like SoFi can benefit greatly.

It is already growing rapidly. During the second quarter, its revenue surged 43%, with the business adding 846,000 net new customers. Despite a prolonged period of above-average interest rates, SoFi has still been expanding at a brisk pace. The potential for lower interest rates can supercharge that growth.

In the second quarter, the bank originated $8.8 billion worth of loans (combined among personal, student, and home). That figure was up 64% year over year. Besides interest income, the business collects fees for originations. And lower interest rates, unsurprisingly, can jump-start loan originations, which have already been growing at a fantastic clip.

This same situation can help the banking industry as a whole. On the flip side, though, investors need to pay attention to risks. Lower interest rates might spur demand from borrowers to take out loans. However, this can increase default risk on a lender’s balance sheet.

To its credit, SoFi has done a good job targeting a more affluent demographic. For instance, the company’s personal-loan borrowers have a weighted-average income of $161,000 and a weighted-average Fair Isaac FICO score of 743. They should be better able to make their loan payments.

“The health of our consumer remains strong, and we’re not seeing any signs of weakness,” Chief Financial Officer Chris Lapointe said during the second-quarter earnings call.

The business is poised to continue growing its profits

A reduction in interest rates can not only help SoFi generate more revenue, but it can also increase the company’s profits. It first became profitable on the basis of generally accepted accounting principles (GAAP) in the fourth quarter of 2023. Since then, the bottom line has expanded in an impressive fashion.

In 2024, SoFi reported $227 million in adjusted net income; management expects the company will post $370 million in 2025. And Wall Street analysts on average anticipate earnings per share will increase 77% in 2026 and 36% in 2027.

This is a very exciting outlook for shareholders. It highlights that SoFi operates with a very scalable business model, which is helped by the fact that it doesn’t carry the overhead of physical bank branches. It would make sense that SoFi’s earnings would grow at a faster clip than the top line.

And that can continue driving the stock higher. Value investors might hesitate, with the shares trading at a forward price-to-earnings (P/E) ratio of 47. However, don’t ignore the incredible trajectory that SoFi is on. It’s easy to be confident that the stock will do well over the long run given a more accommodative interest-rate environment that can push profits up.

With roughly 10 weeks to go before 2025 comes to a close, it looks as if it’ll be another banner year on Wall Street — and the evolution of artificial intelligence (AI) is a big reason why.

Empowering software and systems with AI capabilities affords them the opportunity to make split-second decisions and become more efficient at their assigned tasks without human intervention. It’s a game-changing technology that the analysts at PwC believe can add $15.7 trillion to the global economy by the turn of the decade.

Although dozens of public companies have benefited from the AI revolution, none have taken their spot on Wall Street’s mantle quite like Nvidia (NVDA 0.86%), the largest publicly traded company, and Palantir Technologies (PLTR 0.11%). Since 2022 came to a close, Nvidia stock has rocketed higher by more than 1,100% and added over $4 trillion in market value. Meanwhile, Palantir shares are approaching a nearly 2,700% cumulative gain, as of the closing bell on Oct. 16, 2025.

Image source: Getty Images.

While there’s a laundry list of reasons that can justify the breathtaking rallies we’ve witnessed in both companies, this dynamic AI duo has also issued a very clear warning to Wall Street that can’t be swept under the rug.

Nvidia’s and Palantir’s success derives from their sustainable moats

There are few business characteristics investors appreciate more than sustainable moats. Companies that possess superior technology, production methods, or platforms don’t have to worry about competitors siphoning away their customers.

Nvidia is best known for its world-leading graphics processing units (GPUs), which act as the brains of enterprise AI-accelerated data centers. Though estimates vary, Nvidia is believed to control 90% or more of the AI-GPUs currently deployed in corporate data centers.

No external GPU developers have come close to challenging Nvidia’s Hopper (H100), Blackwell, or Blackwell Ultra chips, in terms of compute abilities. With CEO Jensen Huang targeting the release of a new advanced AI chip in the latter half of 2026 and 2027, it seems highly unlikely that Nvidia will cede much of its AI-GPU data center share anytime soon.

To add fuel to the fire, Nvidia’s CUDA software platform has served as an unsung hero. This is the toolkit used by developers to build and train large language models, as well as maximize the compute abilities of their Nvidia hardware. The value of this software is exemplified by Nvidia’s ability to keep its clients within its ecosystem of products and services.

Meanwhile, the beauty of Palantir’s operating model is that no other company exists that can match its two core AI- and machine learning-inspired platforms at scale.

Gotham is Palantir’s true breadwinner. This software-as-a-service platform is used by the U.S. government and its primary allies to plan and oversee military missions, as well as gather and analyze data. The other core platform is Foundry, which is a subscription-based service for businesses looking to make sense of their data and automate some aspects of their operations to improve efficiency.

Palantir’s government contracts have supported a consistent annual sales growth rate of 25% or above, and played a key role in pushing the company to recurring profitability well ahead of Wall Street’s consensus forecast.

Yet in spite of these well-defined competitive edges, this AI-inspired dynamic duo has offered a stark warning to Wall Street and investors.

Image source: Getty Images.

Nvidia’s and Palantir’s insiders are sending a clear message to Wall Street

Though AI has been the hottest thing since sliced bread over the last three years, it’s not without headwinds.

For example, every next-big-thing technology and hyped innovation since (and including) the advent of the internet more than 30 years ago has endured an early innings bubble-bursting event. This is to say that all new technologies have needed time to mature, and evidence of that maturation isn’t wholly evident from the companies investing in AI solutions.

But perhaps the most damning message of all comes from the insiders at Nvidia and Palantir Technologies.

An “insider” refers to a high-ranking employee, member of the board, or beneficial owner holding at least 10% of a company’s outstanding shares. These are folks who may possess non-public information and know their company better than anyone on Wall Street or Main Street.

Insiders of publicly traded companies are required to be transparent with their trading activity. No later than two business days following a transaction — buying or selling shares of their company, or exercising options — insiders are required to file Form 4 with the Securities and Exchange Commission. These filings tell quite the tale with these two high-flying AI stocks.

Over the trailing five-year period, net-selling activity by insiders is as follows:

• Nvidia: $5.342 billion in net selling of shares
• Palantir: $7.178 billion in net selling of shares

In other words, insiders at the two hottest stocks in the AI arena have, collectively, sold $12.5 billion more of their own company’s stock than has been purchased since Oct. 16, 2020.

The stipulation to this publicly reported data is that most executive and board members at public companies receive their compensation in the form of common stock and/or options. To cover the federal and/or state tax liability tied to their compensation, company insiders often sell stock. In short, there are viable reasons for insiders to head for the exit that aren’t necessarily bad news.

What may be even more telling with Nvidia and Palantir Technologies is the complete lack of insider buying we’ve witnessed. The last time an Nvidia executive or board member purchased stock, based on Form 4 filings, was in early December 2020. Meanwhile, there’s been just one purchase by an executive or board member for Palantir since the company went public in late September 2020.

Neither Nvidia nor Palantir Technologies are inexpensive stocks, based on their price-to-sales (P/S) ratios. Over the trailing-12-month period, Nvidia and Palantir are valued at P/S ratios of 27 and 131, respectively. History tells us both figures aren’t sustainable over an extended period.

If no insiders from either company are willing to buy shares of their own stock, why should everyday investors?

With shares up by a jaw-dropping 5,100% over the last 12 months, Rigetti Computing (RGTI -3.01%) exemplifies the life-changing potential of stock investing. If you bought $10,000 worth of shares of this speculative tech company last October, your position would now be worth over half a million dollars.

After a rise of that magnitude, potential new investors must be left wondering if they should jump on Rigetti’s hype train or wait for a dip. Let’s dig into the company’s fundamentals to decide what the near future might bring.

Is quantum computing ready for prime time?

Quantum computing promises to radically expand the reach of digital technology. When it works accurately, it can solve certain types of unusual, but extraordinarily difficult, problems that would take even a classical supercomputer an impossible amount of time. And while the technology has seemed “just around the corner” for decades, some recent breakthroughs have ignited optimism.

For example, one of the chief challenges in developing a useful quantum computer is that they are vastly more prone to errors than classical machines. But late last year, Alphabet subsidiary Google revealed its Willow chip, a state-of-the-art quantum computing chip that does a progressively better job of correcting its own mistakes the more computing power it uses. Perhaps more remarkably, on one of the benchmark computational problems that is used to test the abilities of quantum machines, Willow delivered the answer in about five minutes. For a traditional supercomputer to solve it would have taken 10 septillion years.

If they can be made reliable and cost effective enough to commercialize, such machines could drive revolutionary advances in areas ranging from drug discovery to material science. Quantum computers could also play a role in artificial intelligence by assisting with model training and optimization, which involves finding the most efficient use of resources to achieve a task.

Where does Rigetti fit in?

While Google looks like the leader in quantum computing technology, a rising tide lifts all boats, and investors are pouring capital into the entire industry. Rigetti’s compelling business model has also likely played a role in its explosive rally.

Rigetti takes a comprehensive picks-and-shovels approach to the quantum computing industry. It designs and builds its own chips, called quantum processing units (QPUs), at its California-based foundry. And it created its own programming language called Quil alongside a platform called Quantum Cloud Services (QCS), which is designed to allow clients to access its quantum processing power through the cloud.

The company is in the early stages of commercialization: It recently announced a $5.7 million purchase order for two of its Novera quantum computing systems, which it expects to deliver in 2026. But while these deals are a good sign, investors shouldn’t expect those purchases to necessarily mark the start of mass quantum computing adoption or sustainable growth.

While nonprofit research institutions and early adopters will continue to experiment with quantum computing, analysts at McKinsey and Company believe scalable quantum devices might not be commercially viable before 2040 at the earliest. In the meantime, Rigetti’s financial condition is alarming.

Massive cash burn

Image source: Getty Images.

For better or worse, public companies exist to generate profits for their shareholders. Technological prowess comes second, and arguably doesn’t matter at all if it doesn’t eventually benefit the bottom line. Rigetti’s shareholders may soon have to reckon with this fact.

In the second quarter, its operating losses grew 24% year over year to $19.8 million (compared to revenue of $1.8 million). Meanwhile, the number of shares outstanding jumped by 74% to almost 300 million. Rigetti is still sitting on a mountain of cash from a $350 million stock offering in June. But that money won’t last forever, and investors should expect the company to continue relying on equity financing to fund operations until it can achieve profitability.

With viable quantum computers potentially over a decade away, Rigetti’s management team will likely need to substantially dilute the positions of current shareholders in their efforts to get the company across the finish line. Yet even with this in mind, it’s not too late to buy the stock. If anything, it’s too early. But it may make sense to wait for a correction or another technological breakthrough before you consider opening a position in the stock.